20061114Petition for reconsideration.pdf

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DAHO
POWE R (B)
RE.C:::!Vr:C'BARTON L. KLINE
Senior Attorney
2006 Nay 14 PI'1 ll:
An IDACORP Company
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~\:f' n U11!..111':::'J ,-,U"'i;ii00!-.-'November 11 , 2006
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re:Case No. IPC-06-
Application of Idaho Power Company for an Accounting Order
Addressing the Deferral of Costs Related to the Development of Grid
West
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho
Power s Petition for Reconsideration of Commission Order No. 30157 in the above-
referenced matter.
I would appreciate it if you would return a stamped copy of this transmittal
letter in the enclosed self-addressed , stamped envelope.
t1J1
Barton L. Kline
BLK:sh
Enclosu res
Telephone [phone] Fax [phone] E-mail BKlinefiYidahopower.com
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BARTON L. KLINE ISB #1526
MONICA B. MOEN ISB #5734
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Phone: [phone]
FAX: [phone]
bkline
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idahopower.com
mmoen (g) idahopower.com
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Attorneys 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 APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER ADDRESSING
THE DEFERRAL OF COSTS RELATED
TO THE DEVELOPMENT OF GRID WEST
) CASE NO. IPC-06-
IDAHO POWER'S PETITION FOR
RECONSIDERATION OF
COMMISSION ORDER NO. 30157
Idaho Power Company (hereinafter referred to as "Idaho Power" or "the
Company ), petitioner herein , pursuant to RP 33 and 331 et seq.and Section 61-626
Idaho Code, respectfully petitions the Commission for reconsideration of Order No.
30157 dated October 24, 2006, issued in Case No. IPC-O6-6 (the "Order"), The
Company requests that the Commission reconsider only that portion the Order that
prevents the Company from recovering carrying costs on the deferral balance during the
period of amortization. The Commission s decision not to allow the Company to recover
the carrying costs the Company will incur is unreasonable , arbitrary, capricious
unlawful , erroneous, unduly discriminatory and not in conformity with the facts of record
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO, 30157 -
and/or the applicable law, resulting in a revenue requirement and rates which are
confiscatory. This Petition is based on the following reasons and the following grounds:I. DENYING IDAHO POWER THE ABILITY TO RECOVER ITS CARRYING
COSTS ON AN AUTHORIZED DEFERRAL IS UNREASONABLE, UNLAWFUL
ERRONEOUS, ARBITRARY, CAPRICIOUS AND NOT IN CONFORMITY WITH THE
FACTS OF RECORD AND/OR THE APPLICABLE LAW.
Federal Energy Regulatory Commission ("FERC") Order No. 2000 requires every
public utility that owns , operates or controls facilities used for the transmission of electric
energy in interstate commerce to file a proposal to participate in a regional transmission
organization ("RTO") or make an alternative filing explaining the efforts to participate in
an RTO , or the reasons why the entity cannot make a filing to participate in an RTO
and the specific plans , if any, the utility has to participate in an RTO, 18 CFR 35.34(d)
(2004). Because it meets the above-described criteria, Idaho Power was required to
participate in the formation of an RTO, Grid West. (Order No. 30157 p. 3), Grid West
was not successfully formed,
When it became apparent that Grid West would probably not move forward
Idaho Power filed an application requesting that the Commission allow it to defer and
amortize two (2) categories of costs the Company had incurred to participate in the
formation of Grid West. First , the Company requested that it be permitted to defer and
amortize the principal amounts and accrued interest associated with loans the Company
made to Grid West to cover expenses Grid West incurred in its attempt to form. These
expenses including the cost of preparing periodic regulatory filings required by the
FERC, Second , Idaho Power requested that the Commission allow it to defer internal
incremental costs the Company incurred to participate in the development of Grid West.
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO. 30157 - 2
These internal expenditures included incremental travel expenses of personnel working
on development and regulatory matters , outside counsel's legal fees and carrying costs
of the funds associated with these non-loan amounts.
In the Order the Commission allowed the Company to defer for later recovery in
rates the principal potion of the loans made to Grid West. The Order denied the
Company s request to defer the other expenses the Company had incurred.
In the Order the Commission acknowledged that FERC Order No. 2000 required
Idaho Power to participate in the Grid West formation process. (Order No. 30157 p. 3),
Based on that regulatory requirement and because Idaho Power participated in the Grid
West formation process in good faith , the Commission found that it would be fair to
allow Idaho Power to defer the principal portion of the amounts loaned to Grid West.
