HomeMy WebLinkAbout28358.docBEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO IMPLEMENT THE POWER COST ADJUSTMENT RATE FOR ELECTRIC SERVICE TO CUSTOMERS IN THE STATE OF IDAHO FOR THE PERIOD MAY 16, 2000, THROUGH MAY 15, 2001.
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CASE NO. IPC-E-00-6
ORDER NO. 28358
In March 1993, the Commission authorized Idaho Power to file proposed power cost adjustment (PCA) surcharges or rebates to take effect in May each year. Order No. 24806. On April 14, 2000, the Idaho Power Company filed an Application for approval of Tariff Schedule 55 implementing a PCA of 0.1371 cents per kWh and related tariffs incorporating the PCA adjustment for the period May 16, 2000 through May 15, 2001. To expedite the process, on April 21, 2000, the Commission ordered the filing be processed under Modified Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules of Procedure, IDAPA 31.01.01.201 through -.204. Order No. 28348. Comments were due on May 4, 2000. Id.
On May 4, 2000, Staff filed comments recommending approval of the PCA adjustment and further recommending that $70,287.60 be held in the deferral account as the beginning balance for the next PCA. The Industrial Customers of Idaho Power also filed comments May 4, 2000. They do not take issue with Idaho Power's calculation of the proposed 2000-2001 PCA but do express concern about rate shock, especially for Idaho Power customers with high load factors like some Industrial Customers. The Industrial Customers also recommend that the Commission initiate a separate proceeding to review the current method for compensating Idaho Power and its shareholders for operating Idaho Power.
On May 5, 2000, Idaho Power responded to the Comments filed by both the Industrial Customers and Staff.
Based on the comments, the law, Order No. 24806 and the record, the Commission approves Idaho Power's compliance filing and orders $70,287.60 be held in the deferral account as the beginning balance for the next PCA.
BACKGROUND
Idaho Power operates as a public utility supplying electric service in Southern Idaho, Eastern Oregon and in a portion of Elko County in Northern Nevada. Moreover, Idaho Power is subject to the regulatory jurisdiction of the Oregon Public Utility Commission, the Nevada Public Utilities Commission, the Idaho Public Utilities Commission, and the Federal Energy Regulatory Commission. In compliance with Commission Order No. 24806, approving a PCA mechanism for Idaho Power in Case No. IPC E-92-25, Idaho Power filed this compliance filing stating that its PCA for the period May 16, 2000 through May 15, 2001 consists of: 1) ninety-percent (90%) of the difference between the projected power cost and the Commission’s approved base power cost and 2) the true-up of the 1999/2000 power costs.
Idaho Power maintains that the projected power cost was computed in compliance with Commission Order No. 24806 by inserting the National Weather Service Northwest River Forecast Center’s projected Brownlee streamflow of 3.93 million acre feet for April through July into the Commission adopted equation for projecting PCA expenses. According to Idaho Power, the resulting projected power cost of $101,488,260 equates to a cost of 0.7274 cents per kWh. This 0.7274 cents per kWh is 0.2036 cents per kWh higher than the Commission’s approved base of 0.5238 cents per kWh. Idaho Power contends that, by virtue of Order No. 25880, Idaho Power is authorized to adjust rates by ninety-percent (90%) of the 0.2036 cents per kWh difference or 0.1832 cents per kWh.
Idaho Power states that the true-up component of the PCA is -0.0461 cents per kWh. The difference between the projected power cost and the base power cost (0.1832) and the true-up ( 0.0461) combine to produce a PCA for the period of May 16, 2000 through May 15, 2001 of 0.1371 cents per kWh. Idaho Power concludes that the change in the PCA from the existing 0.2143 cents per kWh currently in effect results in an increase of 0.3514 cents per kWh to existing rates.
Pursuant to Rule 123 (IDAPA 31.01.01.123) and Idaho Code § 61-307, Idaho Power requests that the tariff filing implementing the PCA rate of 0.1371 cents per kWh become effective May 16, 2000.
COMMISSION FINDINGS
The Idaho Public Utilities Commission has jurisdiction over the Idaho Power Company and its Application in this case by virtue of Title 61, Idaho Code.
In 1993, the Commission thoroughly considered the reasons for authorizing Idaho Power to file power cost adjustment (PCA) surcharges or rebates each year and balanced conflicting but valid objectives with respect to the proper design of a power cost adjustment mechanism. See Order No. 24806. The purpose for adopting a PCA is two-fold – to provide earnings stability for the Company in low water years and, conversely, to provide ratepayers benefits in high water years through reduced rates. Id.. In other words, while ratepayers are subject to a surcharge in poor water years, through the PCA, they will enjoy reduced rates in high water years. In fact, last year customers enjoyed a significant rate decrease in recognition of better than average water flows. See Order No. 28049.
