20090219Petition for Reconsideration.pdf

BARTON L. KLINE
Lead Counsel
e;IDA~POR~
An IDACORP Company
February 19, 2009
VIA HAND DELIVERY
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-08-10
General Rate Case
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Petition for Reconsideration and/or Clarification in the above matter.
Upon receipt of this filing, i would appreciate it if you would return a stamped copy of
this letter for my file in the enclosed stamped, self-addressed envelope.velJL
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
BARTON L. KLINE, ISB #1526
LISA D. NORDSTROM, ISB #5733
DONOVAN E. WALKER, ISB #5921
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
bklineCCidahopower.com
InordstromCCidahopower.com
dwalkerCCidahopower.com
E!'/O
2009 fEB I 9 Mill: 26
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 ) CASE NO. IPC-E-08-10
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC ) PETITION FOR RECONSIDERATIONSERVICE. ) AND/OR CLARIFICATION
)
Idaho Power Company (hereinafter referred to as "Idaho Powet' or "the
Company"), petitioner herein, pursuant to RP 33 and 331, et. seq., and Idaho Code
Section 61-626, respectfully petitions the Commission for reconsideration and/or
clarification of Order No. 30722, dated January 30,2009, issued in Case No. IPC-E-08-
10 ("the Order").
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION-1
I.
STANDARD OF REVIEW
The Commission's pursuit of regulatory authority is valid as long as it "has not
abused or exceeded its authority or made findings unsupported by substantial evidence
or improperly employed its own methods of rate determination." Intermountain Gas Co.
v. Idaho Public Utiities Comm'n, 97 Idaho 113, 127,540 P.2d 775, 789 (1975).
To regularly pursue its authority, the Commission must enter adequate findings
of fact based upon competent and substantial evidence. See Boise Water Corp. v.
Idaho Public Utílties Commission, 97 Idaho 832,555 P.2d 163 (1976); Hartig v. Pugh,
97 Idaho 236,542 P.2d 70 (1975). Thus "(a)n order based upon a finding made without
evidence. . . or upon a finding made upon evidence which clearly does not support it . . .
is an arbitrary act against which courts afford relief." Oregon Shortline Railroad v.
Public Utilities Commission, 47 Idaho 482,484,276 P.2d 970, 971 (1929).
Not only must the Commission make and enter proper findings of fact, but it must
set forth its reasoning in a rational manner. "What is essential are suffcient findings to
permit the reviewing court to determine that the Commission has acted non-arbitrarily."
Boise Water Corp. v. Idaho Public Utílties Commission, 97 Idaho 832, 840, 555 P .2d
163, 171 (1976).
In addition to findings of fact based on substantial, competent evidence, the
Commission must explain the reasoning employed to reach its conclusions in order to
ensure that the Commission has applied relevant criteria prescribed by statute or its
own regulations and thus has not acted arbitrarily or capriciously. See Washington
Water Power v~ Idaho Pub. Util. Comm'n, 101 Idaho 567, 575, 617 P.2d 1242, 1250
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 2
(1980) ("Not only must the Commission make and enter proper findings of fact, but it
must set forth its reasoning in a rational manner.").
Idaho Power does not believe portions of Order No. 30722 meet the above-
described requirements, specifically- the issues addressed in Sections ii-v of this
Petition. The Company respectfully requests the Commission reconsider the issues
addressed in Sections ii-v of this Petition because the Commission decisions
concerning these issues are unreasonable, erroneous, unduly discriminatory, not in
conformity with the facts of record and/or the applicable law, and result in a revenue
requirement and rates which are confiscatory. Additionally, Idaho Power seeks
clarification of the issues raised in Sections VI-iX so that it may properly implement the
Commission's Order. This Petition is based on the following reasons and upon the
following grounds:
II.
COMPUTING IDAHO POWER COMPANY'S LABOR EXPENSE FOR THE TEST
YEAR USING ANNUALIZED BUT UNESCALATED PAYROLL IS UNREASONABLE,
ERRONEOUS, AND NOT IN CONFORMITY WITH THE FACTS OF RECORD
AND/OR THE APPLICABLE LAW.
A. The Commission Approved a Reduction of $2,039,629 in the Test
Year Payroll Amount.
The Commission approved a test year payroll expense equal to an annualized,
average, actual 2008 August and September payroll expense totaling $140,903,490.
This represents a $2,039,629 reduction to the Company's proposed $142,943,119 total
annualized payroll for the 2008 test year. On page 27 of the Order, the Commission
described the basis for the approved adjustment, which was agreed to by Staff and the
Company, as follows:
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 3
The Company applied a 6.5% growth escalator to its payroll
expense, and annualized the projected December 31, 2008
amount, resulting" in a test year payroll amount of
$142,943,119. Staff reviewed the actual payroll amounts for
August and September 2008, and annualized the test year
payroll amount based on the actual figures for those two
months. Tr. p. 1264. Based on its annualization of actual
payroll amounts, Staff recommended a $2,039,629 reduction
in the Company's test year payroll expense. Although Idaho
Power disagreed with Staffs adjustment "from a ratemaking
logic perspective," the Company agreed with the adjustment
in light of "the actual plateaued employment levels in 2008."
Tr. p. 2528. The Company explained that it "is adjusting to
the economic slowdown and has instituted a selective hiring
freeze to help manage labor costs during diffcult times." Id.
Accordingly, although the Company did not agree with
Staffs methodology, the Company stated Staffs payroll
annualizing adjustment is reasonable "from a review of
employment data after the Company filing." Id. Based on
this record, the Commission finds Staffs adjustment to the
test year payroll to be fair and reasonable, and we thus
approve a reduction of $2,039,629 in the test year payroll
amount.
Idaho Power did not dispute the $2,039,629 reduction of its annualizing
adjustment to the proposed 2008 test year payroll expense at the time of the technical
hearing, nor does it now. However, the Commission's quantification of the
annualization adjustment in the Jurisdictional Separation Study ("JSS"), and ultimately
in the Company's revenue requirement, reflects a much larger reduction than the
$2,039,629. The Company used an escalation methodology to arrive at its 2008 test
year payroll of $139,259,871 and then annualized payroll to 2008 year-end levels of
$142,943,119. This methodology included the 2007 payroll escalated by 6.5 percent or
$8,501,976. Staff Exhibit No. 116. Mr. Leckie states in his direct testimony, "I believe
using the annualized average of the actual payrolls for August and September 2008 is a
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 4
better representation of the actual payroll costs the Company wil incur than the
Company's forecast for December 2008 payroll annualized." Tr. at 1265.
By accepting Staffs recommendation that it should look at the actual payroll
costs in August and September 2008, the Commission concluded that the Company's
test year payroll quantification was too high by $2,039,629. However, the Commission
removed not only the $2,039,629 but also the escalation required to arrive at the
August/September payroll levels. As a result, the test year payroll amount of
$140,903,516 accepted by the Commission in Order No. 30722 and agreed to by the
Company is not reflected in the final revenue requirement and JSS. Mr. Leckie included
the $2,039,629 annualizing adjustment to the Company's 2008 test year payroll in his
adjustment provided to Ms. Vaughn. Ms. Vaughn removed not only Mr. Leckie's
adjustment but also the Company's payroll methodology for its proposed 2008 test year.
