20021106Order No 29143.pdf

Office of the Secretary
Service Date
November 6, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
SUPREME COURT
DOCKET NO. 29016
IDAHO POWER COMPANY,
Applicant/Appellant,
IPUC CASE NO. IPC-01-
IDAHO PUBLIC UTILITIES COMMISSION,
Respondent on Appeal.IPUC ORDER NO. 29143
In the sprIng of 2001 , the Commission approved Idaho Power Company
Application to implement the Irrigation Buy-Back Program.The Program authorized the
Company to pay large irrigation customers to reduce their electric consumption. In Order No.
28992 the Commission authorized Idaho Power to recover nearly $74 million in payments made
to irrigators but denied the Company s request for approximately $12 million attributable to "lost
revenue.In Order No. 29103 issued August 2002, the Commission denied the Company
petition to reconsider the lost revenue issue. On October 2, 2002, Idaho Power filed an appeal
with the Supreme Court.
On October 1 2002, the Company filed a Motion for Stay of Order Nos. 28992 and
29103. The Company filed this Motion because it believes it needs to preserve its right to
recover the $12 million in lost revenue if it is successful on appeal. In this Order, the
Commission declines to issue a stay because a stay is not necessary in this instance.
BACKGROUND
In the spring of 2001, the Commission approved Idaho Power Company s Irrigation
Buy-Back Program ("Program ), authorizing the Company to pay large irrigation customers to
reduce their electric consumption during the 2001 growing season. Order Nos. 28676 and 28699
(Case No. IPC-01-3). The Program was implemented in response to two unique conditions:
the second worst drought on record and unprecedented wholesale power costs. The Company
alleged that as a result of this Program it incurred two costs. The first was the direct cost of the
Program, i., the actual payments made to irrigation customers for reducing their energy
consumption. Order No. 28699 at 12. The second component was the "lost revenue" which
ORDER NO. 29143
represents a calculated amount of revenue the Company might have received from the sale of
power to irrigation customers had the Program not been in operation. In Order No. 28699 the
Commission authorized Idaho Power to record the direct costs and any calculated lost revenue in
separate purchased power subaccounts. Order No. 28699 at 12.
After conclusion of the Program at the end of September 2001 , the Company filed an
Application on October 18, 2001 , starting Case No. IPC-01-34. It sought, amongst other
things, Commission authorization to recover the direct costs and lost revenue it alleged occurred
as a result of the Program. The Company requested authorization to recover these amounts
through the 2002/2003 Power Cost Adjustment ("PCA"
).
Id. at 5-
On April 15 , 2002, the Commission issued Order No. 28992 granting Idaho Power
request to recover the Program s direct costs from all ratepayers, which at its conclusion totaled
nearly $74 million in payments made to irrigators for reducing their electrical consumption.
However, the Commission denied the Company s request to recover approximately $12 million
oflost revenue ($11 587 179.08 plus $428 008.18 in carrying charges).
Idaho Power filed a timely Petition for Reconsideration requesting that the
Commission reconsider its decision in Order No. 28992 regarding lost revenue. The Company
did not request a hearing to submit additional evidence and asked the Commission merely to
reconsider its decision based upon the existing record. On May 30, 2002, the Commission
granted reconsideration so that it could "thoroughly review the record. . . and render our
decision." Order No. 29040 at 2.
On August 29, 2002, the Commission issued Order No. 29103 that reaffirmed its
decision in Order No. 28992 to deny Idaho Power authorization to recover lost revenue.
Following the issuance of this Order the Company filed its Motion for Stay of Commission
Order Nos. 28992 and 29103 on October 1 , 2002. On October 2, 2002, the Company filed its
Notice of Appeal from these two Commission Orders.
THE MOTION FOR STAY
On October 1 2002, Idaho Power, pursuant to Commission Rule 324, filed a Motion
for Stay of Commission Order Nos. 28992 and 29103 as they pertain to lost revenues. IDAPA
31.01.01.324. Because of its uncertainty as to the applicability of the Supreme Court's opinion
in Utah Power Light Co. v. Idaho Public Utilities Commission 107 Idaho 47 , 685 P.2d 276
I This amount includes a carrying charge.
ORDER NO. 29143
(1984) to this case, Idaho Power requests that the Commission enter an Order staying those
portions of Order Nos. 28992 and 29103 concerning lost revenues during the pendency of the
appeal. Motion at 1-2. The Company does not seek to recover the lost revenue at this time.
