20060418notice_of_application_order_no_30022.pdf

Office of the Secretary
Service Date
April 18, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR CASE NO. IPC-06- 7
AUTHORITY TO IMPLEMENT POWER
COST ADJUSTMENT (PCA) RATES FOR NOTICE OF APPLICATION
ELECTRIC SERVICE FROM MAY 31, 2006
THROUGH MAY 31,2007 NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30022
On April 12, 2006, Idaho Power Company filed its annual power cost adjustment
(PCA) Application. Since 1993 the PCA mechanism has permitted Idaho Power to adjust its
rates upward or downward to reflect the Company s annual "power supply costs." Because of its
predominant reliance on hydroelectric generation, Idaho Power s actual cost of providing
electricity (its power supply cost) varies from year-to-year depending on changes in Snake River
streamflow and the market price of power. The annual PCA surcharge or credit is combined
with the Company s "base rates ) to produce a customer s overall energy rate.
In this PCA Application Idaho Power calculates that its annual power costs have
decreased $46.8 million below the normalized PCA rates. The Company estimates that this
represents a $123.5 million decrease in revenues from existing PCA rates, or an average
reduction in the PCA rates of 19.34%. Exhibit 8.
In this Order the Commission decides to process the PCA Application under
Modified Procedure and establishes a deadline for written comments. Interested persons are
invited to comment on the PCA Application.
THE PCA MECHANISM
The annual PCA mechanism is comprised of three major components. First, PCA
rates are adjusted to compensate for the forecast in Snake River streamflows and storage. In
years of abundance of streamflows with correspondingly plentiful, relatively inexpensive hydro-
generation, the Company s power supply costs are usually lower. Conversely, when streamflows
I Base rates are to be established by the Commission in Idaho Power s pending general rate case (Case No. IPC-
05-28). All parties in the pending general rate case have urged the Commission to approve a settlement Stipulation
to increase base rates by an average of3.2%.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022
or snow packs are low, Idaho Power must rely increasingly upon its other thermal generating
resources and purchased power from the regional market. The Company s other thermal
generating resources (coal and gas plants) and purchased power, are typically more costly than
the Company s hydro-generation. Under the PCA mechanism, the Company may recover 90%
of the difference between the projected power costs and the approved base power costs. Order
No. 25880.
Second, because the PCA includes forecasted costs, the preceding year s forecasted
costs are "trued-up" to account for actual costs. Third, is the "true-up of the true-up." Idaho
Power uses "normalized" power sales (measured in kilowatt hours (kWh)) from the ensuing PCA
year as the denominator to computing the true-up of the true-up. Over or under recovery
balanced with the following year s true-up. Thus, ratepayers will pay for the actual amount of
power sold by Idaho Power to meet native load requirements - no more or no less. Order No.
29334 at 4. In summary, ratepayers receive a rate credit when power costs are low, but are
assessed a surcharge when power costs are high.
NOTICE OF PCA APPLICATION
A. The PCA Components
YOU ARE HEREBY NOTIFIED that this year s PCA Application includes the
forecasted costs based on water condition; a true-up of last year s forecasted costs to reflect
actual costs; and the true-up of the 2005-2006 PCA year true-up (the true-up of the true-up).
This year s water forecast for April through July inflows at Brownlee Reservoir is 8.38 million-
acre feet (mat). The Company reports the 30-year average inflows at Brownlee is 6.3 maf (1971-
2000). This year s water forecast is roughly 33% above the 30-year average. Application at 3.
YOU ARE FURTHER NOTIFIED that based upon the projected water inflow and
replacement power costs, the Company calculates that the projected power supply costs are
$63 316,436 for the 2006-2007 PCA year (June 1 2006 to May 31 , 2007). The projected power
costs equal 0.4691 cents per kWh. The 0.4691 cents per kWh estimate is 0.2786 cents per kWh
lower than the Commission s approved normalized PCA base of 0.7477 cents per kWh.
Consequently, the Company is proposing a credit of 0.2507 cents per kWh (90% of 0.2786 cents)
for the power cost projection component. Application at 3; Schwendiman Dir. at 5.