Using the Company's payroll methodology is necessary to accurately determine the
number Mr. Leckie used for his proposed adjustment.
B. Due to Escalation Omission, the Current Revenue Requirement Must
Be Increased by $5,987,408 to Equal the 2008 Test Year Operating
Payroll Expense Approved in Order No. 30722.
Although Idaho Power does not believe the Commission intended to eliminate all
2008 test year O&M payroll escalation, either in the form the Company presented or the
form that Staff witness Leckie presented, a combination of adjustments has
inadvertently caused escalation and/or actuals to be left out entirely. Staff intended to
calculate test year operating payroll expense by using the annualized average of the
actual payrolls for August and September 2008 and then annualize that amount to
reflect payroll amounts as of January 1, 2009. The $2,039,629 reduction to the
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 5
Company's annualizing adjustment was initially proposed in the direct testimony of Staff
witness Joe Leckie (Tr. at 1265 and Exh. 116, line 5) and was to be applied to the
Company's proposed test year payrolL. The adjustment was inadvertently magnified by
the calculations of Staff witness Cecily Vaughn as she removed all increases to 2007
actual payrolL. Ms. Vaughn's direct testimony stated, "i believe it is inappropriate to
escalate labor costs using the CAGR when 2008 labor costs are more directly escalated
elsewhere. Payroll annualization and SSA has been addressed previously by Staff
witness Leckie in his direct testimony." Tr. at 1303 (emphasis added). This statement
indicates that the escalation of the 2008 labor costs would occur in Mr. Leckie's
calculation and she would not provide the escalation as her testimony was limited to
Other O&M Expenses excluding labor.
As identified in Attachment No.1, line 2, the problem is that Staffs Adjustment
for the payroll escalation to the JSS is reflected as zero because Ms. Vaughn removes
this escalation amount when she provides only for a non-payroll escalation of
$1,750,020 for 2008 O&M accounts. The $1,750,020 escalation is strictly limited to
Power Generation and Distribution Other Expense account categories reduced by
Accounting Entries. Order No. 30722 at 23.
The escalation for labor was omitted when Ms. Vaughn removes the Company's
Other O&M request for $15,985,407 (includes labor escalation) and replaces this
escalation with Staffs adjustment of $1,750,020 (includes no labor escalation). Tr. at
1299. This adjustment eliminates all 2008 test year O&M payroll escalation
expense from the Company's revenue requirement.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 6
In summary, the rates resulting from the revenue requirement approved in Order
No. 30722 currently reflect the Company's adjusted 2007 payroll before escalation plus
the results of Mr. Leckie's annualizing adjustment of $1,157,487, not the annualized
average of the actual August and September 2008 payroll specified on page 27 of the
Order. To properly present the test year payroll expense of $140,903,490
($142,943,119 less $2,039,629), the Commission must increase the current revenue
requirement by $5,987,353 to include the annualized average of the actual August and
September O&M payroll for 2008. This calculation is detailed in Attachment No. 1 to
this Petition.
The Company wil present additional testimony or written comments, including
the adjustments described in Attachment NO.1, to further detail the escalation omission
if the Commission determines that additional evidence is required to make a decision.
Idaho Power respectfully requests the Commission correct this omission so as to put
rates in place that reasonably reflect payroll expense at the agreed-upon and ordered
2008 levels.
II.
THE CALCULATION OF THE O&M ESCALATION AMOUNT DOES NOT CONFORM
TO THE ORDER. AS A RESULT OF THE ERRONEOUS CALCULATION, THAT
PORTION OF COMMISSION ORDER NO. 30722 IS UNREASONABLE,
ERRONEOUS, NOT SUPPORTED BY SUBSTANTIAL AND COMPETANT
EVIDENCE IN THE RECORD, AND NOT IN CONFORMITY WITH THE APPLICABLE
LAW.
The Commission's Order No. 30722 adopts Staffs recommendation allowing the
escalation of only two Operation and Maintenance ("O&M") expense accounts from the
2007 actual expenses. Order No. 30722 at 23. The Order allows a "5% growth
escalator" for Power Generation Other Expense and Distribution Other Expense,
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION-7
resulting in a projected growth of $2,876,561. Id. The Order also accepts Staffs
Accounting Entries adjustment of negative $1,126,541, reducing the Company's
recommended escalation amount to a total 2008 O&M account escalation of $1,750,020
with no escalation for 2007 payroll expense. Id.
There are two primary calculation errors associated with Staffs Accounting
Entries adjustment. First, Staff, and subsequently the Order, uses a "simple average"
of selective 2005-2007 account balances and does not measure "year-to-year change"
or "three years average growth" as stated in testimony and the Order. Rather than
measure growth, the three year account average ignores growth and produces values in
some cases below 2007 levels. Second, the Order reflects the Staff computation
without explanation, which completely removed some accounting entries in their
entirety, and double counted other entries in error.
A. Simple Average.
Staffs calculation of the Accounting Entries adjustment is not the "three year
average growth" Staff witness Vaughn said she used (Tr. at 1307) , nor is it "three years
of year-to-year change" as stated in the Order. Staffs calculation is a "simple average"
of selective 2005 through 2007 account balances. The Order purports to find that "three
years of year-to-year change" with reference to Staff Exhibit No. 122 is a "reasonable
and appropriate" adjustment to Staffs recommended escalation. Order No. 30722 at
23. Exhibit No. 122, as well as the accompanying direct testimony of Staff witness
Vaughn, describes this calculation as "3 yr. Average Growth." Exhibit No. 122, column
8; Tr. at 1307.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 8
As shown in the table below, there is a substantial difference between calculating
"average growth" and calculating a "simple average." Although Order No. 30722 finds
three years of year-to-year change to be the reasonable and appropriate growth
adjustment, that is not what Staff calculated to arrive at the $1,750,020 amount
approved by the Order to escalate the 2008 O&M accounts. It should be noted that the
table below only reflects the error in the formula and does not correct for entries that
were either double counted or excluded by Staff.
A B C D E F G
Actual 2004 Actual 2005 Actual 2006 Actual 2007 Formula Reference
Staffs Total
Accounting AverageEntries -($2,590,571)($1,251,401)($936,020)($1,192,203)($1,126,541)E=(B+C+D)/3 (a)
Vaughn Exhibit
No. 122, line 6
Staffs Total
Accounting GrowthEntries-($2,590,571)($1,251,401)($936,020)($1,192,203)$466,123 E=(D-A)/3 (b)
Vaughn Exhibit
No. 122, line 6
(a) The presented formula is what Staff used to quantify the "three years of year-to-
year change." This calculation is a simple average of account balance.
(b) This represents the corrected calculation using a true growth rate for the "three
years of year-to-year change.
In order to show growth, or decline, for a specific account, one must show the
change that has occurred in that account over time. In order to show the average
change or the average growth/decline in that same account, one would divide the
change by the number of years. In the above chart this is ilustrated by the second row
and represented by the equation E=(D-A)/3. By contrast, the first row in the above chart
shows Staffs calculation, which does not represent the amount of year-to-year change
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 9
in that account, it simply computes the average account balance; Le., the middle
value, and is represented by the equation E=(B+C+D)/3. Upon closer examination it is
apparent that, even using the numbers from the first row, there was consistent "growth"
in the account in that the negative number actually moves consistently closer to zero
each year.
