20200623_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: JUNE 19, 2020

SUBJECT: APPLICATION OF ROCKY MOUNTAIN POWER FOR
AUTHORIZATION TO CHANGE DEPRECIATION RATES
APPLICABLE TO ELECTRIC PROPERTY; CASE NO. PAC-E-18-08

On September 11, 2018, Rocky Mountain Power, a division of PacifiCorp (“Rocky
Mountain Power” or “Company”) filed an Application seeking approval of its proposed changes
to depreciation rates applicable to the Company’s electric plant. The Company’s last depreciation
case, PAC-E-13-02, was approved by the Commission in 2013.
On October 5, 2018, the Commission issued a Notice of Application and Notice of
Intervention Deadline directing Staff and parties to discuss the appropriate scheduling for the case.
Monsanto, PacifiCorp Idaho Industrial Customers (“PIIC”), Idaho Irrigation Pumpers
Association, Inc., (“IIPA”) and Idaho Conservation League (“ICL”) intervened in this case.
On April 18, 2018, a technical conference was held in Boise, followed by several
meetings and conference calls where settlement discussions were held with parties.
On June 15, 2020, the Company filed a proposed Settlement Stipulation (“Settlement
Stipulation”) signed by the Company, Staff, Monsanto, PIIC, and IIPA (collectively the
“Stipulating Parties”)1. The Stipulating Parties requested the case be processed by Modified
Procedure.

1 Idaho Conservation League is not a Stipulating Party but does not oppose the Settlement Stipulation.

DECISION MEMORANDUM 2
THE SETTLEMENT STIPULATION
The Stipulating Parties agreed to depreciation rates that would increase annual
depreciation expenses allocated to Idaho by about $8.7 million. The Stipulating Parties further
agree:
1. That the proposed depreciation rates in Attachments 1-3 of the Settlement
Stipulation are just and reasonable depreciation rates and would take effect on January 1, 2021.
2. Cholla Unit 4 would be removed from electric plant in-service as of December 2020
and ratemaking treatment for unrecovered plant balances, decommissioning, and other closing
costs would be addressed in Case No. PAC-E-20-03.
3. To recognize the conversion of Naughton Unit 3 to natural gas with a retirement
date of December 2029. Additionally, Naughton Units 1 and 2 would reflect the filed retirement
date of December 2029.
4. Any solar and/or battery storage assets acquired or developed by the Company
before its next depreciation study is filed would use a 25-year lifespan based on Iowa Curves and
Net Salvage values in Table 3 of the Settlement Stipulation.
5. The Company would defer the changes in depreciation expense from current rates,
$13,940,303, for one year through December 31, 2020. This amount includes about $8.7 million
of the Idaho jurisdictional allocation for the depreciation study, about $3.2 million of excess
reserve amortization in rates that end as of the effective date of the depreciation study, and about
$2.0 million for the incremental increase from 2013 depreciation study not yet reflected in rates.
The Company would defer $1,161,692 per month for 12 months in a regulatory asset account for
recovery to be determined in the Company’s next general rate case. No carrying charge would be
applied to the regulatory asset during the deferral period until the next general rate case. A carrying
charge or rate base treatment after the deferral period and the amortization period would be
determined in the Company’s next general rate case. The depreciation expense tracked in the RTM
would be calculated using the depreciation rates provided in Case No. PAC-E-13-02, Order No.
32926, to eliminate any double counting. The Company would also stop deferring incremental
depreciation expense from PAC-E-13-02 currently recovered in the Energy Cost Adjustment
Mechanism effective December 31, 2020.
DECISION MEMORANDUM 3
6. If the Company decides to retire any thermal plant besides Cholla Unit 4 before its
next depreciation study, the Company will not seek to shorten the cost recovery period for such
thermal plant prior to the approval of its next depreciation study.
7. The Company agrees to present an analysis supporting the proposed lives and net
salvage value for all Company-owned wind resources in its next depreciation study.
8. To support a Phase II in this case which will evaluate incremental decommissioning
costs filed with the Commission on January 17, 2020 and March 16, 2020 (collectively “2020
Decommissioning Studies”) and appropriate ratemaking treatment. The Settlement Stipulation
proposes to complete the review of the regulatory treatment of the 2020 Decommissioning Studies
in Phase II in time to allow the Commission to issue a final order before December 31, 2020.
STAFF RECOMMENDATION
Staff recommends the Commission process the Settlement Stipulation by Modified
Procedure with comments due 21 days from issuance of a Notice of Proposed Settlement and
Notice of Modified Procedure and reply comments due seven days later.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Proposed Settlement and a Notice of
Modified Procedure establishing a 21-day public comment period and a seven-day reply comment
deadline?

__________________________
Dayn Hardie
Deputy Attorney General

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