20050711Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL
DATE:JULY 8, 2005
SUBJECT:IDAHO POWER'PETITION TO MODIFY A PREVIOUS
ACCOUNTING ORDER CONCERNING PRELIMINARY, SURVEY AND
INVESTIGATION CHARGES, CASE NO. IPC-05-
On June 14, 2005, Idaho Power filed a Petition seeking a modification of a prior
accounting order concerning the accounting procedures for preliminary survey and investigation
(PS&I) costs. The Company requests that its Petition be processed under Modified Procedure.
THE PETITION
The Company s Petition recites its current accounting procedures for preliminary
survey and investigation (PS&I) charges. Generally, the Company separates all PS&I costs in
two areas: in-house and external PS&I costs. PS&I costs for new projects which are "'internal in
nature' (that is incurred in-house) will be directly expensed in the period incurred." Petition at 2
(emphasis original). Conversely, PS&I costs incurred in connection with any future projects
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. At the end of each year, the
applicable costs collected in Account 183 during the year will be transferred
to Account 168 and amortization of these "external" costs will commence the
following year over an appropriate time period. The specific amortization
period for the current year expenditures will be determined by the
Company and reviewed by Staff annually.
Petition at 3 (emphasis original).
DECISION MEMORANDUM
Idaho Power asserts that the present accounting protocols for PS&I charges are
incompatible with the Company Integrated Resource Plan (IRP) and relicensing the
Company s hydroelectric facilities.
Idaho Power proposes that it will collect both internal and external PS&I costs in
Account 183 as long as the project is considered "viable.Viability of a project will be
determined based upon whether the project is included in the Company s IRP. If the project is
determined viable (i.e., included in the IRP), the Company proposes that PS&I costs remain in
Account 183 "without any accumulation of AFUDC, until appropriate licenses and/or
Certificates of Public Convenience and Necessity are obtained.Petition at 5. Once licenses or
Certificates are obtained, the Company would then transfer those costs to Account 107 (CWIP),
and AFUDC will begin to accumulate. Id.
If the project is determined not viable (i., not included in the Company s IRP), then
the PS&I costs accumulated in Account 183 will be transferred to Account 182.3 (Other
Regulatory Assets). Expenses in Account 182.3 will be amortized over a defined period of time.
If the total amount of the project does not exceed $250 000, the amount will be fully amortized
in one year. If the accumulated costs range from $250 000 but less than $1 million, the costs will
be amortized over three years. If the project amount exceeds $1 million, the amount will be
amortized over five years.
ST AFF RECOMMENDATION
Staff recommends that the Company Petition be processed under Modified
Procedure.
COMMISSION DECISION
Does the Commission wish to process the Company s Petition under Modified
Procedure?
Don Howell
bls/M:IPCEO521 dh
DECISION MEMORANDUM