Consequently, to properly conform to the reasonable and appropriate year-to-
year change that the Commission's Order authorizes, the calculation methodology must
be one that calculates average growth, and not one that simply reports what the
account's average amount is over three years.
B. Improper Removal and Double Counting of Entries.
Both Staff and the Order state that all Accounting Entries were included in the
calculation. Tr. at 1307, Order 30722 at 23. However, the Accounting Entries for the
Customer Accounting, Sellng and Service category were completely excluded from the
calculation. There is no explanation for this in the Order, and no specific justification for
this in the record. Additionally, several other entries were double counted in error. As
an example, an analysis of 2007 excluded and double counted entries are set forth on
Attachment No.2, Analysis of Accounting Entries. Double counted entries consist of
various FERC 500 accounts related to Distribution Expenses totaling $546,221.
Excruded entries consist of various FERC 900 accounts totaling $8,321,372. See
Attachment NO.2.
The cumulative net effect of the excluded and double counted entries, along with
the improper use of a simple average as opposed to an actual average growth
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -10
calculation, results in a difference of $1,170,998 to the revenue requirement as shown
in the corrected table below.
A B C D E F G
Actual 2004 Actual 2005 Actual 2006 Actual 2007 Growth Formula Reference
Staffs
Accounting
Entries -($2,590,571)($1,251,401)($936,020)($1,192,203)($1,126,541)E=(B+C+D)/3 (a)
Vaughn Exhibit
No. 122, line 6
Company's
Total
Accounting $7,542,019 $7,180,162 $5,007,131 $7,675,390 $4,457 E=(D-A)/3 (b)Entries -
Vaughn Exhibit
No. 119, line 75
Needed
Increase to $1,170,998Revenue
Requirement
(a) Calculated on a simple average account balance and excludes Customer
Accounting, Service and Sellng accounting entries and includes some double
counting.
(b) Calculated on a three year-to-year changes and includes all accounting entries
and excludes double counting.
The actual calculation performed by Staff and adopted by the Commission
through Order No. 30722 does not conform to what was found to be "reasonable and
appropriate" by the Order. The erroneous calculation results in a $1,170,998 revenue
requirement deficiency to the Company. As such, Idaho Power respectfully requests
that the Commission grant reconsideration and correct the calculation to conform to its
Order as shown. above.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 11
iv.
THE USE OF 2006 REVENUE FROM THE FERC CREDIT TO REDUCE 2008
REVENUE REQUIREMENT IS UNREASONABLE, ERRONEOUS, AND NOT IN
CONFORMITY WITH THE APPLICABLE LAW.
A. The Order Directing the Company to Move FERC Credit Revenues
Received in 2006 into 2008 Revenues Is Unlawful Because It Violates
Idaho Law Prohibiting Retroactive Ratemaking.
The Federal Energy Regulatory Commission ("FERC") and other federal
agencies assess utilities for costs the federal agencies incur related to their
administrative and regulatory duties. Idaho Power and other utilities believed that these
federal agency charges were overstated and sued the FERC and other federal
agencies. The Company was successful in its litigation and, as a result, in 2006, Idaho
Power received reimbursement for fees collected from 1999 through 2006 in the amount
of $3,266,010 ("FERC Credit"). Order No. 30722 requires Idaho Power to refund the
2006 FERC Credit amount to customers over a five-year period beginning in 2009,
thereby reducing the Company's annual revenue requirement by $653,202 per year
during the five-year period.
By treating revenues received in 2006 from the FERC Credit as if they were
revenues the Company received in 2008, the Commission has engaged in retroactive
ratemaking. The Idaho Supreme Court has ruled that retroactive ratemaking is contrary
to Idaho law. In Utah Power & Light vs. Idaho Public Utilties Commission, 107 Idaho
47,685 P.2d 276 (1984), the Court held:
I.C. § 61-502 provides that:
Whenever the commission . . . shall find that
the rates . . . are unjust, unreasonable,
discriminatory or preferential, . . . or that such
rates . . . are insuffcient, the commission shall
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -12
determine the just, reasonable or sufficient
rates . . . to be thereafter observed .
(Emphasis added.)
This section provides only prospective relief. It does not give
the PUC authority to prescribe surcharges or reductions to
otherwise reasonable rates in order to make up past revenue
shortalls due to confiscatory rates.
Utah Power & Light vs. Idaho Public Utiities Commission, 107 Idaho 47, 52 (1984)
(emphasis in original).
The prohibition against retroactive ratemaking has been endorsed in numerous
Commission orders. The most recent examples include: Order No. 25880, Case No.
IPC-E-94-5 (1995); Order No. 30157, Case No. IPC-E-06-06 (2006); and Order No.
28097, Case No. WWP-E-98-11 (1999). In each of those cases, the Commission
denied utility requests to recover expenses incurred in a prior period on the grounds that
to do so without a preceding deferral order would violate the legal prohibition on
retroactive ratemaking.
In its rebuttal testimony, the Company addressed Staffs recommendation that
the Commission retroactively move the revenue received in 2006 from the FERC Credit
into the 2008 test year. Company witness Smith testified:
Second, Ms. Vaughn has simply selected one expense item
out of many to make a retroactive adjustment for ratemaking
purposes. She is artificially increasing the Company's
revenues for the next five years when she creates the
amortization of her credit. This amortization has no
relationship to the actual ongoing costs of the Company. It
wil simply cause the Company to under-earn through the
device of creating a revenue stream from a prior period by
assuming that the Company has over-collected on an
expense item for a prior period. Tr. at 2346-47.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -13
At the hearing, Idaho Power provided the Commission with a copy of the
pertinent portion of Order No. 25880 in which the Commission invoked the prohibition
on retroactive ratemaking as grounds for denying Idaho Power's recovery of a
nonrecurring expense from a prior period. Tr. at 1351-52. At the hearing, counsel for
Idaho Power attempted to cross-examine the Staff witness that recommended the
Commission utilize retroactive ratemaking to treat the 2006 revenues from the FERC
Credit as if they had been received in 2008. Counsel for Micron objected, arguing that
the issue of retroactive ratemaking is complex and required analysis of legal issues.
Because the Staff witness was not competent to discuss legal matters, the cross-
examination on the retroactive ratemaking issue was suspended. The Company's
attorney then requested that the Commission take offcial notice of the retroactive
ratemaking discussion in Order No. 25880 that had been provided to the Commission
prior to cross-examination and the Commission agreed to do so. Tr. at 1351-52. A
copy of the portion of Order No. 25880 which was presented to the Commission is
included as Attachment NO.3.
As the hearing transcript shows, the question of whether the Staffs
recommendation to include the 2006 FERC Credit in 2008 rates constituted ilegal
retroactive ratemaking was squarely presented to the Commission.
Despite the issue being presented to the Commission, Order No. 30722 makes
no mention of the question regarding retroactive ratemaking as applied to the FERC
Credit. The Commission's sole grounds for accepting the Staffs recommendation to
employ retroactive ratemaking was that it found the Company's rebuttal testimony
"unpersuasive. "
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -14
B. The Order Requiring the Company to Move the 2006 Revenues
Associated With the FERC Credit into the 2008 Test Year Is Unjust,
Unreasonable, Arbitrary, and Capricious.
