20070530Notice of suspension of the credit.pdf

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An IDACORP Company
PHIL A. OBENCHAIN
Senior Pricing Analyst
Pricing & Regulatory Services
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1) '[phone]
FAX [phone]
MAIL pobenchain~idahopower.com
May 30 2007
Ms. Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
RE:Case No. IPC-01-
Application for Authority to Implement a Residential and
Small Farm Energy Rate Adjustment Credit
Dear Ms. Jewell:
Idaho Power Company is suspending the monthly residential and small farm
credit. The credit will be $O.OOOOOO/kWh beginning with Cycle 1 on June 1 , 2007.
On May 3, 2007 , the Ninth Circuit Court of Appeals ruled that the settlement
agreements Bonneville Power Administration (BPA) entered into with the region s investor-
owned utilities (IOU's) were not consistent with the Northwest Power Act. As a result, BPA
suspended payments to the northwest investor-owned utilities as of May 21 2007. BPA and the
IOU's believe the court's ruling is wrong and will continue to work to restore the Residential
Exchange Program credits. Attached is a copy of the letter from BPA suspending payments
under the residential exchange program.
The Company will continue to notify the Commission Staff at the beginning of
each revenue month giving you the opportunity to respond to any customer inquiries that may
result. If you have questions, please do not hesitate to call.
PAO:ma
Attachment
Beverly Barker, IPUC
Terri Carlock, IPUC
Randy Lobb, IPUC
Ric Gale, IPCO
Department of Energy
Bonneville Power Administration
O. Box 3621
Portland, Oregon 97208-3621
POWER SERVICES
May 21 , 2007
In reply refer to: PS-
Mr. John R. Gale, Vice President
Regulatory Affairs
Idaho Power Company
1221 West Idaho Street
Boise, ID 83702
Dear Mr. Gale:
As we have recently informed you or your representatives, the law provides that a Federal
Certifying Officer is personally responsible and accountable for certifying the legality of a
proposed payment, and is personally accountable for making a payment prohibited by law. See
31 D.C. ~ 3528; Principles of Federal Appropriations, Second Edition, Volume 11 88 - 9-
145. In the Ninth Circuit Court of Appeal's (Court) recent May 3 2007 PGE and Golden
Northwest Aluminum decisions, the Court concluded that certain Bonneville Power
Administration (BP A) actions in entering residential exchange settlements in 2000 with your
company and other Investor Owned Utilities were "not in accordance with law." This quite
understandably raised substantial question whether the BP A Certifying Officer could certify
additional payments under the settlement agreements; indeed, the Court has asked for briefing as
to the effect of its rulings on pending challenges to other outstanding settlement agreements.
We have concluded that this uncertainty created by the Court's decisions means that we must at
this time suspend payments. You have acknowledged that BP A is, thus, currently prevented by
reasons beyond its control from continuing payment pending final decisions by the Ninth Circuit
in the outstanding Ninth Circuit challenges, and that in light of this uncertainty created by the
Court's decisions you agree not to assert BP A is in breach of contract as a result of the
suspension. Accordingly, BP A is immediately suspending payments (including conservation and
renewable discounts and any other credits) under the challenged BP A agreements pending final
decisions by the Ninth Circuit in the outstanding Ninth Circuit challenges. Such temporary
suspension and acknowledgement shall not constitute an admission or waiver of, and is subject
to, any statutory, contractual and other rights and obligations ofthe parties that may exist, so the
suspension is without prejudice to the issue of whether the suspended amounts must at some later
point be paid (or credited). BP A's suspension in no way affects the continued existence of the
settlement agreements.
We very much regret that it is necessary for us to suspend payments at this time, since we
understand that this will rapidly result in large and, for some, severe rate consequences for your
residential and small farm customers. We have spent considerable effort seeking to find means
to continue the payments to allow more time for the parties to find a way to address the issues
raised by the Court, but without success.
BP A currently anticipates that such suspension will continue at least until any petitions for
rehearing on the Court's decisions are finally resolved. We believe the Court's decisions on the
settlements are in error, and we are exploring all potential viable avenues for rehearing, including
by the full Court if possible. BP A agrees that this suspension is only an interim measure and
does not represent a final action by the Administrator, and it will not assert otherwise. BP
agrees it will inform you of its final decision regarding the suspended and any remaining
payments (and credits) within a reasonable period oftime after the decisions by the Ninth Circuit
are final in the outstanding Ninth Circuit challenges.
In the interim we will be consulting with key stakeholders informally as to any ideas for finding
a way to resolve these issues consistent with the Court's decision. This is made more
challenging by the fact that the Court has not ruled yet on the significant 2001 and 2004
amendments to the contracts that the Court did rule on. We want to resolve this issue as quickly
as possible, but also recognize that any work now may be undone by further rulings from the
Court.
This is a most vexing problem, and we look forward to working with you and others in the
Pacific Northwest region to find a resolution that best serves the interest of all Northwest
citizens.
Sincerely,
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Mark O. Gendron
Vice President, Requirements Marketing