20140801IPC to IIPA 1-5.pdf

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LISA D. NORDSTROM
Lead Gounse!
I [e-mail]
August 1,2014
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 W est Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-14-14
ADITC/Revenue Sharing Mechanism Beyond 2014 ldaho Power
Company's Response to the First Data Request of the ldaho lrrigation
Pumpers Association, !nc.
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and three (3) copies of ldaho
Power Company's Response to the First Data Request of the ldaho lrrigation Pumpers
Association, lnc. to ldaho Power Company.
Sincerely,
LDN:evp
Enclosures
u rtl?# lrc,iiii; i ss i,: r,
An IDACORP ComDanv
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LtsA D. NoRDSTRoM (tsB No. s733) ff[CE{\'r;r
i11"fi:ffi::^"I3;:l (r.ror) ?orr'Au6-, PH ?; rg
P.O. Box 70 lDAltn $r,, : ,
Boise, ldaho a3tor uTlllTlds*Cd[i#j$sroru
Telephone: [phone]
Facsimile: [phone]
I no rd stro m @ id ahopowe r. co m
Attorney for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
lN THE MATTER OF IDAHO POWER )
coMPANY',S APPLTCATION TO EXTEND ) CASE NO. IPC-E-14-14
ITS ACCUMULATED DEFERRED )
INVESTMENT TAX CREDITS/REVENUE ) IDAHO POWER COMPANY'S
SHAR|NG MECHANTSM BEYOND 2014 ) RESPONSE TO THE IDAHO
) TRRTGATTON PUMPERS
) ASSOCTATION, INC.',S FIRST
) DATA REQUEST TO TDAHO
) POWER COMPANY
COMES NOW, ldaho Power Company ("ldaho Powed' or "Company"), and in
response to the ldaho lrrigation Pumpers Association, lnc.'s ("llPA") First Data Request
to ldaho Power Company dated July 11, 2014, herewith submits the following
information:
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 1
REQUEST NO. 1: On page 3 of the Application there is listed approximately $51
million of "Offset to Pension Balancing Account". Please answer the following:
a. What has been the year ending amount of the Pension Balancing account
for each year from 2008 through 2013 for the total Company and for the ldaho
jurisdiction?
b. On a total Company basis and an ldaho jurisdictional basis, what has
been the amount of pension expense that was collected in base rates each year from
2008 through 2013?
Per the Stipulation in Case NO. IPC-E-09-30 (Paragraph 5.2 (d)), the
Company was allowed to increase rates for Pension Expense Recovery. For each of
the years 2008 through 2013, what total Pension Expense Recovery was built into rates
for the total Company and for the ldaho jurisdiction?
d. Per the Stipulation in Case NO. IPC-E-09-30 (Paragraph 5.2 (d)), the
Company was allowed to increase rates for Pension Expense Recovery. When was
each change made, and what were the annual amounts of the rate change for the total
Company and for the ldaho jurisdiction?
RESPONSE TO REQUEST NO. 1:
a.
2008 $
2009 $
2010 $ 53.169,373
2011 $ 38,976,484
2012 $ 50,036,086
2013 $ 45,520,420
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 2
b.
ldaho
Jurisdictional
Base Rate
Recoverv
2008 $
2009 $
2010 $ 3,159,798
2011 $ 12,263,331
2012 $ 17.153.713
2013 $ 17.153.713
Please note that the balancing account is an ldaho only mechanism. The Total
Company contribution and the ldaho allocation of that contribution is detailed in the
narrative below.
Case No. IPC-E-I0-08 (Final Order No. 31091)
Total Company contribution for 2O1O (less subsidiary contribution) was
forecasted to be $5,776,067. The ldaho allocation was calculated by applying the ldaho
Labor Allocator of 93.78 percent from the 2008 Federal Energy Regulatory Commission
("FERC") Form 1. Order No. 31091 approved ldaho jurisdictional recovery of
$5,416,796. This amount was to be recovered using straight-line amortization over 12
months beginning June 1,2010, through May 31 ,2011.
Gase No. IPC-E-11-04 (Final Order No. 32248)
Tota! Company contribution in 2010 (less subsidiary contribution but including the
contribution amount already included in the !PC-E-10-08 case) was actually
$59,946,494. The ldaho allocation was calculated by applying the Labor Allocator of
94.26 percent from the 2O1O FERC Form 1 then subtracting the $5,416,796 already
provided for in rates for the prior 12 months. Order No. 32248 approved pension
recovery of $17,153,713 (incremental increase of $11.7M) effective June 1, 2011,
(based on a three-year amortization of the 2010 contribution).
Case No. IPC-E-I1-08 (Final Order No. 32426)
The revenue requirement in the 2011 ldaho general rate case included ongoing
collection of pension expense at$17.2 million.
c. Please see the Company's response to llPA's Data Request No. 1.b.
d. Please see the Company's response to llPA's Data Request No. 1.b.
The response to this Request is sponsored by Tim Tatum, Cost of Service
Manager, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 3
REQUEST NO. 2: Regarding the "ldaho Jurisdictional ROE" values listed on
page 3 of the Application, please answer the following:
a. Please provide a general description of how these values were derived.
Explain if the base data used comes from FERC Form 1 data or some other source.
