20101124notice_of_filing_order_no_32124.pdf

Office of the Secretary
Service Date
November 24, 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'INQUIRY INTO LOAD GROWTH
ADJUSTMENTS THAT ARE PART OF POWER COST ADJUSTMENT MECHANISMS.
CASE NO. GNR-IO-
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ORDER NO. 32124
Power supply costs represent a significant portion of a utility s total revenue
requirement and are subject to a high degree of volatility largely outside the utility s control.
Power Cost Adjustment mechanisms allow a utility to collect from customers or credit to
customers the majority of the difference between actual net power costs incurred by the utility to
serve its customers and the normalized amount of power supply costs collected from customers
through rates set in a general rate case.
In a recent case (P AC- E-1 0-0 1) the Commission observed that in periods of declining
load, the mechanism "appears to operate much the same as a decoupling mechanism reimbursing
the Company for lost revenue for reductions in customer usage (sales)." Order No. 31033. The
Commission directed Staff to hold a workshop "to discuss this phenomenon and report continued
justification for use of an LGAR (load growth adjustment rate J when loads decline.!d.
BACKGROUND
On June 9, 2010, Commission Staff met with representatives from Avista, Idaho
Power and Rocky Mountain Power to identify and discuss differences in the three load growth
adjustment mechanisms. On September 10 2010, the Commission initiated this case and issued
a Notice of Workshop to provide a forum for the exploration of issues related to load growth
adjustments. The workshop was held September 28, 2010. Representatives from Avista, Idaho
Power, and Rocky Mountain Power were in attendance. Other participants included:
Commission Staff, Industrial Customers of Idaho Power, and Snake River Alliance.
Avista and Idaho Power utilize a Power Cost Adjustment (PCA) mechanism. Rocky
Mountain Power s mechanism is characterized as an Energy Cost Adjustment Mechanism
(ECAM). All three mechanisms are designed to recover/rebate abnormal power supply costs in
similar ways. All three currently contain a load growth adjustment mechanism. The
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ORDER NO. 32124
Commission and other parties have expressed concern over costs added to the adjustment
mechanisms due to declining loads. During the workshops some parties supported an
asymmetrical approach that would remove dollar amounts from recovery by the utilities when
loads grow but not make cost adjustments when loads decline. Others believed that the
adjustment can be made symmetrical and fair by eliminating the load growth adjustment
mechanism entirely.
On November 17, 2010, Commission Staff filed a Motion to allow all interested
parties an opportunity to consider and comment on a proposed modification to the load growth
adjustment mechanism methodology. Staff requested that the case proceed by Modified
Procedure with comments due no later than January 14, 2011 , and responsive comments due no
later than January 28, 2011.
NOTICE OF FILING
YOU ARE HEREBY NOTIFIED that, at the September 28 2010 workshop, Avista
offered a compromise position that amounts to a revision of current methodology. The proposal
maintains symmetry in growing and declining load scenarios and substantially reduces the load
growth adjustment rate (LGAR) such that the impact of imputed costs to the various utilities in
declining load scenarios is reduced but not eliminated.
YOU ARE FURTHER NOTIFIED that the proposal calculates the adjusted rate
based upon the energy classified portion of embedded production revenue requirement as
established in the cost of service for each utility. Presently, the rate for Idaho Power and Rocky
Mountain Power is based on all embedded production revenue requirement. Avista s current rate
is based on all production and transmission revenue requirement. The proposed change reduces
load decline imputed costs that accumulate in the three cost adjustment mechanisms. It also
potentially eliminates the issue of decoupling from the cost adjustment mechanisms and avoids
the possibility of double recovery of demand classified embedded production revenue
requirement that Idaho Power recovers from residential and small commercial customers through
a Fixed Cost Adjustment (FCA) mechanism. The following table shows the LGARs under
present methodology and Avista s proposed methodology for all three utilities:
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ORDER NO. 32124
CURRENT PROPOSED
UTILITY UNITS METHODOLOGY METHODOLOGY
Avista $/MWh 48.30.16
Idaho Power $/MWh 26.15.43
Rocky Mountain Power $/MWh 19.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure, IDAPA 31.01.01.201-204. The Commission notes that Modified Procedure and
written comments have proven to be an effective means for obtaining public input and
participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
proposal may file a written comment in support or opposition with the Commission no later
than January 14 2011 , with responsive comments due no later than January 28, 2011. The
comment must contain a statement of reasons supporting the comment. Persons desiring a
hearing must specifically request a hearing in their written comments. Written comments
concerning this proposal shall be mailed to the Commission and the parties at the addresses
reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
472 W. Washington Street
Boise, ID 83702-5918
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ORDER NO. 32124
IDAHO POWER COMPANY:
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
1221 West Idaho Street
PO Box
Boise, ID 83707-0070
Mail: dwalker(fYidahopower.com
Inordstrom(fYi dahopower. com
Mike Youngblood
Idaho Power Company
PO Box
Boise ID 83707-0070
E-mail: mvoungblood(fYidahopower.com
ACIFICORP:
Mark C. Moench
Daniel E. Solander
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
E-mail: mark.moench(fYpacificorp.com
daniel. so lander(fYpacificorp. com
Ted Weston
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
E-mail: ted.weston(fYpacificorp.com
AVISTA CORPORATION:
David 1. Meyer
A vista Utilities
PO Box 3727
Spokane, W A 99220
E-mail: david.meyer(fYavistacorp.com
Kelly Norwood
A vista Utilities
PO Box 3727
Spokane, W A 99220
E-mail: kelly.norwood(fYavistacorp.com
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon and complete the comment form using the case number as it appears on the front of this
document. These comments must also be sent to the parties at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
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YOU ARE FURTHER NOTIFIED that the "proposal" workpapers have been filed
with the Commission and are available for public inspection during regular business hours at the
Commission offices. The workpapers are also available on the Commission s web site at
www.puc.idaho.gov by clicking on "File Room" and then "Electric Cases.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code ~~ 61-118, 61-119, 61-502, and 61-503. The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons and the parties may file written comments no later than January 14, 2011 , with
responsive comments due no later than January 28 2011.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
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if
fI1.
day of November 2010.
Qu.D. K MPT SIDENT
61~,,~ MARSHA H. SMITH, COMMISSIONER
CO MMISSI ONER
ATTEST:
D. Jewel
Commission Secretary
O:GNR-10-03 ks2
NOTICE OF FILING
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32124