20050615Application.pdf

BARTON L. KLiNE ISB #1526
MONICA B. MOEN ISB #5734
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Phone: [phone]
FAX: [phone]
E-mail: BKline (g) idahopower.com
E-mail: MMoen (g) idahopower.com
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Attorneys for Idaho Power Company
~press Mail Address
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER MODIFYING
THE ACCOUNTING FOR PRELIMINARY
SURVEY AND INVESTIGATION CHARGES.
CASE NO. IPC-05- ";;"'1
PETITION
Idaho Power Company ("Idaho Power" or "the Petitioner ) hereby petitions
the Idaho Public Utilities Commission ("the Idaho Commission" or "I PUC") for an order
providing for modifications to the Idaho Power accounting procedures for preliminary,
survey and investigation charges ("PS&I"
The Petitioner
The exact name of Petitioner and the address of its principal business
office are: Idaho Power Company, 1221 West Idaho Street, P.O. Box 70, Boise, Idaho
PETITION, Page
83707-0070.
The Petitioner is an electric public utility engaged principally in the
generation, purchase , transmission, distribution and sale of electric energy in an
approximately 24 000 square mile area over southern Idaho and in the counties of
Baker, Malheur and Harney in eastern Oregon. Petitioner is subject to the jurisdiction of
this Commission , the Public Utility Commission of Oregon , and the Federal Energy
Regulatory Commission ("FERC"). Petitioner, in addition to supplying general retail
electric service to the public in southern Idaho and eastern Oregon, also provides
wholesale requirements services to FERC jurisdictional customers.
II.
PS&I Accounting Requirements
for Idaho Power
Currently Idaho Power s I PUC accounting requirements for PS&I are
governed by: Part V A 2 of PUC Order No. 17499 (Case No. U-1 006-185) dated
August 20, 1982; Idaho Power letters dated November 24, 1982 and December 5
1993; and Commission letter dated December 21 , 1983. An excerpt from Commission
Order No. 17499 and the letters referenced are attached to this Petition for the
convenience of the Commission and any interested person.
The current accounting requirements for Idaho Power s PS&I charges are
set out in the Idaho Power letter dated November 24 , 1982 (attached to this Petition):
All preliminary survey and investigation charges incurred in
connection with. . . any new projects that are studied in the future
which are "internal in nature" (that is incurred in-house) will be
directly expensed in the period incurred. The Company will
continue to use a project order to collect the costs for each
individual project for record keeping purposes. Each month the
current "internal" charges incurred will be transferred from the
PETITION , Page 2
project work orders to the appropriate functional operating expense
account.
All preliminary survey and investigation charges incurred in
connection with. . . any new projects that are studied in the future
which are "external in nature" (that is incurred other than in-house)
will be accumulated in Account 107 (CWIP) and transferred to
Account 183 (preliminary survey and investigation charges) on a
monthly basis. No AFUDC will be accrued on these charges.
the end of each year, the applicable costs collected in Account 183
during the year will be transferred to Account 186 and amortization
of these "external" costs will commence the following year over an
appropriate time period. The specific amortization period for the
current year s expenditures will be determined by the Company and
reviewed by Staff annually.
There must be a point in any project at which time the
expensing of preliminary survey and investigation charges will be
discontinued and the accruing of construction charges commences.
This point in time for the Company will be the receipt of a final
construction license from the Federal Energy Regulatory
Commission. Any internal or external charges incurred after receipt
and acceptance of the final construction license will be
accumulated in construction work in progress (Account 107), and
the Company will commence accruing an allowance for funds used
during construction (AFUDC) on such charges. Thus , all costs
incurred from receipt and approval of a final Federal Energy
Regulatory Commission license to construct until commercial
operation will be capitalized in the traditional manner.
III.
