20061101final_order_no_30171.pdf

Office of the Secretary
Service Date
November 1 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER REGARDING
AMERICAN FALLS REPLACEMENT DAM
REFUNDING BONDS
CASE NO. IPC-06-
ORDER NO. 30171
On September 7, 2006, Idaho Power Company filed an Application seeking an
accounting order for authority to amortize the principal balance owed on American Falls
Replacement Dam Refunding Bonds (the Bonds) over the remaining term of the Bonds and the
operating license ofthe American Falls Dam. On October 5, 2006, the Commission issued Order
No. 30142 requesting interested persons file comments regarding the Application no later than
October 25, 2006. Only the Commission Staff filed comments, and recommended the
Commission approve the Company s Application. Based upon our review we grant the
Company s Application as more fully set forth below.
THE APPLICATION
According to the Company s Application, in April 2000 the Company refinanced the
Bonds to a variable rate, interest-only mode. The principal amount of $19 885 000 is due in full
in February 2025 , the same time that the Company s operating license expires at the American
Falls Dam. The interest on the Bonds is currently being paid monthly and expensed to Water for
Power (Account 536). The principal balance is currently recorded as a liability (Account
224200) with a corresponding deferred debit (Account 186727) in the same account.
Idaho Power states that since refinancing the Bonds in 2000 it has not amortized the
principal amount and has charged only the interest payments to the Water for Power expense.
The Company states that as a result, Idaho customers have only been paying the interest portion
of the debt since the 2003 general rate case (IPC-03-13). While this has resulted in lower
overall rates in the short term, the principal balance and carrying charge will come due in the
future, affecting rates.
The Company proposes that the deferred debit be amortized over the remaining life
of the Bonds and the license. The Application states that by amortizing the deferred asset over
the remaining lives of the Bonds and license, i., 2025 , current retail customers receiving the
benefits of this facility would fund the recovery of the principal portion just as they are currently
ORDER NO. 30171
funding the interest portion. The Company proposes amortizing the $19 885 000 in equal
monthly amounts beginning January 1 , 2006 through January 31 , 2025. This will result in an
additional $1 042 008.72 annual O&M expense for the years 2006 through 2024, and one
month's amortization of $86 834.06 in 2025 before the Bonds mature February 1 , 2025. The
annual expense would be included in the next general rate case test year.
ST AFF COMMENTS
Staff reviewed the Company s Application as well as all applications and Orders
regarding the Bonds dating back to 1976. Staff recommended that the proposed amortization of
the Bonds, and the proposed transaction to record the principal amount of the Bonds and the
current accounts and entries to record interest expenses is reasonable. Staff recommended that
the Commission approve the Company s request.
FINDINGS
We have reviewed the record for this case, including the Application and comments.
No protests to the Commission s use of Modified Procedure were filed. We continue to find that
the public interest does not require a hearing to consider the issues presented in this case and that
Modified Procedure is appropriate. IDAP A 31.01.01.204. The Commission has jurisdiction
over Idaho Power, its Application seeking an accounting order, and the issues involved in this
case by virtue of Title 61 , Idaho Code, specifically Idaho Code ~~ 61-129, 61-119 , 61-501 , 61-
901 , and 61-524, and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
We find that the Company s request to amortize the principal balance owed on
American Falls Replacement Dam Refunding Bonds over the remaining term of the Bonds and
the operating license of the American Falls Dam is reasonable. Failing to do so would subject
customers to the possible recovery of the entire principal amount in rates when it comes due in
the future. The amortization allows the customers who are currently receiving the benefits of
this facility to fund the recovery of the principal as well as the interest on this debt. The
accounting entries proposed by the Company, and recommended by Staff are approved.
ORDER
IT IS HEREBY ORDERED that Idaho Power s Application is granted.The
principal balance owed on American Falls Replacement Dam Refunding Bonds may be
amortized over the remaining term of the Bonds and operating license of the American Falls
ORDER NO. 30171
Dam.The accounting entries proposed by the Company and recommended by Staff are
approved.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order.Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this IS.f
day of November 2006.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~RJ. ~2i
D. Jewe
C mmission Secretary
O:IPC-06-19 dw2
ORDER NO. 30171