20030415_437.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:LISA NORDSTROM
DATE:APRIL 15, 2003
RE: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, 2003 THROUGH MAY 15,
2004. CASE NO. IPC-03-05.
On April 15 , 2003 , Idaho Power Company filed an Application with the Commission for
authority to decrease the Power Cost Adjustment (PCA)! rate schedule. The PCA is traditionally
comprised of two major components: 1) excess Company power supply costs during the preceding
twelve (12) months, which include off-system power purchases from the regional power market
beyond the amount previously included in customer base rates, and 2) the projection2 of the next
year s power supply costs based on expected3 Snake River stream flows and storage. This year the
PCA contains a third component for class-specific deferrals. A portion oflast year s PCA costs for
small commercial, industrial and irrigation customers were carried over to this year, thus reducing
the amount of their respective rate decreases. This request, if approved, would decrease the
Company s overall revenues by approximately $114 million. Idaho Power supplies electricity to
approximately 360 000 customers in southern Idaho. The Company has requested an effective date
of May 16, 2003.
I In March 1993 , the Commission authorized Idaho Power to file proposed Power Cost Adjustment (PCA) surcharges or
rebates to take effect in May each year. Order No. 24806 (Case No. IPC-92-25).
2 The Company may recover 90 percent of the difference between the projected power cost and the Commission
approved base power cost. Order No. 25880.
3 Typically this forecast is based upon an April 1 projection of April through July Brownlee runoff.
DECISION MEMORANDUM
THE PCA APPLICATION
PCA Components
Although the Company seeks to reduce the current PCA surcharge, the proposed rates
would generate approximately $81 million more than base rates from the three PCA components.
First, Idaho Power seeks approximately $38.7 million to recover above normal power supply costs
incurred during the April 2002 - March 2003 PCA period. These costs are predominantly Astaris
load reduction and settlement costs.
Second, the Company requests approximately $26.6 million in anticipation of above
normal power supply costs for the April 2003 - March 2004 PCA period due to below normal Snake
River stream flows and storage. Low reservoir levels upstream have caused forecasted stream flow
into Brownlee Reservoir to be only 53% of normal.
The third PCA component is comprised of approximately $16 million in Commission-
authorized deferrals for amounts still owed by three customer classes from last year s PCA. To
recover this additional amount, Idaho Power proposes that small general service customers pay an
additional 0.2438~ per kilowatt hour (kWh), industrial customers pay an additional 0.2178~ per
kWh, and irrigation customers pay an additional 0.7120~ per kWh.
Specific Expenses and Credits to be Recovered in the Proposed PCA
Idaho Power s Application identified the following expenses and credits to be recovered
in the PCA:
2002-2003 Power Supply True-
. Astaris Voluntary Load Reduction Payments
. Astaris Voluntary Load Reduction Credit
. Astaris Take-or-Pay Charge
. Mobile Home Metering Costs
. Intervenor Funding
. Annual IDACORP Energy credit
. Proposed IDACORP Energy Settlement
. Interest on True-Up Amounts
. All other power supply items
2003-2004 Projected Power Supply Costs
2002-2003 Customer Class Deferrals
TOTAL
DECISION MEMORANDUM
$38,707,636
$28 223 583
($ 425 000)
$ 1 275 663
$ 16 499
$ 26 138
($ 2 000 000)
($ 1 363 475)
$ 731 354
$12 222 873
$26,574 485
$16.039.041
$81 311 162
As this table illustrates, Astaris Voluntary Load Reduction payments comprise most of
the approximate $38 million in power supply true-up costs from the last PCA. Pursuant to the
settlement approved by the Commission in Order No. 29050, Idaho Power included amounts related
to Voluntary Load Reduction payments made to Astaris, the Voluntary Load Reduction credit, and
the Take-or-Pay charge in its proposed 2003-2004 PCA rates.According to testimony
accompanying the Application, Idaho Power included the voluntary load reduction amounts paid
from April 2002 to February 2003 for recovery from ratepayers in the period. As the Company is no
longer required to pay for Astaris load reduction going forward, this expense will not appear in Idaho
Power s 2004-2005 PCA filing next year.
The Company s Idaho ratepayers receive a $2 million annual credit pursuant to the
Stipulation in support of a Supply Management Agreement that the Commission approved in Order
No. 28596. This credit reflects the approximate amount Idaho Power over-collects from ratepayers
to pay for management functions assumed by Idaho Power s marketer, IDACORP Energy (IE).
Although Idaho Power s present Application includes the $2 million credit for the 2002-2003 true-up
period, the Application notes that the credit "should cease as of April I , 2003 in recognition that the
Supply Management Agreement is no longer in place" due to the dissolution of IE.
The IDACORP Energy Settlement amount is intended to resolve federal concerns
regarding $1 782 320 of profit IE earned on three wholesale transactions. Idaho Power states that
this amount is in addition to $4 043 866 IE previously paid Idaho Power for ancillary services related
to these transactions. Although these amounts are found in separate line items, Idaho Power
proposes that $1 363 4754 be credited to ratepayers during the 2003-2004 PCA period covered by
this Application.
Rates for Specific Customer Classes
Because not all customers pay the same per-kilowatt-hour charge and some customer
classes deferred portions of last year s PCA costs, each customer class has a different percentage
decrease. The overall proposed rate change reflects an average 18.2% decrease to current Idaho
Power rates. The approximate percentage impact ofthe proposed decrease for each customer class is
set out below:
4 $1 782 320 adjusted to the 85% Idaho jurisdictional number and with 90/10 PCA sharing.
DECISION MEMORANDUM
CURRENT PROPOSED PROPOSED PROPOSED PROPOSED
CUSTOMER AVERAGE PCA CARRY -OVER AVERAGE PERCENT AGE
GROUP RATE DECREASE ADDER RATE DECREASE
(~/kWh)(~/kWh)(~/kWh)(~/kWh)(~/kWh)
RESIDENTIAL (01)(1.4)18.
SMALL (1.1)0.2 11.0%
COMMERCIAL(07)
LARGE 5.4 (1.24.
COMMERCIAL (09)
INDUSTRIAL (19)(1.1)20.
IRRIGATION (24)5.2 (0.5.1
NOTE: The components listed above are rounded to one decimal place (one-tenth of a cent) for purposes of simplicity.
More specifically, the Company s bill stuffer notifies customers that a typical monthly
residential bill for 1 200 kWh will decrease from $85 to $69 if the approximate 1.4 ~ residential rate
decrease is approved.
COMMISSION DECISION
Does the Commission wish to process the Application by Modified Procedure with a 21-
day comment period?
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Lisa D. Nordstrom blb
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DECISION MEMORANDUM