As the Idaho Supreme Court noted in Utah Power & Light, supra:
Whenever the Commission . . . shall find that the rates . . .
are unjust, unreasonable, discriminatory or preferential, . . .
or that such rates . . . are insuffcient, the Commission shall
determine the just, reasonable, or suffcient rates. . . to be
thereafter observed. . . . (Emphasis added.)
In his direct testimony, Company witness Gale explained how test years are used
to set a utilty's rates. He explained t he purpose of the test year is to establish
reasonable assumptions for both the expenses and revenues that the utility may incur
during the future time period in which the rates based on that test year wil be in effect.
Tr. at 162 and 165. On reconsideration, the Company wil present additional evidence
showing how, as a result of matters beyond the Company's control, e.g., unanticipated
generation plant maintenance, health care cost increases, changing loads, etc., actual
expenses can be either higher or lower than those assumed in the test year. Such
deviations from the test year assumptions are normal and expected in utility ratemaking.
On reconsideration, the Company wil provide evidence showing that contemporaneous
with its receipt of the FERC Credit in 2006, the Company actually incurred various items
of expense that exceeded the expense levels assumed in the test year. Even limiting
consideration to those expense items that exceed $1 milion wil show that in 2006 the
Company absorbed approximately $10 millon in expense above the amounts assumed
in the applicable test year.
In making its recommendation to the Commission that it would be appropriate to
add the $3 milion of revenue received in 2006 from the FERC Credit to 2008 revenues,
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -15
Staff did not address those large additional expense items the Company incurred during
2006. By accepting Staffs recommendation, the Order "cherry picks" a single revenue
item from 2006 and moved it into 2008 with the result that the Company's 2008 revenue
requirement was reduced. Such selective application of retroactive ratemaking is not
only unlawful, it is unjust, unreasonable, and constitutes arbitrary and capricious
ratemaking.
In the concluding paragraph of the section addressing the FERC Credit, Order
No. 30722 states: "Idaho Power does not dispute that it included in rates $3,266,010 for
collection from customers to pay fees it ultimately did not have to pay." Order No.
30722 at 19. This statement is true. It is equally true that during the same period Idaho
Power incurred large items of additional expense totaling approximately $10 milion that
customers ultimately did not have to pay. Fundamental fairness dictates that if the
Commission desires to use retroactive ratemaking, it must consider both revenues and
expenses that exceed test year assumptions. The Staff adjustment is particularly
disconcerting given that Exhibit NO.1 demonstrates that the Company was not over-
earning in 2006 even with the full inclusion of the FERC Credit received in October of
2006. Tr. at 102.
On reconsideration, Idaho Power wil present the results of its legal research that
shows that with one minor exception,1 the FERC Credit is the only instance where the
Commission has authorized the use of retroactive ratemaking without requiring that a
prior deferral order be obtained. In every other instance, the Commission has rejected
1 In Order No. 30157, the Commission allowed the Company to recover principal amounts loaned to Grid West. The
Commission denied recovery of all other Idaho Power expenses and carrying charges incurred in pursuit of the Grid
West project.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -16
the application of retroactive ratemaking where it would increase a utility's revenue
requirement. Idaho Power believes this demonstrates that the FERC Credit decision in
this case is arbitrary and capricious ratemaking.
Idaho Power believes that on reconsideration most of the issues relating to
retroactive ratemaking can be addressed by legal brief. On reconsideration, Idaho
Power wil also be prepared to present testimony and exhibits showing that in 2006,
when the Company received the FERC Credit, it also incurred several large items of
expenses in excess of the amounts assumed in the applicable test year. If the
Commission believes retroactive ratemaking is appropriate to recover out-of-period
revenues, the Commission should simultaneously authorize the recovery of out-of-
period expenses.
V.
REMOVAL OF PURCHASING CARD ("P-CARD") EXPENSES FROM BASE RATES
IS UNREASONABLE, ERRONEOUS, NOT SUPPORTED BY SUBSTANTIAL AND
COMPETENT EVIDENCE IN THE RECORD, AND NOT IN CONFORMITY THE
APPLICABLE LAW.
Order No. 30722 adopts Staffs recommendation to remove $884,787 from the
Company's revenue requirement as a reduction to 2007 P-Card purchases. Order No.
30722 at 26. This reduction is not supported by substantial and competent evidence in
the record, is arbitrary, and is unlawfuL. The auditing methodology used to derive this
number does not conform to any standard or accepted auditing practice, and the
ultimate recommended reduction is based upon nothing more than an arbitrary amount
chosen subjectively by Staff.
Staffs auditing methodology did not comply with either the American Institute of
Certified Public Accounts (UAICPA") or the Government Accountabilty Offce ("GAO")
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -17
standards and criteria. Tr. at 2319-20. The three main problems, or deficiencies,
related to Staffs auditing methodology and its resulting recommendation are: (1) The
criteria for evaluating audit evidence were not defined, (2) Staff did not use the
information obtained through the review of the sample of 900 reconciliations to develop
conclusions on the entire population of data, and (3) Staffs conclusions on
disallowances regarding meals and cell phone usage were completely arbitrary and
subjective and not supported by the testing documentation. Tr. at 2320.
Staff Witness Vaughn makes a 50 percent reduction to restaurant expenditures,
admittedly based only upon her personal belief that the Company is too permissive in
what it considers business related expenses, and that the restaurant expenditures are
too high. Tr. at 1322-23. Similarly, Staff removed 75 percent of the cell phone expense
charged to Administrative & General ("A&G") and 50 percent of all remaining cell phone
expense based upon Staff witness Vaughn's unverified assumptions concerning the
number of employees that have cell phones. She based her assumption of
unreasonable cell phone usage on the simplistic computation of dividing total cell phone
charges by 12 months divided by $50 per month, and then callng the result excessive.
Tr. at 1324-25. In both of these examples, Staff arbitrarily reduces the associated
expense category by either 50 percent or 75 percent simply because it thinks the
amount is too large. Staff admitted in discovery, Production Request No. 46, that no
individual P-Card envelopes (reconciliations) were reviewed by Staff that support the
charges included on Staff Exhibit No. 125, pages 1 and 2 that formed the foundation of
Staffs conclusion that the expenses should be excluded from recovery in rates. Tr. at
2322. There is no empirical rationale, no direct link to imprudent expenditures
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -18
uncovered in Staffs extensive audit, and no audit or investigation into the actual
charges in the accounts to justify or support the random deductions recommended by
Staff, and ultimately adopted by the Commission. This speculative conclusion does not
meet the legal requirement that the Commission base its findings on substantial and
competent evidence in the record.
