20110118PacifiCorp Comments.pdf

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Janua 14,2011 zoti JAN l 8 Atilt): 08
201 South Main. Suite 230
Salt Lake City. Utah 84111
VI ELECTRONIC FILING
AND OVERNIGHT DELIVERY
Jean D. Jewell
Commission Secreta
Idaho Public Utilities Commssion
472 W. Washigton
Boise, ID 83702
Re: Case No. GNR-E-10-03
In the matter of the Commission's inquiry into load growt adjustments that are par of
the power cost adjustment mechasms.
Dear Ms. Jewell:
Enclosed pleae fid an ongin and seven copies of Rocky Mounta Power's comments for the
above-referenced matter regardig load growt adjustment rates.
If you have any questions please contact Ted Weston at [phone].
Very trly yours,L/1A
Cc: Service List
Mark C. Moench
Danel E. Solander
Rocky Mounta Power
201 S. Main St., Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
Fax: [phone]
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Attorneys for Rocky Mounta Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN THE MATTER OF THE COMMSSION'S )
INQUIRY INTO LOAD GROWTH ) CASE NO. GNR-E-10-03
ADJUSTMENTS THT AR PART OF TH )
POWER COST ADJUSTMENT ) Comments of Rocky MountanMECHASMS. ) Power on Load Growt
) Adjusents
COMMENTS OF ROCKY MOUNAI POWER
ON LOAD GROWTH ADJUSTMENTS
COMES NOW PacifiCorp dba Rocky Mounta Power ("RM" or the
"Company") and puruat to Rules 56 and 256 of the rues of Procedure of the Idao
Public Utilties Commssion (the "Commssion"), submits comments on the inqui into
the load growt adjustment rate ("LGAR") tht is par of the Company's power cost
adjustment mechasm.
I. Backgound
On Febru 1, 2010, Rocky Mountain Power fied an Application with the
Commission for authonty to implement a power cost adjustment to rates for all customer
classes excluding taff contrt customers (Monsanto Company and Agnum, Inc). The
Company's Energy Cost Adjustment Mechasm ("ECAM") was approved by the
Page 1 - Comments of Rocky Mountan Power
Commission on September 29, 2009, in Case No. PAC-08-08, Order No. 30904. The
ECAM, which includes an LGAR is designed to collect or credit 90% of the
accumulated difference between tota Company base net power costs (Base NPC)
collected from Idao customers though rates and tota Company actul net power costs
(Actu NPC) incured to serve customers in Idaho calculated on a cents-per-kilowatt-
hour basis.
In Case No. PAC-E-10-0l, Order No. 31033 issued March 31, 2010, the
Commission directed Staf to hold a workshop for the thee utilties and discuss the
justification of the LGAR in ties of decling load.
On June 9, 2010, Commssion Sta met with representatives from Avista Idao
Power, and Rocky Mountan Power to identify and discuss differences in the three load
growt adjustment mechansms. On September 10, 2010, the Commission initiated ths
case and issued a notice of workshop to provide a foru for the exploration of issues
related to load growth adjustments. The workshop was held September 28, 2010, at the
Commssion offces in Boise. Representatives frm A vista, Idaho Power, and Rocky
Mounta Power were in attendace along with other interested paries.
Pusuat to Commssion directions in Order No. 32124, Rocky Mounta Power
is providig the followig comments concerng the appropnateness of the load growt
adjusent rate as par of an energy cost adjustment mechasm.
II. Comments
Rocky Mounta Power continues to support the need for an ECAM because net
power costs represent a large portion of the Company's tota revenue requirement tht are
subject to a high degree of volatilty that to a large extent are outside the Company's
Page 2 - Comments of Rocky Mountan Power
control, and appreciates the Commssion's findig that such a mechansm is in the public
interest and ordenng its use. The implementation of the Company's ECAM was as a
result of a stipulation among pares to the ECAM docket. The Company's onginal
ECAM application did not include an LGAR because the Company believes capital and
the other operation and maitenace costs included in the LGAR calculation are not
highy volatile or largely outside the Company's control and therefore should not be
included as par of the energy cost adjustment mechasm. In order to make progress
towards the implementation of an ECAM, the Company accepted an LGAR as proposed
by Commssion Staff as par of the broader settlement to approve and implement the
ECAM.
Rocky Mounta Power's ECAM is different from A vista and Idao Power's
power costs adjustment mechasms because the ECAM compares net power costs
included in rates to actu net power cost incured to serve customers on a cents-per-
kilowatt-hour basis. By companng net power costs on a cents-per-kilowatt-hour basis any
impact caused by vanations in load is excluded. Ths metod addresses the
Commssion's concern that the Company should not be allowed to collect growt-related
power supply costs though an ECAM surcharge and then also collect base revenue from
tht new load to cover the sae power supply costs.
In Case No. PAC-E-08-08, (Order No. 31033) the Commssion stated that the
LGAR "appears to operate much the sae as a decoupling mechansm reimbursing the
Company for lost revenue for reductions in customer usage (sales)" and went on to state
"If the Company desires a decoupling mechansm it should request and justify one in a
Page 3 - Comments of Rocky Mountan Power
separte filing." Rocky Mounta Power agees with the Commission, the LGAR does
act as a decoupling mechansm and is not an appropnate component of the EcAM.
