The URL can be used to link to this page

Home My WebLink About20120511IPC to Staff 25-33.pdfHO WS POMR. RECEv4.. D An IDACORP Company to 'M LISA D. NORDSTROM Lead Counsel jT Inordstrom(äidahopower.com SiON May 10, 2012 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilities Commission 472 West Washington Street Boise, Idaho 83702 Re: Case No. IPC-E-12-14 Langley Gulch Recovery— Response to the Third Production Request of the Idaho Public Utilities Commission Staff Dear Ms. Jewell: Enclosed for filing please find an original and three (3) copies of Idaho Power Company's Response to the Third Production Request of the Commission Staff ("Staff') to Idaho Power Company in the above matter. Also enclosed are four (4) copies of non-confidential and confidential disks containing information responsive to Staff's Third Production Request. Please handle the enclosed confidential information in accordance with the Protective Agreement executed in this matter. Very truly yours, 1(";,L ~(- vo-t-4 A-~ Lisa D. Nordstrom LDN:kkt Enclosures 1221 W. Idaho St. (83702) P.O. Box 70 Boise, ID 83707 LISA D. NORDSTROM (ISB No. 5733) JULIA A. HILTON (ISB No. 7740) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5825 Facsimile: (208) 388-6936 Inordstrom(äidahopower.com ihiItonäidahopower.com RECEIVED t11W( UTtLT1ES COMMSSON Attorneys for Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS RATES AND ITS RATE BASE TO RECOVER ITS INVESTMENT IN THE LANGLEY GULCH POWER PLANT. CASE NO. IPC-E-12-14 IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in response to the Third Production Request of the Commission Staff to Idaho Power Company dated April 19, 2012, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -1 REQUEST NO. 25: Please provide copies of external and internal auditor workpapers that document the review (and related conclusions) of Allowance for Funds Used During Construction (AFUDC) during the years of the Langley Gulch project (2009 to date). These documents should include but not be limited to: considerations during planning the audit and internal control, communications with the Company, identification of risk, planned procedures and procedures performed, and communication of exceptions whether passed or the basis of adjustments to the financial statements. Please provide all documents unaltered and in their original formats. RESPONSE TO REQUEST NO. 25: Internal controls related to AFUDC have been reviewed by Internal Audit as part of compliance with annual Sarbanes Oxley Act ("SOX") requirements. The related SOX process is Fixed Assets - Month-End Processing (FAME), and workpapers related to AFUDC controls testing are available for audit years 2009, 2010, and 2011. Idaho Power Company is willing to make the requested information available for the Idaho Public Utilities Commission Staff's review at the offices of Idaho Power Company. Please contact Doug Jones (388-2615) or Camilla Victoria (388-5821) to schedule an on-site review. The Company has also initiated a letter to its external auditors requesting that they provide the Idaho Public Utilities Commission ("Commission") Staff with access to their workpapers, as requested above. Arrangements should be made directly between Deloitte & Touche, LLP and Commission Staff for the time, location, and procedures. The contact person at Deloitte & Touche, LLC for these arrangements will be Kathleen Malone, Audit Senior, (208) 388-2452 or katmalone@deloitte.com . IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -2 The response to this request for information from internal audit was prepared by Jeff McCormick, Audit Director, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. The response to this request for information from external audit was prepared by Bruce MacMahon, Director, Financial Accounting and Reporting, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -3 REQUEST NO. 26: If not provided in response to Request No. 25, please provide any documentation (unaltered and in its original format) provided to internal and external auditors regarding AFUDC. RESPONSE TO REQUEST NO. 26: All relevant information has been included in the response to Production Request No. 25. The response to this request for information from internal audit was prepared by Jeff McCormick, Audit Director, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. The response to this request for information from external audit was prepared by Bruce MacMahon, Director, Financial Accounting and Reporting, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -4 REQUEST NO. 27: Please describe the method by which AFUDC has been applied to the Langley Gulch project and evidence documenting this application. Please include within your response the monthly memos (or other documentation) identifying the monthly AFUDC rate applied to Langley Gulch and all other plant projects. If AFUDC applied to Langley Gulch differs from the manner (and rate) in which AFUDC is applied to other projects, please provide the rates and a detailed explanation of the differences. RESPONSE TO REQUEST NO. 27: AFUDC is calculated and applied on construction work orders, except when Contributions In Aid of Construction are collected from customers prior to construction. AFUDC is not applied to general plant work orders, such as the purchase of autos, furniture, or computers, because these items are generally purchased ready to use. The basis to which AFUDC is applied is the average monthly Account 107 - Construction Work in Progress ("CWIP") balance, which includes general overheads and previously applied AFUDC. The calculation of the monthly AFUDC rate is performed using a Federal Energy Regulatory Commission authorized formula. (CFR 18, Electric Plant Instruction #3, paragraph 17.) The calculation includes components for both