20060407Stipulation.pdf

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BARTON L. KLINE ISB #1526
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Phone: [phone]
FAX: [phone]
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Attorney for Idaho Power Company
Express Mail Address
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
INVESTIGATION OF APPROPRIATE
RATEMAKING TREATMENT OF
IDAHO POWER COMPANY'S S02
AllOWANCE SALE PROCEEDS.
CASE NO. IPC-05-
STIPULATION
This Stipulation ("Stipulation ) is entered into by and among Idaho Power
Company ("Idaho Power" or the "Company ), the Staff of the Idaho Public Utilities
Commission ("Staff"), the Industrial Customers of Idaho Power ("ICIP") and Micron
Technology, Inc. ("Micron ). These entities are collectively referred to as the "Parties.
INTRODUCTION
1 .The terms and conditions of this Stipulation are set forth herein.
The Parties agree that this Stipulation represents a fair, just and reasonable
compromise of the issues raised in this proceeding and that this Stipulation is in the
STIPULATION , Page
public interest. The Parties maintain that the Stipulation and its acceptance by the
Idaho Public Utilities Commission ("I PUC" or "Commission ) represents a reasonable
resolution of legal and other issues identified in this matter. The Parties , therefore
recommend that the Commission , in accordance with RP 274 , approve the Stipulation
and all of its terms and conditions without material change or condition.
II.
BACKGROUND
On August 22 2005, in Order No. 29852 issued in Case No. IPC-
05-, the Commission approved Idaho Power s Application for (1) blanket authority to
sell surplus sulfur dioxide ("S02") emission allowances and (2) an accounting order to
provide for recording the sales of such surplus allowances pending a determination of
appropriate ratemaking treatment for the proceeds of such sales. The Company was
ordered to file a report with the Commission within sixty (60) days of the receipt of the
proceeds of any surplus S02 allowance sales. The Commission also ordered that this
docket be opened and directed the Staff to conduct workshops and make a
recommendation to the Commission regarding the appropriate ratemaking treatment of
any surplus S02 allowance proceeds.
Petitions to intervene in this proceeding were filed by ICIP and
Micron. The Commission granted the intervention of the ICIP in IPUC Order No. 29978
and Micron s petition in Order No. 30005.
Pursuant to Order No. 29852, the Company has filed three Status
Reports concerning its sales of S02 allowances. The reports were filed on
December 9 2005 , February 3 2006 and March 23 , 2006.
STIPULATION , Page 2
As of the date of this Stipulation , Idaho Power has sold 78 000 SO2
emission allowances for a total emissions allowance sales amount of approximately
$81.6 million. After subtracting transaction fees and income taxes , the total amount of
sales proceeds to be allocated to the state of Idaho is approximately $46.8 million. This
$46.8 million amount assumes an income tax rate of approximately 39% and a
jurisdictional allocation to Idaho of 94.1 %. Attachment 1 provides a detailed
computation of the approximately $46.8 million proceeds amount.
Pursuant to notice and in accordance with RP 272, the Parties held
workshops and settlement discussions on November 7 2005, November 23 2005
February 7 2006 and March 23 , 2006. Based upon the settlement discussions among
the Parties , as a compromise of the positions of the Parties in this case and for other
consideration as set forth below, the Parties agree to the following terms:
III.
TERMS OF THE STIPULATION
Inclusion of Sales Proceeds In the PCA.The Parties agree that if
the Commission issues its Order approving this Stipulation , the Company will retain
10% of the approximately $46.8 million in total emission allowance net proceeds, which
is currently approximately $4.7 million , as a shareholder benefit. The remaining 90% of
the approximately $46.8 million in total emission allowance net proceeds, which is
currently approximately $42.1 million , will be recorded as a customer benefit included as
a line-item in the PCA true-up. At the date of the Order approving this Stipulation , the
customer benefit of approximately $42.1 million, with interest computed at the PCA
interest rate , will be reflected in the Company s PCA as a credit to the PCA true-up
STIPULATION , Page 3
balance for amortization in PCA rates during the June 1 2007 through May 31 2008
PCA rate period. A more detailed description of the accounting to be used to defer and
amortize the customer benefits to the appropriate PCA account is enclosed on
Attachment 2.
Additional Sales of Surplus S02 Allowances.Idaho Power
currently anticipates needing approximately 14 500 allowances for compliance with
Clean Air Act requirements each year. Idaho Power receives allocations of SO2
allowances from the EPA each year. Idaho Power s annual allowance allocations range
from 15 524 to 28 622. As a result, it is possible that in the future Idaho Power may, in
accordance with the authority granted in Order No. 29582 , sell additional surplus S02
emission allowances in a manner similar to the sales that generated the above-
described $81.6 million proceeds. Idaho Power will record any proceeds of future sales
of surplus S02 allowances, net of taxes and fees , received after June 1 , 2006 in the
PCA. Within future PCA true-ups the recorded amount will be jurisdictionalized and
shared.