Explain how costs and revenues are allocated to the ldaho jurisdiction.
b. Are net power costs or components of net power cost normalized in any
way?
c. Are there expenses included in the calculation that have been partially or
totally disallowed by the Commission in previous rate cases since 2O0O?
d. Please provide in Excel format the data and calculation that produced
each of these ROE's for 2008 through 2013.
RESPONSE TO REQUEST NO. 2:
a. The Company prepares a full Jurisdictional Separation Study ('JSS")
based on third quarter financial information as of September 30, 20XX, and jurisdictional
allocation factors from the prior year FERC Form 1 filing. The results of this study are
then used to develop allocation factors for various components of operating income and
rate base. Following the completion of the fiscal year, retail revenues are directly
assigned to each jurisdiction, and the allocation factors from the third quarter JSS are
applied to all other year-end system-level financial figures to determine the year-end
ldaho jurisdictiona! net rate base and operating income. Common equity is then
allocated according to each jurisdiction's proportion of net rate base. Finally, the Idaho
jurisdictional year-end Return on Equity ('ROE') is determined by dividing the ldaho-
allocated earnings on common stock by the ldaho-allocated portion of common equity.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 4
b. Net power costs are not normalized in the ldaho jurisdictional ROE
calculation.
Yes. The premise of the Accumulated Deferred lnvestment Tax Credits
('ADlTC")/Revenue sharing mechanism is based on the Company's actual financial
results, therefore, the financial data used in the calculation of the ldaho jurisdictional
year-end ROE is not adjusted for any regulatory disallowances. However, the Company
is not aware of any regulatory disallowances ordered by the ldaho Commission since
2000.
d. Please see the attached Excel file. Please note that the first year of the
mechanism was fiscal year 2009.
The response to this Request is sponsored by Tim Tatum, Cost of Service
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY. S
REQUEST NO. 3: Please provide in Excel format the derivation of the
"Reduction to Rates" figures and the "Offset to Pension Balancing Account" figures
listed on page 3 of the Application?
RESPONSE TO REQUEST NO. 3: Please see the Excel file provided in the
Company's response to llPA's Data Request No. 2.d.
The response to this Request is sponsored by Tim Tatum, Cost of Service
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 6
REQUEST NO. 4: With respect to the figures listed on page 3 of the Application,
for the years 2011 through 2013, please list the financial benefit realized by the
Company.
RESPONSE TO REQUEST NO. 4: The figures listed on page 3 of the
Application are the amounts ldaho Power has shared with its customers either through
a direct rate reduction or as an offset to the pension balancing account because of the
ADITC/Revenue sharing mechanism that is in place. The Company has not utilized any
of the allowed ADITCs under the mechanism, therefore, there has not been a financial
benefit realized by the Company. The qualitative benefits recognized by the Company
are described in paragraph 3 of the Application.
The response to this Request is sponsored by Tim Tatum, Cost of Service
Manager, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 7
REQUEST NO. 5: According to page 4 of the Application, "the Company
expects to use less than $5 million of additiona! ADITC in 2014;' What are the most
significant changes that brought about this "expected use of less than $5 million of
additional ADITC in 2014" compared to 2011 through 2013?
RESPONSE TO REQUEST NO. 5: At the time the Application was filed, ldaho
Power expected to use less than $5 million of additional ADITC in 2014. The most
significant differences for 2014 as compared to 2011 through 2013 are related to
unanticipated events that occurred in 2011 through 2013.
ln 2011, the Company's earnings were positively impacted by the approval of a
uniform capitalization tax method change that allowed the Company to recognize $56.9
million in tax benefits relating to tax years 2009 and prior. The Company's 2012
earnings increased due to $17.6 million lower tax expense primarily driven by a
capitalized repairs method change and an increase in the uniform capitalization annual
tax deduction. Additionally in 2012, higher sales volumes, driven primarily by a warmer,
drier spring caused significant increases in irrigation usage contributed to the
Company's earnings. For 2013, the Company's earnings were largely driven by
increased weather-related sales across all customer classes and an $11.6 million gain
on the 2013 sale of investments in securities. For further reference regarding the years
201 1 through 2013, please see the attached PDF file of IDACORP, lnc.'s corresponding
fourth quarter earnings releases. ln each of those years, IDACORP, lnc. provided
prospective guidance for the coming year and stated ldaho Power's estimated use of
additionalAD|TC would be less than $5 million.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 8
As announced in IDACORP, lnc.'s second quarter earnings release on July 31,
2014, the Company no longer expects to use additional ADITC in2014.
The response to this Request is sponsored by Catie Miller, Director of Strategic
Analysis, ldaho Power Company.
DATED at Boise, ldaho, this 1"t day of August 2014.
IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 9
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 1" day of August 2014 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO
IRRIGATION PUMPERS ASSOCIATION, !NC.'S FIRST DATA REQUEST TO IDAHO
POWER COMPANY upon the following named parties by the method indicated below,
and addressed to the following:
Gommission Staff
Kar! T. Klein
Deputy Attomey General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ldaho Irrigation Pumpers Association
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE, &
BAILEY, CHARTERED
201 East Center
P.O. Box 1391
Pocatello, ldaho 83204-1391
Anthony Yankel
29814 Lake Road
Bay Village, Ohio 44140
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IDAHO POWER COMPANY'S RESPONSE TO THE IDAHO IRRIGATION
PUMPERS ASSOCIATION, INC.'S FIRST DATA REQUEST TO IDAHO POWER COMPANY - 1O