20090330_2516.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: NEIL PRICE
DEPUTY ATTORNEY GENERAL

DATE: MARCH 24, 2009

SUBJECT: IDAHO POWER’S APPLICATION FOR A RATE INCREASE DUE TO
INCLUSION OF AMI INVESTMENT IN RATE BASE; CASE NO. IPC-E-
09-07

On March 13, 2009, Idaho Power Company (“Idaho Power” or “Company”)
submitted an Application, pursuant to Idaho Code §§ 61-502, 61-502A and 61-507, and
Commission Rules of Procedure 52, 121 and 123, “for authority to increase its rates due to the
inclusion of Advanced Metering Infrastructure (“AMI”) investment in rate base.” Application at
1. The Company requested that its Application be processed through Modified Procedure.
IDAPA 31.01.01.201-.204.
THE APPLICATION
Idaho Power proposes “a uniform percentage increase of 1.61 percent to Tariff
Schedules 1, 4, 5, 7, 9 secondary, 24 secondary, 41 metered service, and 42 (residential, small
commercial, irrigation, and metered lighting customer classes).” Id. at 3. The Company requests
that the proposed increase take effect on June 1, 2009, unless otherwise ordered by the
Commission, for service provided on and after that date. Id.
Idaho Power cites to “the Company’s investment in AMI through the end of May
2010 into the Company’s rate base/revenue requirement” as justification for the increase. Id. at
2. The Company seeks to include the capital investment it has made thus far pursuant a CPCN
authorizing the installation of AMI throughout its service territory, see Commission Order No.
30726, as well as “those investments that will be made during a June 1, 2009 through May 31,
2010, test year.” Id. The Company states that it has included reductions for removed metering
DECISION MEMORANDUM 2
equipment and “changes in operating expenses that accompany the changes in plant investment”
in its calculations. Id. Idaho Power believes that “the proposed test year and recovery of the
resulting revenue requirement” are necessary in order to meet “the increased challenges
associated with raising capital in the financial markets during the present financial crisis.” Id. at
2-3.
Idaho Power estimates that the “13-month average plant in service associated with the
AMI system for the test year is $23,981,251.” Id. at 3. The Company also estimates that after
applying the Commission authorized rate-of-return of 8.18 percent, authorized three-year
depreciation period, Operation and Maintenance benefits, and applicable tax rates, an increase of
$11,181,318 to the Idaho jurisdictional revenue requirement is warranted. Id.
Idaho Power has included revised/proposed tariff sheets reflecting the proposed
increase to the Idaho jurisdictional revenue requirement; and a report comparing revenues under
its existing rates and revenues generated under its proposed revenue requirement as Attachments
1-3 to its Application. The Company filed the testimony of Gregory W. Said, Director of State
Regulation in the Pricing and Regulatory Services Department, and Courtney Waites, Pricing
Analyst, simultaneously with, and in support of, its Application.
STAFF RECOMMENDATION
Staff has reviewed Idaho Power’s Application and attached testimony and
recommends that it be processed through Modified Procedure with a 60-day comment period.
COMMISSION DECISION
Does the Commission wish to process Idaho Power’s Application for authority to
increase its rates due to the inclusion of its AMI investment in rate base through Modified
Procedure with a corresponding 60-day comment period?

M:IPC-E-09-07_np