When the Commission originally considered the mechanism for calculating the PCA, it recognized that the benefits (rates tailored to water conditions) derived from the PCA would affect rate stability and, therefore, included provisions designed to alleviate rate shock. See Order No. 24806. The Commission also recognized that any flow forecast will have some degree of inaccuracy and, therefore, included provisions to mitigate those predictive inaccuracies through a true-up mechanism. Id.. The Commission finds that the PCA continues to produce consumer benefits by recognizing lower power costs in the form of lower rates during years of favorable stream flows. Therefore, the Commission finds that continuing to adjust rates through the PCA is still in the public interest and that the methods for calculating the forecasts and true-up are reasonable and appropriate.
Staff reviewed Idaho Power's Application and supporting documentation and concluded that the methods, representations and calculations are generally correct and comply with the Commission's PCA Orders. Exhibit No. 3 to Idaho Power witness Said’s testimony illustrates the calculation of Idaho Power's 1999 2000 true-up. Utilities Division Staff reviewed Idaho Power's calculation and stated that it agreed that Idaho Power over collected power supply costs by $4,983,547 last year and owes that amount to its Idaho ratepayers. See Attachment B to Staff’s Comments. The Industrial Customers do not contest the calculation.
As part of its audit of the true-up, Utilities Division Staff uncovered two calculation errors that total $70,287.60. Staff Comments at 3-4. Utilities Division Staff and Idaho Power recommend that this balance be carried forward in the balancing account that accumulates interest and be included in next years PCA true-up. See Idaho Power Response at 2. The total adjustment proposed to be placed in the deferral account is $70,287.60. See Attachment C to Staff’s Comments. The Commission finds that the true-up calculation is the appropriate method for treating these calculation errors.
When the Commission originally considered approving the PCA mechanism it expressed concern about the potential impact on ratepayers from significant rate changes. Order No. 24806 at 14. It recognized that the twin goals of earnings stability for the Company and rate stability for the customers directly conflict. Id. Therefore, if forecasted increases above normalized power supply costs in any given year are predicted to exceed seven percent (7% ) of Idaho Power's normalized base revenues for its Idaho jurisdiction, the Commission considers whether the rate increase should be deferred in order to avoid rate-shock. Order No. 24806 at 14. This year the overall increase proposed for customer rates is 9.52 percent over last year’s rates which is an increase over base rates of 3.51 percent. While the Industrial Customers do not request the rate increase be deferred, they expressed concern about “rate-shock” if the PCA is approved.
The Commission understands the impact rate increases of any magnitude have on customers. One of the primary purposes for implementing Idaho Power's PCA is to “capture for ratepayers the benefits of reduced power supply costs due to good water conditions.” Id. However, this is not one-sided. While customers enjoy rate reductions to reflect good water conditions, when forecasted flows are significantly less than those in the previous year, rates must increase. The Commission finds that the magnitude of the increase this year is primarily caused by the expiration of a large rate decrease associated with good water conditions last year. Therefore, the Commission finds that none of the proposed increase should be deferred to next year. The Commission also notes that the rate impact to Industrial Customers would have been mitigated by revenue sharing had the Industrial Customers and the special contract customers not requested immediate refunds in 1999. See Order No. 28099 at 3-4.
Therefore, the Commission finds that approval of the tariff revisions filed by Idaho Power is appropriate and that $70,287.60 should be carried in the balancing account where it will be trued-up in next years PCA. The Commission finds that Staff thoroughly reviewed and examined Idaho Power's compliance filing and the underlying data supporting its filing. In addition, no party objected to those calculations. The Commission hereby approves Idaho Power’s 2000 PCA filing as proposed by Idaho Power in its Application and set forth in the accompanying tariffs.
Finally, Industrial Customers urge the Commission to initiate a new proceeding to consider changes to the rate structure for Idaho Power. Idaho Power opposes such an endeavor, noting that the Industrial Customers have taken similar positions before, that such activities are normally unproductive and that the restructuring of the electrical industry is a legislative prerogative.
On February 14, 2000, the Commission Staff filed a report addressing some of the issues raised by the Industrial Customers. See Report to the Idaho Public Utilities Commission on Workshop Concerning Energy Trading Contracts and Power Cost Adjustment. The Commission believes that the Industrial Customers’ request is outside the scope of this proceeding. Moreover, the Industrial Customers do not object to the PCA calculation at issue. Therefore, the Commission finds that it is premature to conduct a formal hearing relating to the remaining issues. Furthermore, it is incumbent on the parties to specifically identify both the issues they wish addressed and suggest alternative solutions.
Therefore, the Commission encourages the parties to informally discuss these issues with Staff. The parties are free to petition this Commission to initiate a formal case.
O R D E R
IT IS HEREBY ORDERED that Idaho Power’s 2000-2001 PCA, set forth in the proposed tariffs, is approved effective May 16, 2000.
IT IS FURTHER ORDERED that $70,287.60 should be carried in the balancing account where it will be trued-up in next years PCA.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. IPC E-00-6 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this order or in interlocutory Orders previously issued in this Case No. IPC-E-00-6. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61 626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of May 2000.
DENNIS S. HANSEN, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
PAUL KJELLANDER, COMMISSIONER
ATTEST:
Myrna J. Walters
Commission Secretary
O:ipce006_cc2
ORDER NO. 28358 -1-
Office of the Secretary
Service Date
May 9, 2000