20220222_yy1rq.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:YAO YIN
DAYN HARDIE
DATE:FEBRUARY 17,2022
RE:IDAHO POWER'S ANNUAL COMPLIANCE FILING TO UPDATE
CHARGES,CREDITS,AND GENERAL OVERHEADS UNDER RULE H,
NEW SERVICE ATTACHMENTS AND DISTRIBUTION LINE
INSTALLATIONS OR ALTERATIONS;TARIFF ADVICE NO.21-02
BACKGROUND
On December 28,2021,Idaho Power ("Company")filed Tariff Advice No.21-02 with
the Commission proposing to update charges and allowances to its Rule H tariff,New Service
Attachments and Distribution Line h2stallations or Alterations.The Company is required to
make this annual compliance filing to update the Rule H charges and credits by way of
Commission Order Nos.30853 and 30955.The Company is also required to update the general
overhead rate used within the Rule H tariff through Commission Order No.32472.The filing
requests the Commission approve the update by March 1,2022,to facilitate implementation of
the Rule H tariff revisions to meet an effective date of March 15,2022.
STAFF ANALYSIS
Staff reviewed the followingitems tied to the Company's Rule H compliance filing:(1)
the adjustment to the overhead rates applied to work order costs;(2)the updated costs for
standard service attachment charges;(3)the revisions to line installation and attachment
allowances;and (4)the update to the rate charged for engineering services.The cost estimation
methodology used to update these charges and credits is the same as used in prior annual filings.
The Company proposes to update the Single-Phase allowance from $2,324 to $2,532,and the
DECISION MEMORANDUM -1 -FEBRUARY 17,2022
Three Phase allowance from $5,625 to $6,297.The increases are primarily driven by material
and trench costs.
Overhead Rates
Compared to last year's filing,the general overhead rate has been reduced from 13.64%,
to 13.29%,while the stores overhead rate remains at 9.0%.The Company's general overhead
rate is applied to all direct costs related to vehicles,labor,materials,and trenching while the
stores overhead rate is only applied to direct costs for materials and trenching.Staff
recommends approval of the reduction to the proposed general overhead rate.
Standard Charges
Standard charges are established for both base and distance costs for the installation of
undergroundservices,temporary service attachments,and return trip services.Reduction in the
general overhead rate,as mentioned above,has moderated increases in the direct costs of these
charges,resulting in charges that range from a 5%to 34%increase.
Compared to last year's annual filing,the increases in standard charges are primarily
driven by increases in material and trenching cost.See Table No.1.
Table No.1:Comparison between This Year's Filing and Last Year's Filing
Yeaf-to-Pievlous YearComparison(%)
Base Charge |Material |Trench
Overhead including 2"riser 25%
Overhead including 3"riser 28%
Total Unclerground Amounts
Company Installed Facilities with:
1/0 underground cable 61%61%
4/0 underground cable SS%61%
350 underground cable 54%61%
Customer Provided Trench &Conduit with:
1/0 underground cable 11%
4/0 underground cable 18%
350 underground cable 23%
Distance Charge (per foot -based on 100 ft)
Company Installed Facilties with:
1/0 underground cable 115%61%
4/0 underground cable 88%61%
350 underground cable 70%61%
Customer Provided Trench &Conduit with:
1/0 underground cable 175%
4/0 underground cable 41%
350 underground cable 38%
DECISION MEMORANDUM -2 -FEBRUARY 17,2022
Staffhas reviewed the Company's invoice records and believes that the increases in
material costs reflect the elevated commodity prices in the market,especially for copper,which is
used in the manufacturing of cable and transformers,and oil,which is used in 2-inch and 3-inch
Schedule 40 conduit and other resin-based materials.See Response to StaffProduction Request
No.1.
Staffhas also reviewed the records associated with trenching cost and believes the
increases are reasonable due to increased material and labor costs.See Response to Staff
Production Request No.1.
AHowances
Service attachment allowances are provided to customers to compensate for distribution
costs the Company recovers through base retail rates.Customers receive the allowance as a
credit against the cost of terminal facilities and line installation cost.Total allowances for single-
phase and three-phase installations have increased by 9%and 12%,respectively.These costs
reflect the increases in the cost of the components included in the standard charges,some of
which are also included in the components that make up the allowance.Staff believes the
increases in the proposed allowances are reasonable.
EngineeringServices
Engineering cost for line installations and alterations have increased from $78.36 per
hour to $81.37 per hour despite a reduction in the overhead rate from 13.64%in last year's rate
to 13.29%for this year.The increase is mainly driven by a 2.76%rise in engineering wage rates
in combination with an increase in the benefit rate of 7.45%.The increase in wages is in line
with electrical engineeringwage increases in the West over the last four years.'For this reason,
Staffbelieves that the increase in Engineering Services cost is reasonable.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company's proposed general
overhead rate of 13.29 percent and changes to the Rule H charges and allowances reflected in the
i According to the U.S.Bureau of Labor Statistics,over the past fouryears,average Electrical Engineering wages
have increased by three percent.https://www.bis.govioes!
DECISIONMEMORANDUM -3 -FEBRUARY 17,2022
Company's tariff advice filing,dated December 28,2021 as filed.Staffrecommends an
effective date of March 15,2022.
COMMISSION DECISION
Does the Commission wish to approve the Company's proposed updates to the general
overhead rate and the Rule H charges and allowances as filed with an effective date of March 15,
2022?
Yo Yin
Udmemos/Rule H Decision Memo
DECISION MEMORANDUM -4 -FEBRUARY 17,2022