YOU ARE FURTHER NOTIFIED that Idaho Power reports that the difference
between last year s forecast costs and actual costs (the true-up) is a credit to customers of
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022
$39 513 704. Id.; Exh. 3. The PCA true-up component also includes several additional items
previously approved by the Commission. Application at 4. These additional items include the
customer benefits associated with settlement of the Valmy outage, reduced power costs
associated with the new Bennett Mountain power plant, non-recurring tax credit issues (Order
No. 29600), and one year of interest (Order No. 29789). Schwendiman Dir. at 5-7. This amount
is then divided by the estimate of total jurisdictional sales in CY 2005 of 12 695 163 MW. Idaho
Power witness Celeste Schwendiman calculates that the true-up portion of the PCA rate is a
credit of 0.3113 cents per kWh. Id. at 7-
YOU ARE FURTHER NOTIFIED that the third PCA rate element is the "true-up of
the true-up." Last year the Company collected all but $24 513 298 of the PCA deferral balance.
The Company states this deferral balance included the carry-over from last year s PCA case and
recovery of the "lost revenue" from Case No. IPC-01-34 (Order No. 29669). Schwendiman
Dir. at 8. Dividing this amount by the 2005 Idaho jurisdictional sales results in a PCA true-up of
the true-up rate element of 0.1931 cents per kWh.
YOU ARE FURTHER NOTIFIED that combining the three components - the
projected power costs credit of 0.2507 cents, the true-up component credit of 0.3113 cents and
the true-up of the true-up surcharge of 0.1931 .cents - results in a proposed PCA rate credit for
the 2006-2007 PCA year of 0.3689 cents per kWh. This represents a decrease of 0.9728 cents
from the existing PCA surcharge rate of 0.6039 cents per kWh.
B. The PCA Rate Proposal
YOU ARE FURTHER NOTIFIED that Idaho Power has proposed to implement the
PCA rates on June 1 , 2006? The proposed PCA rate represents an overall average percentage
decrease of 19.34% but due to the fixed cents adjustment, each customer class will receive a
different percentage decrease. The Table below shows the proposed decreases in the PCA rates
for the major customer classes:
2 This would coincide with the proposed 3.2% average increase in base rates in the pending rate case, IPC-O5-28.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022
Customer Group Current Proposed Percentage
(Schedule)PCA Rate PCA Rate Decrease
Residential (1)6045~3689~15.4%
Small Commercial (7)6039~0.3689~12.
Large Commercial (9)06039~3689~21.9%
Industrial (19)6039~3689~27.
Irrigation (24-25)6052~3689~19.4%
The PCA rates for Idaho Power s three special contract customers would also decrease. The
proposed PCA rate decreases would be: 30.59% for Micron; 32.4% for Simplot; and 31.93% for
the Department of Energy (INL). Schwendiman Exh. 8. The Company s Application included
the proposed PCA tariff in Schedule 55.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission s Rules
of Procedure IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation in past PCA cases.
YOU ARE FURTHER NOTIFIED that the Commission does not intend to hold
hearing in this proceeding unless it receives written protests or comments opposing the use of
Modified Procedure. Persons desiring a hearing must specifically request a hearing in their
written comments and state why Modified Procedure is inappropriate in this case.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
PCA Application may file a written comment in support or opposition with the Commission
no later than May 12, 2006. The comment must contain a statement of reasons supporting the
comment. Written comments concerning this Application shall be mailed to the Commission
and the Applicant at the addresses reflected below:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022
Street Address for Express Mail:
Barton L. Kline, Senior Attorney
Monica Moen, Attorney II
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Mail: bklinetfYidahopower.com
mmoentfYidahopower .com
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
472 W. Washington Street
Boise, ID 83702-5983 Gregory W. Said
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
E-mail: gsaidtfYidahopower.com
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the Applicant at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that Idaho Power s PCA Application together
with the Company s prefiled exhibits and the testimony of Celeste Schwendiman can be viewed
at the Commission offices and at the principal office of Idaho Power during regular business
hours. Idaho Power Company is located at 1221 West Idaho Street, Boise, Idaho ((208) 388-
2323). Idaho Power s Application, prefiled testimony and exhibits are also available on the
Commission s Web site at www.puc.idaho.gov under the "File Room" icon and then "Electric
Cases.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code ~~ 61-307, 61-503, and 61-622. The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, IDAP A 31.01.01.000 et seq.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons wishing to file comments must do so no later than May 12, 2006.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this filA
day of April 2006.
J~.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30022