On page 3 of the Order the Commission stated: "We agree that the Company
participation in the RTO discussions was prudent and beneficial. That is why we allow
recovery of the loan amounts,
Even though the Commission found that deferral of the loan principal amounts
would be fair, just and reasonable and in the public interest, the Commission disallowed
the recovery of a carrying charge on the deferral amount. The Order does not including
findings of fact or conclusions of law or cite any specific rationale for not allowing Idaho
Power to recover its carrying costs on the amount the Commission allowed the
Company to defer. The Order only states "On this record. .. we do not authorize a
carrying charge on the deferral account." (Order No. 30157 p, 3), The Order does not
provide any factual or legal basis on which the Commission relied to make its
determination that it is unreasonable for the Company to recover the financing costs the
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO, 30157 - 3
Company will incur to carry the deferral balance , a balance that was accrued to pursue
an activity the Commission has characterized as "prudent and beneficial", (Order No.
30157 p. 3).
II.IDAHO POWER IS PREPARED TO SUBMIT ADDITIONAL EVIDENCE.
Acknowledging the Commission s comment in the Order that On this record.
. .
we do not authorize a carrying charge on the deferral account." (emphasis added),
Idaho Power should be permitted provide additional evidence and/or argument to
support the reasonableness of allowing the Company to recover the financing costs it
will incur to carry the deferred principal balance of the loans it made to Grid West during
the amortization period.In light of the Commission s holding that the Company
participation in the RTO formation process was prudent and beneficial , additional
evidence supporting the appropriate carrying charge rate would be appropriate.
Because the Commission concluded in the Order that the deferred loan principal
amount should be amortized over a five year period beginning in January 1 , 2007, a
carrying charge rate equal to the Company authorized overall cost of capital would be
appropriate,This is the same carrying charge rate the Oregon Public Utilities
Commission approved in Order No, 06-483 when the OPUC allowed Idaho Power to
defer Grid West loan amounts.At that carrying charge rate , the total amount of
financing expense over the five (5) year deferral period would be approximately
$191 000.
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO, 30157 - 4
III.NATURE AND EXTENT OF EVIDENCE AND ARGUMENT TO BE
OFFERED ON RECONSIDERATION.
Commission Rule of Procedure 331 requires that Idaho Power state the nature
and extent of evidence and/or argument it will present or offer if reconsideration is
granted, The Commission found that the Company was required by FERC Order 2000
to pursue formation of Grid West, and this FERC order provides sufficient evidence to
support deferral of the principal amount of the Grid West loan, It seems logical that the
same regulatory requirement also provides sufficient evidence to support recovery of
the carrying costs on the deferral balance the Company will incur over the term of the
amortization period,Nevertheless , the Company is prepared to present additional
testimony and/or argument that supports recovery of carrying costs on the deferred loan
principal amount equal to the Company s overall rate of return or such other evidence
as the Commission desires to review on reconsideration,
The procedure to be followed , including the scope and type of evidence
and argument the Commission desires to receive , would be determined by the
Commission as part of its granting of this Petition for reconsideration,
Respectfully submitted this 14th day of November, 2006,
....
LX-
BART N L. KLINE
Attorney for Idaho Power Company
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO. 30157 - 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of November , 2006 , I served a true and
correct copy of the within and foregoing document upon the following named parties by
the method indicated below, and addressed to the following:
Commission Staff
Weldon B, Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
O. Box 83720
Boise , Idaho 83720-0074
Hand Delivered
----2LU.S. Mail
Overnight Mail
FAX
Email weldon.stutzman(g)uc,idaho,
Industrial Customers of Idaho Power
Peter J. Richardson , Esq.
Richardson & O'Leary
515 N. 2ih Street
O. Box 7218
Boise, Idaho 83702
Hand Delivered
--.2LU.S. Mail
Overnight Mail
FAX
Email eter(g) richardsonandolea com
Don Reading
Ben Johnson Associates
6070 Hill Road
Boise, Idaho 83702
Hand Delivered
--.2LU.S. Mail
Overnight Mail
FAX
Email dreadin
(g)
minds rin com
Barton L. Kline
IDAHO POWER'S PETITION FOR RECONSIDERATION OF COMMISSION ORDER NO. 30157 - 6