20060929Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:WELDON STUTZMAN
DATE:SEPTEMBER 29, 2006
SUBJECT:CASE NO. IPC-06-
IDAHO POWER COMPANY'S REQUEST TO DEFER THE COSTS
RELATED GRID WEST, A REGIONAL TRANSMISSION
ORGANIZATION
On April 4, 2006, Idaho Power Company filed an Application requesting an
accounting order from the Commission authorizing the deferral of costs the Company incurred
relating to the development of a regional transmission organization (RTO). Idaho Power alleges
it participated in efforts to develop an RTO, now called Grid West, pursuant to orders issued by
the Federal Energy Regulatory Commission (FERC). The Application states that Pacific
Northwest electric utilities have been involved in the RTO development process since 2000 and
that the costs incurred by the utilities were to be repaid through surcharges on customers after the
RTO became operational. It now appears the development of Grid West is unlikely, and Idaho
Power requests authorization to defer the amounts it loaned to Grid West or expended, with
interest, in the development process.
Idaho Power states its expenditures relating to the development of Grid West fall into
two categories. The first category is costs incurred in the form of loans to Grid West under a
series of funding agreements. The second category of Idaho Power s costs are internal
incremental costs, which consist of the disbursement of cash and payment of costs in the
development process. Idaho Power states it loaned a total of $1 274 158 to Grid West and
expended a total of $2 594 318 in incremental internal costs. Idaho Power states the Idaho
jurisdiction of the total amount loaned and expended is $3,350 874.
DECISION MEMORANDUM
On June 29, 2006, the Commission issued a Notice of Application and Notice of
Modified Procedure to process Idaho Power s Application. During the comment period
established by the Notice, written comments were filed by the Commission Staff and by the
Industrial Customers of Idaho Power (ICIP). Both Staff and ICIP support an accounting order
for deferral of the actual amount loaned by Idaho Power to Grid West. Staff and ICIP both
object to the deferral of the incremental internal expenses incurred by Idaho Power. Staff also
opposes deferral of the interest accrued or a carrying charge on the deferred balance. Staff
recommended Idaho Power begin amortization of the deferred balance at the conclusion of its
next general rate case or on January 1 2010 whichever first occurs, with a five year
amortization period. ICIP recommends the Commission require amortization of the costs to
begin immediately over a three-year period. Idaho Power believes Staffs recommendation
regarding amortization is reasonable.
On September 22, 2006, Idaho Power filed reply comments in response to the
comments filed by Staff and ICIP. Idaho Power argues that it should be allowed deferral of
interest on the loan amounts, a carrying charge on the deferred balance, and recovery of the
incremental internal costs it identified in its Application.
COMMISSION DECISION
Should the Commission issue an Order authorizing deferral of the amount Idaho
Power loaned to Grid West, as well as the amount the Company identified as internal expenses?
If so, should the amount for deferral include interest for Idaho Power s Idaho jurisdictional
services or a carrying charge?
Should the Order include a date for amortization to begin and the amortization
period?
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Weldon Stutzman
bls/M :IPC-O6-06 ws
DECISION MEMORANDUM