20210119_rk1jo.pdf

'DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:RICHARD V.KELLER
DATE:JANUARY 14,2021
RE:IDAHO POWER'S ANNUAL COMPLIANCE FILING TO UPDATE THE
SUBSTATION ALLOWANCE UNDER SCHEDULE 19,LARGE POWER
SERVICE,TARIFF ADVICE NO.20-07
BACKGROUND
On December 30,2020,Idaho Power ("Company")filed the Tariff Advice No.20-07
proposing an update to the Substation Allowance outlined in Schedule 19,Large Power Service,
required by Idaho Public Utilities Commission Order Nos.32893 and 32914.The Company
requested the update to the allowance become effective February 1,2021.
STAFF ANALYSIS
Staff reviewed the Company's cost adjustment and methodology used to determine the
proposed allowance and believes it conforms with Order Nos.32893,32914,32982,and 34576
from case Nos.IPC-E-13-09 (Glanbia Foods Petition for Allowance to Rule H),IPC-E-14-01
(Schedule 19 Update,and IPC-E-19-40 (Update to Substation Allowance Under Schedule 19),
respectively.Under the current methodology,the Company determines the per Megawatt
("MW")substation allowance by dividing the estimated fully loaded costs for constructing a
transformer substation by 44.8 Megavolt Amperes ("MVA"),which is the rating of the
transformer commonly used by the Company for this type of service.I
Overall,the Substation Allowance decreased 0.5 percent from $49,253 to $49,016 per
MW.The slight decrease was primarily due to a reduction in the Company's general overhead
'MVA and MW are equivalent for purposes of determining the cost per MW of the Substation Allowance.
DECISION MEMORANDUM -1 -JANUARY 14,2021
rate from the current 9.57 percent to 8.97 percent in this year's filing.Prior to the adjustment for
overhead costs,substation direct cost increased by $1,323 driven by an increase in labor costs,
which were offset by a smaller decrease in vehicle costs.Major equipment costs tied to the
44.8 MVA transformer,and 4-unit metal clad switchgear were unchanged.In total,the
substation installation costs decreased by $10,641.When this difference is divided by the
transformer rating of 44.8 MVA,the result is a decrease of $238 per MW for the substation
allowance.Staff believes the resulting allowance is reasonable.
STAFF RECOMMENDATION
The Company's methodology is consistent with that approvedby Commission Order
Nos.32893 and 32914.Staff therefore recommends the Company's proposed update to
Schedule 19 be approved with an effective date of February 1,2021.
COMMISSION DECISION
Does the Commission wish to approve the Company's proposed update to Schedule 19
with an effective date of February 1,2021?
Er Richard V.Keller
Udmemos/DecisionMemo TA 20 07 Ol1121
DECISION MEMORANDUM -2 -JANUARY 14,2021