28761.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AN ORDER ESTABLISHING THE MINIMUM ENERGY COST AMOUNT BEFORE ISSUANCE OF AN ENERGY COST FINANCING ORDER.
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CASE NO. IPC-E-01-19

ORDER NO. 28761

Earlier this year the Legislature enacted a new law to provide for the issuance of Energy Cost Recovery Bonds. 2001 Sess. Law Ch. 380 (to be codified at Idaho Code §§ 61-1501 through 61-1508). The legislation provides electric and natural gas public utilities with a mechanism for recovery of their increases in short-term costs over several years, thus moderating or decreasing immediate rate increases to utility customers. Qualifying energy costs are those authorized by the Commission as reflected in a usage-based charge of a utility (i.e., a fuel or cost adjustment; a commodity electric rate adjustment; or a purchase power tracker rate). Idaho Code § 61-1502(4).
Before seeking to recover its costs through the issuance of Energy Bonds, each electric or natural gas public utility is required to file with the Commission a proposal to establish a “trigger” or a threshold energy cost amount. A utility’s request to recover increased operating costs through the use of energy bonds would only be considered for authorized revenue increases if, taken together, the short-term charges already in place (whether or not in support of already outstanding bonds), plus the additional charge that would be needed if new bonds were not issued, would exceed the “trigger” or threshold amount. The trigger is expressed in either a cents per kilowatt hour (kWh) or cents per therm measurement. Idaho Code § 61-1503(2).
On May 25, 2001, Idaho Power Company filed an Application seeking to establish its trigger for energy bonding. In this Order, we approve the Company’s Application.
BACKGROUND
Before an energy utility may submit an Application requesting Commission permission to issue Energy Cost Bonds, the Commission must first establish the trigger threshold for each utility. Once established, then the utility may seek to recover its “qualifying energy costs” through the issuance of Energy Cost Bonds. Energy costs that may be recovered through the issuance of energy bonds, include fuel or power cost adjustments, commodity electricity rate adjustments, or a purchased power trackers. See Idaho Code § 61-1502(4). Bonds may be issued having an expected maturity of no later than five years from issuance and having a legal maturity of no later than seven years after issuance. Once a utility files an Application seeking to establish its trigger, the Commission must issue its Order regarding the trigger within 28 days, or in this case, no later than June 22, 2001.
In its Application, Idaho Power recommended that the Commission establish a trigger of 1¢ per kWh. The Company reports that based on its 1999 normalized Idaho jurisdictional revenues, a trigger of 1¢ kWh equates to an annualized revenue increase of $127,704,000. In other words, Idaho Power could seek to recover its short-term costs through the issuance of Energy Cost Bonds if the annualized revenue increase would exceed $127.7 million in the absence of an issuance.
On June 1, 2001, the Commission issued a Notice of Application and a Notice of Modified Procedure in this matter. Given the statutory requirement to issue its Order within 28 days, the Commission found that there was good cause to request public comment in fewer than 21 days. Consequently, the Commission directed that comments in this matter be submitted no later than June 14, 2001. The only party to submit comments was the Commission Staff.
STAFF COMMENT
The Staff compared the Company’s proposed trigger revenue of $127.7 million with triggers set at $50 million, $100 million, and $200 million. Staff suggested that the potential savings and benefits to the Company and its customers are best analyzed at the time that the Company files an Energy Bond Application. For comparative purposes, however, Staff was able to calculate potential benefits for the use of the bond at the various levels. According to Staff’s analysis, using any of the four comparative trigger amounts would be reasonable. Setting the trigger at $50 million represents an increase of 10.25%; at $100 million represents a 20.5% increase; at $127.7 million represents a 26.17% increase; and $200 million represents a 40.99% increase. Staff recommended that the Commission choose a trigger amount that represents the lowest single-year percentage increase that the Commission is willing to pass through to customers without considering multiple-year securitization.

DISCUSSION
Based upon our review of the Application and the Staff’s comments, we approve the Company’s Application. We find, that an energy bonding trigger of one (1¢) cent per kWh represents a potential revenue increase of $127.7 million. In establishing a trigger amount, we must balance the potential of substantial rate increases over a short period of time against moderating an authorized rate increase over several years. As shown in the Staff’s analysis, establishing a trigger at one (1¢) cent per kWh represents an annualized revenue increase to the Company of approximately 26.17%. This translates into an increase for residential service of approximately 19.6%; an increase to large commercial customers of 28.37%; an increase to irrigation customers of 26.95%; and an increase for special contract customers ranging from approximately 40 to 45%. We find an energy bonding trigger of one (1¢) cent per kWh represents a reasonable and appropriate trigger or threshold amount for energy bonding.
We also agree with the Staff that the merits of any particular Application seeking authority to issue Energy Cost Recovery Bonds will be determined after such an Application is filed. Idaho Code § 61-1503(1) requires the Commission to find that each Application to issue Energy Bonds be in the public interest.
O R D E R
IT IS HEREBY ORDERED that Idaho Power Company’s Application pursuant to Idaho Code § 61-1503(2) to establish one (1¢) cent per kilowatt hour as the trigger or special revenue amount for energy cost recovery bonding is granted. Accordingly, an energy cost financing Order may be issued in favor of Idaho Power Company only if, at the time that Idaho Power applies for such an Order, the total of: (a) its ECAs (as defined in Idaho Code § 61-1502(4)); (b) its energy cost bond charges (as so defined); and (c) the amount it identifies in its application as the additional ECA that would be required absent an issuance of energy cost recovery bonds exceeds one (1) cent per kilowatt hour.
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-0119 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-01-19. 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 June 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:ipce0119_dh

ORDER NO. 28761 1

Office of the Secretary
Service Date
June 29, 2001