20200428_dh1.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: DAYN HARDIE
DEPUTY ATTORNEY GENERAL

DATE: APRIL 22, 2020

SUBJECT: IN THE MATTER OF IDAHO POWER COMPANY’S
APPLICATION FOR AN ACCOUNTING ORDER FOR COSTS
ASSOCIATED WITH CLOUD COMPUTING ARRANGEMENTS;
IPC-E-20-11

On March 9, 2020, Idaho Power Company (“Company”) applied to the
Commission seeking an order (1) approving the deferral of costs associated with cloud
computing arrangements to regulatory asset, and (2) acknowledging that the unamortized
regulatory asset amounts are eligible for rate base treatment and the associated annual
amortization expense is eligible for potential recovery in a future rate proceeding. The
Company requested its Application be processed via Modified Procedure.
THE APPLICATION
For purposes of information technology, the Company uses both on-premise
solutions and cloud computing. On-premise solutions are products or applications on the
Company’s premises that require the Company to buy a license or copy of the software.
Cloud computing is the delivery of information technology, including servers, storage,
databases, networking, and software, over the internet. Based on current accounting
guidelines, the Company classifies investments in on-premise solutions as capital
expenditures and cloud computing investments as operating expenditures, with the
exception that cloud computing integration costs are capitalized.
The Company states the current accounting treatment provides a financial
disincentive for it to invest in certain cloud computing arrangements. The Company
DECISION MEMORANDUM 2
proposes to capitalize all costs associated with cost-effective cloud computing because the
cloud computing investments are “equivalent to that of a traditional on-premise
[information technology] solution.”
STAFF RECOMMENDATION
Staff recommends the Commission issue a Notice of Application and Notice of
Modified Procedure setting a twenty-one (21) day public comment deadline and a seven
(7) day Company reply deadline.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of
Modified Procedure setting a twenty-one (21) day public comment deadline and a seven
(7) day Company reply deadline?

Dayn Hardie
Deputy Attorney General

I:\Legal\ELECTRIC\IPC-E-20-11\memos\IPCE2011_dec_dh.docx