20031022Final Order No 29363.pdf

Office of the Secretary
Service Date
October 22, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY TO REVISE ITS
DEPRECIATION RATES FOR PLANT IN )SERVICE. CASE NO. IPC-O3- 7
ORDER NO. 29363
On October 9, 2003 , Idaho Power Company filed a Motion for Acceptance of
Settlement on behalf of itself, Commission Staff, and the Industrial Customers of Idaho Power
(ICIP), which are collectively referred to as "the Parties." The changes agreed to by the Parties
resulted in an overall reduction in the Company requested depreciation rate from
approximately 3.15% to 3.06%, or a reduction in the Company s annual requested increase in
depreciation expense from about $7.0 million to $4.3 million. After reviewing the record and the
provisions of the Stipulation, the Commission accepts the Stipulation as a fair, just and
reasonable resolution in this case.
PROCEDURAL BACKGROUND
Idaho Power is an electric utility engaged in the generation, transmission, distribution
and sale of electric energy and provides retail electric service to approximately 380 000
customers in southern Idaho and eastern Oregon. Idaho Power Company filed an Application on
May 6, 2003 requesting authority to revise its depreciation rates for the Company s electric plant
in service. Idaho Power s depreciation rates have not been significantly changed since the
Commission issued Order No. 24739 in 1993. Although the Company total annual
depreciation expense would increase by nearly $7 million under its proposal, the present
Application did not request a change in electric rates.
The proposed depreciation rates are based on the results of a detailed depreciation
study of Idaho Power s electric plant in service as of December 31 , 2001 that was conducted by
Gannett Fleming, Inc. Gannett Fleming identified and measured changes as well as
recommended depreciation rates. The most significant rate change is in the category of General
Plant, which Gannett Fleming recommends be increased from 5.52% to 11.24%. Gannett
Fleming s study also updates net salvage percents and service life estimates for all plant assets.
ORDER NO. 29363
Idaho Power s current depreciation rates have been applied to the investment in each
primary and subplant account. The proposed depreciation rates are based on the straight line
remaining life method, average service life procedure for all electric plant. A summary schedule
detailing the December 31 , 2001 original plant cost, depreciation accrual amount, and rate is set
forth in Attachment 1 to the Application.
Based on $2 900 657 420 of depreciable electric plant in service on December 31
2001 , Idaho Power s requested depreciation rate changes would increase its total annual
depreciation expense by $6 994 021. Idaho Power requested that its Application be processed
pursuant to the Commission s Rules of Procedure, i., by written submission rather than by
hearing. Commission Rules of Procedure, IDAPA 31.01.01.201-204. The Company also asked
that the Commission issue an Order approving the proposed depreciation rates effective
December 1 , 2003.
On June 3 , 2003 , the Commission issued a Notice of Application, Modified
Procedure, Public Workshop as well as Intervention and Comment Deadlines. The ICIP was the
only party who requested and was granted intervention in these proceedings. Order No. 29274.
The Parties met on multiple occasions to negotiate a settlement prior to filing this Settlement
Agreement. To allow additional time for resolution, the Commission extended the deadlines for
comment and reply comments from August 8 and 19 to August 29 and September 9
respectively. Order No. 29313. Prior to the filing of this Settlement, Staff filed comments on
August 29 2003 setting forth the same principles now embodied in this proposed Settlement.
PROPOSED SETTLEMENT
To settle the depreciation matters identified above, the Parties agree to reduce Idaho
Power s requested increase in depreciation expense from $6 994 021 to $4 310 591 per year
based upon 2001 plant levels, in accordance with the following:
1. Steam Production Plant (Accounts 311.00. 312.10. 312.20 and 314.00): The
Company will lower the salvage costs for the Jim Bridger Plant from a negative ten percent to a
negative five percent which coincides with the rates recently approved by the Commission for
PacifiCorp. Idaho Power and PacifiCorp are joint owners of the Bridger Plant. As illustrated in
Exhibit 1 to the Agreement, changes to Accounts 311., 312., 312.20 and 314.00 will reduce
the depreciation expense of the Company s steam production plant from $22 672 796 as
requested in its Application to $21 693 983 , or by $978 813 per year based on 2001 plant levels.
