2001719_jh.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
TONYA CLARK
DON HOWELL
RANDY LOBB
KEITH HESSING
TERRI CARLOCK
BEV BARKER
GENE FADNESS
WORKING FILE

FROM: JOHN R. HAMMOND

DATE: JULY, 19 2001

RE: IN THE MATTER OF THE APPLICATIONS OF IDAHO POWER COMPANY, CASE NO. IPC-E-01-18; AVISTA CORPORATION DBA AVISTA UTILITIES, CASE NO. AVU-E-01-9; AND PACIFICORP, CASE NO. PAC-E-01-9 TO DISCONTINUE COST INFORMATION FILING AND SUSPENSION OF THE FILING DATE PENDING DETERMINATION.

On May 18, 2001, Idaho Power Company filed an Application requesting Commission authorization to discontinue the filing of the annual cost information-unbundling report. Idaho Power also requested suspension of the July 1, 2001 filing date for this report until the Commission makes a decision on its Application. On June 5, 2001, Avista Utilities filed a Motion for an Extension of the Filing Date with respect to the same unbundled cost report. On June 8, 2001, PacifiCorp filed an Application that is identical to Idaho Power Company’s request.
On June 19, 2001, the Commission issued a Joint Notice of Applications, Joint Notice of Modified Procedure. Order No. 28749. In this Order the Commission suspended the filing date for cost reports for 60 days from July 1, 2001, or until the Commission issues an order resolving this matter. The Commission also established deadlines for written comments and reply comments and decided to treat Avista’s Motion as an Application. The Commission Staff, Avista and Idaho Power filed written comments.
BACKGROUND
In 1997 the Legislature enacted Chapter 403, Session Laws of Idaho 1997, pp. 1279-1281, creating Idaho Code §§ 61-338 and 61-339. Under these sections, electric suppliers in the state of Idaho with over 1,000 customers were required to file unbundled cost information with the Commission. The Legislature determined that such cost information shall be separated among utility functions consisting, at a minimum, of generation, transmission and distribution services and including other categories as the Commission may require.
In response to Idaho Code §§ 61-338 and 61-339 the Commission commenced Case No. GNR-E-97-1, which ultimately provided for the method and manner by which these cost reports would be compiled and submitted. See Order No. 27211. As an outgrowth of Case No. GNR-E-97-1, the Commission instituted three separate proceedings for Idaho Power Company, Avista Utilities and PacifiCorp. See Case Nos. IPC-E-98-2, UPL-E-98-1 and WWP-E-98-1. The Commission in the final Orders in these cases required that the Companies submit cost reports with updated cost information on or before July 1, of every year. See Order Nos. 27676, 27678 and 27679.
Idaho Code §§ 61-338 and 61-339 as enacted provided that these sections would become null and avoid and of no force and effect on and after January 1, 1999. Accordingly, Idaho Power and PacifiCorp, with Avista now joining this argument, have requested that the Commission authorize them to discontinue the filing of their annual cost report and to suspend the filing requirement of July 1, 2001, until the Commission has issued its decision on their requests. The Companies contend that preparation of these cost reports are time consuming and of little value on an ongoing basis insofar as the regulation by the Commission is concerned. Accordingly, the Companies submit that it is in the public interest to permit it to discontinue their filing. In the event that the Commission does not grant the Companies’ requests PacifiCorp, in the alternative, asks the Commission to extend the annual filing date for this report until October 1 of each year. Idaho Power and PacifiCorp also request that this matter be processed by Modified Procedure under the Commission’s Rules.

STAFF RECOMMENDATION
Staff contends that unbundled cost reports continue to have value because there is still substantial interest in retail choice on the federal level. Furthermore, Staff states that unbundled cost information provides insight into cost differences that exist among utilities. Accordingly, Staff recommends that the Commission continue to require Idaho Power, PacifiCorp and Avista to file these reports. However, recognizing that costs change relatively slowly, Staff recommends that the Commission require the Companies to file their reports every other year instead of yearly as is currently required, with the first filing due July 1, 2002.
If the Commission decides to continue to require the filing of this report Staff recommends making modifications to it so that it is more informative and useful. First, Staff recommends that instead of reporting unbundled cost information by delivery voltage level it should be reported by customer class as identified in each utility’s cost of service study. Second, it should be reported at actual earned rate of return and not adjusted to authorized return levels. In addition, Staff also recommends that the actual earned rate of return for each customer class should also be reported.
COMPANY REPLY COMMENTS
Avista Corporation
Avista states that historically the Commission has been consistent in the treatment granted to itself, Idaho Power and PacifiCorp in regards to the filing of unbundled cost reports. Specifically, that whatever was required of one Company was also required of the other two. Avista also expresses its support for the arguments made by Idaho Power and PacifiCorp for discontinuing the filing of this report. Additionally, Avista states that the requirement to update these reports annually is “somewhat administratively burdensome with no clear benefit evident from the exercise.” Avista Comments at p. 2. Accordingly, Avista requests that it also be allowed to discontinue the filing of this report.
Idaho Power Company
As stated in its Application in Case No. IPC-E-01-18, Idaho Power states that the legislation requiring the filing of this report has expired and deregulation is a dead issue in this state. Accordingly, until the Legislature chooses to re-enact this provision, the filing of this report at best will only obtain incomplete data. Accordingly, Idaho Power requests that the Commission allow it to discontinue the filing of this Report.
Idaho Power contends that if the Commission desires to continue to receive this report for internal purposes it should not be released to third parties as dissemination of this information could be detrimental to both Idaho Power and its retail customers. Idaho Power also suggests that if the report must be filed that it be filed every five years as costs change relatively slowly. In the alternative because the filing of this report would be in addition to the “Form 1” information that the Company files annually, Idaho Power suggests that the information that would be contained in this report be filed only when the Commission requests it. Finally, Idaho Power does not believe that Staff’s recommended modifications to the report will improve its usefulness.
COMMISSION DECISION:
Does the Commission wish to require Avista, Idaho Power and PacifiCorp to continue filing the unbundled cost information report? If so, how often does the Commission wish the Companies to file it?
If the Commission requires this report to be filed does it wish to modify it as recommended by Staff or leave it in its current form?
If the Commission requires this report to be filed should it be treated as confidential or privileged information?

John R. Hammond

Staff: Keith Hessing

M:ipce0118_avue019_pace019_jh2

DECISION MEMORANDUM 3