20050414Gale exhibit 2.pdf

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BEFORE THE
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IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-O5-
IDAHO POWER COMPANY
EXHIBIT NO.
JOHN R. GALE
BARTON L. KLINE ISB #1526
MONICA B. MOEN ISB #5734
Idaho Power Company
P. O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
Attorney for Idaho Power Company
Street Address for Express Mail
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS INTERIM)
AND BASE RATES AND CHARGES FOR
ELECTRIC SERVICE.
CASE NO. IPC-03-
STIPULATION FOR ACCEPTANCE
OF SETTLEMENT
This Stipulation is entered into among Idaho Power Company ("Idaho
Power ), the Staff of the Idaho Public Utilities Commission ("Staff'), and the other Parties
in this proceeding as their signatures appear on the signature pages hereof (collectively
referred to as "the Parties" and individually as "Party
Background
In this case, Idaho Power filed its test year income tax expense based on
the current statutory income tax rates. Staff advocated use of an historic five-year
average to calculate income tax expense. In Order No. 29505, the Commission adopted
EXHIBIT NO.
CASE NO. IPC-E- 05-
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page J. GALE, IPC
Page 1 of 12
the Commission Staff's position and ordered the Company to use a historic five-year
average to calculate the Company s test year income tax expense in lieu of the statutory
rates. This reduced the test year revenue requirement attributable to income tax expense
by $11 504 677. Idaho Power filed a timely Petition for Reconsideration and, in Order No.
29547, the Commission decided to reconsider that portion of Order No. 29505 relating to
the Commission s determination of the Company s income tax expense for revenue
requirement purposes.
II.
Terms of the Stipulation
The Parties stipulate and agree as follows:
Order No. 29505 should be modified to utilize statutory income tax
rates to compute test year income tax expense. Applying the statutory rates results in a
federal tax rate of 350/0 (net of state benefit, 32.7950/0) and a state tax rate of 6.30/0. On
normalized basis, this change would increase Idaho Power's Idaho jurisdictional test year
revenue requirement by $11 ,504 677.
For the period June 1 2004 through May 31 2005 , the Company will
compute and record monthly in a regulatory asset account an amount equal to the
additional revenue the Company would have received through its energy rates if its
revenue requirement had been determined using the statutory income tax rates rather
than the five-year historic average income tax rates. The energy rate to be used to
compute the additional monthly revenue to be recorded in the regulatory asset account
will be determined in accordance with the formula set out below:
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page 2
EXHIBIT NO.
CASE NO. IPC-E-O5-
J. GALE, IPC
Page 2 of 12
Where:
$11 504 667 (normalized increased revenue)
476 747 MWh (normalized Idaho jurisdictional energy sr:1les adjusted for load
growth of 3.140/0 per year)
$0.92209/MWh
The monthly entry in the regulatory asset account will be computed by
multiplying actual MWh sales during the month by $0.92209/MWh.
The total amount recovered will include interest on the regulatory asset from
June 1 , 2004 at the PCA carrying charge rate which is currently one percent (10/0).
Exhibit 1 shows how the regulatory asset will be accrued assuming normalized Idaho
jurisdictional sales levels would occur. To effectuate the deferral, the Parties propose the
following accounting entries:
During the deferral period, the Company will record the deferred
regulatory assets with the following monthly entry:
Record the regulatory ~sset:
DEBIT:Account 182.366 - ReQulatory Assets
CREDIT: Account 407.466 - ReQulatorv Creditsand Account 421. - Interest Income
Beginning June 1 , 2005, the Company will reverse the regulatory
assets with the following monthly entry:
Record reversal of regulatory assets:
STIPULATION FOR ACCEPTANCE OF SETTLEMENT , Page 3
EXHIBIT NO.
CASE NO. IPC-O5-
J. GALE, IPC
Page 3 of 12
DEBIT:Account 407.366 - Requlatorv Debits
CREDIT:pcount 182.366 - Requlatorv Assets
In addition to the recovery of the income tax expense for the
June 1,2004 through May 31 2005 period described in paragraph 8 above,
$11 504 677 will be included in the Company s base rates for ongoing recovery after
June 1 2005.
The Company will not seek to recover in its revenue requirement
any deficiency assessed by the Internal Revenue Service related to the one-time
adjustment associated with the capitalized overhead cost tax method change for the
years 1987 through 2000.
III.
The Parties have negotiated this Stipulation as an integrated settlement
document. The Parties recommend that the Commission accept this Stipulation without
material change or condition. This Stipulation will be entered into the record in this
proceeding and no Party shall oppose its adoption or appeal any portion of this
Stipulation if the Stipulation is subsequently approved by the Commission without material
change. If the Commission requests testimony in support of the Stipulation, Idaho Power
and Staff shall each make witnesses available Lo provide testimony in support of this
Stipulation.
IV.
It is the intent of the Parties that this settlement will allow Idaho Power to
continue its compliance with the normalization provisions of the Internal Revenue Code
and associated Treasury Regulations and will allow Idaho Power to continue to obtain the
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page 4
EXHIBIT NO.
CASE NO. IPC-E-05-
J. GALE, IPC
Page 4 of 12
benefits of accelerated depreciation. If the Internal Revenue Service questions or
challenges Idaho Power's compliance with income tax normalization requirements or its
right to utilize accelerated depreciation, the Parties agree they will work cooperatively to
obtain Commission orders that will bring Idaho Power into compliance.