ORDER NO. 29363
2. Hydraulic Production Plant (Accounts 331.00. 332.1. 332.2 and 334.00): Idaho
Power will reduce the proposed depreciation expense of its hydraulic production plant from
$13,445 303 as proposed in its Application to $12 393 839 (based upon plant levels as of
December 31 , 2001) by adjusting the net salvage rate for accounts 331.00, 332., 332.2 and
334.00. These changes will result in an overall depreciation expense reduction of$1 051 464 per
year based on 2001 plant levels for the Company s hydraulic production plant as illustrated in
Exhibit 1. Idaho Power and Staff acknowledged that they do not agree on the weight that should
be given to the term of FERC operating licenses in setting depreciation expense. Idaho Power
and Staff agreed that this settlement does not constitute acquiescence on that issue by either
Party.
3. Transmission Plant (Accounts 354.00 and 355.00): The Company will reduce the
negative salvage rate of its towers and fixtures (Account 354.00) from a proposed negative
salvage rate of 50% to a negative salvage rate of 30%. Furthermore, the Company will adjust the
negative salvage rate of its poles and fixtures (Account 355.00) from a negative salvage rate of
75% to a negative salvage rate of 60%. The combined effect of these changes will reduce the
proposed depreciation expense of the Company s transmission plant from $10 717 860 to
$10 064 707 for a reduction of $656 153 in proposed depreciation expense based upon 2001
plant levels and as illustrated in Exhibit 1 to the Settlement.
4. General Plant (Accounts 391.20 and 391.21): The Parties agreed to divide the
two existing computer equipment plant sub accounts (391.200 and 391.210) into four
subaccounts. Equipment with a vintage prior to 2002 will be amortized at the rates proposed by
the Company in its original Application. Equipment with a vintage 2002 and thereafter will be
amortized at the straight-line rate for the agreed-upon service lives: 5 years for 391.200 and 6
years for 391.210. The actual implementation process for vintages prior to 2002, including rates
and/or retirements, shall be further determined during the general rate case that is expected to be
filed in October 2003.
5. The Parties agreed to the depreciation accruals originally proposed by the
Company in its Application for its distribution plant, its general plant (with the exception of
computer Accounts 391.200 and 391.210), and its other production plant categories as shown on
Exhibit 1 to the Settlement.
ORDER NO. 29363
The Parties agreed that the depreciation rates agreed to should become effective on
December 1 , 2003. According to the Motion for Acceptance of Settlement, all Parties to this
case are signatories to the Stipulation. Furthermore, the Parties agree that the Stipulation is in
the public interest and all the terms of the Stipulation are fair, just and reasonable. The Parties
request the Commission issue an Order accepting the Stipulation in settlement of all remaining
issues in this case. As a result, the Parties do not believe that an evidentiary hearing is required
according to Procedural Rule 274.
COMMISSION FINDINGS AND DISCUSSION
Pursuant to Commission Rule 274 we shall decide whether to accept the Stipulation
based on the record currently before us. IDAP A 31.01.01.274. This Stipulation is the result of
substantial negotiations and all parties that participated in those negotiations have signed it.
Accordingly, we find further proceedings are not necessary.
After reviewing the Stipulation and the Motion, the Commission adopts and approves
the Stipulation as presented. We find that this Stipulation appropriately resolves issues regarding
the proper depreciation accruals to be booked in Idaho Power s accounts going forward. We
further find that this Stipulation has been made to compromise contested claims and is entered
largely for the purpose of fairly resolving contested issues, avoiding expense, inconvenience, and
uncertainty of further litigation. Finally, pursuant to Commission Rule 275 and Idaho Code
61-505 we find that the Parties have carried their burden of showing that the Stipulation is just
fair and reasonable, in the public interest, and in accordance with the law and regulatory policy
of this State. IDAP A 31.01.01.275. Accordingly, we accept the Stipulation and depreciation
rates proposed by the Parties without modification. The depreciation rates and accruals adopted
by the Parties ' Stipulation and the Commission are detailed in the attachment to this Order.
ORDER
IT IS HEREBY ORDERED that the Parties' Motion for Acceptance of Settlement is
granted. The Commission adopts the depreciation rates contained in the Stipulation.
IT IS FURTHER ORDERED that the depreciation rates approved by this Order shall
become effective on December 1 , 2003.
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-O3- 7
may petition for reconsideration within twenty-one (21) days of the service date of this Order
ORDER NO. 29363
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this Case No. IPC-03-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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of October 2003.
