20050614_1237.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEG AL
FROM:SCOTT WOODBURY
DA TE:JUNE 13, 2005
SUBJECT:CASE NO. PAC-05-1 (PacifiCorp)
STIPULATION AND PROPOSED SETTLEMENT
On June 13, 2005, a Stipulation (and proposed Settlement) was filed in PacifiCorp
Rate Case No. PAC-05-1. Reference IDAPA 31.01.01.272, 274 - Settlements. The
Stipulation is signed by PacifiCorp; Commission Staff; the Idaho Irrigation Pumpers
Association; Community Action Partnership Association of Idaho; Agrium, Inc.; J.R. Simplot
Company and Timothy J. Shurtz. The Commission is apprised Agrium, Inc. specifically noted in
its June 13, 2005 submittal letter to Staff (and Parties of Record) that Agrium "takes no position
on the agreement between the Staff and PacifiCorp regarding the application of the tariff
standard to all Idaho customers." The Commission is further apprised Monsanto Company, an
intervenor, specifically objects to ~ 9 of the Stipulation and did not sign the Stipulation.
Pursuant to Rule 274 of the Commission s Rules of Procedure
, "
when a settlement
be it active or passive, is presented to the Commission, the Commission will prescribe
procedures appropriate to the nature of the settlement to consider the settlement." As reflected in
the Commission s Rules, the Commission is not bound by settlements. Rule 276. Proponents of
a proposed settlement carry the burden of showing that the settlement is reasonable, in the public
interest, or otherwise in accordance with law or regulatory policy. Rule 275.
COMMISSION DECISION
A Stipulation and proposed Settlement in Case No. P AC-05-1 is presented to the
Commission for Commission determination of further procedure. See attached Stipulation.
bls/M:PACEO501 sw
James M. Van Nostrand
James F. Fell
STOEL RIVES LLP
900 S W Fifth Avenue, Suite 2600
Portland, OR 97204
Telephone: [phone]
Fax: [phone]
Email: mvannostrand(fYstoel.com
i ffe 11 (fYstoe1. com
Lisa Nordstrom
PacifiCorp Office of the General Counsel
825 NE Multnomah Street, Suite 1800
Portland, OR 97232
Telephone: [phone]
Fax: [phone]
Email: lisa.nordstrom(fYpacificorp. com
Bar Number: 5733
Attorneys for PacifiCorp dba Utah
Power & Light Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF P ACIFICORP DBA
UT AH POWER & LIGHT COMPANY
FOR AUTHORITY TO INCREASE ITS
RATES FOR ELECTRIC SERVICE
TO ELECTRIC CUSTOMERS IN THE
ST A TE OF IDAHO
CASE NO. PAC-05-
STIPULATION
This stipulation ("Stipulation ) is entered into by and among PacifiCorp, doing business
as Utah Power & Light Company ("PacifiCorp" or the "Company ), the Idaho Public Utilities
Commission Staff ("Staff'), the Idaho Irrigation Pumpers Association, Inc. ("lIP A"), Agrium
Inc. ("Agrium ), J.R. Simplot Company ("Simplot"), Community Action Partnership
Association of Idaho ("CAP AI"), and Timothy J. Shurtz ("Shurtz ) (collectively referred to as
the "Parties
STIPULATION - Page
Portlnd3-1S17347.90020017-00072
I. INTRODUCTION
The terms and conditions of this Stipulation are set forth herein. The Parties
agree that this Stipulation represents a fair, just and reasonable compromise of the issues raised
in this proceeding and that this Stipulation is in the public interest. The Parties, therefore
recommend that the Public Utilities Commission ("Commission ) approve the Stipulation and all
of its terms and conditions. Reference IDAPA 31.01.01.272, 274.
II. BACKGROUND
On January 15, 2005 , PacifiCorp filed an Application in this case, seeking
authority to increase the Company s base rates for electric service by $15.1 million annually, an
average increase of approximately 12.5%. The increase in base rates would vary by class of
customer and actual usage. The proposed increase is offset in part by the expiration of the Power
Cost/Tax Surcharge in September 2005. The revised tariff schedules reflect a net increase of
$11.4 million (9.2%) and a proposed effective date of September 16, 2005.
Petitions to intervene in this proceeding were filed by Monsanto Company, lIP A
Agrium, Simplot, CAP AI, and Shurtz. By various orders, the Commission granted these
interventions.
