20080328Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
CO MMISSI 0 NER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
FROM:DON HOWELL AND KRISTINE SASSER
DEPUTY ATTORNEYS GENERAL
DATE:MARCH 25, 2008
SUBJECT:APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO
MODIFY ITS RULE H CHARGES AND CREDITS RELATED TO
DISTRIBUTION LINE INST ALLA TIONS AND UNDERGROUND
SERVICE A TT ACHMENTS, CASE NO. IPC-08-
On March 10, 2008 , Idaho Power Company filed an Application with the
Commission seeking authority to modify its Rule H tariff relating to the charges and credits for
installing distribution lines and underground service. Specifically, the Company wishes to
update Section 4(b) concerning Underground Service Attachment Charges. The Company
requests that the Application be processed by Modified Procedure and that the updated charges
become effective May 1 , 2008.
THE APPLICATION
The Company asserts that the last major change to its charges and credits (specific to
this section of its Rule H tariff) occurred in February 1997. Since that time, the Company has
noted an increase in the construction of larger-sized residential properties within its service
territory that require a larger-sized conductor than the Company originally contemplated and
used as a cost-basis in determining its current charges and credits. The Company currently
installs three sizes of service wire to provide electric service to the customer, but its existing
tariff only provides for a uniform charge. Approximately 70% of customers are currently being
billed for the correct wire size. The use of larger-sized conductors has prompted Idaho Power to
submit this Application.
Currently, Section 4(b) of the Company s Rule H tariff (New Service Attachments
and Distribution Line Installations or Alterations) assigns additional charges for customers who
DECISION MEMORANDUM
take service under Schedules 1 , 4, 5, or 7. These customers must pay for underground service
attachments. The charges in this section are divided into two types: the Base Charge and the
Distance Charge (priced per foot based on the length of the installation).
1. Distance Charge . The current method used to calculate the Distance Charge
compares the cost difference between installing overhead and underground service based on a
single service-size.! The Distance Charge is currently $5.05 per foot and contemplates use ofthe
1/0 underground cable. In its Application, the Company proposes a Distance Charge calculation
using the same method (overhead vs. underground), but with an additional assessment dependent
on the size of the wire. The proposed charges are $6.90 per foot with 1/0 cable, $7.50 per foot
with 4/0 cable, and $9.60 per foot with 350 cable.
Section 4(b) also addresses the discount in Distance Charges for customers who
provide their own trenching. The existing charge for wire in customer-provided trenching is
$1.05 per foot. The proposed charges were determined by measuring the cost difference between
installing overhead and underground service for each service type. This is the same method that
was used when the charges were originally created. The proposed charges for the service wire
are $2.15 per foot with 1/0 cable, $3.60 per foot with 4/0 cable, and $4.65 per foot with 350
cable.
2. Base Charge.The Company s Base Charge is currently $30 for service from
existing underground facilities, and $255 for service from overhead facilities due to the cost of
the 2" riser. The Company proposes to increase the Base Charge to $40 for service from existing
underground facilities and $395 for service requiring a 2" riser. The Company also proposes to
add a charge for a 3" riser option to address the larger-sized services not previously envisioned
when the tariff was created. By offering variable pricing determined by the service size, the
Company submits that it can more accurately match the customer charges to actual costs incurred
for installing service.
3. Requested Effective Date. In order to meet the spring and summer construction
demand, the Company requests that the updated tariff become effective on May 1 , 2008. The
Company is planning a communication effort to work with builders and electricians in its service
territory. Current plans include a press release, an ad in the Idaho Business Review, and a
I Customers receive standard overhead service from the Company at no charge, but must pay the added cost to
install underground service.
DECISION MEMORANDUM
mailing to active builders and electricians with an updated price list 30 days in advance of the
new rates taking effect.
STAFF RECOMMENDATION
Staff has reviewed the Application and recommends that the case proceed by
Modified Procedure. Although the extent of the proposed changes is limited, the Application
may elicit responses from the affected parties. Consequently, Staff recommends the Commission
suspend the rate changes to be effective May 1 , 2008, issue a Notice of Application, and set a
short deadline for intervention. Once the parties are determined, they can discuss processing the
case via Modified Procedure.
COMMISSION DECISION
1. Does the Commission wish to suspend the Company s proposed effective date of
May 1 , 2008 , pursuant to Idaho Code g 61-622 , issue a Notice of Application, and set a short
deadline for intervention?
2. Once the Notice of Parties is issued, should the Staff Attorney convene an
informal prehearing conference for the parties to discuss processing this case via Modified
Procedure?
3. Anything else?
vn/
Don Howell and Kristine A. Sasser
Deputy Attorneys General
M:IPC-O8-02 ks
DECISION MEMORANDUM