20040422Notice of Application Order No 29478.pdf

Office of the Secretary
Service Date
April 22, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO IMPLEMENT POWER COST ADJUSTMENT
(PCA) RATES FOR ELECTRIC SERVICE FROM
MAY 16, 2004 THROUGH MAY 31, 2005.
CASE NO. IPC-04-
NOTICE OF APPLICATION
NOTICE OF MODIFIED
PROCEDURE
ORDER NO. 29478
On April 15, 2004, Idaho Power Company filed an Application for authority to
implement its annual power cost adjustment (PCA) rates. Since 1993 the PCA mechanism has
permitted Idaho Power to adjust its rates upward or downward to reflect the Company s annual
power supply costs." Because of its predominant reliance on hydroelectric generation, Idaho
Power s actual cost of providing electricity (its power supply costs) varies from year-to-year
depending on changes in Snake River streamflow and the market price of power. The annual
PCA surcharge or credit is combined with the Company s "base rates"! to produce a customer
overall energy rate.
Idaho Power s PCA Application contains two recommendations. First, the Company
requests that the existing PCA rates that are scheduled to expire on May 16, 2004 be extended
until May 31 , 2004. Second, the Company is proposing to continue the current PCA rates for the
2004-2005 PCA year except for anticipated decreases in PCA rates for Schedule 7 (small general
service), Schedule 19 (large power service), and Schedule 24 (irrigation service) customers.
In this Order the Commission decides to process this Application under Modified
Procedure and establishes a schedule for written comments. In addition, the Commission shall
suspend the expiration of the current PCA rates on May 16 and continue these rates until
May 31 2004.
1 Base rates are authorized by the Commission in a general rate case. The Commission expects to establish new
base rates effective June 1 2004, as a result of the Company s current general rate case, No. IPC-03-13.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478
THE PCA MECHANISM
The annual PCA mechanism is comprised of two major components. First, PCA rates
are adjusted to compensate for the forecast in Snake River streamflows and storage. In years of
abundance of streamflows with correspondingly plentiful, relatively inexpensive hydro-
generation, the Company s power supply costs are usually lower. Conversely, when streamflows
or snow packs are low, Idaho Power must rely increasingly upon its other thermal generating
resources and purchased power in the regional market. The Company s other thermal generating
resources (coal and gas plants) and purchased power, are typically more costly than the
Company s hydro-generation. Under the PCA mechanism, the Company may recover 90% of
the difference between the proj ected power costs and the approved base power costs. Order
No. 25880.
Second, because the PCA includes forecasted costs, the preceding year s forecasted
costs are "trued-up" to account for actual costs. Thus, under the PCA mechanism ratepayers
receive a credit when power costs are low, but are assessed a surcharge when power costs are
high.
RECENT CHANGES TO THE PCA MECHANISM
Last year the Commission issued Order No. 29334 that implemented several changes
to the PCA methodology. These changes are effective with the 2004-2005 PCA year. Briefly,
the Commission implemented three modifications to the PCA mechanism. First, the initial PCA
methodology used "normalized" power (measured in kilowatt hours (kWh)) sales from 1993 as
the denominator to computing the true-up. Commensurate with this PCA Application, Idaho
Power will calculate its total Idaho jurisdictional kWh sales made during the ensuing PCA year
rather than using a sales figure from 1993. In essence, using normalized sales data will eliminate
the under-collection, over-collection, under-refunding, and over-refunding by "truing up the true-
up." Order No. 29334 at 4. Consequently, ratepayers will pay for the actual amount of power
sold by Idaho Power to meet native load requirements - no more or no less.
Second, because payments of the prior true-up amounts for their rate schedules were
deferred over a two-year period, customers receiving service under Schedule 7 (small
commercial), Schedule 19 (industrial), and Schedule 24 (irrigation) had additional class-specific
rate elements. Customers taking service from these three schedules have completed deferral
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478
payments and will return to the overall PCA adjustment during this 2004-2005 PCA year. Order
No. 29334 at 5. Third, the prior PCA methodology did not allow computation of carrying
charges during the true-up collection or true-up refund period. Beginning with this PCA
Application, the Commission found that it was reasonable to include a carrying charge on the
unamortized balance dUring true-up collections and refunds. The carrying charge will be the
same interest rate the Commission annually determines to be appropriate for the true-up deferral
balance accumulation. Id. at 5-
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that this year s PCA Application includes the
forecasted costs based on water condition; a true-up of last year s forecasted costs to reflect
actual costs; and the true-up of the 2002-2003 PCA year true-up (the true-up of the true-up).
This year s water forecast for April through July inflows at Brownlee Reservoir is 3.13 million
acre feet (mat). The 30-year average inflows at Brownlee are 6.3 maf. In other words, this
year s water forecast is roughly 50% below the 30-year average. Based upon the projected water
flow and replacement power costs, the Company calculates that the projected power supply costs
are $129 823 425 for the 2004-2005 PCA year. The projected power costs equal 1.0092~ per
kWh. The 1.0092~ per kWh estimation for projected power cost is 0.2777~ per KW higher than
the Commission s approved base ofO.7315~ per kWh. Consequently, the Company is proposing
to collect 0.2499~ per kWh (90% ofO.2777~).
The difference between last year s forecast costs and actual costs (the true-up) is
estimated by the Company to be 0.3661~ per kWh. Finally, the third PCA rate element is the
new "true-up of the true-up." Last year the Company collected all but $556 693 of the deferral
balance. Dividing this amount by the 2003 Idaho jurisdictional sales of approximately
096 872 MWh results in a PCA true-up of the true-up rate element of 0.0046~ per kWh.
