peterecon.pdf

Peter J. Richardson, ISB # 3195
Richardson & O’Leary
99 East State Street, Suite 200
P.O. Box 1849
Eagle, Idaho 83616
Telephone: [phone]
Fax: [phone]
[e-mail]

Attorney for Industrial Customers of Idaho Power

BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AN ENERGY COST FINANCING ORDER AND AUTHORITY TO INSTITUTE AN ENERGY COST BOND CHARGE
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CASE NO. IPC-E-02-02

PETITION FOR RECONSIDERATION
OF THE INDUSTRIAL CUSTOMERS
OF IDAHO POWER
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO IMPLEMENT A POWER COST ADJUSTMENT (PCA) RATE FOR ELECTRIC SERVICE FROM MAY 16, 2002 THROUGH MAY 15, 2003.
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CASE NO. IPC-E-02-03

PETITION FOR RECONSIDERATIONOF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER

COMES NOW, The Industrial Customers of Idaho Power, (“ICIP” or the “Industrial
Customers”) pursuant to Rule 331 of this Commission’s Rule of Procedure, IDAPA
31.10.01.331, and hereby petitions the Commission for reconsideration of Order No. 29026
issued in the above referenced cases on May 13, 2002, and as grounds therefore states as follows:

IPIC Petition for Reconsideration– IPC-E-02-02; IPC-E-02-03
I.
IT IS UNREASONABLE TO ORDER IDAHO POWER TO RECOVER ALL OF ITS
EXCESS POWER SUPPLY COSTS IN A SINGLE PCA YEAR

Every party to this case that made a recommendation relative to recovery of Idaho
Power’s extraordinary excess power supply costs argued for some form of a deferred recovery.
Every party’s recommendation would have resulted in an immediate rate DECREASE for Idaho
Power’s customers. In response, this Commission rejected the testimony of all parties to this
case (including Idaho Power Company) and ordered an immediate rate INCREASE. This
unprecedented action will cause further irreparable harm to Idaho’s economy, and may erode the
confidence the customers of this investor-owned utility have in the willingness of this
Commission to protect the economy of the State of Idaho. The Commission disregarded the
pleas from Idaho Power’s ratepayers that immediate rate relief is needed.
The Commission’s logic for rejecting the position of all parties to this case is
inconsistent. For example, in response to the ICIP’s argument for a five year deferral, the
Commission, while asserting that it was ”sympathetic to the concerns of the Industrial Customers
that a rate increase will place them at a competitive disadvantage,” went on to say that a deferral
would prolong higher rates and delay the “substantial decrease” that would presumably take
place at the end of the one year recovery period adopted by the Commission. Order No. 29026 at
p. 15. While relying on the tantalizing prospect of a substantial rate decrease next year as a
foundation for denying deferral, the Commission at the same time cited a speculative fear that
wholesale rates will increase substantially next year:
One of our primary concerns is the water supply necessary to generate the
electricity that Idaho Power relies on to supply 60% of its system load. Snowpacks the

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
2

last two years have been significantly lower than average. . . Idaho’s reservoirs have not
yet refilled and the opportunity to generate hydroelectricity is thus diminished in the near
term. If another drought year were to occur while the Bonds were outstanding, electricity
rates could easily climb again.
In addition to the unpredictability of the weather, the Commission is concerned
about potential volatility in the western wholesale power markets once FERC’s price
mitigation orders terminate on September 30, 2002. [Footnote omitted.]

In short, the Commission denied deferrals because it hopes rates are going to go down
next year anyway, and it also denied deferrals because it fears rates might go up next year. This
inconsistent logic does not support the Commission’s decision. The truth is, no one knows what
wholesale rates are going to do next year and Idaho Power’s customers need rate relief today.
Deferring recovery of excess power supply costs does not harm customers. With the minor
exception (relatively speaking in this case) of carrying costs on deferred balances, deferrals
simply move costs into future periods for later recovery. On the other hand, customers benefit
greatly by deferring such huge rate increases and recovering them over a period of time.
II.
NEGATIVE IMPACT OF THE COMMISSION’S DECISION
The ICIP testified at the hearing in this matter as to the economic harm to the State of
Idaho of increasing our rates again this year. Apparently the Commission did not fully
comprehend the serious nature of the situation. While the ICIP does not want to sound strident,
we cannot underscore the critical importance of immediate rate relief. Should the Commission
so desire, the ICIP stands ready to sponsor additional witnesses to help the Commission to fully
understand the real and pressing need the industrial customers of this state have for immediate
rate relief.