Following a May 4, 2005 Notice of Staff Intent to Engage in Settlement
Discussions (IDAPA 31.01.01.272), representatives of the Parties met on May 16 and engaged in
initial discussions with a view toward resolving PacifiCorp s Application in this case.
Based upon the settlement discussions among the Parties, as a compromise of the
positions in this case, and for other consideration as set forth below, the Parties agree to the
following terms:
III. TERMS OF THE STIPULATION
PacifiCorp shall be allowed to implement revised tariff schedules designed to
recover $5.75 million in additional annual revenue from base rates, representing an aggregate
base rate increase of 4.8%. Such revised tariff schedules shall become effective as of
STIPULATION - Page 2
Portlnd3-1S17347.90020017-00072
September 16 2005 , contemporaneously with the expiration of the Power Cost/Tax Surcharge
(Schedule 93) currently appearing on customers' bills. (Order No. 29518) All regulatory assets
and liabilities included in PacifiCorp s filing are unadjusted and recognized for purposes of this
settlement.
The Parties agree that this revenue requirement results in a uniform 1.7% rate
increase above current rates whether or not such current rates include Schedule 93, Power
Cost/Tax Surcharge and Schedule 94, Rate Mitigation Adjustment. The overall increase will be
reflected in base rate tariffs filed for each customer class.
This Stipulation implements the Revised Protocol jurisdictional cost allocation
methodology in Idaho. In Case No. P AC-02-, Order No. 29708, the Commission approved a
Stipulation and Agreement ("MSP Stipulation ) recommending implementation of Revised
Protocol. The MSP Stipulation included a Rate Mitigation Measure to limit the financial impact
regarding the choice of allocation methodology. Under the Rate Mitigation Measure, the impact
of implementation of Revised Protocol was limited to 101.67 percent of the rates that would have
resulted from use of the Rolled-In method. As a result of application of the Rate Mitigation
Measure, the Company s original filing in this case was reduced by $1.8 million below what it
would have been without application of the Rate Mitigation Measure. The Parties support
continued use of the Revised Protocol for future rate proceedings, consistent with the terms and
conditions of the MSP Stipulation.
The Parties were unable to agree upon the impact on the Company s Idaho tariff
customers of the Commission s adoption of a contract standard for the Monsanto Company in
Case No. PAC-01-16. In that proceeding, the Commission approved a fixed price contract for
Monsanto to remain in effect through December 31 , 2006, finding that the rates and charges
under the contract would "reasonably reflect the Company s cost of service to Monsanto going
forward.Order No. 29157
p.
8. In its initial filing in this case, PacifiCorp s cost of service
study allocated its Idaho revenue requirement deficiency only to its Idaho tariffed customers
STIPULATION - Page 3
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eligible for an increase i. e.its Idaho customers other than Monsanto. Staff and lIP A opposed
this treatment, and argued that any revenue requirement deficiency associated with service to
Monsanto (i., the difference between Monsanto s fixed price contract rates and the cost of
serving Monsanto if its cost of service were updated) should not be spread to the Company
remaining Idaho customers. The cost of service issue is not resolved in this Stipulation, and is
proposed to be addressed in a general rate case to be filed by the Company no later than April 29
2006 in' order that the effective date of rates in that proceeding will coincide with the expiration
of the current Monsanto contract in December 2006.
Staff and the Company agree that all of the Company s Idaho customers should
be served under the tariff standard. In any future proceedings involving Company customers
seeking electric service under a special contract, Staff will support the position that any service
contract should be pursuant to the tariff standard rather than the contract standard. Other Parties
to the Stipulation that participate in such proceedings shall support or not oppose this position.
The Commission is not bound by any agreement of the Parties on this issue in any such
proceedings.
10.Staff agrees to meet with the Company in a collaborative discussion to explore
development of alternative rate recovery mechanisms, including a power cost adjustment (PCA)
mechanism or an alternative form of regulation (AFOR). The initial meeting to discuss the
development of such mechanisms shall occur no later than thirty (30) days after the
Commission s order with respect to this Stipulation. The purpose of these meetings is to discuss
the possibility of developing on an expedited schedule a mutually agreeable form of alternative
rate recovery mechanism that could be filed with the Commission for approval prior to the
Company s next general rate proceeding in Idaho, and implemented in such rate proceeding.