Contrary to Staffs assumptions, on rebuttal, the Company presented testimony
that pointed out these deficiencies with Staffs recommendation. Tr. at 2314-36. With
regard to cell phone expense, the Company presented evidence that, contrary to Staff
witness Vaughn's assumptions, there were many legitimate business charges, in
addition to Staffs assumed cell phone use by employees, that make up the cell phone
expense categories. Tr. at 2327-30. Among such other charges are communications
charges for remote stream flow monitoring equipment, remote equipment monitoring
snow levels, communications service for dams, remote metering equipment, and after-
hour and on-call support for the call center. Tr. at 2327-28. These valid expenses may
have been uncovered if Staff had followed accepted auditing practices and examined
the underlying data; however, because they were not, they were also subjected to the
Staff's arbitrary 50 percent and 75 percent reductions.
Similarly, with regard to restaurant expense, in Staff witness Vaughn's response
to Idaho Power Company's Request No. 36 regarding the 50 percent adjustment to
restaurant expenditures, Staff states that "the 50% was not based on a specific
calculation. . .." As the rationale for this disallowance, Staff cites 50 percent as a
reasonable percentage "to eliminate expenditures that are believed to be excessive."
Tr. at 1323. It is striking that in support of its recommendation, Staff only cites four
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION -19
"worrisome" examples of meal expenditures that it believes are neither reasonable nor
necessary for a regulated utility based on the limited description provided in a data
dump from the Company's ledger system. Id. These four examples total less than
$150 and serve as Staffs basis for excluding nearly $236,000 in restaurant
expenditures for ratemaking purposes. Staffs workpapers do not provide an adequate
basis to conclude that the meal expenses were neither reasonable nor necessary.
There is no evidence that 50 percent of the meal expenses reviewed by Staff met Staffs
own criteria as "worrisome." Further, Staff did not include any facts or objective criteria
to support its assertion that these "worrisome" expenses are excessive.
Order No. 30722 does not offer any further explanation or rationale to support the
$884,787 P-Card deduction from revenue requirement beyond that of Staffs, and
simply states:
The significant total amount of P-Card purchases for 2007 by
itself suggests the Company's policy for authorizing business
purchases by employees may be too lenient. The
explanations of Company policy regarding particular
categories of purchases do not alleviate that concern. We
find Staffs audit to be reasonably thorough, especially
considering the limited time and resources available to Staff.
On this record, the Commission approves the adjustment to
reduce 2007 P-Card purchases by $884,787. Order No.
30722 at 26.
The Order lacks the proper foundation to reduce P-Card expenditures at the levels
recommended by Staff. Based on a limited description provided in a data dump from
the Company's general ledger system and with no apparent detailed review, a 50
percent and 75 percent adjustment removing these expenses is unreasonable. The
Company submitted evidence that it has adequate oversight controls in place for P-Card
purchases in order to ensure they have a legitimate business purpose and are neither
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 20
excessive nor unreasonable. Tr. at 2314-36. The $884,787 reduction to revenue
requirement is not supported by substantial and competent evidence in the record. It is
based upon an arbitrary, unsupported percentage reduction with no empirical nexus to
actual data. As such, upon this record, the Company respectfully requests that the
$884,787 reduction to revenue requirement be reversed upon reconsideration.
Alternatively, the Company suggests that additional evidence be taken upon this issue
whereby an independent auditing specialist could examine Staffs auditing approach
and methodology, evaluate the methodology used to reach its conclusions, and if found
to be deficient, to recommend a sound auditing methodology.
Vi.
THE COMPANY DESIRES CLARIFICATION OF THE COMMISSION'S INTENT FOR
CAPAI ENERGY EFFICIENCY EDUCATION FUNDING AND DISTRIBUTION.
On page 46 of its Order, the Commission directed Idaho Power "to fund each of
the Community Action Partnership (CAP) agencies located throughout its service
territory in the amount of $25,000 annually - for a total amount of $125,000 annually."
Idaho Power has no objection to the Commission's directive, but seeks clarification on
two issues as it attempts to productively comply.
A. The Commission Did Not Specify How the Energy Effciency
Education is to Be Funded.
Order No. 30722 does not indicate whether the $125,000 allotted annually to
energy effciency education should be paid with funds from Idaho Power's Energy
Efficiency Rider or through base rates. Idaho Power has no preference as to which
funding source is used. However, if the energy effciency education funds are to be
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 21
funded by base rates, Idaho Power wil need a corresponding revenue requirement
increase to reflect that annual expense.
B. The Commission's Directive to Fund Each Community Action
Program Equally Does Not EveniY Distribute Education Funds.
The Order directs Idaho Power to fund each CAP agency located in its service
territory in the amount of $25,000 annually. The Company believes its special needs
customers wil be best served if the education funds are targeted toward Idaho Power
Customers who apply for federal "L1HEAP/Energy Assistance" and "Project Share"
assistance at local Community Action Partnership Agency offces and at Project Share
offces. As demonstrated in Attachment NO.4, the number of Idaho Power residential
customers in each region served by CAP agencies varies widely, from 4,384 (1.1
percent) served by Eastern Id aho Community Action Partnership to 170,106 (43.5
percent) served by EI-Ada Community Action Partnership. Idaho Power requests that
the Commission authorize that the funds be spent on a per capita customer basis rather
than equally among the five service regions so that the $125,000 wil benefi as many
Idaho Power special needs customers as possible.
Idaho Power's Energy Efficiency personnel are experts on conservation and wish
to lead the effort to collaborate with CAPAI, CAP agency Energy Assistance managers,
Idaho Department of Health & Welfare staff, Commission staff, and other interested
parties to develop an educational program with supporting materials that wil educate
special needs customers about energy effciency and ways to reduce home energy
bils. Because it will be funded through electric rates, Idaho Power believes the
Commission should clarify that the funds be directed toward conservation of electricity
rather than other heating sources. Idaho Power believes that by managing the process
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 22
and working together with interested parties, it could develop the curriculum in time for
customer use by October 1,2009.
In summary, Idaho Power requests the Commission clarify its Order to specify
what funding source should be used for energy effciency education and to allow for the
equitable distribution of educational funds on a per capita customer basis throughout
Idaho Power's service territory. The Company also requests the Commission authorize
it to lead a collaborative effort with CAPAI, Commission Staff, and other interested
parties to develop a program to effectuate the equitable distribution of educational funds
throughout Idaho Power's service territory and the cost-effective development of
educational materials as described above.
VII.
THE COMPANY DESIRES CLARIFICATION THAT THE LGAR IS PROPERLY
QUANTIFIED AT $26.52/MWh.
On January 9, 2009, the Commission issued Order No. 30715 approving
modifications to the Company's Power Cost Adjustment ("PCA") mechanism as set forth
in a Settlement Stipulation ("Stipulation"). One of the issues addressed in the
Stipulation was the formula used to calculate the Load Growth Adjustment Rate
("LGAR"). The LGAR is a part of the PCA mechanism that is intended to eliminate
recovery of power supply expenses associated with load growth resulting from changing
weather conditions, a growing customer base, or changing customer use patterns.
According to the Stipulation, the LGAR wil be recalculated at the time of a general rate
case proceeding to reflect the Commission-approved adjustments to the Company's
revenue requirement.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 23
Because the Commission's Order No. 30722 does not explicitly state an LGAR
amount to become effective February 1, 2009, the Company has calculated an updated
LGAR of $26.52/MWh. Attachment No. 5 ilustrates how Idaho Power determined the
LGAR in accordance with the Commission-approved Stipulation. Idaho Power requests
the Commission review and approve the $26.52/MWh load growth adjustment rate for
use effective February 1, 2009.