Allowance for Other Funds (equity) and Allowance for Borrowed Funds (borrowed). The equity rate is based on the Commission-approved or imputed rate of return on equity. The borrowed rate is a blend of the weighted-average long-term debt rate and the monthly short-term interest rate. The blend is based on the aforementioned paragraph 17 formula. These rates are IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -5 then applied to the average monthly CWIP balance for those qualifying work orders, on a monthly basis. When a work order is placed in-service, the charges to CWIP are moved to Account 101 - Electric Plant in Service ("EPIS"). Costs moved to EPIS are not subject to AFUDC. When a work order is completed, AFUDC ceases. AFUDC is applied to the Langley Gulch power plant ("Langley Gulch") project work orders in the same manner as other construction work orders subject to AFUDC. Please see the attached Excel file for monthly AFUDC memos identifying the monthly AFUDC rate used by the Company. Please see the Company's response to Commission Staffs Production Request No. 28 below for evidence documenting the application of AFUDC. The response to this Request was prepared by Larry Tuckness, Business Unit Finance Team Leader, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -6 REQUEST NO. 28: Please provide a schedule of the total AFUDC applied to Langley Gulch to date (and when available, through April 30, 2012) by month for the length of the project, the total costs on which AFUDC was applied for the same time period by month, and the AFUDC rate calculated based upon those costs. This should be provided on a CD in Excel format with formulas intact. If the AFUDC rate calculated in this response does not match the rate provided in response to Request No. 27, please explain and reconcile the differences between the rates. RESPONSE TO REQUEST NO. 28: Please see the attached Excel file for the schedule of AFUDC applied to the Langley Gulch project by Project ID and month. Please refer to the Company's response to Commission Staffs Production Request No. 27 above for memos showing the calculation of the AFUDC rates. Schedules will be updated with April information when April close is complete. The response to this Request was prepared by Larry Tuckness, Business Unit Finance Team Leader, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -7 REQUEST NO. 29: Staff expects this information has already been submitted to Staff in response to Request Nos. I and 2. However, if not provided previously in response to Request Nos. I and 2, please provide all documentation supporting the estimates contained in Exhibit No. 2. Please include within your response all underlying spreadsheets, contracts, projections, forecasts, calculations and the manner in which those forecasts/projections were formed. Any calculations should be provided on a CD in Excel format with formulas intact. RESPONSE TO REQUEST NO. 29: Please see the attached Excel file for documentation supporting the estimates contained in Exhibit No. 2. The response to this Request was prepared by Courtney Waites, Regulatory Analyst II, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -8 REQUEST NO. 30: Please provide all the documentation supporting the calculation of federal income taxes contained within Exhibit No. 3. Please include within your response a description of the calculation to include the documentation of the underlying components of the calculation. Please provide all calculations on a CD in Excel format with formulas intact. RESPONSE TO REQUEST NO. 30: Please see Table 10 in the Jurisdictional Separation Study provided in the Company's response to Commission Staffs Production Request No. 2 for the calculation of the federal income taxes. There are two inputs that impact the total federal income tax included in the Company's request: Federal Income Tax Adjustments - Plant and Interest Expense Synchronization. Please see the "Timing Duff & Deferred Tax" tab in the Excel file provided in the Company's response to Commission Staff's Production Request No. 22 for the documentation supporting the calculation of Federal Income Tax Adjustments - Plant. Please see the "lntSync" tab in the Excel file for the documentation supporting the calculation of the Interest Expense Synchronization. The Interest Expense Synchronization computation presented on the "IntSync" tab makes an adjustment to interest expense used in the test year tax calculations to reflect the incremental change in interest expense resulting from the addition of Langley Gulch in rate base. While the interest expense synchronization computations used in the last general rate case (Case No. IPC-E-11-08) to develop current rates included a portion of Langley Gulch in the form of CWIP, this current adjustment provides customers the interest deduction benefit of the incremental investment associated with Langley Gulch that was added in 2012. Both amounts presented are on a total system basis. