20090319reconsideration_order_no_30754.pdf

Office of the Secretary
Service Date
March 19 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC
SERVICE TO ITS CUSTOMERS IN THE
STATE OF IDAHO
ORDER NO. 30754
CASE NO. IPC-08-
The Commission issued its final Order No. 30722 in this case on January 30, 2009.
Idaho Power Company filed a Petition for Reconsideration and/or Clarification on February 19
2009. Commission Staff and the Community Action Partnership Association of Idaho (CAP AI)
filed Answers to the Company s Petition. The Department of Energy (DOE) also filed a Petition
for Reconsideration.The Commission in this Order grants Idaho Power s Petition for
Reconsideration and Clarification to correct errors and clarify the Commission s decisions in
Order No. 30722, and denies DOE's Petition.
Idaho Power requests reconsideration on four issues and clarification on another four.
The four issues identified for reconsideration are: (1) calculation of the test year payroll expense;
(2) calculation of certain Operation and Maintenance (O&M) expenses; (3) amortization of $3.
million the Company recovered in Federal Energy Regulatory Commission (FERC) fees;, and
(4) disallowance of a percentage of employee Purchase Card (P-Card) purchases. The
Commission grants reconsideration on the payroll expense issue and the double counting in the
O&M expense adjustment to correct miscalculations and denies reconsideration of the remaining
issues. We grant the Company s Petition to clarify four issues and approve its recommended
clarification of each issue.
DOE in its Petition for Reconsideration requested a change in the cost-of-service
model used to evaluate the relative costs to provide service to Idaho Power s different classes of
customers. Specifically, DOE contends a weighted 12 coincident peak (W12CP) allocator
should be used in place of the 12 coincident peak (12CP) allocator used in the model for the
allocation of demand-related production costs. DOE also suggested the Commission order the
Company and Staff to organize workshops to further investigate other cost-of-service issues
raised by the parties in the case. The Commission denies DOE's Petition for Reconsideration.
ORDER NO. 30754
We first address the issues Idaho Power identified for reconsideration and then
discuss the four issues on clarification, followed with a discussion of DOE's Petition for
Reconsideration.
Issues for Reconsideration
1. Calculation of Payroll Expense. The Commission approved a test year payroll
expense of $140,903,490 , or approximately $2 million less than recommended by the Company.
Idaho Power determined a payroll amount for its 2008 test year by applying a growth estimate to
its 2007 actual payroll amount. In Order No. 30722, the Commission approved Staffs
recommendation to use actual payroll figures for August and September 2008 , annualized for the
entire year, to establish the test year payroll amount. Idaho Power agreed with this calculation in
its rebuttal testimony, but asserts in its Petition for Reconsideration that "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 J(urisdictionalJ S(eparationJ
S (tudy J.Idaho Power Petition for Reconsideration, p. 5. Correction of this miscalculation will
increase the Company s revenue requirement by $5 987 353. Idaho Power Petition, p. 7.
Commission Discussion.The Commission reviewed the calculation of the test year
payroll as included in the JSS and calculation of the Company s revenue requirement, and
determined that the error identified by Idaho Power did occur. The $140 million figure approved
by the Commission for test year payroll apparently was not actually calculated in the final
revenue requirement for the Company. The error apparently occurred when the Company
proposed growth estimate was removed from the 2007 payroll amount, along with the
Company s non-payroll escalators for most other O&M accounts. The Commission s final
Order thus reflects the Company s adjusted 2007 payroll, rather than the annualized average for
August and September 2008 as approved by the Commission. We grant reconsideration on this
issue to correct this error and increase the Company s revenue requirement by $5 987 353. The
rates resulting from increases in the Company s revenue requirement are set forth in Attachments
3 to this Order.
2. Calculating O&M Expenses . The Company contends two calculation errors are
associated with Operation and Maintenance expense accounts when calculating the 2008 test
year amount. The Commission rejected most of the Company s estimated growth amounts in the
O&M accounts, but approved an increase in the Power Generation Other Expense and
ORDER NO. 30754
Distribution Other Expense accounts. Idaho Power contends the Commission intended to use a
year-to-year change to escalate these accounts, but that the actual calculation computes an
average account balance over three years rather than a year-to-year change. Idaho Power argues
that "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.
Idaho Power Petition, p. 10. The Company also claims that some accounting entries were either
double counted or were excluded in the final revenue requirement determination. Idaho Power
Petition, pp. 10-, Attachment 2 to Petition.
