20160125_4884.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:MICHAEL V.MORRISON
DATE:JANUARY 21,2016
RE:IDAHO POWER’S ANNUAL COMPLIANCE FILING TO UPDATE THE
SUBSTATION ALLOWANCE UNDER SCHEDULE 19,LARGE POWER
SERVICE,TARIFF ADVICE NO.15-15
BACKGROUND
On December 29,2015,Idaho Power (“Company”)filed a tariff advice with the
Commission proposing an update to the Substation Allowance outlined in Schedule 19,Large
Power Service,as required by Idaho Public Utilities Commission Order Nos.32893 and 32914.
The Company proposes that the updates become effective February 1,2016.
STAFF ANALYSIS
Staff reviewed the Company’s cost estimation methodology,and found it to conform with
the methodology used in IPC-E-13-09 (Glanbia Foods Petition for Allowance to Rule H),and
IPC-E-14-01 (Schedule 19 Update,Tariff Advice No.13-08).Under this methodology,the
Company determines the per MW substation allowance by dividing the filly loaded costs of
constructing a standard 30 MVA substation by 30.
Overall,the Substation Allowance increased 0.18%from $65,787 to $65,985 per MW.
This increase was due to large increases in material costs that were largely offset by decreases in
general overhead costs.
The 4 Unit Metalclad used to determine the substation allowance was responsible for the
largest increase,from $552,640 to $650,126 (17.6%).The cost of a 138 kV Airbreak Switch
increased 33.8%,from $11,948 to $15,987.The Company attributes these price increases to
DECISION MEMORANDUM -1 -JANUARY 21,2016
limited world-wide manufacturing capacity and an uptick in increased world-wide demand for
these particular components.These increases were partially offset by a 7.3%decrease in the cost
of the 138kV/l3.O9kV 30 MVA transformer,from $796,294 to $748,138.The Company
explained that costs for this transformer are largely determined by copper and iron prices,which
have decreased during the past 12 months.
The cost of overhead decreased 20.7%,from 242,829 to $192,556.The Company
explained that the Company has undertaken an unusually large number of construction projects
over the past year,and attributed this decrease to economies of scale within the Company.
STAFF RECOMMENDATION
The Companys methodology is consistent with that approved by the Commission in
Order Nos.32893 and 32914.Staff therefore recommends that the Companys proposed update
to Schedule 19 be approved with an effective date of February 1,2016.
COMMISSION DECISION
Does the Commission wish to approve the Company’s proposed update to Schedule 19
with an effective date of February 1,2016?
Udmcmosjldaho Power Tariff Advice 15-15 dcc memo
DECISION MEMORANDUM -2-JANUARY 21,2016