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Home My WebLink About20061219Application.pdf-:- DAHO -..;!! POWE R (B) - " , ,\: r.ot:Ct.\\ ! ,.\'\..... H\ 4~ 41 1\J~~ DEC \ ~ ~)\' :::C\~0".J" ~" ., ,::, c;c :!\\,I' December\.r8~2'd6t3 - BARTON L. KLINE Senior Attorney An IDACORP Company 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- In the Matter of the Application of Idaho power Company for an Accounting Order to Comply with SFAS 158 Regarding Treatment of Pension and Postretirement Benefit Obligations Dear Ms. Jewell: Please find enclosed for filing an original and seven (7) copies of Idaho Power Company s Application for 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. BLK:sh Enclosures Telephone (208) 388-2682 Fax (208) 388-6936 E-mail BKline(ij)idahopower.com HEC E i\fC: nnc r-r ,Yo~ u 0 - .... ' I I Ii . BARTON L. KLINE ISB #1526 MONICA B. MOEN ISB # 5734 Idaho Power Company O. Box 70 Boise, Idaho 83707 Phone: (208) 388-2682 FAX: (208) 388-6936 bkline (Q) idahopower.com mmoen (Q) idahopower.com UTjl ' '~ c:)j:;iSIC:i: 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 TO COMPLY WITH SF AS 158 REGARDING TREATMENT OF PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS. ) CASE NO. IPC-06- ) APPLICATION COMES NOW , Idaho Power Company ("Idaho Power" or "the Company ) and in accordance with the provisions of Idaho Code 9 61-524, and RP 052 , hereby applies for an accounting order authorizing the Company to (1) record , as a regulatory asset or regulatory liability, the cumulative financial statement impact resulting from the Company implementation of Statement of Financial Accounting Standards ("SFAS") 158; and (2) APPLICATION, Page record on an ongoing basis, as a regulatory asset or a regulatory liability, an amount equal to the changes in the SFAS 158 related balances. Such an order will not materially affect the current level of pension and postretirement costs or cost of capital calculations included in the Company s revenue requirement. In support of this Application, Idaho Power states as follows: Idaho Power is an electrical corporation and public utility in the state of Idaho and is subject to the jurisdiction of the Commission with regard to its rates , service, and accounting practices. This application is filed pursuant to Idaho Code 9 61-524, which authorizes the Commission to prescribe the accounting to be used by public utilities subject to its jurisdiction. Communications regarding this Application should be addressed to: Barton Kline Monica Moen Attorneys for Idaho Power Idaho Power Company O. Box 70 Boise , Idaho 83707-0070 bkline (Q) idahopower.com mmoen (Q) idahopower.com John R. Gale Vice President, Regulatory Affairs Idaho Power Company O, Box 70 Boise, Idaho 83707-0070 male (Q) idahopower.com BACKGROUND Idaho Power currently accounts for pension and postretirement benefits in accordance with SFAS Nos. 87, 88 106 , and 132(R). In September 2006, the Financial Accounting Standards Board ("FASB" issued Statement No, 158 Employer s Accounting for Defined Benefit Pension Plans and Other Postretirement Plans an amendment of SFAS No. , 88 106, and 132 (R). Under SFAS 158 , an employer that is a business entity and sponsors one or more single- APPLICATION , Page 2 employer defined benefit plans must (1) recognize the funded status of a benefit plan in its statement of financial position and (2) recognize as a component of other comprehensive income, net of tax, the actuarial gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS No. 87 Employers ' Accounting for Pensions' or No. 106 Employers Accounting for Postretirement Benefits Other Than Pensions. Under SFAS 158, the benefit obligation of a pension plan is the projected benefit obligation and the benefit obligation of any other post-retirement benefit plan , such as a retiree health care plan , is the accumulated postretirement benefit obligation. addition, amounts recognized in the accumulated Other Comprehensive Income, including the gains or losses , prior service costs or credits, and the transition asset or obligation remaining from the initial application of SFAS Nos. 87 and 106, are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements. Under SFAS 158 , entities, including Idaho Power and other public utilities are required to recognize and account for pension and other postretirement benefit plans differently than they have traditionally accounted for them. The SFAS 158 changes affect pension assets and liabilities and other comprehensive income , but do not affect the income statement.Other comprehensive income is a component of equity on the Company s balance sheet and the balances in that account are used in general rate cases to determine Idaho Power s revenue requirement., Unless the regulatory accounting changes described in this application are approved, the GAAP accounting changes APPLICATION , Page 3 required by SFAS 158 will affect the calculation of revenue requirement in future rate case proceedings. Idaho Power is required to implement SFAS 158 in order to comply with generally accepted accounting principles. In order to reflect the impact of SFAS 158 Idaho Power will record on its books the transition entry shown in Exhibit 1. The amounts shown in Exhibit 1 represent the effect based on January 1 , 2006 actuarial valuations however the actual entries recorded in December 2006 will use actuarial valuations as of December 31 , 2006. Exhibit 2 illustrates future annual entries that will be required by SFAS 158 to record pension expense and postretirement benefit expense. 