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Home My WebLink About20110328IPC to ICIP 16.pdfesIDA~POR~ An 10ACORP Company LISA D. NORDSTROM Lead Counsel InordstromØìidahopower.com March 25, 2011 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilities Commission 472 West Washington Street P.O. Box 83720 Boise, Idaho 83720-0074 Re: Case No. IPC-E-10-25 IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY FOR ACCEPTANCE OF ITS 2011 RETIREMENT BENEFITS PACKAGE Dear Ms. Jewell: Enclosed for filing please find an original and three (3) copies of Idaho Power Company's Response to the Second Production Request of the Industrial Customers of Idaho Power in the above matter. In addition, included in a separate envelope are an original and three (3) copies of a confidential document that is being produced in response to the Industrial Customers of Idaho Power's Production Request No. 16. Idaho Power requests the confidential information be handled in accordance with the Protective Agreement executed in this matter. Very truly yours, K~f2VZ~ Lisa D. Nordstrom LDN:csb Enclosures 1221 W. Idaho St. (83702) P.o. Box 70 Boise, 10 83707 LISA D. NORDSTROM (ISB No. 5733) DONOVAN E. WALKER (ISB No. 5921) Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5825 Facsimile: (208) 388-6936 Inordstrom(âidahopower.com dwalker(âidahopower.com RECEI D iOn MAR 25 PM 4: 43 Attorneys for Idaho Power Company Street Address for Express Mail: 1221 West Idaho Street Boise, Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION ) OF IDAHO POWER COMPANY FOR ) ACCEPTANCE OF ITS 2011 ) RETIREMENT BENEFITS PACKAGE. ) ) ) ) ) ) CASE NO. IPC-E-10-25 IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in response to the Second Production Request of the Industrial Customers of Idaho Power dated March 14, 2011, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1 REQUEST NO. 16: In Idaho Public Utilties Commission Order 31003, Case No. IPC-E-09-29, the Commission said, "We authorize the clarified treatment of defined pension expense as detailed above in our summary of the Company s (sic) reply. We find this approach satisfies the SFAS 71 requirements. Furthermore, we adopt the four points of clarification requested by the Company in its reply comments, as set forth above." (p. 11.) And, as set forth above; "While the Company continues to believe that its proposed tracking mechanism better matches recovery of pension costs with the Company's cash outlays to fund the pension, the Company is not opposed to the recommendations included in Staff's comments as clarified in the Company's reply. Further, the Company is satisfied that Staff's proposed methodology would meet the deferral requirements of SFAS 71. Should the Commission choose to adopt Staffs recommendations, the Company requests that the Commission provide the following clarifications: 1 . The regulatory asset account previously authorized for the deferral of cash contributions will be considered a balancing account for the purpose of tracking the difference between cumulative cash contributions to the pension plan and amounts recovered in rates; and 2. The timing of the amortization of the deferred cash contributions as well as the amounts wil be matched to the collection of those costs in rates; and 3. The amounts contributed in excess of the ERISA minimum, while potentially subject to longer amortization, wil not be disallowed solely because they are made sooner than they are legally required to be paid; and 4. The unamortized balance of deferred cash contributions wil earn a carrying charge at the Commission- approved interest rate for deposit. (p. 10.)" Please provide, for the next 20 years a forecast for each year of the 20 year period, the dollar amount of the regulatory asset balancing account under the IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2 assumption of, A) the Company's proposed pension plan set forth in its Application in IPC-E-10-25, and B) beginning in 2012 all new employees pensions wil be based on a defined contribution plan rather than defined benefis. For each of these two scenarios please assume a return on the regulatory asset balancing account equal to the "Best Case" and "Worst Case" for 5 Years as shown in Chart 4 "Projected Investment Returns Over Time vs. Actuarial Assumption Based on Current IPCO Target Allocation" found on page 6 of 11 of the Company's "Supplemental Report: Retirement Benefits Risk Analysis" file (sic) in this Docket on February 20,2010. Please provide this analysis in electronic format and state the assumptions of return, pension payments to retirees, and the Company expected contributions to the balancing account, under both the A and B scenarios listed above. RESPONSE TO REQUEST NO. 16: The requested information was provided in the Company's February 18, 2011, Supplemental Report for the years 2011 through 2019. Funding amounts associated with Scenario A for 2011 through 2019 can be found in Chart 6, page 9. Funding amounts associated with Scenario B for 2011 through 2019 can be derived by subtracting the values provided in Chart 5, page 8 from Chart 6 and then adding the values provided in Chart 8, page 10. The Company is unable to forecast the balance in the "regulatory asset balancing account" for the next 20 years because (1) the model the Company's actuary (Miliman) utilizes does not currently generate actuarial projections beyond ten years and (2) the Company does not know the level of recovery that may be allowed to offset pension contributions. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3 A well designed "balancing" account would not be expected to accumulate an extreme balance, as the goal would be to ratably amortize contributions over a reasonable period of time. The confidential attachment prepared by Miliman detailing the Projected Counts, Payroll, and Benefits of Idaho Powets Retirement Plan may be helpful in showing the forward trend in pension contributions; however, Idaho Power cannot predict the potential accuracy of further extrapolating the projections based on current conditions over longer periods of time. Because this information is proprietary and confidential, Idaho Power is providing this information only to parties that have executed the Protective Agreement. The response to this Request was prepared by Ron Meyers, Pension and Investment Administrator, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. DATED at Boise, Idaho, this 25th day of March 2011. dG Jl tkkfLISA D. NORDS OM Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 25th day of March 2011 I served a true and correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Weldon B. Stutzman Deputy Attorney General Idaho Public Utilties Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 ~ Hand Delivered U.S. Mail _ Overnight Mail FAX ~ Email Weldon.Stutzmancapuc.idaho.gov Industrial Customers of Idaho Power Peter J. Richardson Gregory M. Adams RICHARDSON & O'LEARY, PLLC 515 North 27th Street P.O. Box 7218 Boise, Idaho 83702 Hand Delivered ~ U.S. Mail _ Overnight Mail FAX ~ Email petercarichardsonandoleary.com gregcarichardsonandoleary.com Dr. Don Reading Ben Johnson Associates 6070 Hil Road Boise, Idaho 83703 Hand Delivered ~U.S.Mail _ Overnight Mail FAX ~ Email dreadingcamindspring.com &:Qif~ Lisa D. Nordstro IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-E-10-25 IDAHO POWER COMPANY RESPONSE TO ICIP'S PRODUCTION REQUEST NO. 16 THE DOCUMENT BEING PROVIDED IN RESPONSE TO ICIP'S PRODUCTION REQUEST NO. 16 IS CONFIDENTIAL AND IS BEING PROVIDED TO THOSE PARTIES THAT HAVE SIGNED THE PROTECTIVE AGREEMENT