11.The Company agrees to meet with lIP A and other interested parties regarding the
calculation of credits under the Company s Schedule 72, the Irrigation Load Control Credit
Rider. The initial such meeting shall occur no later than August 31 , 2005. In the event the
STIPULATION - Page 4
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parties reach agreement on such calculation, the Company shall prepare a stipulation setting forth
the agreed-upon terms and file such stipulation with the Comm~ssion no later than September 30
2005. In the event these parties do not reach agreement on such calculation, each party shall file
its proposal with respect to this issue with the Commission no later than September 30, 2005 in
order to accommodate a Commission decision that will not delay the scheduled January 15 2006
customer notification of the credit level for the 2006 irrigation season.
12.To increase customer participation and available incentives for installation of
additional cost-effective weatherization measures, PacifiCorp will file revisions to its Low
Income Weatherization Program tariff (Schedule 21). Specific proposed program and tariff
changes will include increasing the available annual Community Action Agency incentives from
$100 000 to $150 000 annually. The Company will also propose to increase the rebate on
weatherization services available on homes with installed electric heat from the current
maximum of $1 ,000 per dwelling to an average annual rebate of $1 ,500 per dwelling. In
addition, the Company will propose to increase the administrative reimbursement provided to
Community Action Agencies from $150 per completed home to 15 percent ofPacifiCorp
rebate on installed measures with set maximums. The Company will also propose to expand its
current program incentives by offering reimbursement of 50 percent of costs associated with
additional measures installed in homes regardless of heating source, including compact
fluorescent light bulbs, replacement refrigerators and water heating measures in homes with
electric water heaters. To promote installation of efficiency measures that have become cost-
effective in the last decade, PacifiCorp will propose to offer rebates for homes in which benefits
were provided under this tariff prior to October 1 , 1993 , once per individual measure and up to
two times per dwelling. The Company will evaluate this tariff (Schedule 21) within two years to
determine if further revisions are warranted.
13.The Parties agree that this Stipulation represents a compromise of the positions of
the Parties in this case. Other than the above referenced positions and any testimony filed in
STIPULATION - Page 5
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support of the approval of this Stipulation, and except to the extent necessary for a Party to
explain before the Commission its own statements and positions with respect to the Stipulation
all negotiations relating to this Stipulation shall not be admissible in evidence in this or any other
proceeding regarding this subject matter.
14.The Parties submit this Stipulation to the Commission and recommend approval
in its entirety pursuant to IDAP A 31.01.01.274. Parties shall support this Stipulation before the
Commission, and no Party shall appeal any portion of this Stipulation or Order approving the
same. If this Stipulation is challenged by any person not a party to the Stipulation, the Parties to
this Stipulation reserve the right to cross-examine witnesses and put on such case as they deem
appropriate to respond fully to the issues presented, including the right to raise issues that are
incorporated in the settlements embodied in this Stipulation. Notwithstanding this reservation
rights, the Parties to this Stipulation agree that they will continue to support the Commission
adoption of the terms of this Stipulation.
15.In the event the Commission rejects any part or all of this Stipulation, or imposes
any additional material conditions on approval of this Stipulation, each Party reserves the right
upon written notice to the Commission and the other Parties to this proceeding, within 15 days of
the date of such action by the Commission, to withdraw from this Stipulation. In such case, no
Party shall be bound or prejudiced by the terms of this Stipulation, and each Party shall be
entitled to seek reconsideration of the Commission s order, file testimony as it chooses, cross-
examine witnesses, and do all other things necessary to put on such case as it deems appropriate.
In such case, the Parties immediately will request the prompt reconvening of a prehearing
conference for purposes of establishing a procedural schedule for the completion of the case.
The Parties agree to cooperate in development of a schedule that concludes the proceeding on the
earliest possible date, taking into account the needs of the Parties in participating in hearings and
preparing briefs. If necessary, the Company will extend the suspension period for such period as
is reasonably necessary to accommodate the revised procedural schedule.
STIPULATION - Page 6
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The Parties agree to cooperate in development of a schedule that concludes the proceeding on the
earliest possible date, taking into account the needs of the Parties in participating in hearings and
preparing briefs. If necessary, the Company will extend the suspension period for such period as
is reasonably necessary to accommodate the revised procedural schedule.
16.The Parties agree that this Stipulation is in the public interest and that all of its
terms and conditions are fair, just and reasonable.