Rather, it would seek recovery of lost revenues at a later date should it prevail on appeal. In
addition to its request for a stay, Idaho Power also requests the Commission approve an
accounting methodology to allow for the potential recovery of the lost revenues in the event it is
successful on appeal. The Company proposes to record the disputed amount ($12 015 187.26) in
Account 186 (Miscellaneous Deferred Debits). Id. at 2-
Idaho Power expressed concern that without staying these Orders, it might be
prohibited from later recovering the disputed amount through March 31 , 2002 even were it
successful on appeal. The Company further states it has ceased accruing any carrying charges on
the lost revenue amounts as of March 31 , 2002. Motion at 3. Furthermore, the Company does
not propose to accumulate any additional carrying charges during the pendency of the appeal.
Id. However, Idaho Power acknowledges that if the Commission or the Court were to determine
that additional carrying charges, if any, would be appropriate it would gladly accept them. Id.
No party in this case filed a response to the Company s Motion to Stay.
DISCUSSION AND FINDINGS
The Public Utilities Law contemplates that filing an appeal "shall not of itself stay or
suspend the operation of the order of the commission.Idaho Code 9 61-635. Pursuant to
Commission Rule 324 the Commission in the first instance may issue a stay of the enforcement
of an order it issued. Rule 324 states:
Any person may petition the Commission to stay any order, whether
interlocutory or final. Orders may be stayed by the judiciary according to
statute. The Commission may stay any order on its own motion.
IDAP A 31.01.01.324.
Under the Public Utilities Law, a stay "shall not become effective until a suspending
bond shall first have been executed and filed with, and approved by the commission (or approved
on review by the court)(.J" Idaho Code 9 61-637. Use of a bond assumes that if the utility is not
successful on an appeal, that ratepayers will "be promptly paid. . . in a manner and through such
methods of distribution as may be prescribed by the commission.Idaho Code 9 61-638.
ORDER NO. 29143
A. The Utah Power Case
Idaho Power is "uncertain" whether a stay is necessary to preserve its ability
recover the disputed amount if it is successful on appeal. Motion at I. The Company "does not
desire to put itself at peril" if it is later determined that the holding of Utah Power is applicable
to the disputed amount in this case. Id. at 2. The Company claims that it will suffer irreparable
injury if it would lose the ability to recover the disputed amount. Id. at 3.
The Idaho Supreme Court has addressed the stay provisions contained in Idaho Code
9 61-633 et seq. in several cases. See Utah Power Light Company v. Idaho P. Uc.107 Idaho
, 685 P.2d 276 (1984); Mountain States Tele. Tele. Company v. Jones 76 Idaho 241 , 280
P.2d 1067 (1955); Joy v. Winstead 70 Idaho 232, 215 P.2d 291 (1950). The Company assumes
that the Utah Power case may be controlling.
The Utah Power case was a general rate case. In that case, the Commission granted a
rate increase that was less than the amount proposed by the Company. The utility appealed
seeking to recover the difference between the amount granted by the Commission and the
proposed amount. However, Utah Power did not request a stay on appeal. On appeal the utility
argued that it should be granted a surcharge to recover past losses when the PUC Order was later
set aside by the Court on appeal. Utah Power 107 Idaho at 48 685 P.2d at 277.
The Supreme Court held that the Company was not entitled to a surcharge. The
Court ruled that the Public Utilities Law has an intricate statutory scheme for obtaining monetary
relief from confiscatory Orders of the Commission. The majority of the Court observed that the
stay and bond procedures represent the exclusive remedy to preserve a utility s right to be
compensated for a confiscatory general rate order. Because Utah Power did not seek a stay and
post a bond, the lower Commission-approved rates set forth in the Order were final in all
respects so long as such Order continued in effect. Utah Power 107 Idaho at 49, 685 P.2d at
278. Had the Company obtained a stay of the Commission s Order and posted the necessary
bond, it would have been allowed to collect the higher proposed rates pending issuance of the
Court's opinion on appeal. In other words, if no stay is sought and the Order is later set aside by
the Court, the Commission cannot authorize a surcharge to collect the rate hike between the
issuance of the Order and the decision on appeal. Rates may only be set prospectively.