~ENT
1f~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:IPCE0307 In3
ORDER NO. 29363
----:-
EXhIlOl.T 1
IDAHO POWER COMPANY
COMPARISON OF PROPOSED CALCUtATED ANNUAL DEPRECIATION ACCRUALS VS. PRESENT ANNUAL DEPReCIATION ACCRUALS
CALCULATED ANNUAL DEPRECIATION RATES AS OF DECEMBER 31, 2001
AVERAGE SERVICE LIFE PROCEDURE AND GENERAL PLANT AMORTIZATION
ACCOUNT
(1)
ORIGINAL
COST
(4)
SURVIVOR
CURVE
ORIGINAL
CDBT
(4)
Coo. No.IPC-E-43-41 .
CALCULATED ANNUAL
ACCRUAL ACCRUAL
AMOUNT RATE
(8p(1V(4)
NET
SALVAGE
PERCENT
(3)
DEPRECIABLE PLANT
STEAM PRODUCTION PLANT
NET
SALVAGE
PERCENT
Augual 4, 2003
COMPROMISE ANNUAL
ACCRUAL ACCRUALAMOUNT RATE
Augua' Ii, 2003
NET AS STIPULATED
SALVAGE ACCRUAL ACCRUAL
PERCENT AMOUNT RATE
DIFFERENCE
BETWEEN
CURRENT ANNUAL APPLICATION AND
. ACCRUAL ACCRUAL STIPULATEDAMOUNT RATE AMOUNTS
BOILER PLANT EQUIPMENT - RAILCARS
.. ii,)R~Q9~~E~t1?Ri.iikf~7D';'if;'!;,
!" .
ACCESSORY ELECTRIC eOUlPMENT
MISCELLANEOUS POWER PLANT EQUIPMENT
MISCELLANEOUS POWER PLANT EQUIPMENT
MISCELLANEOUS POWER PLANT EQUIPMENT
MISCELLANEOUS POWER PLANT EQuiPMENT
MISCELLANEOUS POWER PLANT EQUIPMENT
116.372.94
w:JiO.;~IHi:~ '
61,461196.
224.247.74
215.428.
11,334.
21.491.
131.591.02
25-R3
::"
~6if'W'
65-81.5 .
45-RO.5 .
11.S2.
14.LO.
116.372.94
iw;~;jijJ9ii;8i;
461 196.
10.224.241.
215.428.
11.334.
21.491.
131.591.
113,419"'3:~t~:~!'
329 069
321042
335
618
142
22,812,186TOTAL STEAM PRODUCTION PLANT 155778.081.155 778,081.
HYDRAULIC PRODUCTION PLANT
JiJ;
Y71;115'
113.419'Y""3:8Qt!~""
329.069
321.042
335
618
142
646
22,112,186 893 983 918 81323,201,828
:i33,OO WATER WHEELS, TURBINES AND GENERATORS 161 422 864.16 .60-R3 181 422.864.16 (5) 3.324 062 1.83 (5). 3,324.062 . 1.83 (5) 3 324 062 1.83 2.813.896 1.43
. .
~~:!iIt: i f.i::p g~~q~ g ~gcTRIj:,j; QQ!rM:gNt i~~l)(;:ff!iiff'
. \"
::'4Xie~ :~:1 ~ ~' :;1i'Y!'4 r~ j\~ ':1; ~lii) Mi~ji:j jiA: ~X'
~:;::'
I ~fh'fH:r ;: ( ;~:~ti):;f!\\t"'J.0:+': 4 'QijV)! :of' \'1) ;:i~:;;;-\; :IW\: ~~Jif,Qiji .imfiif!;: ""'1. ~J:iD';::;\qN')!Xi:W*!\'(\ 9~ j 11 i1!!\Y %:;1)\\\:18';' : ~:~J!8W: ; ~5 :!\Q!13~Ul$!:J'!':;j:~ *,;\~!" i; Xl F"" ~1 a..;;
335,00 MISCELLANEOUSPOWERPLANTEQUIPMENT 13.568.424.13 100-50' 13.588.424.13 0 249 810 '64 0 249.810 1.64 249.610 1.64 213.850 1.41
338.00 ROADS. RAILROADS AND BRIDGES 933.691.15-R3 933.691.~ 1.95 134.913 95 134.913 95 106.093 1.16
805 84&,412.805840,412.13.445 303
852.649.Squa,e 852.649.206
631.916.Squa,e 631.916.46.318
141,458.Squaru 141.458.21.518
40.888.665.Squaru 40.888.885.161.418
193,280.Squaru 193 260.33.283
419.086.Squa,e 419.086.
