20170324IPC to Staff Redacted 29-30.pdf

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An IDACORP Company
LISA D. NORDSTROM
Lead Counsel
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March 24,2017
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-16-24
Recovery of Costs Associated with North Valmy Power Plant - ldaho Power
Company's Response to the Third Production Request of the Commission
Staff
Dear Ms. Hanian:
Enclosed forfiling in the above matter please find an originaland three (3) copies of
ldaho Power Company's Response to the Third Production Request of the Commission
Staff.
Also enclosed for filing are an original and three (3) copies of the confidentia!
attachment provided in response to Staffs Request No. 29. Please handle the confidential
information in accordance with the Protective Agreement executed in this matter.
Very truly yours,
,{r'*{./(^t-r,*
Lisa D. Nordstrom
LDN:csb
Enclosures
1221 W. ldaho St. (83702)
PO. Box 70
Boise. lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I n ord strom @ ida hopowe r. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
iliIc I ii'ED
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IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE lTS RATES
FOR ELECTRIC SERVICE TO RECOVER
COSTS ASSOCIATED WITH THE NORTH
VALMY PLANT
CASE NO. IPC-E-16-24
IDAHO POWER COMPANY'S
RESPONSE TO THE THIRD
PRODUCTION REQUEST OF
THE COMMISSION STAFF
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COMES NOW, ldaho Power Company ("ldaho Powe/' or "Comp?f,y"), and in
response to the Third Production Request of the Commission Staff to ldaho Power
dated March 10,2017, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF. 1
REQUEST NO. 29: Please provide an explanation for the calculation of all
income tax inputs, including the deferred income tax amounts in the detail worksheets
for Exhibit 2. Please provide all supporting documentation, calculations, and source
documents. !n addition, please provide a narrative description for, and calculation of,
the "Reversing Flow-Through Allocation" with a rate of 39.93%. Please provide the
source documents for the various tax rates used in the spreadsheet.
RESPONSE TO REQUEST NO. 29: The income tax calculations in Exhibit No.
2 were prepared to compute the current income tax, deferred income tax, and change in
accumulated deferred income taxes related to the book-to-tax difference for
depreciation expense. These calculations are representative of those used in ldaho
Power's actual income tax provisions for both financia! and regulatory accounting
purposes.
Please see the confidential attachment for the supporting documentation,
calculations, and source documents.
For regulatory accounting purposes, ldaho Power employs the "flow-through"
method of accounting for income taxes. Flow-through accounting allows the current tax
benefit or expense of a temporary book-to-tax difference to impact income tax expense.
Under Financial Accounting Standards Board Accounting Standard Codification ("ASC")
740, "lncome Taxes," a deferred tax is created for temporary differences, thereby
offsetting any current tax; this is known as the "normalization" method. Thus, the flow-
through method can increase or decrease financia! and regulatory accounting income
tax expense, whereas the normalized method has no net impact to income tax expense.
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF - 2
ldaho Power applies the flow-through method to utility plant-related tax adjustments
unless normalization is required by federal income tax law (e.9., tax depreciation).
When a plant-related, flow-through tax adjustment originates, its income tax
expense amount (typically a tax benefit) is recorded in that first year. Being that a flow-
through item is a temporary difference, the reversal of the originating adjustment occurs
over the depreciable life of the related plant asset, and thus its impact (typically a tax
expense) is recorded over a span of years. This is known as "reversing" flow-through,
and it's computed through an allocation of book depreciation in the plant-related
deferred income tax calculation. The calculation of the 39.93 percent allocation is
included in the confidential attachment. For further information related to ldaho Power's
income taxes, please refer to Note 1 "Summary of Significant Accounting Policies" and
Note 2 "lncome Taxes" to the financial statements in !DACORP's 2016 Annual Report
on Form 10-K, available via the following link:
https://www.sec.qov/Archives/eds arldatal49648/0001 05787717000035/id a1231'l610k.htm.
Please see the confidential attachment for the various tax rates used in the
spreadsheet.
The confidentia! attachment will be provided to those parties that have executed
the Protective Agreement in this matter.
The response to this Request is sponsored by Gene Marchioro, Corporate Tax
Director, ldaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF.3
REQUEST NO. 30: Please quantify the dollar revenue requirement difference
between the Company's proposal to accelerate Valmy depreciation rates, and leaving
the currently-approved depreciation rates in place, i.e. no acceleration, regardless of the
actual retirement dates for Valmy 1 and Valmy 2 under each of the following scenarios:
a. lncluding full recovery of the forecasted capital additions and including
decommissioning costs, with Valmy 1 scheduled for retirement as currently planned in
2031 and Valmy 2 scheduled for retirement as currently planned in 2035.
b. Without including recovery of the forecasted capital additions but including
decommissioning costs, with Valmy retiring al2031as currently scheduled and Valmy 2
retiring at 2035 as currently scheduled.
RESPONSE TO REQUEST NO. 30: As discussed with counsel for Staff, ldaho
Power requires additional time to complete this response but anticipates it wi!! be filed
on or before March 31,2017 .
DATED at Boise, ldaho, this 24th day of March 2017.
SA D
Attorney for Company
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF - 4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of March 2017 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Camille Christen
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-007 4
Micron Technology, !nc.
Thorvald A. Nelson
Frederick J. Schmidt
Emanuel T. Cocian
Brian T. Hansen
HOLLAND & HART, LLP
6380 South Fiddlers Green Circle, Suite 500
Greenwood Village, Colorado 80111
Pete Bennett
Micron Technology, lnc.
8000 South FederalWay
Boise, ldaho 83707
ldaho lrrigation Pumpers Association, lnc.
Eric L. Olsen
ECHO HAWK & OLSEN, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, ldaho 83205
Anthony Yankel
12700 Blake Avenue, Unit 2505
Lakewood, Ohio 44107
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISSION STAFF - 5
X Hand Delivered
_U.S. Mail
_Overnight Mail
_FAXxEmail [e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
fsch m idt@ hol land ha rt. com
etcocian @ hol land hart. com
bhansen@ hol land ha rt. com
klha I l@ hol land ha rt. com
kmtrease@ hol land ha rt. com
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
[e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand DeliveredX U.S. Mai!
_Overnight Mail
_FAXX Email [e-mail]
ldaho Conservation League
Benjamin J. Otto
ldaho Conservation League
710 North Saxth Street
P.O. Box 844
Boise, ldaho 83701
Sierra Club
Travis Ritchie
Sierra Club
2101 Webster Street, Suite 1300
Oakland, California 94612
United States Department of Energy and
Federal Executive Agencies
Steven Porter
Office of the General Counse! (GC-76)
The United States Department of Energy
1000 lndependence Avenue, SW (Room 6D-033)
Washington, D.C.20585
IDAHO POWER COMPANY'S RESPONSE TO THE THIRD
PRODUCTION REQUEST OF THE COMMISS]ON STAFF - 6
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand DeliveredX U.S. Mail
_Overnight Mail
_FAXX Email [e-mail]
_Hand DeliveredX U.S. Mai!
_Overnight Mail
_FAXX Email [e-mail]
Christa Bearry, Legal Assistant
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
cAsE NO. IPC-E-16-24
IDAHO POWER COMPANY
RESPONSE TO STAFF'S REQUEST NO.29
THE ATTAGHMENT
IS CONFIDENTIAL AND
WILL BE PROVIDED TO
THOSE PARTIES THAT
HAVE EXEGUTED THE
PROTECTIVE AGREEMENT
IN THIS MATTER