20071109Second report of proceeds and Motion.pdf

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IDAHO~POWER~
An IDACORP Company
ZUUl NOV -9 Pi; 4: 38
LISA D. NORDSTROM
Attorney II
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UTIliTIES COMMI ...1. '
November 9 , 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise , Idaho 83720-0074
Re:Case No, IPC-05-
Application of Idaho Power Company for an Order Authorizing the
Blanket Sale of Air Emission Allowances and for an Accounting
Order.
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Second Report of Proceeds from Sale of S02 Allowances in 2007 and Motion for
Workshop Schedule.
I would appreciate it if you would return a stamped copy of this transmittal letter
for our files in the enclosed self-addressed stamped envelope.
Very truly yours
cA~~ AI '-111
Lisa D. Nordstrom
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Enclosures
o. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
LISA D. NORDSTROM , ISB # 5733
BARTON L. KLINE, ISB # 1526
Idaho Power Company
1221 West Idaho Street
O. Box 70
Boise, Idaho 83707
Telephone: [phone]
FAX Telephone: [phone]
RECE!VE.
ZDOl NOV -9 Pr1 4: 38
IDJi,HO PUBLICUTILITIES COMMISSIOr
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ORDER AUTHORIZING THE BLANKET
SALE OF AIR EMISSION ALLOWANCES
AND FOR AN ACCOUNTING ORDER.
) CASE NO. IPC-05-
IDAHO POWER'S SECOND REPORT
OF PROCEEDS FROM SALE OF S02
ALLOWANCES IN 2007 AND MOTION
FOR WORKSHOP SCHEDULE
In 2005, in Order No. 29852 issued in Case No. IPC-05-, the
Commission granted Idaho Power Company ("Idaho Power" or "the Company ) blanket
authority to sell surplus sulfur dioxide emission allowances.
In Order No. 29852 , the Commission also approved the accounting
treatment to be used by the Company to record the sales of surplus sulfur dioxide
emission allowances from the time proceeds are received until the Commission
determined the appropriate ratemaking treatment of the proceeds.
In Order No. 29852 , the Company was also directed to file a report with
the Commission within sixty (60) days of the receipt of any proceeds from the sale of
surplus sulfur dioxide emission allowances.
During 2007 , conditions in the emission allowances market were such that
Idaho Power sold surplus sulfur dioxide emission allowances. In its Initial Report of
IDAHO POWER'S SECOND REPORT OF PROCEEDS FROM SALES OF SO2 ALLOWANCES IN 2007
AND MOTION FOR WORKSHOP SCHEDULE - Page
Proceeds from Sales of Surplus Sulfur Dioxide Emission Allowances in 2007 Initial
2007 Report") filed on August 27, 2007, Idaho Power reported net proceeds of
$11 266 500 from the sale of 20 000 surplus sulfur dioxide emission allowances as of
that date. Subsequent to that filing, the Company sold an additional 15 000 surplus
sulfur dioxide emission allowances. The total net proceeds received since the filing of
the Initial 2007 Report is $8 375 750. Net proceeds are total amounts received less
broker s fees of $3,750. This Second Report covers all surplus sulfur dioxide emission
allowance sales during 2007 to date. Idaho Power does not expect to sell additional
sulfur dioxide emission allowances in 2007.
The after-tax amount of proceeds received and allocated to the state of
Idaho is $4 320 249.08 from these 15 000 sulfur dioxide emission allowances. The
after-tax amount of proceeds received and allocated to the state of Idaho for all
allowances sold in 2007 (which include those reported in the Initial 2007 Report and this
filing) is $10 131 559.86.This assumes an income tax rate of 39.095%, and a
jurisdictional allocation to the state of Idaho of 94.10%.
In Order No. 30041 , issued in Case No. IPC-05-26, the Commission
approved a sharing arrangement in which 90% of the state of Idaho s 94% jurisdictional
share of the net sale proceeds, including tax effects, were allocated to customers and
the remaining 10% share was allocated to Idaho Power s shareowners. In Order No.
30041 , the Commission directed the Company to include the sulfur dioxide allowance
sales proceeds in the Power Cost Adjustment ("PCA") to reduce the level of PCA rates.
Idaho Power proposes that the same 90%/10% sharing of benefits be
utilized to allocate the proceeds from sales of surplus sulfur dioxide emission
IDAHO POWER'S SECOND REPORT OF PROCEEDS FROM SALES OF SO2 ALLOWANCES IN 2007
AND MOTION FOR WORKSHOP SCHEDULE - Page 2
allowances made in 2007. Customers benefited from the proceeds received from sales
of surplus allowances in 2005 and 2006 through a PCA rate reduction. Although the
proceeds from the 2007 sales could be used to similarly offset the PCA , the Company
believes that other opportunities presently exist with the potential to provide greater
long-term value to customers.
One opportunity Idaho Power would like to investigate is the possibility of
using the customers' share of the proceeds to purchase multi-year streams of
Renewable Energy Certificates ("green tags ) from the owners of renewable generation
facilities that have entered into Public Utility Regulatory Policies Act ("PURPA"
contracts with Idaho Power.If a federal renewable portfolio standard ("RPS") is
enacted, Idaho Power will be required to purchase green tags at prices expected to be
higher than those existing today. This would result in increased costs to Idaho Power
customers. If Idaho Power purchased green tags prior to the enactment of a federal
RPS or in excess thereof, the Company would sell the green tags on a short-term basis
and flow the proceeds from the sales to customers through the PCA.
second option Idaho Power would like to consider is using the
customers' share of the proceeds to buy down a portion of the rate base associated with
the purchase of wind project development rights. If this approach was viewed favorably
by the Commission, Idaho Power would enter into negotiations or issue a Request for
Proposal ("RFP") to purchase a permitted wind project. By developing and owning the
wind project rather than purchasing equivalent energy elsewhere, Idaho Power
customers would have additional access to renewable energy at competitive prices and
retain the value of the green tags associated with the wind project.
IDAHO POWER'S SECOND REPORT OF PROCEEDS FROM SALES OF SO2 ALLOWANCES IN 2007
AND MOTION FOR WORKSHOP SCHEDULE - Page 3
MOTION FOR WORKSHOP SCHEDULE
10.If the Commission agrees that Idaho Power should investigate potential
uses of the customers' share of the proceeds other than offsetting the PCA, Idaho
Power respectfully requests the Commission schedule a workshop for the purpose of
receiving feedback from interested parties concerning possible alternatives to benefit
customers. Idaho Power would then report the results of the workshop to the
Commission for its approval.
Clii
Respectfully submitted this -L day of November 2007.
IDAHO POWER'S SECOND REPORT OF PROCEEDS FROM SALES OF SO2 ALLOWANCES IN 2007
AND MOTION FOR WORKSHOP SCHEDULE - Page 4