VII.
THE COMPANY DESIRES CLARIFICATION OF THE COMMISSION'S INTENT FOR
TIERED RATES FOR MASTER METER ACCOUNTS.
In Order No. 30722, the Commission established a three-tiered residential rate
which became effective February 1, 2009. While this Order establishes a residential
tiered rate, it is silent as to any exception which may be considered for master-metered
customers who currently receive service under Schedule 1, Residential Service.
The Company and Commission have had previous experience with three-tiered
residential rates. In Order No. 28722 (Case Nos. IPC-E-01-7 and IPC-E-01-11), the
Commission established a three-tiered residential rate which became effective May 1,
2001. Following that Order's issuance, the Commission's Consumer Assistance Staff
received several informal complaints from several Idaho Power customers who owned
master-metered mobile homes or R.V. parks. These master-metered customers had
tenants whose usage is submetered. For example, the utility bils its master-meter park
owner who, in turn, reads the tenants' submeters and bils them for their individual
usage.Under the Commission's Master-Metering Rule 101.02 (IDAPA
31.26.01.101.02), the park owner must bil their submetered tenants at the same rate
Idaho Power would charge the tenant if the tenant were billed directly by Idaho Power.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 24
Applying the tiered residential rate to master-metered customers results in the
vast majority of usage being billed at the highest tier, while an individual tenant's
monthly usage may typically fall within the first two rate tiers (2000 kWh or less). If the
owners follow the requirements of Master-Metering Rule 101.02, there wil be a
substantial shortall between the amount the park owners (Le., the master-metered
customers) wil be able to collect from their tenants and the amount the. owners wil pay
to Idaho Power.
To address that unforeseen consequence, the Commission issued Order No.
28738 which, in part, created a separate subclass for master-metered customers served
under Schedule 1. Idaho Power was directed to transfer Schedule 1 master-metered
customers to the subclass and bil them at a flat energy rate per kWh plus the current
service charge.
The Company proposes that the Commission consider similar treatment of
master-metered customers following Order No. 30722. The Company proposes that
Schedule 1 master-metered customers be transferred to a new rate schedule, Schedule
3, Master-Metered Mobile Home Park Residential Service. Schedule 3 customers wil
be biled at a flat energy rate of 6.0061 cents per kWh plus the $4.00 service charge.
This rate represents a 1.61 percent overall increase over previous Schedule 1 rates.
This approach is consistent with the rate design for the overall average increase for the
residential class approved in Case No. IPC-E-08-10. Idaho Power would adjust the
billng for master-metered mobile home or R.V. park owners that are currently served
under Idaho Power's Schedule 1 to reflect the rates set out above. In keeping with
Master-Metering Rule 101.02, mobile home/R.V. park owners would then bil tenants
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 25
according to Idaho Power's Schedule 1 residential tiered rates. Billng submetered
customers under the tiered rates wil send an appropriate price signal and encourage
customers to conserve energy. This wil also ensure that submetered residential
tenants pay the same rates as residential customers directly served by Idaho Power.
ix.
THE COMPANY DESIRES CLARIFICATION OF THE HELLS CANYON
CONSTRUCTION WORK IN PROGRESS (CWIP).
A. The Commission Did Not Specify Regulatory Liabilty Accounting
Treatment.
Order No. 30722 authorizes the Company to include in rates an Allowance for
Funds Used During Construction ("AFUDC") amount of $6,477,352 Ourisdictional for
Idaho) associated with the CWIP balance for the Hells Canyon relicensing effort but is
silent on how Idaho Power accrues that liability. The Company proposes to account for
this AFUDC amount by recording monthly a regulatory liability in proportion to the test
year Idaho monthly sales revenue as detailed in Attachment NO.6. To be revenue
neutral, the liability needs to be accrued based on the dollar amount in the Order and
not on actual collections. Any deviation in revenue collection from the base AFUDC
amount that occurs due to changes in loads wil be credited to, or collected from,
customers through the LGAR. Idaho Power requests the Commission clarify that Idaho
Power's approach is reasonable and effectuates the Commission's intent as set forth in
Order No. 30722.
B. The Commission Did Not Specify a Carrying Charge for Hells Canyon
CWIP.
On page 14 of its Order, the Commission found that it was in the public interest
to include $6,815,472 of AFUDC in rates for the Hells Canyon relicensing project.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 26
However, the Commission did not indicate whether it believed a carrying charge was
appropriate and, if so, what that carrying charge should be.
Both Staff and Idaho Power agreed that a carrying charge was appropriate and
that funds should accrue interest at the same rate as the AFUDC booked as CWIP for
financial accounting purposes so as to prevent compounding of AFUDC that has been
included in base rates. Tr. at 352-53, 1300, and 1313.
Staff recommended that interest accrue on the recorded liability whereas Idaho
Power believes the balance on which the carrying charge is calculated must contain all
components that would be included in rate base, including tax accounts. Tr. at 1313
and 352-53. Under the Company's approach, Idaho Power would accrue interest only
on the portion of that liability that represents the amount of AFUDC included in rates
and not on what is collected for tax purposes. In this manner, the interest accrual would
match the compounding of the similar AFUDC amounts included in CWIP and recorded
for financial accounting purposes. Idaho Power calculates the carrying charge on
accumulated sulfur dioxide (S02) emission allowances in a similar manner. To do
otherwise would negatively affect Idaho Power's income because the resulting carrying
charge would be higher than what would be recorded on similar AFUDC amounts
included in CWIP. Therefore, the Company requests the Commission clarify that it (1)
authorizes a carrying charge to accrue on the portion of the Regulatory Liability that
represents the amount of AFUDC included in rates and (2) that the carrying charge rate
will be the same rate used for AFUDC recorded as CWIP for financial accounting
purposes.
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 27
X.
NATURE AND EXTENT OF EVIDENCE AND ARGUMENT TO BE OFFERED ON
RECONSIDERATION.
Commission Rule of Procedure 331 requires that Idaho Power state the nature
and extent of evidence or argument it wil present or offer if reconsideration is granted.
It is the position of Idaho Power that the evidentiary record before the Commission and
the applicable law requires that the Commission modify Order No. 30722 as set forth in
this Petition for Reconsideration. Idaho Power believes that the evidentiary record
should be augmented by additional legal briefing, testimony, and exhibits as described
earlier in the Petition. The Company is prepared to present additional testimony and/or
argument in support of each of the items it has identified as requiring modification set
forth in this Petition.
Respectfully submitted this 19th day of February 2009.
~~
Attorney for Idaho Power Company
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 28
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 19th day of February 2009 I served a true and
correct copy of the within and foregoing PETITION FOR RECONSIDERATION AND/OR
CLARIFICATION upon the following named parties by the method indicated below, and
addressed to the following:
Commission Staff
Weldon B. Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Neil Price
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson, Esq.
RICHARDSON & O'LEARY PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Idaho Irrigation Pumpers
Association, Inc.