If the Commission rejects any or all of this Stipulation or imposes any
material conditions on approval of this Stipulation, each Party reserves the right, upon
wriUen notice given to the Commission and the other Parties to this proceeding within
seven (7) days of the Commission s order, to withdraw from this Stipulation. In such
case, the withdrawing Party shall not be bound by the terms of this Stipulation and such
withdrawing Party shall be entitled to pursue reconsideration as provided in Order No.
29547 and to undertake such other steps it deems appropriate.
VI.
The Parties agree that this Stipulation will be in the public interest and that
all of its terms and conditions are fair, just and reasonable.
This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page 5
EXHIBIT NO.
CASE NO. IPC-E-05-
J. GALE, IPC
Page 5 of 12
OY - lCa-
Date BARTON L. KLINE
Attorney for Idaho Power Company
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page 6
EXHIBIT NO.
CASE NO. IPC-05-
J. GALE, IPC
Page 6 of 12
lw/6
Date ~~DON ~T
Attorney for Idaho Public Utilities
Commission Staff
STIPULATION FOR ACCEPTANCE OF SETTLEMENT, Page 7
EXHIBIT NO.
CASE NO. IPC-05-
J. GALE, IPC
Page 7 of 12
IDAHO POWER COMPANY
CASE NO. IPC-O3-
EXHIBIT 1
SETTLEMENT STIPULATION
EXHIBIT NO.
CASE NO. IPC-05-
J. GALE, IPC
Page 8 of 12
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P
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this day of August, 2004, I served a
true and correct copy of the within and foregoing STIPULATION FOR ACCEPTANCE
OF SETTLEMENT upon the following named parties by the method indicated below
and addressed to the following:
Lisa D. Nordstrom
Weldon B. Stutzman
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, Idaho 83720-0074
Hand Delivered
S. Mail
Overnight Mail
FAX [phone]
Randall C. Budge
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey
O. Box 1391; 201 E. Center
Pocatello , 10 83204-1391
Hand Delivered
x U.S. Mail
Overnight Mail
FAX [phone]
Anthony Yankel
29814 Lake Road
Bay Village , OH 44140
Hand Delivered
x U.S. Mail
Overnight Mail
FAX [phone]
Peter J. Richardson
Richardson & O'Leary
99 East State Street, Suite 200
O. Box 1849
Eagle, ID 83616
Hand Delivered
--L U.S. Mail
Overnight Mail
FAX [phone]
Don Reading
Ben Johnson Associates
6070 Hill Road
Boise , 10 83703
Hand Delivered
L U.S. Mail
Overnight Mail
FAX [phone]
Lawrence A. Gollomp
Assistant General Counsel
U. S. Department of Energy
1000 Independence Avenue, SW
Washington, D.C. 20585
Hand Delivered
x U.S. Mail
Overnight Mail
FAX [phone]
CERTIFICATE OF SERVICE , Page
EXHIBIT NO.
CASE NO. IPC-05-
J. GALE, IPC
Page 10 of 12
Dennis Goins
Potomac Management Group
5801 Westchester Street
Alexandria, VA 22310-1149
Conley E. Ward
Givens, Pursley LLP
601 W. Bannock Street
o. Box 2720
Boise, I D 83701-2720
Dennis E. Peseau, Ph.
Utility Resources , Inc.
1500 Liberty Street S., Suite 250
Salern, OR 97302
Dean J. Miller
McDevitt & Miller LLP
O. Box 2564
Boise, ID 83701
Jeremiah Healy
United Water Idaho, Inc.
O. Box 190420
Boise, ID 83719-0420
William M. Eddie
Advocates for the West
O. Box 1612
Boise, ID 83701
Nancy Hirsh
NW Energy Coalition
219 First Ave. South, Suite 100
Seattle, WA 98104
Brad M. Purdy
Attorney at Law
2019 N. 17th Street
Boise , I D 83702
Michael Karp
147 Appaloosa Lane
Bellingham, W A 98229
CERTIFICATE OF SERVICE, Page 2
Hand Delivered
S. Mail
Overnight Mail
FAX
Hand Delivered
S. Mail
Overnight Mail
FAX [phone]
Hand Delivered
U. S. M ai
Overnight Mail
FAX [phone]
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Hand Delivered
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Overnight Mail
FAX [phone]
Hand Delivered
S. Mail
Overnight Mail
FAX [phone]
EXHIBIT NO.
CASE NO. IPC-E-05-
J. GALE, IPC
Page 11 of 12
Michael L. Kurtz, Esq.
Kurt J. Boehm, Esq.
Boehm, Kurtz & Lowry
36 East Seventh Street, Suite 2110
Cincinnati, OH 45202
Kevin Higgins
39 Market Street, Suite 200
Salt Lake City, UT 84101
Thomas M. Power
Economics Department , LA 407
University of Montana
32 Campus Drive
Missoula, MT 59812
CERTIFICATE OF SERVICE , Page 3
Hand Delivered
x U.S. Mail
Overnight Mail
FAX [phone]
Hand Delivered
-L- U.S. Mail
Overnight Mail
FAX
Hand Delivered
-L- U.S. Mail
Overnight Mail
FAX
rL--
BARTON L. KLINE
EXHIBIT NO.
CASE NO. IPC-E-05-
J. GALE, IPC
Page 12 of 12