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Home My WebLink About20260319Staff Comments.pdf RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION JEFFREY R. LOLL DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83702 (208) 334-0357 IDAHO BAR NO. 11675 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF ROCKY MOUNTAIN ) POWER'S APPLICATION FOR AN ) CASE NO. PAC-E-26-02 ACCOUNTING ORDER FOR EXCESS ) LIABILITY INSURANCE COSTS RELATED ) TO WILDFIRE LIABILITY ) COMMENTS OF THE COMMISSION STAFF COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission ("Commission"), by and through its attorney of record, Jeffrey R. Loll, Deputy Attorney General, submits the following comments. BACKGROUND On January 27, 2026, PacifiCorp, d/b/a Rocky Mountain Power ("Company") applied to the Commission requesting an accounting order authorizing it to establish a balancing account for tracking (1) annualized revenues associated with excess liability insurance costs related to wildfires and (2) 80 percent of any Idaho wildfire liability costs arising from wildfires that ignite on or after February 15, 2026, from February 15, 2026 until the earlier of a future wildfire reserve fund mechanism's effective date or February 15, 2027 ("Application"). As part of a Commission-approved settlement in the Company's most recent general rate case, $8.63 million of excess liability insurance attributable to wildfire risk was included in the Company's base revenue requirement. Application at 3. The settlement also allowed the PacifiCorp Idaho Industrial Customers and the Idaho Irrigation Pumpers Association to take part STAFF COMMENTS I DUE MARCH 23, 2026 RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION in the Wildfire Insurance Working Group, which also included the Company, P4 Productions, L.L.C., an affiliate of Bayer Corporation, and Commission Staff(collectively, "Working Group"). Id. The Working Group is currently working on a joint application to create a reserve fund from which the Company would recover Idaho wildfire liability costs. Id. The reserve fund would allow the Company to avoid maintaining commercial excess liability insurance for Idaho wildfire claims. Id. The Company's excess liability insurance policy covering Idaho wildfires expired at midnight on February 14,2026. Id. at 4. The parties to the Working Group agree that the proposed reserve fund is likely to be more cost effective for customers than renewal of the Company's excess liability insurance policy. Id. The Company requests Commission approval of a balancing account for tracking (1) annualized revenues associated with excess liability insurance costs related to wildfires in the amount of approximately $8.63 million and (2) 80 percent of any Idaho wildfire liability costs arising from wildfires that ignite on or after February 15, 2026,1 from February 15, 2026 until the earlier of a future wildfire reserve fund mechanism's effective date or February 15, 2027—at which point the Company would re-obtain commercial coverage if the Commission denies the reserve fund mechanism. Id. at 4-5, 7. The Company requests authority to record the deferral in Account 254 (Other Regulatory Liabilities). Id. at 7. The Company anticipates deferring approximately $0.72 million of revenue monthly. Id. The Company represents that it "is unable to estimate any Idaho wildfire liability claims and/or associated outside defense counsel expenses that may be deferred during this period." Id. at 7-8. According to the Company, no party to the Working Group has expressed opposition to the deferral request. Id. STAFF ANALYSIS Staff reviewed the Company's Application and relevant Commission Orders. Based on its review, Staff recommends the Commission: 'As part of the proposed reserve fund mechanism, the Company has agreed to pay 20 percent of wildfire liabilities without seeking recovery from customers.Application at 7. STAFF COMMENTS 2 DUE MARCH 23, 2026 RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION 1. Approve a balancing account to track$8.63 million in annual excess liability insurance costs related to wildfire risk; and 2. Approve a tracking mechanism to record 80 percent of Idaho wildfire liability claims and related outside defense counsel expenses for wildfires occurring on or after February 15, 2026, until the earlier of the implementation of a wildfire reserve fund mechanism, or February 15, 2027. Wildfire Insurance Balancing Account Balancing accounts reconcile the difference between amounts included in base rates and actual expenses. They are commonly used for large or volatile cost categories and allow deferred ratemaking treatment. Balances recorded in the account may later be returned to customers or recovered by the Company in a future proceeding, ensuring that customers pay actual costs and the Company has an opportunity to recover costs that exceed those embedded in base rates. The Company anticipates filing a joint application with members of the Working Group requesting approval of a wildfire reserve fund that would allow the Company to recover the costs associated with third-party claims and outside defense costs incurred as a result of wildfires occurring in Idaho. Upon approval of that reserve fund, any excess revenues accumulated in the balancing account would be deposited into a trust, and would eliminate the need for commercial excess liability insurance. If the reserve fund mechanism is not approved, the Company may resume purchasing commercial excess liability insurance and seek amortization of the balancing account balance in base rates. The establishment of a balancing account does not guarantee approval of all expenses recorded by the Company. In a future rate case, Staff will review entries recorded in the account and provide recommendations to the Commission, which retains authority to determine prudency and ratemaking treatment. Based on its review, Staff believes the balancing account is reasonable and is in the best interests of the Company and its customers; therefore, Staff recommends the Commission approve the Company's request. STAFF COMMENTS 3 DUE MARCH 23, 2026 RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION Excess Liability Insurance Balancing Account The Company's request to track$8.63 million in annual wildfire-related excess liability insurance costs is consistent with Commission Order No. 36452 in Case No. PAC-E-24-04. Under the approved settlement in that case, the parties agreed to the following: 1. The Company will recover Idaho-allocated excess liability insurance premiums totaling approximately $9.81 million, with $8.63 million attributable to wildfire risk; 2. Premium costs above or below base-rate levels are tracked in a deferral,with prudently incurred excess costs recovered in the next general rate case; and 3. The deferral will be reevaluated in the Company's next general rate case in conjunction with any proposed insurance mechanism. Staff believes the Company's proposal aligns with the provisions approved in Order No. 36452. Wildfire Liability Claims and Outside Defense Counsel Expenses The Company also requests authority to track 80 percent of Idaho wildfire liability claims and related external legal expenses for wildfires occurring on or after February 15, 2026,until the earlier of a wildfire reserve fund mechanism's implementation or February 15, 2027. The remaining 20 percent of such costs would be borne by the Company and not recovered from customers. Staff believes this provides an incentive for the Company to minimize wildfire risk while limiting customer exposure to wildfire-related liability costs and thus recommends authorization of the request. STAFF RECOMMENDATION Staff recommends that the Commission: 1. Approve a balancing account to track$8.63 million in annual excess liability insurance costs related to wildfires; and 2. Approve tracking 80 percent of Idaho wildfire liability claims and associated outside defense counsel expenses for wildfires occurring on or after February 15, 2026, until the earlier of the implementation of a wildfire reserve fund mechanism or February 15, 2027. STAFF COMMENTS 4 DUE MARCH 23, 2026 RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION Respectfully submitted this 19th day of March 2026. Jeffrey R. Loll Deputy Attorney General Technical Staff. James Chandler I:\Utility\UMISC\COMMENTS\PAC-E-26-02 Comments.docx STAFF COMMENTS 5 DUE MARCH 23, 2026 RECEIVED March 19, 2026 IDAHO PUBLIC UTILITIES COMMISSION CERTIFICATE OF SERVICE I HEREBY CERTIFY THAT I HAVE THIS 191h DAY OF MARCH 2O26, SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NO. PAC-E-26-02, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING: Rocky Mountain Power: JANA SABA JOE DALLAS, ASSISTANT GENERAL COUNSEL ROCKY MOUNTAIN POWER E-MAIL: jana.saba(d),pacificorp.com joseph.dallaskpacificorp.com datarequest(dpacificorp.com PATRICIA JORD , SECRETARY CERTIFICATE OF SERVICE