20041230Final Order No 29670.pdf

Office of the Secretary
Service Date
December 30, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY'S REQUEST
FOR AN ACCOUNTING ORDER TO
RECOVER CLOUD SEEDING PROGRAM
EXPENSES FOR THE WINTER OF 2004-
2005.
CASE NO. IPC-04-
ORDER NO. 29670
On October 21 , 2004, Idaho Power Company filed an Application for an accounting
order to authorize deferral and later recovery of costs of its cloud seeding program for the winter
of 2004-2005. The Application states that the Company has operated a cloud seeding program
for a number of years and that the Commission did not allow recovery of its expenses in the
Company s recent rate case. Idaho Power filed with its Application additional information that it
asserts demonstrates scientifically measured benefits of the Company s cloud seeding program
during the winter of 2003-2004. Noting that the Company has funded two years of cloud
seeding without any cost recovery, the Application states Idaho Power would like to be able to
recover its costs for continuing its program during the winter of 2004-2005.
Idaho Power clarifies in its Application that it is not asking the Commission to defer
expenditures associated with the cloud seeding program on a long-term basis, but is requesting
only that the Commission authorize the Company to defer the expenses associated with the
program during the upcoming winter. The Application states Idaho Power "is requesting that the
Commission only authorize the Company to defer the expense associated with operating the
cloud seeding program during the winter of 2004-2005 for subsequent recovery at the time the
Company implements its 2005/2006 PCA (Power Cost Adjustment) rates.The Company
estimates those costs to be approximately $950 000, which the Company proposes to capture "
the same ninety percent-ten percent (90%/10%) ratio by which other power supply expenses are
shared between customers and shareholders in the PCA.Idaho Power included with its
Application prefiled direct testimony to provide information on the results of its cloud seeding
program.
On November 3 , 2004, the Commission issued a Notice of Application and Notice of
Modified Procedure, establishing a period for filing written comments on Idaho Power
Application. Written comments were filed by the Commission Staff, which supported approval
ORDER NO. 29670
of Idaho Power s Application. Written comments were also received from two members of the
public, both recommending the Commission deny the Company s Application.
In its comments, Staff summarized the evidence Idaho Power provided in prefiled
testimony on the effectiveness of the cloud seeding program. Two different methods are used to
determine the effectiveness of the program-the target-control method and the trace-chemistry
method. The target-control method is a way to evaluate whether precipitation in the cloud
seeding area exceeds the amount that might be expected based on snowfall outside the seeded
area. The trace-chemistry method identifies silver iodide and two other chemical agents that are
used in cloud seeding in samples taken from snowfall. Using these methods, Idaho Power claims
the cloud seeding program produced an estimated 110 000 acre feet of increased run-off during
2002-2003 , which the Company valued at $1.6 - $1.8 million of additional generation. During
the winter of 2003-2004, the Company seeded clouds between November 1 , 2003 and April 21
2004, producing approximately 68 000 acre feet of additional run-off valued at $1.4 million.
Staff concluded in both years the estimated benefits exceeded the program costs. Based on its
review of the Company s program, Staff stated it believes the program is promising and
recommended PCA treatment of the variable costs of the program for the winter of 2004-2005.
The Company estimated those costs to be approximately $950 000.
Based on the record in this case, the Commission has determined to approve Idaho
Power s Application for an Order to authorize deferral of the 2004-2005 cloud seeding costs.
Idaho Power presented sufficient evidence to establish that the cloud seeding program was cost-
effective during the last two winters, and Staff agreed the benefits produced exceeded the
program costs. While the Commission approves the limited accounting order requested by Idaho
Power, we also reaffirm our interest in exploring demand side and energy efficiency programs.
The Company, Staff and interested parties should continue to review and propose programs that
may be cost-effective in reducing energy or peak load demands on Idaho Power s system.
Demand side management programs to reduce customer energy use, thereby delaYing the need to
build energy production and transmission facilities, may be a better use of energy management
funds provided by Idaho Power s customers.
The Commission approves Idaho Power Company s request for an accounting order
authorizing the Company to defer its variable cloud seeding costs for the 2004-2005 winter. The
accounting treatment proposed by the Company in its Application is appropriate, and Idaho
ORDER NO. 29670
Power should establish sub-accounts specifically for cloud seeding expenses to ensure proper
auditing of the expenses during the PCA review period. Subject to the normal PCA review
process, the Company will be allowed to recover its reasonable cloud seeding costs for the 2004-
2005 winter in the 2005-2006 PCA rates.
ORDER
IT IS HEREBY ORDERED that Idaho Power s Application for an accounting order
to allow deferral of the 2004-2005 cloud seeding costs is approved.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this D21tk
day of December 2004.
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
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Commission Secretary
bls/O:IPCE0424 ws2
ORDER NO. 29670