20140218_4294.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

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

FROM: NEIL PRICE
DEPUTY ATTORNEY GENERAL

DATE: FEBRUARY 7, 2014

SUBJECT: ROCKY MOUNTAIN POWER’S APPLICATION FOR A NET
DECREASE IN RATES THROUGH ITS ENERGY COST ADJUSTMENT
MECHANISM (ECAM), CASE NO. PAC-E-14-01

On January 31, 2014, PacifiCorp dba Rocky Mountain Power (“RMP” or
“Company”) submitted its annual Energy Cost Adjustment Mechanism (“ECAM”) filing in
accordance with Idaho Code §§ 61-502 and 61-503, and Rule of Procedure 52. The Company
requests an effective date of April 1, 2014, for the proposed decrease in Idaho rates. RMP
requests that this matter be processed through Modified Procedure.
THE FILING
RMP is requesting a Commission Order approving the recovery of total deferred net
power costs for the collection period beginning April 1, 2014 through March 31, 2015 (“Deferral
Period”). Application at 1. RMP’s Application seeks to revise Schedule 94, Energy Cost
Adjustment, to recover approximately $13.2 million in total deferred net power costs over the
deferral period. Id. RMP states that this amount represents a decrease of approximately $2.8
million over current Schedule 94 rates authorized by Order No. 32771 (Case No. PAC-E-13-03).
Id. at 2. The Company states that the rates of Monsanto Company (“Monsanto”) and Agrium
Inc. (“Agrium”) will increase while all other customers’ rates will be reduced. Id.
The $13.2 million recovery includes an amortization of Monsanto and Agrium’s
shares of the 2011-2013 deferrals, as set forth as part of the general rate case stipulation
(“Stipulation”) in Case No. PAC-E-11-12 and approved by Commission Order No.32432. Id.
DECISION MEMORANDUM 2
The Company states that its Application incorporates further changes to the ECAM calculation
in accordance with Commission Order 32910 in Case No. PAC-E-13-04. Id. at 4.
The combined amortization of the amounts from the three ECAM deferral periods
result in tariff surcharge rates in this case for Monsanto ($6.0 million) and Agrium’s ($.5
million) share in the deferral period. Id. at 5. RMP included a detailed ECAM calculation as
Confidential Exhibit No. 1. Id. at 6.
As background, the Company noted that on September 29, 2009, the Commission
issued Order No. 30904 approving the implementation of an annual ECAM. Id. at 3. The costs
included in the ECAM are net power costs (“NPC”), as defined in the Company’s general rate
cases and modeled by the Company’s GRID model. Id. Base and actual NPC are booked into
specific FERC accounts. Id. at 3-4. The ECAM process allows the Company to credit or collect
the difference between the actual NPC incurred to serve its Idaho customers and the NPC
collected through rates. Id. at 4. RMP defers the difference into an ECAM balancing account.
Id.
The ECAM includes five additional components: (1) the Load Growth Adjustment
Rate (“LGAR”) or Load Change Adjustment Rate (“LCAR”); (2) a credit for SO2 allowance
sales; (3) an adjustment for the treatment of coal stripping costs; (4) a renewable resource adder
for the renewable resources that are not yet in rate base; and (5) a true-up of Renewable Energy
Credit (“REC”) revenues, as authorized by the Commission in Order No. 32196. Id. at 4-5. The
ECAM includes a 90% (customers)/10% (Company) “sharing band” wherein customers
pay/receive the increase/decrease in actual NPC compared to base NPC and RMP incurs/retains
the remaining 10%. Id. at 4.
The Company notes that the Base NPC originated from the 2011 Stipulation approved
by the Commission. Id. at 6. The Base NPC was set at $1.205 billion for the 2012 calendar year
and $1.385 billion for the 2013 calendar year. Id. The combined Base NPC for the deferral
period is $1.369 billion. Id. For the deferral period, the NPC differential for deferral was
approximately $9.8 million before the 90/10 sharing band. Id. The LCAR reduced the deferral
balance by approximately $1.1 million before sharing due to higher usage during the deferral
period. Id.
Credits for SO2 allowance sales revenues received by the Company were also
included as an offset to the NPC deferral ($3,000 before sharing). Id. at 7. Additionally, Idaho’s
DECISION MEMORANDUM 3
share of incremental load control costs, pursuant to Commission Order 32432, is tracked in the
ECAM and resulted in an adjustment reducing the deferral by $0.2 million before sharing. Id.
In addition to the foregoing ECAM calculation components discussed above, the
deferral balance reflects the difference between actual REC revenues during the deferral period
and the amount of REC revenues included in base rates. Id. at 7. The 90/10 sharing band does
not apply to the REC revenue true-up included in the ECAM. Id.
The difference between including coal stripping costs incurred by the Company, and
recorded on the Company’s books pursuant to accounting pronouncement EITF 04-6, and the
amortization of the coal stripping costs when the coal was excavated was added to the NPC
differential for deferral ($41,000 before sharing). Id.
The deferred ECAM balance of $24.3 million as of November 30, 2013, is derived
from the following calculation: 90% X (deferred NPC + LCAR + SO2 revenues + coal stripping
costs adjustment) + interest charges + REC revenues. Id. at 8. The Company’s Confidential
Exhibit 1 illustrates the detailed calculations for tariff customers, with an ending balance of $9.9
million; Monsanto, with an ending balance of $13.4 million; and Agrium, with an ending balance
of $1.0 million.
RMP notified customers of this filing by “issuing a press release sent to local media
organizations and messages in customer bills over the course of a billing cycle.” Id. Copies of
RMP’s Application are available for review at the Company’s local offices in its Idaho service
territory. Id. at 8-9.
RMP has attached a copy of the direct testimony, including exhibits, of Brian S.
Dickman, Manager of Net Power Costs, and Joelle R. Steward, Director of Pricing, Cost of
Service, and Regulatory Operations in the Regulation Department, in support of its Application.
COMMISSION DECISION
Does the Commission wish to process RMP’s ECAM filing through Modified
Procedure with a corresponding 28-day comment period?

M:PAC-E-14-01_np