. Combining the projected power costs of 0.2499~, the true-up component of 0.3661 ~ and the true-
up of the true-up of 0.0046~, results in a PCA rate for the 2004-2005 PCA year of 0.6206~ per
kWh. This represents an increase of 0.0167~ above the existing PCA rate of 0.6039~ per kWh.
YOU ARE FURTHER NOTIFIED that last year s PCA completed recovery of
deferred PCA rates for three customer classes. Completion of the deferral recovery means that
their PCA rates should decrease. The three customer classes and their respective PCA proposed
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478
reductions are: Schedule 7 (small commercial) - a reduction of 0.0189~ per kWh; Schedule 19
(industrial) - a reduction of 0.0222~ per kWh; and Schedule 24 (irrigation) - a reduction of
0811~ per kWh.
YOU ARE FURTHER NOTIFIED that based upon the Company s calculations, the
2004-2005 PCA rate would result in a slight increase (0.0167~) in the PCA rate for all classes
except Schedules 7, 19, and 24. Because the Company anticipates that its general rate case will
result in an increase in the Company s base rates, Idaho Power requested "that the Commission
keep the overall PCA rate at the same level as last year (0.6039~ per kWh).Application at 5.
Idaho Power is proposing this "unique rate treatment" to avoid having both its base rates and
PCA rates increase in 2004.
YOU ARE FURTHER NOTIFIED that the Company is also proposing that the
current PCA rate scheduled to expire on May 16, 2004, be extended until May 31 , 2004. This
will allow most PCA rates to remain the same and the proposed decreases for Schedule 7, 19
and 24 customers will serve to "off-set" the Company s anticipated increase in base rates for
these classes.
In summary, the Table below shows the Company s proposed PCA rates:
Current Proposed Overall Energy Rate Overall Energy Rate Overall %
Customer Grou PCA PCA with Current PCA with Pro osed PCA Decrease
Residential (1)6039 6039 778 778
Small Commercial (7)8447 5850 179 916 66%
Large Commercial (9)6039 6039 176 176
Industrial (19)8217 5817 604 364 66%
Irrigation (24)1.3159 5228 035 4.242 15.75%
. All prices shown in cents per kWh. The "Overall Energy Rate" is the current effective energy rate including both
the base rate and PCA rate. As indicated in the text, the Company anticipates that the base rate will increase as a
result of the current general rate case.
COMMISSION FINDINGS
As explained above, Idaho Power proposes to continue the current PCA rates set to
expire on May 16, 2004 until May 31 , 2004. Continuing the PCA rates until May 31 will avoid
the possibility of having two rate adjustments (the PCA and base rates) in a two-week period.
Commission Staff agreed with this request. Based upon our review of the Application, we find
NOTICE OF APPLICATION
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ORDER NO. 29478
that it is reasonable to continue the current PCA rates until May 31 , 2004. We further find that
continuing the existing rates will allow time for us to consider public comments concerning the
Company s request to continue the existing PCA rates for the entire 2004-2005 PCA year.
Customers will not be disadvantaged by continuation of the current rates because the Company
had calculated that the PCA rates should increase except for the three customer classes.
Accordingly, we shall grant the Company s request to continue the existing PCA rates until
May 31 , 2004.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has preliminarily determined
that the public interest may not require a formal hearing in this matter and will proceed under
Modified Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities
Commission s Rules of Procedure IDAPA 31.01.01.201 through .204. In doing so, the
Commission notes that Modified Procedure and written comment have proven to be an effective
means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that the Commission does not intend to hold a
hearing in this proceeding unless it receives written protests or comments opposing the use of
Modified Procedure. Persons desiring a hearing must specifically request a hearing in their
written comments and state why Modified Procedure is inappropriate in this case.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may fIJ.e a written comment in support or opposition with the Commission no
later than May 14. 2004 The comment must contain a statement of reasons supporting the
comment. Written comments concerning this application shall be mailed to the Commission and
the Applicant at the addresses reflected below:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
Street Address for Express Mail:
BARTON L KLINE, SENIOR ATTORNEY
. MONICA MOEN, ATTORNEY II
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-mail: bkline(~jdahopower.com
E-mail: . mmoen~idahopower.com
472 WWASHINGTON ST
BOISE, ID 83702-5983 GREGORY W. SAID
IDAHO POWER COMPANY
PO BOX .
BOISE ID 83707-0070
E-mail: gsaid~idaho?ower.com
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478
All submitted comments should contain the case caption and case number shown on
the first page of this document. Persons desiring to submit comments via e-mail may do so by
accessing the Commission s home page located at www.puc.state.id.. Click the "Comments
and Questions" icon, and complete the comment form, using the case number as it appears on the
front of this document. These comments must also be sent to the Applicant at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that Idaho Power Company shall have until
May 17, 2004, to file a written response to any comments, if it so desires.
YOU ARE FURTHER NOTIFIED that Idaho Power s PCA Application together
with the Company s prefiled testimony and exhibits of Gregory Said can be reviewed at the
Commission s office and at the principal office of Idaho Power during regular business hours.
Idaho Power Company is located at 1221 West Idaho Street in Boise, Idaho ([phone]).
Idaho Power s Application, prefiled testimonies and exhibits are also available on the
Commission s website at www.puc.state.id.under the "File Room" icon.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code ~~ 61-307 and 61-503. The Commission may enter any final Order consistent with
its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons wishing to file comments must do so no later than May 14, 2004.
IT IS FURTHER ORDERED that Idaho Power s request to continue the current PCA
rates is granted. The rates contained in the currently approved Schedule 55 shall remain in effect
until May 31 , 2004.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this :Q.."'-'
day of April 2004.
ARSHA H. SMITH, COMMISSIONER
ATTEST:
~ll
Commission Secretary
vld/O:IPCE0409 dh
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29478