Randall C. Budge
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
P.O. Box 1391
201 East Center
Pocatello, Idaho 83204-1391
-l Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-l Email Weldon.stutzmanCCpuc.idaho.gov
-l Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-l Email Neil.priceCâpuc.idaho.gov
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email peterCârichardsonandoleary.com
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email dreadingCCmindspring.com
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email rcbCâracinelaw.net
eloCâracinelaw. net
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 29
Anthony Yankel
Yankel & Associates, Inc.
29814 Lake Road
Bay Vilage, Ohio 44140
Kroger Co. / Fred Meyer and Smiths
Michael L. Kurt
Kurt J. Boehm
BOEHM, KURTZ & LOWRY
36 East Seventh Street, Suite 1510
Cincinnati, Ohio 45202
The Kroger Co.
Attn: Corporate Energy Manager (G09)
1014 Vine Street
Cincinnati, Ohio 45202
Kevin Higgins
Energy Strategies, LLC
Parkside Towers
215 South State Street, Suite 200
Salt Lake City, Utah 84111
Micron Technology
Conley Ward
Michael C. Creamer
GIVENS PURSLEY, LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Dennis E. Peseau, Ph.D.
Utility Resources, Inc.
1500 Liberty Street SE, Suite 250
Salem, Oregon 97302
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email tony((yankel.net
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email mkurt((BKLlawfirm.com
kboehm((BKLlawfirm .com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
Email
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email khigginsCCenergystrat.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email cew((givenspursley.com
mcc((givenspursley.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email dennvtemp((yahoo.com
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION ~ 30
Department of Energy
Lot R. Cooke
Arthur Perry Bruder
Ofice of the General Counsel
United States Department of Energy
1000 Independence Avenue SW
Washington, DC 20585
Routing Symbol GC-76
Dwight D. Etheridge
Exeter Associates, Inc.
5565 Sterrett Place, Suite 310
Columbia, MD 21044
Community Action Partnership
Association Of Idaho
Brad M. Purdy
Attorney at Law
2019 North 1ih Street
Boise, Idaho 83702
Snake River Allance
Ken Miler
Snake River Allance
P.O. Box 1731
Boise, Idaho 83701
Hand Delivered
U.S. Mail
-- Overnight Mail
FAX
-- Email Lot.CookeCãhg.doe.gov
Arthur. BruderCãhg .doe.gov
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email detheridgeCãexeterassociates.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email bmpurdyCãhotmail.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email kmilerCãsnakeriverallance.org
-~~
Barton L. Kline
PETITION FOR RECONSIDERATION AND/OR CLARIFICATION - 31
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
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BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
ATTACHMENT NO.2
Idaho Power Company
Analysis of Accounting Entries
2008 Idaho Rate Case - IPUC Order No. 30772
FERC 2007
Account Actual
Staff's 2007 Total Accounting Entries Per C. Vaughn Exhibit 122, line 6 $(1,192,203)
Double Counted Accounting Entries:
Opr Distribution Underground line Expense 584 $6,180
Opr Distribution Street light and Signal Expense 585 1,062
Opr Distribution Metering Expense 586 44,645
Maint Distribution Station Equipment Expense 592 1,506
Maint Distribution Overhead line Expense 593 286,201
Maint Distribution Underground line Expense 594 192,735
Maint Distribution Street light and Signal Expense 596 13,720
Maint Distribution Misc-Night Guard light Expense 598 172
Total Double Counted Accounting Entries 546,221 (1)
Excluded Accounting Entries:
Customer Uncollectable Accts 904 $2,029,682
Customer Assistance Exp 908 3,242,604
Transfer Credit 922 (92,350)
Outside Services Employed 923 (25)
Property Insurance 924 35
Injuries and Damages 925 2,815
Franchise Req 927 (802)
Regulatory Commission Expense 928 3,139,413
Total Excluded Accounting Entries 8,321,372 (2)
Company's Accounting Entries Per C. Vaughn Exhibit 119, line 75 $7,675,390
(1) These entries were double counted in Ms. Vaughn's summary of accounting entries Exhibit 122, column 7,
line 4 (Distribution Accounting Entries) and again in Exhibit 122, column 7, line 5 (A&G Accounting Entries).
(2) These accounting entries were completely excluded from Ms. Vaughn's summary of accounting entries in
Exhibit 122.
Attachment NO.2
Case No. IPC-E-08-10
Petition Reconsideration, IPC
Page 1 of 1
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
ATTACHMENT NO.3
::
w' ~~..
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
c--
IN THE MATTER OF THE APPLICATION OF)
IDAHO POWER. COMPANY FOR AUTHORIY) CASE NO. IPC.E.94.5
TO INCREASE ITS RATES AND' CHARGES )
FOR ELECTRIC SERVICE TO CUSTOMERS )
IN THE STATE OF IDAHO. ) ORDER NO. 25880
)
ISSUED JANARY 31, 1995
BOISE,IDABO
c
..¡
c
Attachment NO.3
Case No. IPC-E-08-10
Petition Reconsideration, IPC
Page 1 of3
./,
(
./
staments of the Company and have not ben related to any specific items on the Company's
books.
We fid these adjustments. as ag to and coned by the Company, ar reasonable
and should be adopted. Not al these adjustments afect the tet year for mtmag puross.
and thus these changes resut in a net reucton to test yea expense of 5S.906.
With respect to Stas adjustment for the exces trporttion cleang account
expense, IPCo argued th any exces relted frm its us of logical and pnident estite in
acordance with generay accepted accountig prciples, and th Stas adjustment of only one
of the many expeses that ar bas on esates is unfai. Tr. p. 2790. However, evidence
cOncerng the trsporton cleag acunt showed that ~os fr th acount charged to
expese in fact exceed actu trsporton expense incuid. We fid, therfore, that the
Sta-proposed adjustment, reultig in a reuction in expenss of 53S1;i77, is appropriat.
'1. Pacif Hide Clean.Up.
Included in IPo' s tet yea expenses is 5376,172 relatg to hazous waste'clea-up
actvities at the Pacfic Hide and Fu Co. in Pocatello. Sta proposed removal of tls expense
frm the test yea as a nonrcw:g expe. Tr. p. 1923-1924.
IPo agr th the Pacfic Hide clean-up has ben complete and thus the expenes
associa with that projec ar nomeg. IPeo argued, however, that it is apprpriatly
included to reflec expe averge anual expenses for envionmenta clea-up beaue under
cunt envinmenta laws IPo wi liely incu such costs in the futu. Tr. p. 2786. In th
alteatve. IP argued that beaue it spent over $7 mion durg 1986-93 on clea-up at
Pacifc Hide, it shoutd be alwed to amort the fu $7 mion over five yea, retig in an
anua amorton expense of $1,841,962. Tr. p. 2787.
Test yea adjusen to expeses ar intended to rere costs th Company wil
liely incu in the futu when new ra ar in effec. It is undiuted IPCo wi not incu
fu expenss associat wi the Paifc Hide clea-up, and thus th parcul expe is
nonrg and ,caot be alowed.
Although the Company's ason that it may incu sim expenses in th futu may
prove to be tre, no evidence was provided to show with any degr of certy how much those
expse wi be. We believe the Company probably does have some level of anual expen
ORDER NO. 25880 -8-
Attachment NO.3
Case No. IPC-E-08-10
Petition Reconsideration, IPC
Page 2 of3
. r-.àSsociatd with varous types of environmenta clean-ups. Those expenses may be reflecte in
varous oth~r accounts and not separately identied. Without substatial evidece of what the
aet anua level of expense is, and without a demonstrtion that it is not currently reflected
in other accounts, it is inappropriate to include thi level of e~pense with other test yea
expenses.