Rocky Mounta Power believes the LGAR unaily penalizes utilities by only
considenng changes in loads and not considenng changes in underlying cost. With the
curent build cycle that most utilties ar in, Rocky Mountan Power questions the
appropnateness of an LGAR. To eliminte ths penaty the underlying components of an
LGAR would need to be compared on a cost-per-kilowatt-hour basis from the bas penod
to the actu penod. However, even with tht corrction the LGAR would continue to
fuction as a capita and O&M recover mechansm which Rocky Mounta Power
believes was never the Commssion's intent when power cost adjustment mechasms
were implemented. Utilities have appropnate venues to seek recovery of these tyes of
costs. The LGAR is not an appropnate component of the ECAM.
Rocky Mountain Power is not surnsed with the fluctution in its Idaho loads
which is the reason the Company would only agree to include an LGAR as par of the
settlement if it was symetncal. Approximately 15 to 20 percent of the energy usage in
the Company's Idao servce terntory is irgation load. Whle the other customer
classes' usage is relatively stable, irgation is not. The Company has witnessed 50,000 to
150,000 megawatt-hour swigs in usge levels from year to year. To ilustrte ths point,
in Case No. PAC-E-08-07, which is the basis of the curnt base net power costs in the
ECAM, irngation loads were approximtely 698,000 MWh at saes leveL. Durg 2009,
the first year of the ECAM, irgation usage had dropped to 545,000 MWh. Whle 2010
usage was up slightly to 557,000 MWh' usage was stil well below the bas load leveL.
Because Rocky Mounta Power's ECAM is based on a cents-per-kilowatt-hour
Page 4 - Comments of Rocky Mounta Power
companson any net power cost changes dnven solely by volumetnc swings are
automatically excluded eliminating the need for an LGAR for Rocky Mounta Power.
If it is the Commssion's determation that the LGAR should be par of a net
power cost mechansm, then Rocky Mounta Power strongly believes it should be
treated symetncally. As demonstrted above, for Rocky Mountai Power an LGAR
would be dnven almost completely by irngation usage due to weather or other factors
impactig pumping. Additionaly, the Company does not believe an asymetncal
method would ever work. For example if an asymetnca LGAR were implemented, a
utility could expenence a decline in loads eleven months of the year and would not make
a monthly accounting entr to record an LGAR impact, but for one month of the year
expenence an increase in loads in which an asymetncal LGAR would require the
Company to record an LGAR credit. In ths scenao the Company would provide a credit
to customers even though for the year the Company expenenced negative load growt.
Finally, par of rate design is to establish just, reasonable, and fair rates. Rocky Mountan
Power believes asymetncal application of an LGAR would be inequitable and cernly
not fai.
At the September 28, 2010 LGAR workshop A vista presented a compromise
proposal which mainta symet in growing and decling load scenanos and
substatially reduces the LOAR such that the impact of imputed costs to the varous
utilties in fluctuting load scenanos is reduced but not elimate. Absent the
elimination of the LGAR for Rocky Mountan Power due to the per unt methodology
already included in its ECAM, the Company would be more supportive of the
compromise position proposed by Avist th the curnt LGAR calculation because the
Page 5 - Comments of Rocky Mounta Power
proposa only includes the energy component of the production plant cost of service
rather th tota costs. Rocky Mountain Power believes ths is closer aligned to net power
costs.
III. Conclusion
Rocky Mountan Power's opinon is that an LOAR is not appropnate for inclusion
in its ECAM. The curnt methodology based on cents per kWh addrsses volumetnc
changes and therefore elimites the need for any tye of LGAR adjustment. However if
the Commssion determines it wants to contiue to utilize the LGAR Rocky Mounta
would support the symmetncal compromise position proposed by A vista in the
September 28, 2010 workshop, as long as it is based only on generation expenss not
included in the ECAM.
DATED ths 14th day of Janua, 2011.
M~~en':~( ~
Danel E. Solander
Attorneys for
Rocky Mounta Power
Page 6 - Comments of Rocky Mounta Power
CERTIFICATE OF SERVICE
I hereby certify that on ths 14th day of Janua, 2011, I caused to be served, via overnght
delivery and E-mail, a tre and correct copy of Rocky Mounta Power's Comments in
Case No. GNR..E-10-03 to the followig:
Donovan E. Waler
Lisa D. Nordstom
Idaho Power Company
1221 W. Idao Stret
POBox 70
Boise, il 83707-0070
E-mail: dwalker(ßidahopower.com
Inordstrom(ßidahopower.com
David J. Meyer
A vista Utilties
PO Box 3727
Spokae, VV A, 99220
E-mail: david.meyer(ßavistacorp.com
Mie Youngbloo
Idaho Power Company
1221 W. Idaho Street
POBox 70
Boise, ID 83707-0070
E-mail: myoungblood(ßidahopower.com
Kelly Norwood
A vista Utilities
POBox 3727
Spokane, VV A, 99220
E-mal: Kelly.norwood(ßavistacorp.com
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