20080317Application.pdf

eslDA~POR~
An IDACORP Company
01
LISA D. NORDSTROM
Attorney II
March 14, 2008
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-04
Fixed Cost Adjustment Rates
Dear Ms. Jewell:
Please find enclosed for filng an original and nine (9) copies of the Company's
Application requ'esting authorization to implement Fixed Cost Adjustment Rates for electric
service from June 1, 2008 through May 31, 2009.
Enclosed are nine (9) copies of the testimony and exhibits of Michael J. Youngblood
in support of the Application, with one copy of each designated as the "Reporter's Copy."
A compact disk containing the direct testimony and exhibits of the above-named Idaho
Power Company witness is also enclosed.
Also enclosed are the original and three (3) copies of the tariff schedules for the
Application in Case No. IPC-E-08-04 that the Company proposes become effective on
June 1, 2008. For the convenience of the Commission, I have also enclosed a copy of the
proposed tariff schedules in legislative format.
Three (3) copies of the Company's press release are also enclosed.
i would appreciate it if you would return a stamped copy of this letter for my file in
the enclosed stamped, self-addressed envelope.
Very truly yours,
etcfrd£~1t~
BLK:sh
Enclosures
-
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
c
LISA D. NORDSTROM, ISB #5733
BARTON L. KLINE, ISB #1526
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Tel: [phone]
Fax: [phone]
Inordstrom (g idahopower.com
bkline (g idahopower.com
14 Pr1 5: 02
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO IMPLEMENT FIXED
COST ADJUSTMENT (FCA) RATES FOR
ELECTRIC SERVICE FROM JUNE 1, 2008
THROUGH MAY 31, 2009.
)
) CASE NO. IPC-E-08-04
)
) APPLICATION
)
)
Idaho Power Company ("Idaho Power" or the "Company" or the
"Applicant"), in accordance with Idaho Code §61-502, §61-503 and RP 052,
hereby respectfully makes Application to the Idaho Public Utilties Commission
("IPUC" or the "Commission") for an Order authorizing Idaho Power to implement
Fixed Cost Adjustment ("FCA") rates for electric service from June 1, 2008
through May 31, 2009.
In support of this Application, Idaho Power represents as follows:
APPLICATION, Page 1
BACKGROUND
1. Idaho Power and the Commission have long agreed that promotion
of cost-effective energy efficiency and demand-side management (DSM) "is an
integral part of least-cost electric service." Order No. 30267 at 13. Traditional
rate design, however, discourages utilities that recover their fixed costs through
each kilowatt-hour sold from reducing their sales volume through investment in
energy efficiency and DSM.
2. Recognizing that "opportunities exist(edl for improvements in
operating efficiency that would benefit the Company shareholders and its
customers," the Commission opened an investigation in Case No. IPC-E-04-15 to
consider options for a performance-based mechanism that adjusts revenues
when annual energy consumption is either above or below normaL. Order No.
29558 citing Order No. 29505 at 68-69. The FCA mechanism is the collaborative
result of that docket.
FIXED COST ADJUSTMENT MECHANISM
3. In Order No. 30267 issued in Case No. IPC-E-04-15 on March 12,
2007, the Commission approved a Stipulation ("Stipulation") for the
implementation of a three-year Fixed Cost Adjustment pilot program applicable to
Residential Service (Schedules 1, 4, and 5) and Small General Service
(Schedule 7) customers. The FCA mechanism allows Idaho Power to separate
or "decouple" collection of its fixed costs from its volumetric energy sales and
provides symmetry through a surcharge or credit when fixed cost recovery per
APPLICATION, Page 2
customer varies above or below a Commission-established base. In other
words, the FCA will "true-up" the collection of fixed costs per customer to recover
the difference between the fixed costs actually recovered through rates and the
fixed costs authorized for recovery in the Company's most recent rate case.
4. The FCA works identically for both the residential and small general
service classes. For each class, the actual number of customers is multiplied by
the fixed cost per customer rate ("FCC"), which is established as a part of
determining the Company's allowed revenue requirement in a general rate case.
