HomeMy WebLinkAbout20200428_mh1.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: MATT HUNTER
DEPUTY ATTORNEY GENERAL
DATE: APRIL 27, 2020
SUBJECT: IN THE MATTER OF IDAHO POWER COMPANY’S APPLICATION FOR
AUTHORITY TO IMPLEMENT POWER COST ADJUSTMENT (PCA)
RATES FOR ELECTRIC SERVICE FROM JUNE 1, 2020, THROUGH
MAY 31, 2021; CASE NO. IPC-E-20-21
On April 15, 2020, Idaho Power Company (Company) applied for Commission
authorization to implement its Power Cost Adjustment (PCA) rates effective June 1, 2020 through
May 31, 2021. If approved, the Company’s PCA would increase rates in all customer classes, with
an average residential customer’s bill increasing by about $4.03 per month.
Since 1993, the PCA mechanism has allowed the Company to adjust its rates up or
down to reflect the Company’s annual “power supply costs.” Because about half of the Company’s
generation is from hydropower facilities, the Company’s actual cost to provide electricity (its
power supply cost) varies from year-to-year depending on changes in stream flows, the amount of
purchased power, fuel costs, the market price of power, and other factors.
The Company states that if the Application is approved, its Idaho customers
collectively would pay about $58.7 million (5.21%) more for electricity in the upcoming year than
they do now. Application at 1. The Company’s Application would impact major customer classes
as follows:
Percentage Increase from Current Billed Rates
Residential
Small
General
Service
Large
General
Service
Large Power
Irrigation
Overall
Charge
4.20% 3.47% 5.80% 7.25% 5.32% 5.21% Application, Attachment 2.
DECISION MEMORANDUM 2
The Company attributes this year’s PCA increase to several factors. Id. 6. Surplus
power sales revenue is expected to decrease due to an expected reduction in hydro generation and
lower market energy prices. Id. Also, the Company will likely decrease coal-fired generation
because it is less economic for load service and off-system sales. Id.
Another factor contributing to the PCA increase is the removal of the revenue sharing
credit received last year. Id. at 7-8. Under Order No. 33149, the Commission requires the Company
to share revenue with its customers if the Company’s Idaho jurisdictional year-end ROE is 10.0%
or greater. The Company’s Idaho jurisdictional year-end ROE in 2019 was 9.8% and therefore
does not meet the threshold for revenue sharing.1 Id. at 8.
Unlike the 2018-2019 and the 2019-2020 PCA tariff schedules, this year’s PCA tariff
schedule does not include a credit to customers reflecting the Company’s savings from federal tax
reform and Idaho state tax rate changes. Id. Under a settlement stipulation approved by the
Commission in Order No. 34071, Case No. GNR-U-18-01, Idaho Power applied a $7,818,624
credit to its 2018-2019 PCA tariff schedule, and a $2,680,957 credit to its 2019-2020 PCA tariff
schedule. Id. Under the terms of the settlement stipulation, the credit will be reduced to $0
beginning June 1, 2020. Id.
Besides the PCA, the Company recently filed its annual Fixed Cost Adjustment (FCA)
which, if approved, will impact rates for the same period. Id.at 9; see Case No. IPC-E-20-14. If
the Commission approves both rate adjustments as filed, residential customers will see a total price
increase of 4.23%, effective June 1, 2020. Id. Other customer classes would be impacted as
follows:
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1 By comparison, the 2019-2020 PCA included a revenue-sharing component of $5,024,562. See Case No. IPC-E-19-
16, Order No. 34351.
DECISION MEMORANDUM 3
Proposed 2020 Revenue Impact by Class:
Percentage Increase from Current Billed Rates by Proposed Change
Fixed Cost Adjustment
Residential
Small
General
Service
Large
General
Service
Large Power
Irrigation
0.02% 0.01% N/A N/A N/A
Power Cost Adjustment
Residential
Small
General
Service
Large
General
Service
Large Power
Irrigation
4.20% 3.47% 5.80% 7.25% 5.32%
Total Combined Impact
Residential
Small
General
Service
Large
General
Service
Large Power
Irrigation
4.23% 3.48% 5.80% 7.25% 5.32%
See Application, Attachment 2; Case No IPC-E-20-14, Application, Attachment 1.
While acknowledging the impact the proposed rate increase will have on Idaho
customers during the present crisis, the Company argues the long-term risks of deferring the
proposed PCA adjustment outweigh the short-term benefits of deferring some or all of the
proposed increase. Application at 9; Tatum Direct at 24-33. The Company’s proposed PCA
adjustments are reflected in an updated Schedule 55, which is attached to the Application. The
Company requests that the new rates take effect on June 1, 2020, and that the case be processed
by Modified Procedure. Application at 10.
STAFF RECOMMENDATION
Staff concurs with the use of Modified Procedure. Staff recommends that the
Commission issue a Notice of Application and Notice of Modified Procedure, setting a May 14,
2020 comment deadline and a May 21, 2020 reply comment deadline.
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DECISION MEMORANDUM 4
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application and Notice of Modified
Procedure, setting a May 14, 2020 comment deadline and a May 21, 2020 reply comment deadline?
Matt Hunter
Deputy Attorney General
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