28625.mod.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AN ACCOUNTING ORDER AUTHORIZING ESTABLISHMENT OF A REGULATORY ASSET OR LIABILITY FOR DEFERRAL OF THE EFFECTS OF CERTAIN DERIVATIVE AND HEDGING FINANCIAL ACCOUNTING RULES. )
)
)
)
)
)
)
)
) CASE NO. IPC-E-01-1

NOTICE OF APPLICATION

NOTICE OF MODIFIED
PROCEDURE

ORDER NO. 28625

YOU ARE HEREBY NOTIFIED that on January 10, 2001, Idaho Power Company filed its Application for an accounting order authorizing the establishment of a regulatory asset or liability for deferral of the effects of certain derivative and hedging financial accounting rules. In its Application Idaho Power states that Avista Corporation’s Application in Case Nos. AVU-E-00-12 and AVU-G-00-8, which requests identical authorization “succinctly sets forth the reasons for the necessity of the obtaining of an accounting order from the Idaho Public Utilities Commission.” Application at 2. Accordingly, Idaho Power adopts in its entirety Avista’s Application and restates its language verbatim in its own, with the exception that the term Avista Corporation is replaced with Idaho Power Company.
Idaho Power requests that the Commission issue an order authorizing the establishment of a regulatory asset or regulatory liability associated with the implementation of Financial Accounting Standards 133 and 138 (FAS-133/138), Accounting for Certain Derivative Instruments and Certain Hedging Activities for its electric portfolio. FAS-133 was issued by the Financial Accounting Standards Board (FASB) in June 1998. It was later amended by FAS-138 in June 2000. Idaho Power states that these rules must be adopted by all companies with calendar year-ends on January 1, 2001.
The Company states that this standard requires all derivatives and certain embedded derivatives to be reported on the balance sheet at fair value. Changes in the fair value of derivatives are to be recorded through earnings. Idaho Power contends that this standard will potentially expose its accounting earnings to significant volatility not experienced previously. Idaho Power contends that this volatility is strictly related to timing differences between when a resource acquisition contract is entered and when it is settled. The Company states that accounting associated with FAS-133/138 therefore will generally not be part of its regulated pricing and requests deferred accounting treatment be approved so that any entries it makes for balance sheet recognition can be offset by regulatory assets or liabilities and not recorded through the Company’s statement of income. Idaho Power contends that this will allow it to continue to make prudent and timely resource acquisition decisions unencumbered by concerns about this new financial accounting standard. This proposal does not in any way relieve the Company of its obligation to demonstrate the prudency of its resource acquisition decisions.
The Company requests that this Application be processed under Modified Procedure. Staff agrees that Modified Procedure would be appropriate for this case.
YOU ARE FURTHER NOTIFIED that the Application has been filed with the Commission and is available for public inspection during regular business hours at the Commission offices.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code and that 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.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of record in Case No. IPC-E-01-1. The Commission has preliminarily determined that the public interest may not require a hearing to consider the issues presented and that the issues raised by the Application may be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-.204.

YOU ARE FURTHER NOTIFIED that the Commission may not hold a hearing in this proceeding unless it receives written protests or comments opposing the use of Modified Procedure and stating why Modified Procedure should not be used. Reference IDAPA 31.01.01.203.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this Application may file a written comment in support or opposition with the Commission within twenty-one (21) days, not including the day this Notice was issued. IDAPA 31.01.01.017. The comment must contain a statement of reasons supporting the comment. Persons desiring a hearing must specifically request a hearing in their written comments.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the deadline, the Commission will consider the matter on its merits and enter its Order without a formal hearing. If comments or protests are filed within the deadline, the Commission will consider them and in its discretion may set the matter for hearing or may decide the matter and issue its Order on the basis of the written positions before it. Reference IDAPA 31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case No. IPC-E-01-1 should be mailed to the Commission and Idaho Power Company at the addresses reflected below:

COMMISSION SECRETARY LARRY D. RIPLEY
IDAHO PUBLIC UTILITIES COMMISSION IDAHO POWER COMPANY
PO BOX 83720 P.O. BOX 70
BOISE, ID 83720-0074 BOISE, IDAHO 83707
STREET ADDRESS FOR EXPRESS MAIL:
Senior Attorney
472 W WASHINGTON ST
BOISE, ID 83702-5983

All comments should contain the case caption and case numbers shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that the Application in the above cases can be reviewed at the Commission’s office and at the offices of Idaho Power Company in Boise during regular business hours.
O R D E R
IT IS HEREBY ORDERED that this case shall be processed by Modified Procedure in accordance with the Commission Rules. See, IDAPA 31.01.01.201-.204.
IT IS FURTHER ORDERED that any person desiring to state a position on Idaho Power’s Application may file a written comment in support of or in opposition to the Company’s request. These comments must be filed on or twenty-one (21) days after the date of this Order. The written comment must contain a statement of reasons supporting the comment. Persons desiring a hearing must specifically request a hearing in their written comments.
IT IS FURTHER ORDERED that all reply comments may be filed within seven (7) days after the deadline for comments has passed.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of January 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:ipce011_jh

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 28625 1

Office of the Secretary
Service Date
February 1, 2001