Current Resource Investigation
In Order No. 22299 issued in January 1989 (Case No. U-1500-165), the
Commission directed each electric utility (including Idaho Power) to file a biennial
Integrated Resource Plan ("IRP") that analyzes its customer base, load growth , supply-
side resources , and demand-side management resources. Through the IRP process
the Company s initial resource investigation is supplemented by input from an advisory
council including Commission Staff and interested persons. The IRP procedures have
PETITION , Page 3
created a prescreening process since projects that are not included as a potential
resource in the Company s resource plan are considered to be not viable.
Only those projects which are included as a potential resource in the
Company s resource plan are investigated further. The Company will incur both internal
and external costs in exploring the feasibility of the projects once they have been
included in the resource plan. The current accounting requirements do not mesh with
the IRP planning process, since internal costs are expensed under the Company
current PS&I accounting requirements. With the implementation of the IRP, the
Company believes that the accounting procedures for PS&I should be modified so that
the accounting procedures are consistent with the resource planning procedures.
The Company s activities with respect to the Shoshone Falls Hydro
Project upgrade do not fit the activity contemplated by current PS&I accounting
procedures and underscore a need to clarify these procedures. The Shoshone Falls
Hydro Project is licensed by the Federal Energy Regulatory Commission ("FERC"
).
The
Company is contemplating an upgrade to the Shoshone Falls Hydro Project. The
Shoshone Falls upgrade is already included in Idaho Power s IRP filed by Idaho Power
with thelPUC in the IRP.1 The Company was reluctant to file with FERC for authority to
construct the upgrade until it had received a new , multi-year license for the existing
project. That license was obtained in 2004. The Company has expended funds for
external services concerning some design and documentation for the Shoshone Falls
upgrade. The Company did not believe that it was appropriate to amortize the costs
incurred , since the costs were for an upgrade of an existing licensed facility and the
2004 Integrated Resource Plan, Chapter 3, p. 35.
PETITION, Page 4
upgrade was viable and included in the Idaho Power generation forecast. The amount
held in the PS&I account is approximately $90 000 and will increase as the process to
amend the new license to include the upgrade is undertaken. The Company believed
and continues to believe that it is appropriate to hold these expenditures in PS&I
pending the receipt of an amended license.
IV.
Idaho Power Proposed PS&I Accounting
Taking into account the IRP process, the Company proposes that
accounting for the PS&I charges be modified. The Company proposes that it will collect
both internal and external costs in Account 183 (PS&I) as long as the project is
considered viable. Viability of the project will be determined as the result of the
inclusion of the particular project in the IRP or by the determination that the project will
not be included in the RP.
If the project is determined viable, the expenditures will remain in
Account 183 (PS&I), without any accumulation of AFUDC, until appropriate licenses
and/or certificates of public convenience and necessity are obtained. At the time of the
issuance of the licenses and/or the certificates, the costs will be transferred to Account
07(Construction Work In Progress), and AFUDC will begin to accumulate.
If the project is determined not viable, the costs accumulated in Account
183 (PS&I) will be transferred to Account 182.3 (Other Regulatory Assets), and the
amount will be amortized over a period of time. The amount will be fully amortized in
one year if the total amount for the project does not exceed $250,000. If the
accumulated costs are in excess of $250 000 but less than $1 000,000 , the amount will
PETITION , Page 5
be amortized over three years. If the amounts are in excess of $1 000 000, the amount
will be amortized over five years.
The Company respectfully submits that the modifications to the
Company s accounting procedures for PS&I are consistent with the Company s current
IRP process and are in the public interest.
Modified Procedure
The Company requests that this Petition be processed under RP 201
seq.allowing for consideration of issues to be processed under Modified Procedure
i.e., by written submissions rather than by an evidentiary hearing.
VI.
Service of Pleadings
Service of pleadings, exhibits , orders and other documents relating to this
proceeding should be served on the following:
Barton L. Kline
Monica B. Moen
Idaho Power Company
O. Box 70
Boise , I D 83707 -0070
bkline
(g)
idahopwer.com
mmoen
(g)
idahopower.com
John R. Gale
Vice President, Regulatory Affairs
Idaho Power Company
O. Box 70
Boise , I D 83707 -0070
male (g) idahopower.com
WHEREFORE , the Company requests that the accounting modifications
submitted in Paragraph IV, including the accounting for the Shoshone Falls PS&I
expenditures, be approved by the Commission.
