20061122final_order_no_30189.pdf

Office of the Secretary
Service Date
November 22, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER FOR TREATMENT
OF THE DEMAND SIDE MANAGEMENT
PROGRAMS
ORDER NO. 30189
CASE NO. IPC-06-
Application
On September 11 , 2006, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) for an accounting order
authorizing the Company to track its transactions for Demand Side Management (DSM)
programs by implementing supplemental accounting treatment for its DSM Energy Efficiency
Tariff Rider (Rider).
As reflected in the Company s Application, since the 2002 approval of the Energy
Efficiency Tariff Rider by the Commission in Order No. 29026, DSM programs have been an
integral part of the Company s operations.On May 13 , 2005, in Order No. 29784, the
Commission approved an increase in the funding and program expenditures associated with the
Rider by authorizing the collection of 1.5% of customers' base revenues.
According to Generally Accepted Accounting Principles (GAAP), Statement of
Financial Accounting Concept (SFAC) No. 6, ~~ 70, 78-, 215 , money collected and expended
as part of a utility s standard business needs to be reflected on the utility s income statement.
Presently Idaho Power utilizes the following accounting entries to Energy Efficiency
Rider funds:
1. As funding is received from customers, the following transaction is made
to record cash received and set up the obligation to spend the money in
the future on specific programs funded through the Energy Efficiency
Rider:
Dr. Account 131000 - Cash
Cr. Account 254201 - Regulatory Liability
2. As DSM program expenditures are made, the following transaction is
made to record cash paid and reduce the liability account:
Dr. Account 254201 - Regulatory Liability
Cr. Account 131000 - Cash
ORDER NO. 30189
These accounting entries, the Company contends, accurately track DSM-related regulatory
liabilities by recording all transaction activity exclusively through the Company s balance sheet
accounts.
The Company in this Application, however, in addition to continuing the above
mentioned balance sheet accounting entries, to be consistent with GAAP standards, proposes to
create an automatic "monthly voucher" to parallel the balance sheet activity in the Company
income statement. At the end of each month, the Company would make a set of accounting
entries to recognize the expenditures made in serving the regulatory obligation along with an
equal, offsetting entry to recognize the proceeds from Energy Efficiency Rider funds. To
accomplish this objective, the proposed accounting entries are:
Dr. Account 908.xxx - Customer Service Operating Expense
Cr. Account 456.xxx - Other Operating Revenue
Because the incoming and outgoing dollars recognized in the Income statement
subaccounts will be of equal amounts, the net result to the Company s net income will be zero.
Idaho Power contends that there are no current economic tax liability changes or any other net
financial effects from the inclusion of these income statement accounting entries. For external
reporting purposes, the Company contends that the accounting trail of specific DSM related
funding and expenditures will be much easier to track through income statement detail rather
than relying solely on cumulative balance sheet activity.
Comments
On September 28 2006, the Commission issued Notices of Application and Modified
Procedure in Case No. IPC-06-20. The deadline for filing comments was November 2006.
The Commission Staff was the only party to file comments. Staff recommends approval of the
Application and proposed accounting changes.
Staff reports that it conducted an audit of the Company s current accounting
treatment of DSM to determine how the Company accounts for DSM expenditures now and how
the proposed accounting treatment will be used to track expenditures in the future. Staff believes
that the Company-proposed subaccounts and adjustment methodology for rate cases will provide
the ability to ensure that any expenses associated with the DSM Rider programs or funding will
not be commingled or receive double recovery for ratemaking purposes. Staff agrees that the
proposed DSM expenditure bookkeeping and accounting changes requested by Idaho Power will
ORDER NO. 30189
provide the Company with the ability to be consistent with GAAP accounting requirements and
will also allow parties to accurately track DSM rider revenues, expenditures and related
regulatory liabilities. The proposed changes in accounting treatment, Staff agrees, will have no
impact on the Company s net income and will make it easier to track the DSM detail in its
income statement.
Commission Findings
The Commission has reviewed the filings of record in Case No. IPC-06-
including the comments and recommendations of Commission Staff. We continue to find it
reasonable to process this matter pursuant to Modified Procedure.Reference IDAPA
31.01.01.204.
Idaho Power in Case No. IPC-06-20 has requested an order authorizing proposed
accounting treatment of DSM programs. The Company, we find, is not proposing to change its
current balance sheet accounting procedures regarding DSM Energy Efficiency Rider funding.
The Company instead seeks only to make parallel accounting entries to the income statement in
an attempt to more closely comply with GAAP standards and auditing efficiencies. The
Company represents and we find that the proposed accounting entries will have no effect on the
Company s net income. We find that the proposed changes will make it easier to accurately
track DSM Rider revenues, expenditures and related regulatory liabilities. We accordingly find
good reason to approve the Company s Application.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility and the issues raised in Case No. IPC-06-20 pursuant to authority granted in
Title 61 , Idaho Code, and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the Company s Application in
Case No. IPC-06-20 to implement a supplemental accounting method for funding and program
expenditures associated with its DSM Energy Efficiency Tariff Rider.
ORDER NO. 30189
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. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;1.;l..;J(
day of November 2006.
~~~
PAUL KJELe NDER, PRESIDENT
~~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
D. Jewe
Commission Secretary
bls/O:IPC-O6-20 sw
ORDER NO. 30189