20140804_4426.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

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

FROM: KARL T. KLEIN
DEPUTY ATTORNEY GENERAL

DATE: JULY 30, 2014

SUBJECT: COMMISSION INQUIRY INTO IDAHO POWER’S PCA TRUE-UP
COMPONENT AND DEFERRAL BALANCE, CASE NO. IPC-E-14-16

On May 30, 2014, the Commission issued Order No. 33049 in Idaho Power
Company’s 2014 Power Cost Adjustment (PCA) Case, IPC-E-14-05. The Commission’s Order
approved the Company’s determination of the PCA’s forecast and reconciliation components.
But the Commission acknowledged Staff’s concern about how the Company appeared to
calculate the PCA’s true-up component:
Staff’s concern about the true-up is well-taken. The PCA methodology—
including the true-up—is designed to “ensure the amount recovered is no more
or less than the actual power costs paid by the Company.” Order No. 30828,
Case No. IPC-E-09-11. Staff raises serious doubts about whether the Company
applies the true-up in a way that achieves this result. Staff believes the
Company’s application of the true-up introduces a line-loss bias that leads the
Company to inflate the [Net Power Supply Expense] true-up revenue it must
collect by $14.2 million. If Staff is correct, then the Company’s deferral
balance should be decreased by $14.2 million (or $5.9 million, if the Company
is correct that Staff miscalculated its adjustment). However, we believe the
abbreviated time allotted for the consideration of a PCA case constrains the
parties’ ability to more thoroughly vet this issue and Staff’s proposed
adjustment. Accordingly, we find it is reasonable to defer our decision on
Staff’s proposed adjustment so a new docket can be opened in which the
parties can hold a workshop to evaluate the Company’s application of the true-
up and whether a deferral balance adjustment is appropriate. The parties
would then report their findings to the Commission, and the Commission
would adjust the PCA deferral balance as warranted for inclusion in next
year’s PCA.

DECISION MEMORANDUM 2
Id. The Commission thus ordered: “that a separate docket be opened to allow Commission Staff,
the Company, and other interested persons to hold a workshop to further evaluate the Company’s
application of the true-up and whether a deferral balance adjustment is appropriate.” Id. at 13.
On July 1, 2014, the Commission opened this docket, set an intervention deadline, and
scheduled a July 30, 2014 public workshop for the Company, Staff, and interested persons to
further explore these issues. The Commission said that after the workshop it would schedule
further proceedings as needed. Order No. 33067.
The Industrial Customers of Idaho Power intervened in the case. The workshop then
occurred as scheduled. Besides the parties, the Snake River Alliance and Idaho Conservation
League attended the workshop.
STAFF RECOMMENDATION
At the workshop, the Company walked the participants through its base rate and load-
change adjustment rate calculations for the PCA deferral period from April 2013 through March
2014. A copy of the explanation that the Company distributed at the workshop is attached. The
Company’s detailed explanation alleviates Staff’s concern about how the Company applied the
true-up component in the last PCA case. Staff thus withdraws its previously recommended
adjustment to the PCA deferral balance, and recommends that the Commission close this docket.
After this case is closed, Staff will informally meet with the Company and other interested
persons to discuss refining the PCA mechanism to make it more accurate and easy to understand.
All parties concur with this approach.
COMMISSION DECISION
Would the Commission like to close this docket?

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