PETITION , Page 6
Dated at Boise, Idaho , this -'L\.1c~ay of June , 2005.
Barton L. Kline
Monica B. Moen
Attorneys for Idaho Power Company
PETITION , Page 7
BEFORE TilE IDAIIO PUBLIC lITl1.1TIE~ COMl115SION
IN THE HATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AUTH-
ORITY TO INCREASE ITS RATES AND
CHARGES FOR ELECTRIC SERVICE TO
E LECTR I C CUSTOMERS IN THE STATE
IDAHO.
CASE NO. U -1006-185
ORDER NO. 17:"99
APPEARANCES
FOR THE APPLICANT IDAHO
POWER COMPANY:
FOR THE COMMISS ION STAFF:
FOR IDAHO CONSUMER AFFAIRS INC. (ICA):
FOR IDAHO IRRIGATION
PUMPERS, INC. (PUMPERS):
FOR MONSANTO COMPANY
(MONSANTO) :
FOR FMC CORPORATION (FMC):
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LARRY D. RIPLEY
ELAM , BURKE, EVANS J BOYD & KOONTZc/o IDAHO POWER COMPANY
P .0. Box 70Boise J Idaho 83707, .
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and
PAUL L. JAUREGUI
GENERAL COUNSEL
IDAHO POWER COMPANY
O. Box 70Boise J Idaho 83707
MICHAEL S. GILMORE
DEPUTY ATTORNEY GENERAL
Idaho Public Utilities CommissionStatehouseBoise J Idaho 83720
HAROLD C. MILES
IDAHO CONSUMER AFFAIRS
316 Fifteenth Avenue South
Nampa , Idaho 83651
ROBERT C. HUNTLEY, JR.
RAC INE J HUNTLEY J OLSON . NYE
& COOPER
O. Box 1391
Pocatello. Idaho 83201
LOUIS F. RACINE J JR.RACINE, HUNTLEY , OLSON J NYE& COOPER
O. Box 1391
Pocatello, Idaho 83201
R. MICHAEL SOUTHCOMBE
CLEMONS. COSHO & HUMPHREY
1110 First Interstate BuildingBoise J Idaho 8370~
and
JAMES N. ROETHE
PILLSBURY J MADISON & SUTRO225 Bush Street
P .0. Box 7880San Francisco J CA, 94120
MISCELLANEOUS
The Staff's Posi tions.The Staff addressed com-
purer morleling and accumulation of AFUDC.
Computer Model ing.The Staff recommended that
complete documentation of computer models relied upon by the
Company in its Application accompany its Application and be
ava i lable to the S ta ff.Tr. pp. 2193-2201.
We do not address this issue in this Order.Instead,
we inform Idaho Power Company that we are considering calling an
informal conference of all utilities that use computer modeling
in their rate cases to consider how to assure reaso~ab , ~~i,
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to their companies I models, to refine production requests from
shotgun to rifle targets , and to smooth out the Staff's and
interested intervenors ' access to the models or the results of
the models.
Accumulation of AFUDC.The Staff recommended that
the Company be prohibi ted from accumulating AFUDC on $5,320,997
of accounts shifted from preliminary survey and investigation to
construc tion work in progress.Tr. pp. 2466-2467.The Staff
argued that accumulation of CWIP on these projects was improper
under the uniform system of accounts and that it overstated the
Company s earnings.
The Company disagreed.Tr. pp. 3048-3053.I t argued
tha t it was jus t and reasonable to shi ft these accounts to those
accumula ting AFUDC because the studies involved benefi t the
ratepayers and because it would be unfai r for the shareholders to
carry these costs for long periods of time without capitalizing
them.
We decline to address this issue in all respects.
