20051101final order no 29868.pdf

Office of the Secretary
Service Date
October 31, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
CON CERNIN G ISSUES RELATED TO ID AH
POWER COMPANY'S COST OF SERVICE STUDY. CASE NO. IPC-O4-
ORDER NO. 29868
In May 2004 the Commission issued final Order No. 29505 concluding Idaho Power
Company s 2004 general rate case. In that Order the Commission noted that several parties
raised legitimate questions regarding Idaho Power s cost of service methodology. On its own
Motion, the Commission opened a new docket for the purpose of informally evaluating the cost
of service issues raised in the general rate case. The Commission directed Staff and interested
parties to evaluate three issues including:
(1) how best to determine and weight monthly generation and transmission
allocators; (2) how to most accurately capture coincidental peak demand
responsibility; and (3) whether new growth is properly covering its cost of
servIce.
Order No. 29505 at 47.The Commission advised the parties that it expected consensus
recommendations and directed the parties to submit recommendations regarding any needed
changes. Id. The Commission directed the parties to submit a final report to the Commission.
THE FINAL REPORT
On June 29, 2005 , the Staff (on behalf of the parties) submitted a Final Report to the
Commission. The Final Report outlined the issues examined by the parties and listed those cost
of service issues where the parties reached consensus. Parties participating in the proceeding
included: the Commission Staff, Micron, Idaho Power, the Industrial Customers of Idaho Power
the Idaho Irrigation Pumpers Association ("the Irrigators ), U.S. Department of Energy, Victory
Family Heritage, and Energy Strategies Group.
A. Unresolved Issues
The parties held three public workshops. The parties discussed a wide range of
issues that included detailed presentations by the Irrigators, Idaho Power and Pike Teinert. The
parties discussed but could not reach consensus on a number of issues including: (1) allocating
underground distribution plant to customer classes other than the irrigation classes (Schedule
ORDER NO. 29868
or 24); (2) cost of service weighting factors for generation and transmission; (3) allocating the
growth in distribution plant to specific customer classes; (4) allocating peak demand
responsibility to specific customer classes; and (5) a methodology that would properly allocate
the cost of growth, without making a distinction between new and old customers. Regarding the
last issue, the parties were unable to devise a technical remedy that would also satisfy the
Supreme Court opinions in Building Contractors Association of Southwest Idaho v. Idaho P UC,
128 Idaho 534, 916 P.2d 1259 (1996) and Idaho State Homebuilders v. Washington Water
Power 107 Idaho 415 690 P.2d 350 (1984). Final Report at
B. Consensus Issues
The parties were able to reach consensus or near consensus (all except one party) on
a number of issues. These issues are explained in greater detail below.
1. Line Extension Rules . With the exception of one participant, the parties agreed
that Idaho Power s line extension rule should require new customers to pay the full incremental
cost of new distribution plant. The parties agreed that the existing line extension rules are
intended and designed to recover the full incremental costs. Consequently, the parties (with one
exception) concluded that changes to the Company s line extension rules are not needed.
2. Load Research Data. The parties did agree that Idaho Power should provide
customer load research data in computer-readable file. This would enable other parties to review
the development of the coincidental peak demand responsibility factors and to propose
alternative methods utilizing the same base data. Such data would be available in the Company
next general rate case.
3. Monthly Energy Data. The parties next reached consensus that Idaho Power
should implement a more sophisticated nonlinear method of converting "billing month" energy
data to "calendar month" energy data. This new method would capture the effects of weather on
energy consumption by using actual load research data to develop daily usage pattern rather than
simply using linear interpolations to spread billed energy evenly across each billing cycle. This
new method will improve the process of determining the coincidental peak demand
responsibility.
4. Normalizing Demand Finally, based upon the Irrigators' proposal , the parties
agreed that Idaho Power will prepare a surrogate for a demand normalization method in addition
to its traditional method for determination of coincident peak demand responsibility in its next
ORDER NO. 29868
general rate case. The "normalization" surrogate would be the five-year median demand ratios
from load research samples applied to normalized monthly class energy values.
INTER VEN 0 R FUND IN G
On July 11 , 2005 , the Irrigators filed a Petition for Intervenor Funding. The
Irrigators seek intervenor funding in the amount of $29,499.89 generally broken into legal and
consulting expenses. As indicated in their Exhibit A, the Irrigators seek attorney fees in the
amount of $3 955 representing 22.6 hours at $175, and reimbursement for long-distance phone
charges and travel expenses totaling approximately $226. The Irrigators also request funding for
their consultant, Tony Yankel, in the amount of $24 000 representing 192 hours of work at
$ 125/hour. His expenses and per diem to attend the workshops totaled $1 318.85. Idaho Power
did not file an objection to the Irrigators' request.
Requests for intervenor funding are governed by Idaho Code 9 61-617 A and the
Commission s procedural Rules 161-165 , IDAPA 31.01.01.161-165. Idaho Code 961-617A(1)
states that it is the policy of this state "to encourage participation at all stages of all proceedings
before the commission so that affected customers receive full and fair representation in those
proceedings." To advance this goal, the Commission may order certain regulated utilities to pay
all or a portion of one or more intervening parties' legal fees , witness fees and reproduction costs
not to exceed a total of $40 000. Idaho Code 9 61-617 A(2).
