20010824Order No 28831.pdf

Office of the Secretary
Service Date
August 24, 2001
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE IDAHO POWER
COMPANY APPLICATION FOR A
REFUNDABLE EMERGENCY ENERGY
CHARGE FOR THE RECOVERY OF
EXTRAORDINARY POWER SUPPLY
EXPENSES.

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CASE NO. IPC-E-01-7

IN THE MATTER OF THE IDAHO POWER
COMPANY APPLICATION FOR AUTHORITY
TO IMPLEMENT A POWER COST
ADJUSTMENT (PCA) RATE FOR ELECTRIC
SERVICE FROM MAY 1, 2001 THROUGH MAY
15, 2002.
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CASE NO. IPC-E-01-11

IN THE MATTER OF IDAHO POWER
COMPANY'S INTERIM AND PROSPECTIVE
HEDGING, RESOURCE PLANNING,
TRANSACTION PRICING, AND IDACORP
ENERGY SOLUTIONS (IES) AGREEMENT.
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CASE NO. IPC-E-01-16

ORDER NO. 28831

In prior Orders the Commission consolidated the above referenced cases for
evidentiary hearings scheduled for August 28-30, 2001. On August 17, 2001, several parties to
Case No. IPC-E-01-16 (“the –16 case”) filed a Joint Motion to divide the -16 case into two
phases. Some issues would be taken up in next week’s hearing and other issues would be
deferred to a settlement conference. IDAPA 31.01.01.273. As set out in greater detail below, we
grant the Joint Motion of the parties.
BACKGROUND
In February 2001, Idaho Power Company filed an Application in Case
No. IPC-E-01-7 (“the –7 case”) for authority to implement a flat “emergency” energy charge as
part of its annual power cost adjustment (PCA) mechanism for the 2000-2001 PCA year. In its
Application, the Company sought to recover an unprecedented $161 million in power supply
costs incurred over the prior ten (10) months. In March 2001, the Company filed a second
Application in Case No. IPC-E-01-11 (“the –11 case”) for authority to increase the PCA rate

ORDER NO. 28831 1
schedule to recover an additional $66.4 million. This second Application was primarily based
upon the forecasted below-average water flows in Idaho Power’s hydroelectric system for the
coming year. Taken together, the Company sought to recover approximately $227.4 million over
a one-year period for the 2000-2001 PCA year. Order No. 28722 at 2.
In Order No. 28722 the Commission allowed Idaho Power to immediately recover
$168.3 million through the PCA mechanism. The Commission deferred recovery of
approximately $59 million pending further investigation. Id. at i. In particular, the Commission
scheduled an evidentiary hearing to examine the remaining $59 million from the 2000-2001 PCA
year relating to Idaho Power’s “trading practices (to include hedging, transmission and wheeling
charges, Mid-C pricing, and the use of weighted average pricing), the November trading event,
and the Company’s resource planning.” Order No. 28722 at 17. In other words, the focus of the
–7/11 cases is to decide those issues remaining from the 2000-2001 PCA year.
The focus of the –16 case is two fold. First, the Commission intends to examine
Idaho Power’s trading practices (including hedging, transmission and wheeling charges, use of
the Mid-C pricing mechanism, and the use of weighted average pricing) on a going forward
basis, i.e., for the 2001-2002 PCA year beginning March 1, 2001 and beyond. Second, the
Commission also intends to re-examine Idaho Power’s Service Agreement with its unregulated
affiliate, IDACORP Energy (IE)1 adopted in Order No. 28596 issued December 19, 2000 in Case
No. IPC-E-00-13. See Order No. 28722 at 17-18.
THE JOINT MOTION
Prefiled direct and rebuttal testimony in the three cases was filed with the Commission in
July and early August 2001, respectively. On August 16, 2001, the parties2 convened a
settlement conference to discuss issues in the –16 case. As noted in the Joint Motion, all the
parties to the –16 case were in attendance at the settlement conference. Joint Motion at 1.

