20040126Order No 29422.pdf

Office of the Secretary
Service Date
January 26, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY FOR THE RATEBASING OF
THE BENNETT MOUNTAIN POWER PLANT.
CASE NO. IPC-O3-
ORDER NO. 29422
On January 2 2004, the Commission issued Order No. 29410 approving Idaho Power
Company s Application for a Certificate of Public Convenience and Necessity to construct the
Bennett Mountain Power Plant. In response to the Company s request to rate base the capital
costs of the plant, the Commission found that "in the ordinary course of events, Idaho Power
may anticipate ratebasing $44.6 million....Order No. 29410 at 11. The Commission also
found that "it is reasonable to allow the Company to recover its fuel costs through the PCA
mechanism.Id. at 13.
On January 12, 2004, Idaho Power filed a Petition for Clarification Of, in the
alternative, Reconsideration concerning Order No. 29410. In particular, Idaho Power seeks
clarification regarding the Commission s ruling that the Company "may" recover its reasonable
and prudent costs. No cross-petitions or other Petitions for Reconsideration were filed. As set
out below, we clarify Order No. 29410.
THE COMPANY'S PETITION
In its Petition, Idaho Power seeks clarification of two ordering paragraphs. More
specifically, the Company seeks clarification of the Commission s use of the word "may" in the
following ordering paragraphs.
IT IS FURTHER ORDERED that in the ordinary course of events Idaho
Power may recover the reasonable and prudent costs of the Bennett Mountain
project. Capital costs in excess of $44.6 million will be reviewed in a
subsequent case after the plant has been constructed. Capital costs (excluding
transmission interconnection and legally required equipment changes) in
excess of the Commitment Estimate cap of $54.0 million will not be eligible
for inclusion in the Company s rate base.
IT IS FURTHER ORDERED that the Company s reasonable and prudent
fuel costs for the Bennett Mountain plant may be recovered through the PCA
ORDER NO. 29422
mechanism. Idaho Power s risk management policies and fuel procurement
strategies will be evaluated when PCA costs are reviewed.
Petition at 2, quoting Order No. 29410 at 16 (emphasis added).
Idaho Power explains that it seeks clarification based upon its experiences arising
from the Irrigation Buy-back appeal. Supreme Court Docket No. 29016. The Company
concerned that use of the word "may" could be construed as allowing a subsequent challenge to
the ratebasing of capital costs once Bennett Mountain is used and useful. Although "Idaho
Power has no desire to re-litigate" the pending appeal, it would be remiss if it did not obtain "
clear understanding of the Commission s intent expressed in Order No. 29410 today rather than
two years from now" when the Company seeks recovery of its costs. Petition at 3.
Idaho Power suggests the Commission could clarify its Order No. 29410 in two ways.
First, the Commission could confirm that the word "may" has the same construction as the
Commission s language in Order No. 25021 where it approved the upgrade of the Twin Falls
hydroelectric plant. Order No. 25021 states that "in the ordinary course of events, the Company
may expect its investment in the Twin Falls project to be recognized in its revenue requirement
barring unforeseen circumstances...." On appeal, the Idaho Supreme Court confirmed that the
Commission s above-quoted language recognizes that barring unforeseen circumstances, Idaho
Power would be allowed to recover its prudently incurred investment in the Twin Falls upgrade.
Rosebud Enterprises v. Idaho Public Utilities Commission 128 Idaho 633 , 635, 1971 P.2d 790
792 (1996).
In the alternative, Idaho Power suggests that the Commission could clarify the two
paragraphs in Order No. 29410 by replacing the word "may" with the phrases "can expect to
and "can expect its " respectively. Petition at 8. Idaho Power insisted that a clarification by
either method would be sufficient. !d.
D ISCUSSI
Having reviewed our prior Order No. 29410 and the Company s Petition, we clarify
our prior Order. As set out above, Idaho Power has focused on the two "ordering" paragraphs at
the end of the Order. As the Company observed in its Petition, our Supreme Court has
recognized that similar language in the Twin Falls Order was construed to mean that Idaho
Power can expect to recover its prudently incurred investment in the Twin Falls plant barring
unforeseen circumstances. Rosebud 128 Idaho at 635 917 P.2d at 792.
ORDER NO. 29422
In the body of our Order No. 29410, the Commission made specific findings
regarding the Company s ability to recover its costs. In particular, the Commission found that in
the ordinary course of events Idaho Power can anticipate ratebasing $44.60 million. Reasonable
and prudent costs incurred above that figure up to the Commitment Estimate of $54.0 million
will be reviewed in a subsequent proceeding. Order No. 29410 at 11-, 16. Turning to the
Commission s findings regarding fuel costs, our Order states that "we find it is reasonable to
allow the Company to recover its fuel costs through the PCA mechanism. In Order No. 28799
we allowed recovery of fuel costs for the Danskin Plant.... We find that similar treatment here is
reasonable." Order No. 29410 at 13.
In summary, we clarify that in the ordinary course of events, Idaho Power can expect
to ratebase prudent Bennett Mountain capital costs and recover prudent fuel costs in the PCA
mechanism.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Petition for Clarification is
granted. Having clarified our Order No. 29410, there is no need for the Commission to address
the reconsideration alternative.
THIS IS A FINAL ORDER. Any party aggrieved by this Order or other final or
interlocutory Orders previously issued in this Case No. IPC-03-12 may appeal to the Supreme
Court of Idaho pursuant to the Public Utilities Law and the Idaho Appellate Rules. See !daho
Code 9 61-627.
ORDER NO. 29422
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
,..J.
day of January 2004.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
a D. well
Commission Secretary
bls/O:IPCE0312 dh5
ORDER NO. 29422