The Commission s Rule 165 provides the criteria that the Commission uses to
evaluate petitions for intervenor funding. The criteria and the Irrigators' assertions are set out in
greater detail below.
1. Materially Contributed to the Decision The Irrigators maintain that their attorney
and consultant fully participated in the three workshops and advanced various positions (set out
above) during the workshops. More specifically, the Irrigators made three Power Point
presentations in support of their positions. The Irrigators also took positions that resulted in
consensus agreements by the parties.
2. Reasonableness of Costs. The Irrigators state that their expenses and costs
incurred by their attorney and expert "are reasonable in amount and were necessarily incurred in
reviewing and evaluating the data" in the workshops. Petition at 2. In particular, the Irrigators
maintain they reviewed 23 years ofFERC Form 1 data to evaluate the impact of temperature and
demand in normalizing cost of service results. Id. at 2. The Irrigators also worked with the Staff
ORDER NO. 29868
and the Company to develop reasonable proposals regarding cost of service data in future rate
cases.
3. Financial Hardship The Irrigators assert that having to incur intervention
expenses without reimbursement poses a financial hardship for them. The Irrigators state that
their current bank balance is approximately $12,400. Petition at 2. In other words, the
approximate $29 500 in expenses would work a financial hardship upon the Irrigators if the
Commission were to not grant them intervenor funding. The Irrigators also assert they are an
Idaho non-profit corporation relying solely on dues and voluntary contributions paid by
members. The Irrigators maintain that their members are experiencing a depressed agricultural
economy and awards of intervenor funding in cases like this sustain the group s participation in
Commission proceedings. The Irrigators ' part-time executive director is the only paid employee.
Petition at 3.
4. Advocating Material Differences from the Staff.The Irrigators maintain that
demonstrating they took positions different from the Staff is difficult in workshop settings.
However, the Irrigators point out that they took a leading role in addressing two of three issues
identified by the Commission. "The Irrigators were the only party to develop and present
extensive information regarding growth rates and costs over the past 23 years.Id.
5. Issues Addressed Finally, the last criteria requires that the intervenor address
Issues of concern to the general body of customers or to a particular customer class. The
Irrigators claim that they advocated several issues including: the need for normalized demand
data; the need to adjust billing-cycle energy data to recognize temperature changes; and several
growth issues. The Irrigators maintain that these issues impact all classes of customers. Petition
at 4.
In summary, the Irrigators maintain that their request for $29 499.89 in intervenor
funding is reasonable and justified under the criteria of Idaho Code 9 61-617 A.
DISCUSSION AND FINDINGS
The Commission appreciates the efforts of the participants in examInIng Idaho
Power s cost of service study. As indicated in the Final Report, the parties discussed a wide
range of issues relating to cost of service. They were able to reach consensus on some issues and
not reach consensus on other issues. Turning to those issues where the parties reached
consensus, we direct Idaho Power to implement the consensus decisions. In particular, Idaho
ORDER NO. 29868
Power shall provide customer load research in computer-readable files. Such data shall be made
available to parties in the next general rate case.
We also direct Idaho Power to create a more sophisticated non-linear method of
converting "billing month" energy data to "calendar month" energy data. This information will
be used to develop daily usage patterns rather than simply averaging data across billing cycles.
Finally, we direct Idaho Power to prepare a surrogate for normalizing demand based upon five-
year median demand ratios. This surrogate should be available to parties in the next general rate
case.
We now turn to the Irrigators ' request for intervenor funding. The purpose of
intervenor funding is to encourage participation at all stages of all proceedings before the
Commission. Idaho Code 9 61-617 A. This section requires that the Commission consider
several factors in determining whether to award intervenor funding. The Commission must
consider the reasonableness of the cost of intervention and the relative hardship of each
intervenor.
We find that the Irrigators fully participated in the workshops and advocated several
positions. The Irrigators' recommendations differed materially from the positions advanced by
the Commission Staff. The Irrigators are a non-profit organization with limited resources. We
further find that the Irrigators have materially contributed to the decision rendered by the
Commission. Although we find that the Irrigators' Petition satisfies the criteria for awarding
intervenor funding, the Commission does not award the full amount requested by the Irrigators in
this case. While we recognize the Irrigators' contributions, this proceeding was a series of
informal workshops aimed at developing consensus. Rather than adjudicating competing
positions, the Commission only adopted those proposals where the parties reached agreement.
See Notice of Workshop citing Order No. 29505 at 47. The contested issues remain for the next
rate case. Consequently, we find it is fair and reasonable to award the Irrigators $17 500 in
intervenor funding.
ORDER
IT IS HEREBY ORDERED that Idaho Power take the necessary actions to
implement the three areas where the parties reached consensus as explained in greater detail
above. Idaho Power shall implement these three cost of service issues in its next general rate
case.
ORDER NO. 29868
IT IS FURTHER ORDERED that the Irrigators are awarded intervenor funding in
the amount of $17 500. This amount shall be proportioned to all customer classes in the
Company s next general rate case. Idaho Power is directed to pay the Irrigators within 28 days
from the date of this Order.
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-04-
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 or in interlocutory Orders previously issued in
this Case No. IPC-04-23. 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 J.f!tA
day of October 2005.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
(~P J~a~ D. Jewell
C91nmission Secretary
bls/O:IPC-04-23 dh2
ORDER NO. 29868