The alternative the Company proposed to recover the $7 mion cost of the clean-up,
reuping the amount though ras over the next .five year, would violate the priciple th ras
must l) prospee and may not be used to reoup past losses. The proscrption agaist
reacve raemakg mes the Pacic Hide amounts spt by IPo in the past ar not
recoverable thugh fubi ra uness they wer preserved for that puse by deferr or other
reguatory action. When it becae awa the clea-up cost would be substati, the Company
had the opportty to reuest ra relif or deferr of these cost for futu reover. It did
neither. Had the Copany reues deferr of these costs and the Commsion had approved
it, we could now amort ths expenditu. However, that is not the cae and we ar without
a meas to prvide reovery of ths expense reacvely.
,~.
8. Amortri of FAS.I06 mi FAS.1l2 Expelles.
Th issue relas to two changes in accounting stdar reui by Stament of
Finci Accountig Stadad No. 106, Employers' Accountig for Post-Retment Benefits
Oter Than Peions (FAS-106 and Stament of Fincial Accoutig Stadad No. 112,
Emloyers' Accountig for Post-employment Benefi (FAS-1l2). Ord No. 24831 issued in
Case No. IP-E-92-28 aproved 1P0's use of'accru accountig for post-retiment benefts
other ~ pensions in accordance wit FAS-I06. The Or al alowed lPo to defer the
diferece in expe beeen cash and accrual basis acountig, up to a ma of
$6,00,000, for up to two yea. The Company's reuest in Ca No. IP-E-94-16 to defer and
amrt over ten yea it F AS-112 trsition obligation was made subjec to reolution in th
cas.
í--
Both FAS-I06 and FAS-1l2 include the reogntion of previousy unogd
obliatons on th books of the Company. FAS-I06 alows the post-retient "trition"
oblion to be expen over a peod of up to twenty year. FAS-112 genery reui the
post-eployment obligaton to be expesed in the yea FAS-l12 is adopted.
ORDER NO. 25880 -9-
Attachment NO.3
Case No. IPC-E-QS-10
Petition Reconsideration, IPC
Page 3 of3
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
ATTACHMENT NO.4'
Idaho Power Residential Customer Count by County
COUNTY
ADA
ADAMS
BANNOCK
BINGHAM
BLAINE
BOISE
CAMAS
CANYON
CASSIA
ELMORE
GEM
GOODING
IDAHO
JEROME
LEMHI
LINCOLN
MINIDOKA
ONEIDA
OWYHEE
PAYETTE
POWER
TWIN FALLS
VALLEY
WASHINGTON
Idaho Total
Total # of customers
% of customers
Customer
Count
CAP
AGENCY
CAP
CCOA:
EI-Ada:
EICAP:
SCCAP:
SEICAA:
390,925
January 2009
Community Action Partnership Agency
Canyon County Office on Aging
Elmore-Ada Community Action
Eastern Idaho Community Action
South Central Community Action
Southeastern Idaho Community Action
Attachment NO.4
Case No. IPC-E-08-10
Petition Reconsideration, IPC
Page 1 of 1
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
ATTACHMENT NO.5
Idaho Power Company
Derivation of the Load Growth Adjustment Rate
Effective February 1, 2009
The Load Growth Adjustment Rate consists of thee components:
1. A return component based upon production related rate base.
2. An expense component based upon production related expenses.
3. A revenue component based upon production related revenue.
Component 1: Production Related Rate Base
The Production Related Rate Base component was determined according to Staff s
adjusted of Exhibit No. 63, page 1, which contains the demand and energy components of
rate base allocated to the production.
Demand
Energy
Total
$428,629,608
$501,662,258
$930,291,867
The Commission approved cost of capital strctue is 50.1 percent debt and 49.9 percent
equity with an overall rate of retu of 8.18 percent:
Rate base
Debt
Equity
$930,291,867 !§ 8.18% = $76,097,875
$471,937,064 !§ 5.93% = $27,971,710
$464,978,423!§ 10.50% = $48,127,254
The Equity piece is grossed-up for taxes (1.642 multiplier)
Grossed-up Equity
Debt
LGAR Component 1
$79,024,952
$27,971,710
$106,996,661
Attachment NO.5
Case No. IPC~E-08-10
Petition Reconsideration, IPC
Page 1 of2
Component 2: Production Related Expenses
The Production Related Expenses component was determined according to Stafr s
adjusted Exhbit No. 63, page 2, which contains the demand and energy components of
expenses allocated to the production fuction.
Demand
Energy
Total
$124,172,900
$317,934,558
$442,107,458
According to the LGAR computational methodology agreed to in the Stipulation,
expenses related to customer service, and general and administrative expenses that are
not directly associated with production are excluded from the LGAR. The amount of this
exclusion is found in Staffs adjusted Exhbit 62, page 61, lines 467 through 485 and the
adjusted Exhibit 62 page 66, lines 489 though 520. The sum of these exclusions is
$37,041,652.
LGAR Component 2 $405,065,806
Component 3: Production Related Revenues
The Production Related Revenues component was determined according to Sta s
adjusted Exhibit No. 63, page 3, which contains the demand and energy components of
expenses allocated to the production fuction.
Demand
Energy
LGAR Component 3
LGARRate
$1,137,354
$112,111,132
$113,248,486
The Load Growth Adjustment Rate (LGAR) is equalto the result of adding Components
1 and 2, then subtracting Component 3, and finally dividing by the Commission approved
Idaho jurisdictional firm load.
Component 1:
Component 2:
Component 3:
(1) + (2) - (3)
Idaho jurisdictional load
LGARRate-
Effective February 1, 2009
$106,996,661
$405,065,806
$113,248,486
$398,813,981
15,036,726 MWh (Exhbit 51)
$26.52/MWh
Attachment NO.5
Case No. IPC-E-08-10
Petition Reconsideration, IPC
Page 2of2
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
ATTACHMENT NO.6
2009 Relicensing AFUDC Collections
IPUC Order No. 30722 . 2008 Idaho Rate Case
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Idaho
Retail Sales
$ 55,055,481
51,071,874
47,200,999
46,504,066
56,289,545
68,479,339
73,632,567
65,388,791
49,783,850
47,585,630
53,894,980
58,282,419
Percentage
8.18%
7.59%
7.01%
6.91%
8.36%
10.17%
10.94%
9.71%
7.40%
7.07%
8.01%
8.66%
Total $ 673,169,541 100.00%
Total AFUDC Collections Allowed Recovery per IPUC Order No. 30722
Tax Gross-up
Revenue Requirement
Deferred
Revenue
Collections
$ 869,855
806,915
745,757
734,746
889,353
1,081,946
1,163,365
1,033,117
786,565
751,834
851,519
920,839
$ 10,635,812
$ 6,477,352
1.642
$ 10,635,812
Attachment NO.6
Case No. IPC-E-08-10
Petition Reconsideration, ¡PC
Page 1 of 1