20050401Notice of Application Order No 29748.pdf

Office of the Secretary
Service Date
April 1, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC SERVICE
DUE TO THE INCLUSION OF THE
BENNETT MOUNTAIN PLANT
INVESTMENT IN ITS RATE BASE.
CASE NO. IPC-OS-
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 29748
On March 2, 2005 , Idaho Power Company filed an Application to recover its capital
investment in the new Bennett Mountain generating facility located in Mountain Home, Idaho.
More specifically, the Company seeks to rate base $58 022 983 attributable to the cost of
constructing the generating plant and the necessary transmission and interconnection facilities.
Idaho Power initially calculated that the addition to rate base will result in an increase to its
annual revenue requirement of $13 482 146. To recover the proposed revenue increase, the
Company initially suggested that rates for all existing customer classes and its three special
contract customers be uniformly increased by 2.6%.
On March 22, 2005, Idaho Power filed an Amended Application. The Company
noted that it had used an incorrect "federal and state income tax rate" that overstated the
proposed increase in the Company s annual revenue requirement. Using the correct federal and
state income tax rate of 39.1% approved by the Commission in rate case Order No. 29601 , the
Company now requests a proposed revenue requirement of $9 402 996. Amended Application at
5. To recover this lower amount, the Company proposes to increase its base rates by a uniform
percentage increase of approximately 1.84%. Id. at 5-Revised Atch. 4. The Company
requests the proposed increase to its base rates become effective June 1 , 2005, which would
coincide with any rate change caused by the annual Power Cost Adjustment (PCA) mechanism.
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29748
BACKGROUND
In January 2004 the Commission issued Order No. 29410 approving Idaho Power
Application for a Certificate of Public Convenience and Necessity to construct and operate the
Bennett Mountain Power Plant (Case No. IPC-03-12).Bennett Mountain is a 162 MW
natural gas-fired, simple-cycle power plant. The plant was constructed by Mountain View
Power, Inc. Williams Northwest Pipeline will provide the natural gas necessary to fuel the plant.
Mountain View will also construct the natural gas pipeline necessary to interconnect with
Williams.
In its prior Application for authority to construct the Bennett Mountain plant, Idaho
Power provided the Commission with a "Commitment Estimate" of the project's total capital
costs. The Commitment Estimate for the project was $54 million which included the firm bid
price of the project ($44.6 million) plus additional costs such as sales taxes, AFUDC, oversight
and change orders. Order No. 29410 at 4. The Commitment Estimate did not include the cost of
constructing or upgrading transmission facilities necessary to connect Bennett Mountain with the
Company s existing transmission system, any legally required equipment changes, and material
changes in assumed escalation forecast rates. Id. at 16. In its September 2003 Application
Idaho Power estimated that the interconnection and/or transmission upgrades for the plant may
cost between $5.11.6 million. Reasonable and prudent fuel costs for the Bennett Mountain
Plant were to be recovered through the PCA mechanism. Id.
NOTICE OF THE APPLICATIONS
A. Capital Costs
YOU ARE HEREBY NOTIFIED that Company witness Greg Said states in his
testimony accompanying the Application that the Bennett Mountain plant will be in commercial
operation before June 1 , 2005. Said Direct Testimony at 5. He stated that the total investment in
the Bennett Mountain plant itself is $50 298,492, which is well under the Commitment Estimate
of $54 million. This figure includes the following components: $42 932 458 as Construction
Work in Progress (CWIP); $1 358 291 for allowance of funds used during construction
1 The Commission subsequently issued Certificate No. 420 authorizing Idaho Power to construct the Bennett
Mountain Plant. Application, Exh. 2.
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29748
(AFUDC); and $7 366 034 for other anticipated expenses to be booked during the months of
February, March and April. Said Direct at 7.
YOU ARE FURTHER NOTIFIED that in addition to plant investment, the Company
seeks recovery of its investment for interconnection facilities and transmission upgrades in the
amount of $7 724,491. Company witness Said observed in his prefiled direct testimony that the
$7.7 million for transmission and interconnection facilities falls within the Company s cost-
estimate range ($5.5 to 11.6 million) contained in its September 2003 Application. Said Direct at
9. In summary, the Company requests authority to rate base $58 022 983 ($50 298,492 for the
plant and $7 724,491 for interconnection and transmission facilities). Said Direct at 7.
B. The Proposed Change in Rates
YOU ARE FURTHER NOTIFIED that based upon its authorized rate of return of
8520/0 per Order No. 29601 , Idaho Power calculates in its Amended Application that its $58
million investment results in an additional annual revenue requirement of $9.403 million. Said
Supplemental Testimony at 3; Exh. To recover this additional revenue, the Company
proposes a uniform averaged percentage increase of approximately 1.840/0 for all existing
customer classes. Amended Application at 5-6; Said Supp. at 4; Exh. 10. In addition, the
Company also proposes to increase its special contract rates by about 1.84% for the three special
contract customers (Micron (1.85%), Simplot, Dept. of Energy). Exh. 10. The Company
proposes that the increase in base rates become effective June 1 , 2005 , to coincide with any PCA
rate change which may occur. Amended App. at 4; Exh. 9.
YOU ARE FURTHER NOTIFIED that Idaho Power states in its Application that it
has issued media releases and will notify its individual customers of the proposed rate increase
by "bill stuffers." The Company also filed direct and supplemental testimony and exhibits to
support its Application, as amended.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the
Application and the Amended Application and has preliminarily determined that the public
interest may not require a hearing to consider the issues presented in this case. Consequently, the
Commission intends to process this docket under Modified Procedure, IDAP A 31.01.01.201
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29748
through .204. The Commission notes that Modified Procedure and written comments have
proven to be an effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the
Application, as amended may file a written comment in support or opposition with the
Commission no later than Friday" May 6" 2005. The comment must contain a statement of
reasons supporting the comment. Persons desiring a hearing must specifically request a hearing
in their written comments. Written comments concerning the Amended Application shall be
mailed to the Commission and Idaho Power at the addresses reflected below:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Barton L. Kline, Senior Attorney
Gregory W. Said, Manager
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Mail: bkline~idahopower.com
gsaid~idahopower.com
472 W. Washington Street
Boise, ill 83702-5983
These 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.idaho.gov. 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 Idaho Power at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application and Amended Application
together with the supporting testimony, exhibits, and proposed tariffs have been filed with the
Commission and are available for public inspection during regular business hours at the
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29748
Commission offices. The Application and Amended Application may also be reviewed online at
www.puc.idaho.gov under the "File Room" icon and then "Electric Cases.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this
matter and Idaho Power, an electric utility, pursuant to authority and power granted under Title
61 of the Idaho Code and specifically Idaho Code ~~ 61-503 , 61-523 , 61-622. The Commission
may enter any final Order consistent with its authority.
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 the persons desiring to, submit written comments
regarding the Application and Amended Application may do so no later than May 6, 2005.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this I sf
day of April 2005.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~fJ.
J a D. Jewell
C mmission Secretary
bls/O:IPCE0510 dh
NOTICE OF APPLICATION
AND AMENDED APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 29748