20070619Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DONOV AN E. WALKER
DATE:JUNE 15,2007
SUBJECT:IDAHO POWER'S GENERAL RATE CASE APPLICATION, CASE NO.
IPC-07-
On June 8, 2007 , Idaho Power filed an Application for authority to increase its rates
an average of 10.35%. If approved the Company s revenues would increase by $63.9 million.
The Company requested that the proposed rate increase become effective on July 8, 2007.
THE APPLICATION
Idaho Power s Application states that the overall rate of return and return on equity
established in its last general rate case (Case No. IPC-05-28) are no longer reasonable given
the Company s increased costs. Application at 4. Therefore, the Company asserts that
additional revenue is necessary immediately if it is to maintain a stable financial condition and
continue to render reliable and adequate electric service to its customers. Jd.
The Company s Application requests that 2007 be used as the test year and states that
the test year data used in this filing is based on 12 months of forecasted data. Application at 5.
Idaho Power requests the Commission grant it a return on rate base of 8.561 % (utilizing a
11.50% return on common equity) on a $1 882 670 920 net rate base. Jd. This would result in
an additional revenue requirement of $63 945 258 for the Idaho jurisdiction, which requires an
overall increase in revenue of 10.35%. Jd.
The Company proposes to increase rates to each of its customer classes, based
primarily upon cost of service. Idaho Power proposes to cap the requested increase for irrigation
customers and its three special contract customers (l.R. Simplot Company, the Department of
Energy (INL), and Micron Technology, Inc.) at 20%. Application at 3. The Company also
proposes to cap the requested increase for small commercial customers, industrial customers, and
DECISION MEMORANDUM
traffic control lighting customers at 15%. Jd. The Company s proposed increase for residential
customers is 4.5% and for large commercial customers is 13.1 %. !d. The chart below shows an
average charge by kilowatt-hour (kWh) and the proposed increase for various customer groups.
CUSTOMER CURRENT PROPOSED OVERAL
GROUP A VERAGE BASE AVERAGE BASE PERCENT AGE OF
RATE RATE INCREASE
Residential 92~19~
Small Commercial 39~50~15.
Large Commercial 03~56~13.1 %
Industrial 07~53~15.
Irrigation 60~52~20.
Idaho Power proposes to maintain its seasonally adjusted rate design (to dampen
demand during the summer months) and to maintain the 300 kWh thresholds for residential and
small commercial customers. For residential customers the Energy Charge would be 6.4012~
per kWh during June, July, and August, and 5.6875~ per kWh for all other months. Jd. For
small commercial customers the Energy Charge would be 8.5557~ per kWh during summer
months and 7.5973~ per kWh for all other months. Jd. For large commercial customers the
Company proposes to increase the Service Charge, the Basic Charge, the summer Demand
Charge, and the seasonal Energy Charges. Jd. For large commercial customers taking secondary
service, no changes are proposed for the non-summer Demand Charge. Jd. For industrial
customers the Company proposes to increase the Service Charge, the Basic Charge, and the
seasonal and time-of-use Demand and Energy Charges. Jd. For irrigation customers the
Company proposes to increase the Service Charge, the Demand Charge, as well as the in-season
and out-of-season Energy Charges. Jd.
The Company also proposes to adjust its Schedule 89 rates for energy purchases
under qualifying facilities (QF) contracts. Application at 4. The Company states that a portion
of the price it pays for energy purchased under several long-term QF contracts is based on
changes in fuel and other costs at the Company s Valmy Plant. Jd. Idaho Power proposes to
increase Schedule 89 rates from 2.012~ per kWh to 2.727~ per kWh. Jd.
DECISION MEMORANDUM
On June 14, 2007, the Industrial Customers ofIdaho Power (ICIP) filed a Petition to
Intervene in this matter. No objections to ICIP's intervention have been filed.
COMMISSION DECISION
Does the Commission wish to issue Notice of the Company s Application
including an Intervention Deadline?
2. Unless suspended, the Company s proposed rates will become effective on July 8
2007. Does the Commission wish to suspend the proposed rates for a period of 30 days plus 5
months pursuant to Idaho Code ~ 61-622?
3. Does the Commission wish to grant ICIP's Petition to Intervene?
DECISION MEMORANDUM