Ins tead , we noti fy the Company that beginni ng on January 1, 1983,
it may expense its pre iminary inves t iga t ions and surveys done in
house and other reasonable expenses of the most preliminary
na ture .At that same time , it may begin amortizing all such
amoun ts previous ly acc rued.
ORDER NO. 17499 -52-
Our decision here is imprecise.We therefore direct
the Company on 0 r be fare Deccmbc r 1, 1982, ta no t i fy the Com-
mission and the Staff what preliminary survey and investigation
items it wi shes to expense and amortize.I f there is any con-
troversy concerning these items, they can be resolved after that
time.
PURPA Recommendations.The Staff recommended (a)
rejecting PURPAt s standard on interruptible rates, Tr. p. 1390
ind (b) adopting PURPA's standards on load management , Tr. p. 1401.
We refer interested parties to our Orders in Case Nos. P-300-l8
and U-1009-120 for our resolution of these issues.
ICA's posi tion--The CP National Contract.
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requested the Conunission "to do its utmost to see that power
supply contract between Idaho Power and C. P. National is not
renewed after its expiration date.We have been informed that
the Company has filed notice with FERC of its intention not to
extend or renew the contract.We trust that this notice is more
than a hollow gesture , and we expect the Company to report to us
by let ter concerning its progress in pursuing thi s App1 ica tion.
ULTIMATE FINDINGS OF FACt
Idaho Power Company is an elec trical corpora tion
subject to our regulation under the Public Utilities Law.The
rates of all of its tariff customers anQ of its special contract
customers in the state of Idaho are subject to our regulation
under the Public Utilities Law.
Idaho Power I s adjusted net operating income for
the test year 1981 is $93,371 800.
Idaho Power I s adjusted rate base for the test year
1981 is $981 907 000.
Idaho Power I s just and reasonable overall rate of
return is 11.671%.
Idaho Power s revenue de fic iency for the test year
1981 is $39,344 800.This revenue deficiency may be recovered by
ORDER NO. 17499 53-
...
ID:A.HO PO'VVER ' '1\;" Jr
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BOX 70 . BOISE , IDAHO 83707
DUWAYNE D, HAMMOND, JR,November 24, 1982
Controller
Idaho Publ ic Util ities ColTUllissicn
472 West Washi ngton Street
Boise, 10 83702
Attent i on:Mrs Myrna J Wa ters
I n re:Preliminary Survey & Investigation Charges
Case No U-I006-185
Order ' No 17499
Gentlemen:
In accordance with Part V(A) (2) of Idaho Publ ic Util iti~s Commission
Order No 17499 (Case No U-IOO6-185) dated A~gust 20, 1982, Idaho Power Company
(the uCorppany ) hereby 'submits the accoun~ing methodology "that will be utilized
for handling Preliminary Survey and Investigation Charges.
Representatives of the Company and members of the Commission s staff
from the accounting and finance division ("Staffll ) have met and reached agree-
ment on the following procedure ap~ icable to this subject.
Costs I ncurred a~ of December 31, 1982
The Company will amortize, over a ten (10) year period, commencing
on January 1, 1983, those prel iminary survey and ' inve stigation charges on the
books as of December 31, 1982. Exhi bi t One attached sets forth the Company Iestimated investment for these items as of December 31, 1982. At year end
the total charges in Account 107 (CW1P) applicable to these items will be
transferred to Account 186 (miscellaneous deferred debits) from which amor-
tization will begin in 1983. The amortization will be to an appropriatefunctional operating expense account. Calculation of the allowance for fundsused during construction ("AFUDC") for these projects will cease on December 31,1982. The yearly amortization for this investment will therefore remain constant.
Cas ts Incurred Commenci ng Janua ry 1, 1983
All preliminary survey and investigation charges incurred in connec-
tion with the projects set forth on Exhibit One, or any new projects that are
studied in the future, which are internal in nature ll (that is incurred in-house)
will be directly expensed in the period incur~ed. The 'Company will coritinue
to use a project order to collect the costs for each individual proj€ct forreco.rd keeping purposes. Each month the current II i nterna 111 charges incurred
will be transferred from the project work orders to the appropriate functionalop~rat i ng expense account
. If.