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -9 The response to this Request was prepared by Gene Marchioro, Corporate Tax Director, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -10 REQUEST NO. 31: Please provide all the documentation supporting the calculation of state income taxes contained within Exhibit No. 3. Please include within your response a description of the calculation to include the documentation of the underlying components of the calculation. Please provide all calculations on a CD in Excel format with formulas intact. RESPONSE TO REQUEST NO. 31: Please see the "Total Income Tax" tab in the Excel file provided in the Company's response to Commission Staffs Production Request No. 22. The amounts presented are on a total system basis. Additionally, please see Tables 11 and 12 in the Jurisdictional Separation Study provided in the Company's response to Commission Staffs Production Request No. 2. The response to this Request was prepared by Gene Marchioro, Corporate Tax Director, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -11 REQUEST NO. 32: Please provide all the documentation supporting the calculation of operation & maintenance expenses by category or item and by FERC account (insurance expenses, labor, non-labor associated with chemicals and consumables) contained within Exhibit No. 3. Please include within your response a description of the calculation to include the documentation of the underlying components of the calculation. Please provide all calculations on a CD in Excel format with formulas intact. RESPONSE TO REQUEST NO. 32: Please see the confidential Excel file (Attachment 1) provided on the confidential CD for the documentation supporting the insurance expenses included in the operation and maintenance expenses contained within Exhibit No. 3. The confidential CD will only be provided to those parties that have executed the Protective Agreement in this proceeding. Please see the attached Excel file (Attachment 2) for the documentation supporting the labor and non-labor expenses included in the operation and maintenance expenses contained within Exhibit No. 3. Labor and non-labor operations and maintenance expenses included in this request were estimated using 2012 budget amounts which assume a Langley in-service date of June 1, 2012. To estimate the annualized labor and non-labor operations and maintenance expenses, the budgeted 2012 expenses were divided by seven, to represent a monthly expense amount, and multiplied by 12, for the annualized expense. The response to this Request was prepared by Courtney Waites, Regulatory Analyst II, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -12 REQUEST NO. 33: Please provide all the documentation supporting the calculation of taxes other than income taxes contained within Exhibit No. 3. Please include within your response a description of the calculation to include the documentation of the underlying components of the calculation. Please provide all calculations on a CD in Excel format with formulas intact. RESPONSE TO REQUEST NO. 33: Idaho Power property is appraised by the Idaho State Tax Commission ("ISTC") for ad valorem tax purposes. The Company's property in total is appraised in a lump sum value and that value is apportioned to the counties where the property is located by a formula. The ISTC distributes that county value to the appropriate tax code areas by transmission wire mileage, distribution wire mileage or physical location ("situs"). The Langley Gulch property tax calculation is separated into two line items (Langley Gulch Power Plant and Langley Gulch Other Investment) based upon how the ISTC distributes the property value. The ad valorem value for Langley Gulch Power Plant is distributed based upon its situs. The Langley Gulch book investment is adjusted using the ISTC's 2011 taxable value ratio and the 2011 situs tax levy rate is applied arriving at a 2012 property tax. The ad valorem value for Langley Gulch's Other Investment is distributed to the county based upon the ISTC's value by transmission wire mileage and distribution wire mileage. A book investment to tax ratio is determined based upon the Company's book investment in each county and corresponding property tax. The 2011 book investment to tax ratio is applied to the Langley Gulch Other Investment to determine a 2012 property tax. IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -13 The response to this Request was prepared by Katrina Basye, Property Tax Manager, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. DATED at Boise, Idaho, this 10th day of May 2012. LISA D. NORDSTRc1r Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -14 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 10th day of May 2012 I served a true and correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Donald L. Howell, II Karl T. Klein Deputy Attorneys General Idaho Public Utilities Commission 472 West Washington (83702) P.O. Box 83720 Boise, Idaho 83720-0074 Industrial Customers of Idaho Power Peter J. Richardson Gregory M. Adams RICHARDSON & O'LEARY, PLLC 515 North 27th Street (83702) P.O. Box 7218 Boise, Idaho 83707 Dr. Don Reading Ben Johnson Associates, Inc. 6070 Hill Road Boise, Idaho 83703 Idaho Irrigation Pumpers Association, Inc. Eric L. Olsen RACINE, OLSON, NYE, BUDGE & BAILEY, CHARTERED 201 East Center P.O. Box 1391 Pocatello, Idaho 83204-1391 Anthony Yankel 29814 Lake Road Bay Village, Ohio 44140 Hand Delivered U.S. Mail Overnight Mail FAX X Email don. howelI(äpuc.idaho.qov Karl. klein(äpuc.idaho.gov Hand Delivered U.S. Mail Overnight Mail FAX X Email peterrichardsonandoleary.com greci(richardsonandoIearv.com Hand Delivered U.S. Mail Overnight Mail FAX X Email dread ing(ämindsprinci.com Hand Delivered U.S. Mail Overnight Mail FAX X Email eIo(äracineIaw.net Hand Delivered U.S. Mail Overnight Mail FAX X Email tonyyankeI.net IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -15 Micron Technology, Inc. Thorvald A. Nelson Frederick J. Schmidt Sara K. Rundell HOLLAND & HART, LLP 6380 South Fiddlers Green Circle, Suite 500 Greenwood Village, Colorado 80111 Richard E. Malmgren Senior Assistant General Counsel Micron Technology, Inc. 800 South Federal Way Boise, Idaho 83716 Hand Delivered U.S. Mail Overnight Mail FAX X Email tneIson(ähoIlandhart corn fschmidthol land hart. com sakrundell(hol land hart.com lnbuchanan(hol Ia ndha rt. corn Hand Delivered U.S. Mail Overnight Mail FAX X Email rernalmqrenmicron.com —4;y,tie~2A 2i"—ttj--,L Ki berly Towelyxecutive Assistant IDAHO POWER COMPANY'S RESPONSE TO THE THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMPANY -16