20080715_2296.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:NEIL PRICE
DEPUTY ATTORNEY GENERAL
DATE:JULY 3, 2008
SUBJECT:IDAHO POWER'S GENERAL RATE CASE APPLICATION; CASE NO.
IPC- E-08-1 0
On June 27, 2008, Idaho Power Company ("Idaho Power" or "Company ) filed an
Application for authority to increase its rates an average of 9.89%. In its prayer for relief, the
Company states:
The overall rate of return and return on equity heretofore allowed
Idaho Power are no longer reasonable and adequate and Idaho
Power has and will continue to experience increased costs , all of
which now require immediate adjustment by way of increased
revenues if Idaho Power is to maintain a stable financial condition
and continue to render reliable and adequate electric service to its
customers.
Application at 7.
If approved the Company s revenues would increase by approximately $66.6 millio!l'
The Company has requested that the proposed rate increase become effective for electric service
rendered on or after July 27, 2008.
THE APPLICATION
The Company s Application requests that 2008 be used as the relevant test year and
that the test year data used in this filing is "based on actual 2007 data updated to 2008 levels.
Application at 5. Idaho Power requests that the Commission grant it a return on rate base
55% (11.25% return on common equity) on a 093 398 859 Idaho retail rate base. Id. This
DECISION MEMORANDUM
would result in an additional revenue requirement of $66 588 286 for the Idaho jurisdiction
which requires an overall increase in revenue of 9.89%. Id.
The Company proposes to increase rates to each of its customer classes , based
primarily upon cost of service. Idaho Power proposes to cap the requested increase for irrigation
customers and its three special contract customers (lR. Simplot Company, the Department of
Energy (INL), and Micron Technology, Inc.) at 15%. Application at 3. The Company also
proposes to increase the rates for its small commercial customers by 10.63%.Id.The
Company s proposed increase for residential customers is 6.31 % and 11.46% for its large
commercial customers. Id. The chart below shows an average charge by kilowatt-hour (kWh)
and the percentage increase for various customer groups.
CURRENT PROPOSED OVERAL
CUSTOMER AVERAGE BASE AVERAGE BASE PERCENTAGE OF
GROUP RATE RATE INCREASE
Residential 28~67~6.3%
Small Commercial 96~80~10.
Large Commercial 37~88~11.
Industrial 31~81~15.
Irrigation 97~71~15.
Idaho Power seeks an increase of the monthly Service Charge by $1.00 for its
residential customers and to "implement rates that increase based on greater usage during the
non-summer months.Id. at 3. The Company s proposal would "double the number of kilowatt-
hours qualifying for the lower-cost first block of energy and increase the differential between the
first and second block Energy Charges during the summer months" for Schedule 1 residential
customers. Id. The Company states that in order "(tJo provide a stronger price signal to
Schedule 1 residential customers during the summer months of June, July, and August, Idaho
Power proposes an Energy Charge of 6.1376~ per kilowatt-hour for the first block and 7.3409~
for the second block.Id. During the non-summer months
, "
Idaho Power proposes an Energy
Charge of 5.8891 ~ per kilowatt-hour for the first block and 6.1836~ per kilowatt-hour for the
second block.Id.
The chart below lists the remaining customer classes and summarizes the types of
increases each of them would receive pursuant to Idaho Power s Application:
DECISION MEMORANDUM
Special
Small Large Contract
Commercial Commercial Industrial Irrigation (DOE,Schedule
Simp lot,
Micron)
- Monthly service - Service Charge - Service Charge - Service Charge - overall 15 %- increase
charge - Basic Charge - Basic Charge - Demand Increase in the from 2.727~
- # of kw/h qualifying - Demand Charges - Seasonal and Charge component rates per kWh to
for lower-cost 1 - Seasonal Energy time-of-use - In-season and of each of its 976~ per
block of energy Charges Demand out-of-season three special kWh
- Rate differential - Mandatory time-Charges &Energy Charges contract
between 1 sl block and of-use rates for Energy Charges - Introduce a customers
2nd block energy customers taking load-factor
charge during summer service at Primary based pricing
months and Transmission mechanism
service levels.
On July 2 , 2008, the Industrial Customers of Idaho Power ("ICIP") filed a Petition to
Intervene in this matter. No objections to ICIP's intervention have been filed.
CO MMISSI 0 N D ECISI 0 N
Does the Commission wish to issue notice of the Company s Application
including an intervention deadline?
2. Unless suspended, the Company s proposed rates will become effective on July
2008. Does the Commission wish to suspend the proposed rates for a period of 30 days plus
5 months pursuant to Idaho Code ~ 61-622?
3. Does the Commission wish to grant ICIP's Petition to Intervene?
~~~
Neil Price
Deputy Attorney General
M:IPC-O8-
DECISION MEMORANDUM