- 2
All prel iminary survey and investigation charges incurred in connec""
tion with the projects set forth on Exhibit One:, or any new projects that arestudied in the future, which are external in nature " (that is incurred other
than in-house) will be accumulated in Account 107 CWIP) and transferred to
Account ,183 (prel iminary survey and investigation charges) on a monthly basis.
No AFUOC wi 11 be accrued on these charges. At the end of €ach year, the ap-pl icabl e costs co11 ected in Account 183 duri ng the year will be trahsferred to
Account 186 and amortization of these external ll costs wi"! 1 commence the fol-
lowing year over an appropriate time period. The specific amortizatio:! period
for the current yea r t s expend"itures wi 11 be determi ned by the Company and
reviewed by Staff annually.
There must be a point in any project at which time the expensing ofprel iminary survey and investigation charges will be discontinued and the
accruiD9 of construction charges commences. This point in time for the Company
will be the receipt of ~ final const~uction 1.; cense ~rom-the federal EnergyRegulatory Commission. Any internal or external charges incurred after receipt
and acceptance of the final constructi on l i cense will be accumulated in cqn~
struction work in progress (Account 107), and the Company will commence a~cruing
an all owance~ for funds used during construction (AFUDC) on such char~es .Thu ~,
all costs incurred from recei pt and approval of a fi nal Federal Energy Regu-" latory CQmmission license to co~struct until commercial operation will be
cap; ta 1i i~Q in the trad it i aha 1 manner.
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Rat~mak; ng Treatment
For purposes of- determini ng the Company I S reve,nue requirement, the
following pr6cedure will be follo~ed: (1) the yearly amortization of the
balance at December 31, 1982, wi ll be treated as ari ciperating expense, (2) the
post 1982 internallf items expensed will be treated as an operating expense
and (3) the post 1982 external " items amort i zed wi 11 be treated as an oper-
at; ng expense.
A letter indicating approval of the above is necessary to substantiate
the Company s accounting entries for auditing and r~cord keeping purposes.
Accordi ng1y, receipt of concurrence waul d be apprec i~t~d on or before December 15,
1982, such that 1982 can be .closed in an orderly manner.
Sincerely,
DOH: ghs
~'-'-~~ ~~
cc:All parties of record
Case No U-I006-185
The exhibits attached to the original letter have been omitted, as they are no longer
pertinent.
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SNAKE RIVER
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HY DRO POWER
IDA.HO
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BOX BOISE , IDAHO 83707
DUWAYNE D, HAMMOND. JR.December 5, 1983
Controller
I d a ho P u b 1 i c Ut i 1 i tie s C omm i s s ion
472 West Washington StreetBoise, 10 83702
Attention:Mrs Myrna \.1 Wa 1 ters
I n re:1983 Preliminary Survey and Investigation Charges
Gen t emen:
As a result of Part V(A)(2) of Idaho Public Utilities Corrmission
Order Nb:~7499 (Case No. U-IOO6-185) dated, August 20, 1982, and in accordance
with the November 29, 1982 decision meeting of the Commission regarding the
accounting and revenue requirement 'methodology for handl ing Prel iminarySurvey and I nvesti gation Charges ("PS&I "
),
I daho Power Company (" Company II
hereby submits its estimated 1983 expenditures related to PS&I for Commission
a pprova 1 .
Representatives of the Company and members of the Commission I S staff
from the accounting and finance division
("
Staff II ) have met and reached agree-
nmen t tha t the account i n9 procedure conta i ned wi th in is in accordance wi th the
Commission approved practice established last year.
PS& I COSTS INCURRED DURI NG 1983 -
Based upon ten (10) months of actual and two (2) months of estimateddata, a 'total of approximately $1,155,000 is anticipated to be expended for
PS&I during 1983. As reflected on Exhibit One attached , approximately $657,000
is estimated to be spent for external purposes in 1983 with the balance (approx-
imately $498,000) incurred internally. A description of the reasons for these
expenditures is attached to Exhibit One.