Commission Discussion.The Commission reviewed the approved calculation of the
increase in the Power Generation Other Expense and Distribution Other Expense accounts and
grants Idaho Power s request for reconsideration on the calculation for the double counting of
some accounts and denies reconsideration of the other items. We also clarify our decision in
Order No. 30722, the final Order in this case.
The calculation of the year-to-year change to escalate accounts is calculated
accurately in the revenue requirement. The Commission s intent is to use the three-year average
growth where there is no year-to-year trend increase. Staffs exhibits showed the average for
accounts where there is no trend in year-to-year growth. This differs from the two point growth
calculated by the Company. Where the accounts fluctuate, the average is more appropriate. We
reaffirm our decision accepting the calculation of the average for revenue requirement purposes
and thus deny reconsideration on this issue.
The second error claimed by the Company in this area is associated with accounting
entries that were excluded or double counted. Accounting entries for the most part are not items
that should be escalated.F or instance, one of the largest amounts is amortization of
weatherization expenditures. This amortization is set based on prior Commission decisions and
is not an amount that should be escalated. Changes to these accounting entries can adequately be
adjusted, if needed, in pro forma adjustments. We confirm the Order results in part, but reflect a
change in revenue requirement for the double counted accounts. The double counted entries set
forth in the Petition, Attachment 2, for the various FERC 500 accounts related to Distribution
Expenses totaling $546 221 are added to the revenue requirement in Attachments 1-3 to this
Order.
ORDER NO. 30754
3. Amortization of FERC Fee Excess Payment.During 1999-2006, Idaho Power
paid regulatory fees to FERC and other federal agencies that later were determined to be
excessive. In 2006, the Company received a refund of $3 266 010 for the amount overpaid, and
in Order No. 30722 the Commission concluded that "the amount overcollected from customers
should be amortized over five years, reducing annual requirement by $653 202 during that
period." Order No. 30722, p. 19.
Idaho Power contends the Commission s decision to recapture the $3.2 million
overpaid to FERC, and amortize it over five years, is impermissible retroactive ratemaking.
Citing Utah Power Light v. Idaho Public Utilities Commission 107 Idaho 47, 685 P.2d 276
(1984), Idaho Power asserts the Idaho Supreme Court "has ruled that retroactive ratemaking is
contrary to Idaho law.Idaho Power Petition, p. 12. The Company also reminds us that it
requested the Commission take administrative notice of a prior Order where recovery of
expenses was not authorized because the Company failed to obtain a deferral order. In Order
No. 25880, Case No. IPC-94-, the Commission denied recovery of environmental clean-up
costs the Company incurred during an earlier period at a facility called Pacific Hide. Idaho
Power argues in its Petition that the Pacific Hide case demonstrates the Commission
commitment to a retroactive ratemaking proscription in regard to earlier expenses, and that
allowing recovery of the FERC refund in this case amounts to "selective application of
retroactive ratemaking.Idaho Power Petition, p. 16. The Company states it can "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." Idaho Power Petition, p. 15. The Company argues that fundamental fairness
requires the Commission, if it "desires to use retroactive ratemaking, it must consider both
revenues and expenses that exceed test year assumptions." Idaho Power Petition, p. 16.
Commission Discussion. The Commission denies reconsideration of its decision to
amortize the FERC fee credit, but will provide clarification and address the Company
retroactive ratemaking argument. First, we note that not every review of historical costs and
revenues to establish rates results in impermissible retroactive ratemaking. In fact, test years
used in rate cases traditionally are based on historical accounts as the means to establish the
utility s revenue requirement during the period of new rates.
ORDER NO. 30754
Second, Idaho Power describes too broadly the prohibition against retroactive
ratemaking affirmed by the Idaho Supreme Court in the Utah Power Light case. In that case
after successfully appealing an earlier Commission rate decision, the utility company requested
the Commission impose a temporary surcharge on customers to recover the amount lost during
the time the incorrect rates were charged until the higher, corrected rates became effective. The
Commission held it had no authority to impose such a surcharge where the utility had not
requested a stay and posted a bond, as set forth in the public utilities laws, before appealing the
Commission s Order. The Commission stated: "When any party, be it utility, ratepayer or the
State of Idaho , appeals a rate setting Order of the Idaho Public Utilities Commission to the
Supreme Court of Idaho, but does not stay the effectiveness of the Order by posting bond under
the terms of the Public Utilities Law, then the rates and charges set forth by that Order are final
in all respects.Utah Power Light 107 Idaho 49. The Supreme Court specifically agreed
with the Commission s interpretation and affirmed its decision. Id. Had Utah Power obtained a
stay and posted the required bond, it might have recovered the revenue lost during the period of
improper rates.
