20151130_4844.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER RAPER
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:MARK ROGERS
DATE:NOVEMBER 25,2015
SUBJECT:IDAHO POWER ADVICE NO.15-13;RESIDENTIAL AND SMALL-
FARM ENERGY CREDIT ADJUSTMENT
On November 13,2015,Idaho Power Company (“Idaho Power”)tiled a Tariff Advice
with the Commission to revise its Tariff Schedule 98 Residential and Small Farm Energy Credit.
In this Tariff Advice.Idaho Power proposes that the rate credit be increased from the existing
0.0491 per kWh to 0.1 8020 per kWh for the period January 1,2016 through December 31,
2017.
BACKGROUND
This rate credit is designed to pass through to qualifying customers the Residential
Exchange Program (REP)benefits Idaho Power receives from the Bonneville Power
Administration (BPA).The REP was designed to allow the residential and small-farm customers
of investor owned utilities (lOUs)in the northwest to share in the benefits of the federal
Columbia River Power System.Idaho Power passes these benefits to its qualifying customers
through a rate credit on monthly electric bills.The rate credit applies to residential and small-
farm customers served under Schedules 1,3,4,5,7,9,15 and 24.
On July 26,2011,the BPA adopted a settlement agreement that included the six lOUs,
the three state commissions,the BPA staflç and nearly all of the customer-owned utilities
(COUs).The settlement agreement fixed over a 17-year period the total amount of REP benefits
to be paid to all lOlJs.The fixed REP benefits are allocated to the different utilities based on
DECISION MEMORANDUM 1 NOVEMBER25,2015
each utility’s relative qualifying load,their Average System Cost (ASC),as well as the Priority
Firm (PF)Exchange Rate determined by the BPA.’
The settlement agreement also includes a “Reallocation Adjustment”that reallocates
benefits amongst the six lOUs to adjust for the various amounts of “Lookbacks”that each of the
TOUs had repaid to the BPA in prior years.After the BPA calculates the ASC,it is further
adjusted for these reallocations to arrive at the final REP figure for each IOU.Since the BPA
calculates the total amount of REP benefits every two years in conjunction with a BPA rate case,
the ASC for each IOU has changed this year,and will remain the same the following year.
THE TARIFF ADVICE
The proposed increase in the rate credit reflects both the FY16 REP benefits as well as a
residential,small farm and irrigation true up.Idaho Power’s share of the FY16 REP benefits is
$10.2 million;roughly 4.8%of the total REP benefits.2 Of this $10.2 million,$9.8 million or
96%is allocated to Idaho customers.The residential,small farm and irrigation true up is $1.4
million,which is added to the Idaho allocated $9.8 million.The resulting total net benefit is
$11.2 million.
Idaho Power proposes to disburse the REP benefits to Idaho customers from January 1,
2016 through December 31,2016.The projected usage during that time period is 6,221,884,834
kWhs.which leads to a rate credit of 0.1 80e per kWh.The credit will increase from the current
rate ofo.0491Ø per kWh to 0.1800 per kwh,for an overall increase of approximately $8.2
million.For the average Idaho Power residential customer using 1050 kWh per month,the
increase in credit will result in a decreased monthly bill of $1.38.The actual amount will vary
based on customer usage.
When the ASC for Idaho Power is higher than the PF Exchange Rate,BPA purchases electricity from Idaho Power
at the higher ASC,and in turn,BPA agrees to sell Idaho Power electricity at BPA’s lower PP Exchange Rate in an
amount necessary to serve eliibIe customers.The BPA calculates each IOU’s ASC,and PP Exchange Rate.
2The BPA reports a total PYI6-l7 REP benefit of S2l4.lO Million.This can be found in RPA table 2.4.11 online at
https://www.bpa.gov/Financc!ResidentialExchangeProgram/Documents/BP_l6_Tablc%202.4.II .pdf.
DECISION MEMORANDUM 2 NOVEMBER 25,2015
STAFF ANALYSIS
The total REP benefits received by Idaho Power from the BPA increased by 240%from
the previous REP calculation in FYI4-15.3 Table I below shows the increase of REP benefits
due to the large increase in the difference between the ASC and PF exchange rate;as seen in row
three.In Idaho Power’s case,the ASC increased significantly due to a 28%increase in
production costs,a major component in the ASC calculation.4 For Idaho Power’s customers,this
increase in REP benefits is enhanced by the residential,small farm and irrigation true up balance
of$l .4 million in the REP balancing account.5 Thus,for Idaho customers,benefits will increase
by roughly 270%;rather than the 240%due the ASC change alone.
Table I:Comparison of Idaho Power’s ASC,PF Exchange Rate and Total REP.FYI4-l5 versus FYI6-17
FY14-15 FY16-17
:1 ASC (per MWh)$50.22 $59.02
2 Priority Firm Exchange Rate (per MWh)$49.75 $57.51
:3 Difference (1-2)$0.47 $1.51
:4 Exchange Loads (MWh)6,427,000 6,763,000
5 Total REP Credit (3*4)6 $3,020,000 $10,212,000
Idaho Power has asked for an effective date of January 1,2016,with benefits being
passed on to customers on a monthly basis.However,the benefits for Schedule 24 customers
continue to be accrued monthly and passed through to irrigation customers each December,
concurrent with the Company’s annual Idaho kWh and Property Tax Rebate Program.
Currently,the irrigation benefits distributed each December correspond to a prior 12-month
period ending on September 30’’.Monthly benefits are limited,for any single customer,to their
actual metered energy or 222,000 kWh.whichever is less.Thus,no changes have been made by
Idaho Power to the current distribution of REP benefits.Staff believes the proposed credit
Line 5 of Table I shows an increase in REP from $3.02 million to $10.21 million.The BPA calculates REP benefits
every two years in conjunction with a BPA rate case.
The ASC calculation is comprised of the sum olthe Company’s production costs and transmission costs divided by
the contract system load.Production costs increased from $600 million in FYI4-l5 to $777 million in FYI6-l7,
Transmission costs increased from $120 million in FY 14-15 to $128 million in FYI 6-17.The contract load increased
from 14,798,259 MWh to 15,325,421 MWh
An under-refunded balance of$l.4 million from FYI4-15 will be added to the REP benefits in FYI6-17.
Idaho allocation is $9.8 million and Oregon allocation is approximately $400,000 for FYI6-17.
DECISION MEMORANDUM 3 NOVEMBER25,2015
amount of 0.1 80 per kWh is correctly calculated and recommends approval with a January 1,
2016 effective date.
COMMISSION DECISION
Does the Commission wish to approve Idaho Power’s proposed change to its Tariff
Schedule 98 Residential and Small Farm credit from the existing 0.04910 per kWh to 0.1800 per
kWh effective January 1,2016?
%ers
Udmcmos/Idaho Power BPA dcc memo
DECISION MEMORANDUM 4 NOVEMBER 25,2015