The product of this calculation establishes the "allowed fixed-cost recovery"
amount. This allowed fixed cost recovery amount is then compared to the
amount of fixed costs actually recovered by Idaho Power. To determine the
"actual fixed-costs recovered amount," the Company takes weather-normalized
sales for each class and multiplies that sales figure by the fixed cost per energy
rate ("FCE") as established in the Company's general rate case. The difference
between these two numbèrs (the "allowed fixed-cost recovery" amount minus the
"actual fixed costs recovered" amount) is the fixed-cost adjustment for each
class. The proposed FCA tariff, Schedule 54, can be found as Attachment 1 to
this Application and as Exhibit 7 to the testimony of Michael J. Youngblood.
PROPOSED 2008-2009 FCA RATE ADJUSTMENT
5. As part of its enhanced efforts to promote energy efficiency and
demand side management, Idaho Power Company actively pursued numerous,
additional opportunities throughout 2007. These efforts are more fully described
in the accompanying testimony of Mr. Youngblood and on pages 47-50 of the
APPLICATION, Page 3
Company's 2007 Demand Side Management Annual Report, included as Exhibit
1 to his testimony.
6. The true-up amount for the residential class for January through
December 2007 is a negative $3,587,591.70 including accumulated interest as
shown in Exhibit 5 to Mr. Youngblood's testimony. Because the residential true-
up is a negative number, it means that the rate of growth in the number of
residential customers was less than the rate of growth in the energy sales for that
class, i.e., the average use per customer increased. Therefore, the residential
class will receive a refund of the additional fixed costs collected during the year
amounting to a 1.17% decrease in residential rates.
7. For the small general service class during January through
December 2007, the FCA true-up is a positive $1,187,033.97 including
accumulated interest as shown on Exhibit 5 to Mr. Youngblood's testimony.
Because the small general service class true-up is a positive number, this means
that energy usage per customer has decreased and that the Company has
under-collected its fixed costs. The additional revenue to be recovered from the
small general service class would amount to a 7.30 percent rate increase,
which is greater than the 3 percent discretionary cap contemplated by the
Stipulation and Order No. 30267 that authorized the FCA mechanism.
Anticipating that the 3 percent cap wil be implemented , Idaho Power proposes
to recover a portion of the $1,187,033.97 from the small general service class
in the 2008-2009 FCA. The balance would remain in the deferral account
accruing interest until next year's FCA.
APPLICATION, Page 4
8. In the Stipulation and Order No. 30267 authorizing the FCA, the
Company was directed to reconcile any differences between Schedules 1 and 7
class revenue requirements and the corresponding FCC and FCE rates
approved by the Commission in the Company's 2005 general rate case, Case
No. IPC-E-05-28. As described more fully in Mr. Youngblood's testimony and
Exhibits 2 and 3 thereto, Idaho Power has reconciled the differences with the
FCC and FCE rates for use in the FCA mechanism. The Company made
additional adjustments to the FCA deferral account to reflect differences between
the year-end determination of the FCA balances and the sum of the twelve
monthly estimates of FCA balances as demonstrated in Exhibit 5 to Mr.
Youngblood's testimony.
9. In Case No. IPC-E-08-03 filed simultaneously with this Application,
Idaho Power is requesting to increase the Conservation Funding Charge,
otherwise known as the DSM "Energy Efficiency Rider." For purposes of
customer bill presentation, the Commission-approved FCA adjustment wil be
combined with the Energy Efficiency Rider into a single line item on customers'
bils pursuant to Order No. 30267. Idaho Power proposes to label the combined
line item, "Energy Efficiency Services."
10. Idaho Power requests that the FCA rate become effective on June
1, 2008, coincident with Idaho Power's Power Cost Adjustment (PCA) and with
the commencement of seasonal rates. The Company requests that the FCA rate
remain in effect until May 31,2009.
APPLICATION, Page 5
PROPOSED CHANGES TO THE FCC AND FCE
11. With the Commission's approval of the settlement increasing the
Company's general rates in Order No. 30508 in Case No. IPC-E-07-08, the FCC
and FCE need to be adjusted to reflect the new energy rates now in effect. Mr.