The lesson of Utah Power Light is that a utility when appealing a Commission
decision must follow a prescribed procedure to recover revenue lost from an earlier period and
avoid the general prohibition on retroactive ratemaking. The Commission s decision involving
the Pacific Hide expenses is consistent with the Utah Power Light holding. As Idaho Power
recognizes in its Petition for Reconsideration, the Commission authorizes recovery of significant
earlier expenses in a later rate case where the utility has obtained a deferral accounting order for
those expenses. We stated in the Pacific Hide expense case that "(tJhe proscription against
retroactive ratemaking means the Pacific Hide amounts spent by I(dahoJ P(owerJ Co(mpanyJ in
the past are not recoverable through future rates unless they were preserved for that purpose by
deferral or other regulatory action.Order No. 25880, p. 9 (emphasis added).
Idaho Power s argument that it incurred "several large items of expenses in excess of
the amounts assumed in the applicable test year " and that "(iJf 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 is unavailing. Idaho Power
Petition, p. 17. The Company could have preserved the potential to recover significant
unexpected costs in future rates by requesting a deferral order. As a practical matter, a similar
ORDER NO. 30754
ability is not available to ratepayers to preserve a specific, identifiable revenue windfall or
expense refund, and a utility has no incentive to alert the Commission to that event. In this case
ratepayers provided funds for specific regulatory fee or fees, and the Company later received a
significant refund on the fees included in the test year costs paid by ratepayers.
The Commission previously distinguished the circumstances where a retroactive
review results in impermissible retroactive ratemaking. In Case Nos. U-I006-185 and U-1034-
, the Commission directed that certain previously accumulated deferred state income taxes be
amortized over ten years, and Intermountain Gas Company argued such amortization amounted
to retroactive ratemaking. Order No. 17782, p. 2. The Commission disagreed and stated:
There is no bright line that separates those ratemaking decisions relying upon
past ratemaking treatment as prohibited retroactive ratemaking from other
decisions that are not. At one extreme, the future adjustment of rates to take
into account past returns on investment or past ratemaking assumptions
concerning capital costs has traditionally been prohibited as retroactive
ratemaking. (Citations omitted.) At the other extreme, the adjustment of
previously established balancing accounts for such items as fuel expenses or
purchased power or purchased gas has traditionally been accepted in
regulatory proceedings and has not been considered retroactive ratemaking.
(Citations omitted.
The former situations involve retrospective review of prospective assessments
of capital markets, balancing of intangible or unquantifiable ratepayer and
company interests, the vagaries of weather and stream-flow conditions, as
well as other considerations, none of which may be measured precisely and all
of which rely upon judgment in their assessment. Such retroactive reviews
are prohibited. Balancing accounts, on the other hand, are accounts
specifically created to marshal and segregate certain dollars for certain
purposes and are capable of being reconciled to the penny.
Regulators, utilities and ratepayers do not expect companies' earnings to be
retroactively re-examined and a future rate adjusted accordingly. Regulators
utilities and ratepayers do expect balancing accounts to be periodically re-
examined and future rates to be set (by amortization of accounts too high or
increased collections for accounts too low) to bring them into balance.
Amortizing the account for accumulated deferred state income taxes more
closely resembles the allowed adjustment of a balancing account than it does
retroactive ratemaking by re-examining past equity returns for reasonableness.
Order No. 17782, p. 2.
The accrual of expenses that are subsequently refunded is more closely represented
by the tax accrual examples and balancing of a specific account. Therefore, the amortization of
ORDER NO. 30754
the FERC fees refund is not cherry picking; rather it is resetting the accrual reserve identified as
the FERC Expense. The Commission denies reconsideration of the decision to amortize the
Company s recovery ofFERC fees.
4. Card Purchases . The Commission in Order No. 30722 removed $884 787 from
the Company s revenue requirement as an adjustment to 2007 employee P-Card purchases that
exceeded $11.2 million. Idaho Power argues in its Petition that this adjustment is not supported
by substantial, competent evidence because Staff s audit to support it "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. Idaho Power Petition, p. 17.