9. In order to reflect the adoption of SFAS 158, Idaho Power will record on its books, as shown in Exhibit 1 , two transition entries, one for the pension plan and one for the postretirement benefit plan. The third entry, shown on Exhibit 1 , will create the regulatory asset. The net difference between these three entries is the cumulative impact of the implementation of SFAS 158. Idaho Power seeks Commission approval to record that cumulative impact as a regulatory asset or regulatory liability. In addition to these transition entries, SFAS 158 will require entries to record the annual pension expense, as shown in Exhibit 2. The net effect on the balances is detailed at the end of this exhibit. 10. This standard will affect capitalization ratios used by regulatory bodies, credit rating agencies , and covenants of debt financings. In order to reconcile the requirements of SFAS 158 with regulatory accounting practices, the Company seeks Commission approval to record the effect of the adoption of the standard , allowing other comprehensive income to be deferred as a regulatory asset or liability. APPLICATION , Page 4 11.Nothing in this application is intended to request any approval regarding future ratemaking treatment; this request is not intended to change the current cost recovery of SFAS 87 or SFAS 106 expenses. WHEREFORE, Applicant Idaho Power Company requests that the Idaho Public Utilities Commission issue its order: Authorizing Idaho Power to record, as a regulatory asset or a regulatory liability, the cumulative financial statement impact resulting from the Company implementation of SFAS 158; and Authorizing Idaho Power to record on an ongoing basis, as a regulatory asset or regulatory liability, an amount equal to the changes in the SFAS 158 related balances. Idaho Power recommends that the Commission process this Application under modified procedure pursuant to RP 201 et seq.but the Company stands ready to present its testimony and support the program in a technical hearing if the Commission determines that such a hearing is required. Respectfully submitted this ) ~,. day of December, 2006. ~tL.BART L. KLINE Attorney for Idaho Power Company APPLICATION , Page 5 EFO RE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC-O6- ID AH POWER COMPANY EXHIBIT NO. APPLICA TION Exhibit 1 Entries to adopt FAS 158 - based on January 1 , 2006 actuarial and general ledger balances Pension Plan 219 190 165 253 Other comprehensive income Deferred tax asset Prepaid expense Other deferred credits 814 919 500 219 928 252 386,886 Postretirement PlanDr 219 Dr 190 Cr 228, Other comprehensive income Deferred tax asset Accumulated provision for pension and benefits 721 295 093 640 814 935 Proposed regulatory entry 182,Regulatory assets 130 073 219 Other comprehensive income 536 214 190 Deferred tax asset 593 859 Net effect 182.Regulatory assets 130 073 165 Prepaid expense 928 252 253 Other deferred credits 386 886 228,Accumulated provision for pension and benefits 814 935 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC-O6- ID AH POWER CO MP ANY EXHIBIT NO. APPLICA TION Pension Plan 926 219 253 190 Postretirement PlanDr 926Cr 219 Cr 228.Cr 190 219 190 182. 926 253 228, 182, Pension expense entries under FAS 158 Provision for pension and benefits Other comprehensive income Other deferred credits Deferred tax asset Provision for pension and benefits Other comprehensive income Accumulated provision for pension and benefits Deferred tax asset Proposed regulatory entry Other comprehensive income Deferred tax asset Regulatory assets Net effect Provision for pension and benefits Other deferred credits Accumulated provision for pension and benefits Regulatory assets 792 485 Exhibit 2 482 946 999,471 310,068 682 824 893,937 215 976 11,475 309 1,410 991 365 925 905 908 109 913 999,471 365 925 109 913 Notes: 1) These entries are based on January 1 , 2006 actuarial valuations, Actual amounts will be based on year-end valuations, 182. 165 253 228, 926 Net effect on balance at end of year: Regulatory assets Prepaid expenses Other deferred credits Accumulated provision for pensions and benefits Provision for pension and benefits 020 160 475 309 10,928 252 386 357 180 860