Youngblood's testimony and Exhibit 6 thereto demonstrate how Idaho Power
proposes using the same ratio of fixed cost recovery to total revenue recovered
through the energy rate for 2007 as the methodology for adjusting the FCC and
FCE rates to be sued for the calendar year 2008.
MODIFIED PROCEDURE
12. Idaho Power believes that a teqhnical hearing is not necessary to
consider the issues presented herein, and respectfully requests that this
Application be processed under Modified Procedure, i.e., by written submissions
rather than by hearing. RP 201 et seq. If, however, the Commission determines
that a technical hearing is required, the Company stands ready to present its
testimony and support the Application in such hearing.
COMMUNCIATIONS AND SERVICE OF PLEADINGS
13. This Application has been and wil be brought to the attention of
Idaho Power's affected customers by means of news releases to media in the
Company's service area. The news release, a copy of which accompanies this
Application, also describes recently proposed rate changes associated with the
new power plant located at the Evander Andrews Power Complex and the
Energy Efficiency Rider. The Company is currently preparing a customer bil
insert and will file a copy with the Commission once it has been finalized. Idaho
APPLICATION, Page 6
Power will also keep its Application, testimony, and exhibits open for public
inspection at its offices throughout the State of Idaho.
14. Communications and Service of Pleadings with reference to this
Application should be sent to the following:
Lisa D. Nordstrom
Barton L. Kline
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Inordstrom (g idahopower .com
bkline (g idahopower .com
Michael J. Youngblood
John R. Gale
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
myoungblood (g idahopower.com
rgale (g idahopower.com
REQUEST FOR RELIEF
15. Idaho Power respectfully requests that the Commission issue an
Order: 1) authorizing that this matter may be processed by Modified Procedure;
and 2) authorizing Idaho Power tà implement Fixed Cost Adjustment rates for
electric service from June 1,2008 through May 31,2009 as described above.
DATED at Boise, Idaho this J1y of Ma~ch 2008.
£~¡2.li~
LISA D. NORDS OM
Attorney for Idaho Power Company
APPLICATION, Page 7
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-04
IDAHO POWER COMPANY
ATTACHMENT NO.1
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-04
IDAHO POWER COMPANY
ORIGINAL TARIFF
Idaho Power Company
I.P.U.C. No. 29, Tariff No. 101 Original Sheet No. 54-1
SCHEDULE 54
FIXED COST ADJUSTMENT
APPLICABILITY
This schedule is applicable to the electric energy delivered to all Idaho retail Customers
receiving service under Schedules 1, 4, or 5 (Residential Service) or under Schedule 7 (Small General
Service).
FIXED COST PER CUSTOMER RATE
The Fixed Cost per Customer rate (FCC) is determined by dividing the Company's fixed cost
components for Residential and Small General Service Customers by the average number of
Residential and Small General Service cus tomers, respectively.
Residential FCC
Effective Date
January 1, 2008
Rate
$428.85 per Custom er
Small General Service FCC
Effective Date
January 1, 2008
Rate
$294.79 per Custom er
FIXED COST PER ENERGY RATE
The Fixed Cost per Energy rate (FCE) is determined by dividing the Company's fixed cost
components for Residential and Small General Service customers by the weather-normalized energy
load for Residential and Small General Service customers, respectively.
Residential FCE
Effective Date
January 1, 2008
Rate
3.3288Ø per kWh
Small General Service FCE
Effective Date
January 1, 2008
Rate
4.4223Ø per kWh
ALLOWED FIXED COST RECOVERY AMOUNT
The Allowed Fixed Cost Recovery amount is computed by multiplying the average number of
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCC rate.
IDAHO
Issued - March 14, 2008
Effective - June 1, 2008
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, Idaho
Idaho Power Com pany
I.P.U.C. No. 29, Tariff No. 101 Original Sheet No. 54-2
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual Fixed Costs Recovered amount is computed by multiplying the weather-normalized
energy load for Residential and Small General Service customers by the appropriate Residential and
Small General Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Sm all General Service Custom ers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 4, and 5) is -:0.0708::
cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule 7) is 0.2558
cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule wil expire May 31,2009.
IDAHO
Issued - March 14,2008
Effective - June 1, 2008
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, Idaho