17.No Party shall be bound, benefited or prejudiced by any position asserted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery. No Party shall be deemed to have agreed that any
method, theory or principle of regulation or cost recovery employed in arriving at this
Stipulation is appropriate for resolving any issues in any other proceeding in the future.
findings of fact or conclusions of law other than those stated herein shall be deemed to be
implicit in this Stipulation.
18.The obligations of the Parties under this Stipulation are subject to the
Commission s approval of this Stipulation in accordance with its terms and conditions and
upon such approval being upheld on appeal by a court of competent jurisdiction.
Respectfully submitted this 10th day of June, 2005.
Idaho Public Utilities Commission Staff
es F. Fell
James M. Van Nostrand
Stoel Rives LLP
Attorneys for PacifiCorp
Scott D. Woodb
Kira Dale Pfisterer
Attorneys for Idaho Public Utilities
Commission Staff
STIPULATION - Page 7
Portlnd3-1517347.90020017-00072
16.The Parties agree that this Stipulation is in the public interest and that all of its
tenns and conditions are fair, just and reasonable.
17.No Party shall be bound, benefited or prejudiced by any position asserted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery. No Party shall be deemed to have agreed that any
method, theory or principle of regulation or cost recovery employed in arriving at this Stipulation
is appropriate for resolving any issues in any other proceeding in the future. No findings of fact
or conclusions of law other than those stated herein shall be deemed to be implicit in this
Stipulation.
18.The obligations of the Parties under this Stipulation are subject to the
Commission s approval of this Stipulation in accordance with its tenns and conditions and upon
such approval being upheld on appeal by a court of competent jurisdiction.
Respectfully submitted this 10th day of June, 2005.
PacifiCorp Idaho Public Utilities Commission Staff
Scott D. Woodbury
Kira Dale Pfisterer
Attorneys for Idaho Public Utilities
Commission Staff
James F. Fell
James M. Van Nostrand
Stoel Rives LLP
Attorneys for PacifiCorp
Agrium, Inc.
c L. Olsen Conley E. Ward
Racine, Olson, Nye, Budge & Bailey, Chartered Givens Pursley LLP
Attorney for Idaho lITigation Pumpers Attorney for Agrium, Inc.
Association
STIPULATION - Page 7
Portlnd3-1517347.90020017-00072
Idaho Irrigation Pumpers Association
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey, Chartered
Attorney for Idaho Irrigation Pumpers
Association
R. Simplot Company
R. Scott Pasley
Assistant General Counsel
Timothy Shurtz
STIPULATION - Page 8
Portlnd3-1S17347.90020017-O0072
Agrium, Inc.
Conley E. Ward
Givens Pursley LLP
Attorney for Agrium, Inc.
Community Action Partnership
Association of Idaho (CAP AI)
Brad M. Purdy
Attorney at Law
Idaho Irrigation Pumpers Association
Eric L. Olsen
Racine, Olson, NycJ Budge & Bailey, Chartered
Attorney for Idaho Irrigation Pumpers
Association
R. Simplot Company
R. Scott Pasley
Assistant General Counsel
Timothy Shurtz
--',. .
STIPULATION - Page 8
POtt1nd3-~'17347.9 0020017-O007Z
Agrium, Inc.
Conley E. Ward
Givens Pursley LLP
Attorney for Agrium, Inc.
Community Action Partnership
Association of Id.ho (CAPAl)
Brad M Pl1rdy
, Attorney at Law
STEPHANIE FORTEN8ERRv
NOTARY PUBUC
STATE OF IDAHO
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R. Scott Pasley
Assistant General Coun e
Timothy Shurtl
STIPULATION - Page 8
Portl0Q.3.1S1 7347.8 OO~OO17.ooo72
11V. OI::JO
Brad M. Purdy
Attorney at Law
I . '-' '-
Idaho Irrigation Pumpers Association
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey, Chartered
Attorney for Idaho Irrigation Pumpers
Association
R. Simplot Company
R. Scott Pasley
Assistant General Counsel
Timothy Shurtz
STIPULA TION - Page 8
Portlnd3 -1517347.9 0020017-00072
Con y
Givens Pursley
Attorney for Agrium, Inc.
Community Action Partnership
Association of Idaho (CAP AI)
Brad M. Purdy
Attorney at Law