1 At the time the Commission issued its Order No. 28722, IE was known as IDACORP Energy Solutions (IES). As
it recently stated in a filing before the Ninth Circuit Court of Appeals, IE “is a limited partnership organized under
the laws of the state of Delaware. . . . IE is a successor-in-interest to a division of Idaho Power Company known as
IDACORP Energy Solutions . . . .” Disclosure Statement of IDACORP Energy, LP in Public Utility Commission of
the State of California v. Federal Energy Regulatory Commission, Case No. 01-71051 (August 9, 2001). The
Disclosure Statement also indicates that Idacorp Energy Services Company, a Nevada corporation, holds 99% of the
partnership interest in IE. Idacorp Energy Services Company is a wholly-owned subsidiary of IDACORP, Inc., an
Idaho corporation. Id.
2 The parties supporting the Joint Motion are: Idaho Power, Commission Staff, the Irrigation Pumpers Association,
the Industrial Customers of Idaho Power, Astaris, and the U.S. Department of Energy.

ORDER NO. 28831 2
Following discussion of the issues, the parties agreed to recommend that the Commission
bifurcate the issues in the -16 case. The parties maintain that the issues appropriate for
immediate resolution in the -16 case (to be heard August 28-30) include “transfer prices” for
transactions between Idaho Power and IE from March 1, 2001 until the Commission issues its
Order in Phase I of the -16 case. Phase II of the case will re-examine the affiliate agreement
between Idaho Power and IE. The Joint Motion states that the parties
recognize that a collaborative process, undertaken over a period of time, is
much more likely to achieve mutual acceptable results than is the
adversarial hearing process.
While some Parties have expressed skepticism concerning the ultimate
likelihood of achieving consensus, all Parties have agreed that it is
worthwhile to give the collaborative process an opportunity to succeed.

Joint Motion at 2.
The parties also recommend a procedural schedule for the bifurcated –16 case. Idaho
Power agreed that on or before September 13, 2001, it will provide a proposal outlining actions
or amendments it has or will take immediately to address the Idaho Power–IE Agreement
initially approved in Order No. 28596 in Case No. IPC-E-00-13. See Order No. 28722 at 17-18.
Parties will then convene a workshop on September 20, 2001 “to discuss the materials provided
by Idaho Power and to discuss a schedule [for] further workshops.” Joint Motion at 2. The
parties will then report on the status of efforts to settle the Service Agreement issues.
DISCUSSION
To facilitate an orderly review of the issues contained in the -16 case, the
Commission grants the Motion to bifurcate. The Commission agrees with the parties that it is
appropriate to decide the issues of the Company’s trading practices including hedging,
transmission charges, Mid-C pricing, and real time pricing between March 1, 2001 through the
issuance of our Order in Phase I of the –16 case. Because all the parties supported the Joint
Motion and the hearing is set for next week, the Commission finds that it is appropriate to rule
on the Joint Motion for procedural relief without delay. IDAPA 31.01.01.256.03.
The Commission further finds that the proposed schedule for the bifurcated –16 case
is appropriate. For Phase II, Idaho Power shall file an initial proposal outlining amendments to
the Idaho Power–IE Service Agreement (including resource planning measures) no later than
September 13, 2001. The parties shall also convene an informal workshop on September 20,

ORDER NO. 28831 3

ORDER NO. 28831 4
2001 to discuss Idaho Power’s proposal and the further processing of the –16 case. Following
the September 20 workshop, the parties shall report on the status of the settlement discussions
concerning the Service Agreement and recommend how Phase II of the -16 case may be
processed.
Given the relief granted above, we take this opportunity to discuss the evidentiary
hearings scheduled for August 28-30, 2001. It is our intent to first hear the -7/11 cases
concerning the outstanding $59 million request from the 2000-2001 PCA year. We shall then
take evidence in the Phase I portion of the -16 case regarding the Company’s trading practices
(hedging, transmission and wheeling charges, Mid-C pricing, and weighted average pricing) on a
going forward basis as of March 1, 2001.
O R D E R
IT IS HEREBY ORDERED that the Joint Motion to bifurcate the IPC-E-01-16 case
is granted.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of August 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

bls/O:ipce017_11_16_dh