118,318.119.318.356.492
TOTAL HYDRAULIC PRODUCTION PLANT
QItlER PRODUCTION PLANT
341.00 STRUCTURES AND IMPROVEMENTS
342.00 FUEL HOLDERS
343.00 PRIME MOVERS
344.00 GENERATORS
345.00 ACCESSORY ELECTRIC EQUIPMENT
348.00 MISCELLANEOUS POWER PLANT EQUIPMENT
TOTAL OTHER PRODUCTION PLANT
TRANSMISSION PLANT
12.182 108 12.393.839 12,032,210 051
2,64 206 23.180
318 65.332
21.518 20.604
181 418 115.164
2.19 33.283 31.888
69.631 . 2.66.640
1.356 (92 322,808
'24.206
318
21.516
181,418
33.283
69,631
1.356.492
0 191 014 1.54 114091 1.45
(20) 352.556 1.29 144.515 3.23 (5) 3.906.396 2.12 4.281.489 2.43
~Ni~~I1~~lifl~'~1\~~'! ~j~~jiiyt ~ :1~~;J~!9'~I~~4~~~11~i \(20) 1.895.456 1.96 1 109 801 . 1.85 0 3.399 1.01 4.854 1.52
350.20 LAND RIGHTS AND EASEMENTS
352.00 STRUCTURES AND IMPROVEMENTS
353.00 STATION EQUIPMENT
::~:~1i: IW: ~g mJi~~~~~~il~~iti!l~~W~*li~Wjw;
;;!
356.00 OVERHEAD CONDUCTORS AND OEVICES
359.00 ROADS AND TRAILS
TOTAL TRANSMISSION PLANT 10,111 880451,252,115.30 451,252,115.
361.STRUCTURES AND IMPROVEMENTS 13.306.914.55-R2.13,306.914.(~O)212.231
362.STATION EQUIPMENT 102.110891.ro.Dl 102.110.891.39 819,401
384.POLES, TOWERS AND FIXTURES 166,092.812.41-R1.166.092,812.(50)090.818
365.OVERHEAD CONDUCTORS AND DEVICES 88.633.411.48-R2 88.833,411.(30)811.831
388.UNDERGROUND CONDUIT 582.649.28.582.949.(25)582.854
361.UNDERGROUND CONDUCTORS AND DEVICES 119.013666.31-51.119.013.666.(10)256.624
388.LINE TRANSFORMERS 248.883.110.35-R2 248.883,110.300.852
369.SERVICES 42.822.542.30-52 42.622542.(30)511.829
310.METERS 136.193.30-L2 31.136.193.530,909
311.PHOTOVOLTAIC INSTALLATIONS 359.311.8-55 359.311.102 116
311.INSTALLATION ON CUSTOMER PREMISES 128825.11-RO.126.825.(20)204.641
313.STREET LIGHTING AND SIGNAL SYSTEMS 818.644.20-R1 818.644:04 (20)
. TOTAL DISTRIBUTION PLANT 851001,T38.851.001,138.22,623.218
GEN"RAL PLANT
390.STRUCTURES AND IMPROVEMENTS - CHQ I!UnlUNG 24.025."61.100-S1.025161.(5)544.111
390.STRUCTURES AND IMPROVEMENTS - EXCL. CHQ BLOG 28.402,830.50-R3 402.836.(5)513.315
390.LEASEHOLD IMPROVEMENTS 909,141.25-S3 909,141.221423
391.OFFICE FURNITURE & EQUIPMENT - FURNITURE 10.620,649.20-5Q 10.820649.028.288
391.OFFICE FURNITURE & EQUIPMENT - EDP EQUIP.32,450.421.5-8Q 32,450.~21.11.189.362
391.21 OFFICE FURNITURE & EQUIPMENT - EDP EQUIP.040,091.8-55 O40O9UI 931 348
392.TRANSPORTATION EQUIPMENT - AUTOMOBILES 188.319.188.319.320
392.TRANSPORTATION EQUIPMENT - SMALL TRUCKS 12.968.421.9-L3 12.968.421.441 995
392.TRANSPORTATION EQUIPMENT - '-4ISC.240.910.240.910.