Issuance of a stay and posting a bond is the statutory mechanism for preserving a
disputed general rate increase issue on appeal. The majority of the Court explained that the
ORDER NO. 29143
Public Utilities Law (Title 61) only permits prospective relief, (i., no retroactive ratemaking),
and in the absence of a stay, the Commission is not authorized to "allow utilities to obtain a
(subsequentJ surcharge to make up past rate deficiencies.107 Idaho at 55, 685 P.2d at 284.
Posting a bond allows the utility to collect the disputed amount while the appeal is pending.
the appeal is successful, the bond is dissolved. If the Commission is affirmed, then the bond
amount is dispensed to ratepayers. Further, any order approving the stay and bond would also
require the Company "to keep such accounts verified by oath, as may in the judgment of the
commission suffice to show the amounts being charged or received by such public utility,
pending the review in excess of the charges allowed by the order or decision of the
commission(.J" Idaho Code 9 61-638. We now turn to the facts of this case.
B. This Case is Materially Different than the Utah Power Case
1. No Stay is Necessary in this Case. The Commission finds that there are several
important differences between the Utah Power case and the present matter. First, the lost
revenue case now on appeal is not a general rate case like that in Utah Power or those authorities
cited above. The disputed amount here is a finite one-time amount. Rates to recover this amount
are not long-term rates. Second, in this case Idaho Power is not seeking to collect the disputed
amount while the appeal is pending. Thus, ratepayers are not disadvantaged by paying higher
rates for recovery of the "lost revenue" while the appeal is pending. Even if the Commission
would have authorized the recovery of lost revenue, the rates for such recovery would not have
begun until May 1 , 2003 to coincide with the 200312004 PCA mechanism.
Third, and most importantly, the dispute here is over a deferred account that contains
a finite amount of dollars. In this case Idaho Power was required to record the direct costs paid
to irrigators over the five-month irrigation season and any calculated lost revenue in separate
purchased power subaccounts. Order No. 28699 at 12. The Commission provided for a deferral
mechanism for the accounting of costs and lost revenues (and resulting carrying charges) that
accrued through March 31 , 2002. Total costs were not determined until the end of the Program.
Once the costs were audited and verified, the Company proposed to recover the cost over a 12-
month period as part of the annual PCA mechanism. The Commission has typically allowed the
use of deferral accounts to accumulate costs for future examination when they are not yet known.
The amounts usually accrue over time and are "trued up" prior to collection. No such deferral
mechanism was established in the Utah Power case because it was a permanent rate increase not
ORDER NO. 29143
a short-term, annualized adjustment like the PCA. Furthermore, unlike the Utah Power decision
because of the deferred account Idaho Power seeks only to recover a finite amount during a
single year as opposed to a prospective, multi-year general rate increase. Based upon these
distinctions the Commission finds that issuance of a stay and bond is unnecessary in this case.
2. Accounting Order.Idaho Power has also requested that the Commission approve
the accounting methodology it has proposed in order to allow for the potential recovery of lost
revenues in the future. The Commission through Order Nos. 28992 and 29103 denied the
Company the recovery of lost revenues that may have resulted from the operation of the
Irrigation Buy-Back Program. Issuance of an accounting order in this matter is not necessary.
Generally Accepted Accounting Principles (GAAP) govern accounting entries that Idaho Power
is required to make in this instance. Since the accounting will follow GAAP and does not
require any extraordinary treatment, an accounting order is not required.
3. Carrying Charges We next address the issue of carrying charges. Idaho Power
states in its Motion that it does "not propose to accumulate any additional carrying charges
during the pendency of the appeal. . .Motion at 3.Based upon these assertions, the
Commission finds that there is no need for a stay because the Company does not seek to recover
carrying charges while the appeal is pending. The Company also states that it has ceased
applying any carrying charges to its lost revenue balance as of March 31 , 2002. Id. at 3.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Motion for a Stay of Order
Nos. 28992 and 29103 is denied because a stay is not necessary to preserve the amount in
dispute. Furthermore, a stay is not necessary because Idaho Power Company does not seek to
accumulate any additional carrying charges (after March 31 , 2002) during the pendency of the
appeal.
IT IS FURTHER ORDERED that Idaho Power s request that the Commission
approve its accounting methodology described in its Motion is denied because it is not necessary.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) 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. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 29143
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this Sf'"
day of November 2002.
JJ~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
f)
D. Jewell Co ission Secretary
O:IPCEO134 stay
ORDER NO. 29143