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
3

III
THE COMMISSION FAVORED TWO RATE CLASSES WITH A TWO YEAR
DEFERRAL WHILE FORCING ALL OTHER CLASSES TO SUFFER IMMEDIATE
RECOVERY OF EXTRAORDINARY POWER SUPPLY EXPENSES
Despite arguments for a deferral of Idaho Power’s excess power supply costs from all
parties, the Commission rejected those pleas and ordered deferrals for two classes of customers
who did not even have party status at the hearings. This type of discriminatory treatment
certainly discriminates among customer classes with no factual or legal basis.
In exempting the irrigation class from any rate increase this year, the Commission
declared:
At the public hearings, several irrigators testified that they were not aware that a 7%
increase in irrigation rates was approved by the Commission last October. [citation
omitted] This can largely be attributed to the fact that most irrigators typically end their
seasonal usage in October. Thus, the irrigation class as a whole had very little
opportunity to adjust to the October rate increase. Moreover, it is likely that the typical
irrigator did not include that increase in his/her budget when calculating expenses for
2002.
Order No. 29026 at page 17.
No rationale, other than (1) the difficulty irrigators have in understanding their rates and
(2) their inability to “adjust” or “budget” for the multiple Idaho Power rate increases over the
past year, is given in support of the Commission’s decision to give the irrigator class what all of
the parties to this case sought – deferral of this extraordinary rate increase.
There is no basis for the discriminatory treatment of the irrigation class. The fact that
“several irrigators” testified at the public hearings that they didn’t know what their electric rate
was does not indicate that the class as a whole suffered from the same lack of information.
Indeed, the Idaho Irrigation Pumper’s Association (the entity representing the irrigation class)

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
4

was actually a party to the case referenced by the Commission in which the irrigation class
received the 7% increase of which they were supposedly unaware. There is no allegation that
Idaho Power failed to provide all of the Commission mandated notices of a pending rate increase
to the irrigation class. Finally, the irrigation class cannot be signaled out for special treatment
just because, due to the seasonal nature of their usage, some individual irrigators claimed to be
unaware of what their electric rates were. The irrigators are not the only customer class that has
seasonal usage. Some industrial concerns are also seasonal. There is no rationale for not also
exempting the industrial class because they, like the irrigators have seasonal loads. In addition,
many residential customers have summer homes in Idaho. There is no rationale for not also
exempting the residential class. After all, some seasonal homeowners may have been unaware of
a rate increase on them imposed in October. The Commission’s favorable treatment of the
irrigation class without also bestowing the benefits of no rate increase this year to the industrial
and residential classes holds those similarly situated customer classes to a higher and arbitrarily
imposed standard.
The Commission’s other rationale for exempting the irrigation class was that irrigators
would have trouble “adjusting” or “budgeting” for the rate increase. Like the rationale with
respect to the notice issue, there is nothing unique to the irrigation class’s inability to adjust to
Idaho Power’s multiple rate increases. All customer classes have had trouble “adjusting” to
Idaho Power’s reliance on erratic wholesale markets. Had the ICIP known that an inability to
budget for rate increases was the standard this Commission intended to apply when deciding
which classes of customers were entitled to deferral treatment, we would have sponsored
testimony demonstrating the difficulties our plant managers are having trying to adjust to and