392.TRANSPORTATION EQUIPMENT - LARGE TRUCKS (HYO)11.831.896.11-52.11,831.896.641 956
392.TRANSPORTATION EQUIP. - LARGE TRUCKS (NON.HYD)112,154.30 ' 11-52.112.154.135.122
392.TRANSPORTATION EOUIPMENT - TRAILERS 165.626.30-51 185.826.53.401
393.STORES EQUIPMENT 881.154.25-SQ 881 154.89.588
394.TOOLS, SHOP AND GARAGE EClUIP~ENT 443.151.20-S9 443.151.2~.266'
395.LABORATORY EQUIPMENT 699.229.20-SQ 899.229.560,169
396.POWER OPERATED EQUIPMENT 224 213.14-LO.224.213.435.313
391.COMMUNICATION EQUIPMENT - TELEPHONES 6,489.836.15-SQ 489.836.151.085
391.. COMMUNICATION EQUIPMENT - MICROWAVES 968 939.15-SQ 968.939.8116,442
391.COMMUNICATION EQUIPMENT - RADIO 121.433.15-8Q 121.433.312435
391.COMMUNICATION EQUIPt'ENT - FIBER OPTIC 181 131.10-5Q 161.131.83 125,343
398.MISCELLANEOUS EQUIPMENT 864.815.15-8Q 864.815.
TOTAL GENERAL PLANT 183;081,889.183,081,889.20.518,778
TOTAL DEPRECIABLE PLANT 2,900,851.420.900.851420.
NONDEPRECIABLE PLANT
330.LAND 13.935.123.13.935.12UI
340.LAND 213,191.213.191.
LAND 3,431 393.431.393.
389.LAND 150,595.150595.
TOTAL NONDEPRECIABLE PLANT 28.331 503.28.331.503.
TOTAL ELECTRIC PLANT 928 994,923.928,994.923.
STIPULATION.
10.223 119 10,084 101 955 185
(20)212.231 (20)212.231 351.080 ' 2.
619.401 819.401 405.019
(50)090.816 (50)090 816 445.159
(30)811.631 (30)811 631 11~,193
(25)582.854 (25)582 854 543.151
(10)256,824 (10)256.624 2.13 812.996
300.852 300.852 831 216
(30)511,629 (30)511 829 981 810
530.909 530.909 084,051
28.102.116 28.42 102.118 ' 28.25.311
11.(20)204.641 11.(20)204.641 11.134.154 ni9
(20)-219.509 (20)219,509 118.225
623,27'22.623219 105 150
(5)544,111 (5)544.177 406.961
(5)513.315 (5)513,315 511 605
221.423 221423 242.
028.266 026.268 505.535
34.189.362 34.1';189.362 34.590.992 12.
31.931.348 31.931.348 31.818.481 12.
320 .25 320 19.855 10.
441.995 3.45 :1,1;441.995 389.063 11.
33,199 12.
641.956 641.956 828,503
135.122 135 122 153.993
53.401 53.401 116,188
89.588 69.568 30.218
288,266 288.268 150 663
568.189 568.169 315 431
35'435.313 435,313 177 591
11.151.085 11.151 085 11.259.339 4.48
896.442 896.442 354.509
312.435 312.435 145.121
18.45
. - ~
125.343 16.125.343 16.521
158,450 158,450 111.325
20,518.778 20,518,778 10,114084
90.215,230 88.1011,018 84,398,485
853,153
883,430
DIFFERENCE
BETWEEN
STIPULATED AMOUNTS
ANDCtJRRENT
ACCRUAL
145
(485.386)
(551 556)
(122.081)
(46.454)
311 586
(521.805)
(103.601)
(19 540)
156)
(344)
355
513.845'
628.383
12.842
116842)
(54.181)
510366
316.101
35.820
28.880
381 569
026
(18,954)
B12
46.294
415
991
33,884
22.911
(392 019)
(355.013)
458.641
190.210
185 655
(1,455)
108.942
(18 843)
(125.618)
645,111
891,438
39.091
. (616.312)
330423)
(410,241)
446 B58
16.805
481
43.264
(5.142,471)
143:216
11C
(15.354)
52~.133
598 310
312.881
(16 535)
(941 068)
(33.199)
453
(18,811)
(62 191)
39,310
135.803
192.138
251.116
491.146
541 933
166.114
81.822
125
10,482 112
310,581