The Parties agree that this Stipulation represents a compromise of
the positions of the Parties in this case. As provided in RP 272 , other than any testimony
or comments filed in support of the approval of this Stipulation , and except to the extent
necessary for a Party to explain before the Commission its own statements and positions
with respect to the Stipulation, all statements made and positions taken in negotiations
relating to this Stipulation shall be confidential and will not be admissible in evidence in this
or any other proceeding.
STIPULATION , Page 4
10.The Parties submit this Stipulation to the Commission and
recommend approval in its entirety pursuant to RP 274. Parties shall support this
Stipulation before the Commission , and no Party shall appeal a Commission Order
approving the Stipulation or an issue resolved by the Stipulation. If this Stipulation is
challenged by any person not a party to the Stipulation, the Parties to this Stipulation
reserve the right to file briefs and comments and put on such case as they deem
appropriate to respond fully to the issues presented , including the right to raise issues
that are incorporated in the settlements embodied in this Stipulation. Notwithstanding
this reservation of rights , the Parties to this Stipulation agree that they will continue to
support the Commission s adoption of the terms of this Stipulation.
11.If the Commission rejects any part or all of this Stipulation, or
imposes any additional material conditions on approval of this Stipulation , each Party
reserves the right , upon written notice to the Commission and the other Parties to this
proceeding, within 14 days of the date of such action by the Commission, to withdraw
from this Stipulation. In such case , no Party shall be bound or prejudiced by the terms
of this Stipulation, and each Party shall be entitled to seek reconsideration of the
Commission s order, file briefs and comments , and do all other things necessary to put
on such case as it deems appropriate. In such case , the Parties immediately will
reconvene for purposes of establishing a procedural schedule for the completion of the
case.
12.The Parties agree that this Stipulation is in the public interest and
that all of its terms and conditions are fair , just and reasonable.
STIPULATION , Page 5
13.No Party shall be bound, benefited or prejudiced by any position
asserted in the negotiation of this Stipulation , except to the extent expressly stated
herein , nor shall this Stipulation be construed as a waiver of the rights of any Party
unless such rights are expressly waived herein. Except for the agreements expressly
set out in Sections 7 and 8 herein, (a) execution of this Stipulation shall not be deemed
to constitute an acknowledgment by any Party of the validity or invalidity of any
particular method , theory or principle of law, regulation or cost recovery and (b) no
Party shall be deemed to have agreed that any method, theory or principle of law
regulation or cost recovery employed in arriving at this Stipulation is appropriate for
resolving any issues in any other proceeding in the future. No findings of fact or
conclusions of law other than those stated herein shall be deemed to be implicit in this
Stipulation.
14.The obligations of the Parties under this Stipulation are subject to
the Commission s approval of this Stipulation in accordance with its terms and
conditions and upon such approval being upheld on appeal by a court of competent
jurisdiction.
15.This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
STIPULATION , Page 6
Idaho Power Company
Barton L. Kline
Attorney for Idaho Power Company
Dated:'
Micron Technology, Inc.
STIPULATION , Page 7
Idaho Public Utilities Commission Staff
trJ
Donovan Walker
Cecelia A. Gassner
Attorneys for IPUC Staff
1- 6-Dated:
!J.$tomers of Idaho Power
I ustomers
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TT A CHMENT #1
Surplus S02 Allowance Transaction Summary
Total Emission Allowance Sales
Transaction Fees
Net Proceeds
$ 81 ,647 500
(24 500)
623,000
Income Taxes (Q)39.095%(31 910,512)
Net After Tax Proceeds $49 712,488
Jurisdictional Calculations:
Idaho:
Total Net After Tax Proceeds Per Above
Idaho Juridictional Percentage
Net Amount Applicable to Idaho
$49,712,488
94.
46,779,451
Shareholder benefit (Q)10.677 945)
Net Amount to Customers $ 42 101 ,506
(1) Per IPUC Order No. 29505
(1 )
TT A CHMENT #2
Idaho Power Company
Surplus Emission Allowance Sales
Proposed Accounting Entry
(1)
254 Other Regulatory Liabilities-Emission Sales Pretax
699 XOOOOI 999254409 $ 46 779,451.35
182.3 Other Regulatory Assets - PCA Deferral - Idaho
699 XOOOOI 999 182323 $ 42,101 506.21
411.8 Gains for Disposition of Allowances
699 XOOOO 1 999 411804 677 945.
To transfer the after tax Idaho jurisdictional portion of the excess emission
allowance sales to the true-up balance and recognize Idaho Power Company s 10% share
of the gain on the sale of the Idaho jurisdictional excess emission allowances.