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
5

budget for Idaho Power’s unprecedented rate increases. We stand ready to do so should the
Commission order a rehearing on this issue.
Unfortunately, the Commission has insulated only the irrigation class from this increase
due to troubles the irrigation class is having adjusting to the rate increase. Such discriminatory
treatment is illegal. See Grindstone Butte v. Idaho PUC 102 Idaho 175 (1981). All classes
should have the opportunity to avail themselves of the two-year deferral in order to avoid any
rate increase this year.
Order No. 29026 also gave special treatment to another class of customers by allowing
them to avoid the rate increase that the all other classes (except the irrigation class) have
suffered. With respect to the small commercial class the Commission reasoned:
With the exception of the Lighting classes, the Small General Service class was the only
class to have rates set in excess of 8 cents per kWh after last October’s rate increase.
Order No 28852. Rather than raise their rates above the already high 8.021 cents average
rate Schedule 7 currently pay, the Commission finds it appropriate to minimize hardship
to this class by continuing their current rate for this PCA year and to allow recovery of
the remaining portion next year.
Order No. 29026 at pp. 17-18.
This is another troubling example of preferential treatment being afforded rate relief this
year based on a rationale that applies equally to all other classes of customers. The only stated
basis for the Commission’s deferring the Small General Service class from Idaho Power’s rate
increase was to “minimize hardship” and a desire not to increase their rates above their already
high rate of 8.021 cents. All classes are experiencing hardship as a result of Idaho Power’s rate
increases. The Small General Service Class is not unique in that regard. The Small General
Service class is also not unique in having rates in excess of 8 cents. Like the special treatments

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
6

afforded the irrigation class, exempting the small General Service Class from this rate increase is
arbitrary, discriminatory and in violation of Idaho law.
Order No. 29026 does not explain why the rationale for forcing every class (but two) to
pay all of Idaho Power’s extraordinary power supply costs in one year does not also apply to the
small commercial class and the irrigation class. After all, “unknown water and market
conditions” also affect irrigators and small commercial customers in the identical manner they
affect all other customer classes. See Order No. 29026 at p. 16. In addition, irrigators and small
commercial customers may be “required to continue paying costs from this year on top of
whatever increases may be required in future years.” See Order No. 29026 at p.17. The
Commission apparently fears `mortgaging our future’ for all classes except for the irrigators and
the small commercial classes. See Order No. 29026 at p. 15. All of the reasons the Commission
cited in denying the deferral treatment sought by the ICIP apply equally to the irrigation and
small commercial classes. In addition, all of the reasons cited by the Commission for allowing
deferral treatment for the irrigation and small commercial classes apply equally to the industrial
class. In short, there are no valid ratemaking differences among the classes with respect to the
timing of recovery of Idaho Power’s extraordinary power supply costs.
IV
PRAYER FOR RELIEF
WHEREFORE, the Industrial Customers of Idaho Power request that this Commission
grant its Petition for reconsideration by reversing its decision in Order No. 29026 and
implementing a five year deferral of Idaho Power’s 2002 – 2003 PCA expenses, or in the
alternative, schedule a hearing in which the Industrial Customers may be permitted the

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
7

opportunity to demonstrate that (like the irrigators) it has also had difficulties in ‘adjusting’ to
and ‘budgeting’ for Idaho Power’s rate increase and to prove that (like the small commercial
classes) such rate increases have imposed a “hardship” on the Schedule 19 customers such that
they too are entitled to be exempt from this year’s increased PCA rate.
. DATED this 31st day of June, 2002.

Richardson & O’Leary, LLP

By
Peter J. Richardson ISB # 3195
Attorney for the Industrial Customers
of Idaho Power

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
8

ICIP Petition for Reconsideration – IPC-E-02-2, IPC-E-02-3
9

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 31st day of May, 2002, a true and correct copy of the
within and foregoing PETITION FOR RECONSIDERATION OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER, Case Nos. IPC-E-02-02 and IPC-E-02-03, was served by
U.S. Mail, postage prepaid, to:

Larry Ripley
John R. Gale
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707-0070

David Hawk
Director, Energy Natural Resources
R. Scott Pasley
Assistant General Counsel
J R Simplot Company
999 Main Street
P O Box 27
Boise ID 83707-0027

William M. Eddie
Land & Water Fund of the Rockies
P O Box 1612
Boise ID 83701

______________________________
Myrna J. Walters
Legal Assistant