As previously agreed , the in-house costs incurred during 1983 were
directly expensed to the appropriate operating expense account(s) in the monthincurred. Those monies expended which are extern~l in nature have been recorded
in FERC account number 183 (preliminary survey and investigation costs) and
wi 11 be transferred to account 185 (mi scell aneous deferred debi ts) on December 31,
1983 for amortization to the appropriate operating expense account(s) over a
period of ten (10) years commencing in the month of January, 1984.
As previous ly agreed, no all owa nce for funds used dur i ng constructi on
has been accrued on the external funds expended during 1983 and ~ for purposes
of determin in 9,; any future revenue requ irement of th~ Company, the unamort ized
balance contained within FERC account number 185 relating to P$&I will not be
included in rate base.
.' .
, Idaho Public Utilit;,..,
Commi s s ion
December 5 ~ 1983- 2 -
It is hereby requested that the Corrrnission advise the Company that
those sums expensed or amortized in connection wi th PS&I wi 11 be r~cogni zed
as val i d operating costs for purposes of determi ning the Company ' s revenue
requ i rement.
A letter indicating approval of the above is necessary to sub-
stantiate the Company s accounting entries for auditing and record keeping
purposes. Accordingly, receipt of concurrence would be appreciated on or
before December 23 1983, such that 1983 can be closed in an orderly manner.
Sincerely,
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DOH: ghs
cc:Commissioners (3)
A Hol heft
Mr t~r Gil more
The exhibits attached to the original letter have been omitted, as they are no longer
pertinent.
. ,. ..
IDAHO PUBLIC UTILITIES COMMISSION
51 A1EHOU5E
BOISE; IDAHO 83720
334-3143
JOHN V, EVANS
GovernorCONLEY WARD. JR,President
PERRY SWISHER Commissioner
RICHARD S, HIGH Commissioner
December 21 , 1983
Mr. DuWayne D. Hammond
Idaho Power Company
o. Box 70
Boi se, Idaho 83701
RE:1983 ~reliminary Survey and Inv~stigation Charges
De a r Dewey:
Your letter of December 5 , 1983, in this matter was re~eived by the
Commi ssion Secretary ' and discussed at decision meeting. Thatlet ter proposed a method of accoun t ing for the Company s Pre imina rySurvey and Investigation (PS&I) charges for the , year 1983 and; was
acc ompanied by table showing actual charges in the first ten
mon ths of the year and estimated charges for ' the final two months
and an explanation of those charges.
Your letter' concluded with the following two paragraphs:
It ,is hereby requested that the Commissionadvi se the Company that those sums expensed or
amortized in connection with PS&I will be recog-nized as valid operating costs for purposes ofdetermining the Company ' s revenue requi rement.
A letter indicating approval of the above is
necessary to substantiate the Company s account-ing entri es for auditing and recordkeepingpurposes. Accordingly, receipt of concurrencewould be appreciated on or before December 23,
1983, such that 1983 can be closed in an orderly
manner.
,;.... .. .'
r1 r. Du'n'ayn e D. Hamm'
Decenlbe r ' 21, 1983.Page 2
'-1
The Commi ssion ,approves the Company proposed booking of these
expenses for auditing and recordkeeping purposes as requested in thesecond paragraph quoted above.' The Commission explici tly disap-proves advance raternaking treatment of the validity of these ex-
penses for purposes of determining the Company s revenue requirement.A rate case properly and fully noticed to the general public is a
proper forum for determining the validity of expenses for ratemakingpurposes. While this Commission may approve the accounts in which
such expenses are made for purposes of the Company s own recordkeep-
iog and outside audit in a forum other than a rate case , the validi-ty of the ratemaking treatment of any expense or investment is
always at issue in a rate case and cannot be informally approved in
advance in the manner requested by your letter.
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