The Company asserts evidence showed its P-Card expenses had a business purpose and thus
should be allowed. Idaho Power requests the Commission reverse its decision to disallow a
portion of employee P-Card purchases, or alternatively, to allow additional evidence from an
independent auditing specialist to be retained by the Company to examine Staffs audit.
Staff filed an Answer to Idaho Power s Petition addressing only the P-Card issue.
Staff argues that Idaho Power s criticism of Staff s audit is misplaced because the real
disagreement is not over audit particulars but over the standard that applies to include employee
purchases in customer rates. We noted in Order No. 30722 that Staff reviewed P-Card purchases
to assess whether they were necessary, reasonable and prudent in providing service to customers.
Staffs audit did not uncover purchases in violation of Company policy, and instead Staff asserts
its goal by the audit was "to determine whether those expenditures are appropriately the
responsibility ofIdaho Power s customers." Staff Answer, p. 3 quoting from Tr. p. 1317. Staff
contends its audit "identified a representative amount of charges that were clearly not necessary
or directly related to providing service to customers." Staff Answer, p. 5.
Commission Discussion.Idaho Power asserts in its Petition that it "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 excessive nor unreasonable.Idaho
Power Petition, p. 20. That is not the same as saying the Company presented evidence to show
that its employee purchases were necessary and prudent in providing service to customers. The
Company identified the "legitimate business purpose" for some expenses as fostering a positive
working environment and good morale, recognizing an employee s service to the Company, and
supporting employee community involvement. Order No. 30722 , p. 26.
ORDER NO. 30754
Employee purchases should be shown to have a direct benefit to customers or
customer service, and the burden is on Idaho Power to show that the expenses meet the necessary
standard. The only evidence on this standard was provided by Staff, and it shows that many
employee purchases were not necessary to providing service to customers and did not benefit
customers, although they fall within the Company s P-Card policy. With no evidence from
Idaho Power to demonstrate which employee purchases were necessary to provide service to
customers, we found "Staffs relatively modest adjustment to the 2007 P-Card purchase expenses
to be reasonable and appropriate." Order No. 30722, p. 26. Idaho Power does not assert in its
Petition that its evidence on employee purchases meets the necessary standard, but only that it
meets the Company s broader "business purpose standard. On this record, we deny
reconsideration of the Commission s decision to disallow a modest amount of employee P-Card
purchases.
Issues for Clarification
Idaho Power s Petition also requests clarification on several issues, including (1)
distribution of funds for energy efficiency education, (2) calculation of the Load Growth
Adjustment Rate (LGAR), (3) tiered rates for master metered accounts, and (4) accounting for
Construction Work in Progress (CWIP) related to Hells Canyon relicensing. CAP AI filed an
Answer supporting Idaho Power s request for clarification of the distribution of funds for energy
efficiency education.
1. Distribution of $125,000 Energy Education Funds. The Commission approved
payment of $125 000 for energy efficiency education, but did not specify the source of the funds.
Idaho Power requests clarification on whether the amount should be collected through the
Energy Efficiency Rider or be made part of the Company s base rates. The Company also
suggests that rather than provide $25 000 to each of the five CAP agencies , totaling $125 000
annually, a distribution should be made based on the number of customers in the different CAP
agency areas. The eastern Idaho Community Action Partnership region serves only 4 384 Idaho
Power customers, while the EL-ADA Community Action Partnership region contains 170 000
Idaho Power customers. Idaho Power Petition, p. 22.
In an answer to Idaho Power s Petition, CAPAI proposes that the $125,000 energy
education program be funded through general rates (requiring an adjustment to the Company
revenue requirement). CAP AI also agrees with Idaho Power s proposal to spread the funds to
ORDER NO. 30754
the CAP agencies on a pro rata basis, and that the program participants should be only customers
who use electricity for primary heat source.
Commission Discussion The Commission agrees with the Company s suggestion
for clarification of the funding and distribution of the amount we approved for energy efficiency
education. The $125 000 amount the Commission approved should be funded from the
Company s base rates, and thus results in a minor adjustment to the Company s revenue
requirement.We have included this amount in the recalculated revenue requirement and
resulting rates set forth in Attachments 1-3 to this Order.
The Commission also approves Idaho Power s suggestion, supported by CAP AI, that
the education funds be distributed to the CAP agencies on a pro rata share based on the number
of Idaho Power residential customers in each agency area. Also as suggested in its Petition
Idaho Power is directed to work with CAP AI representatives, Staff, Department of Health and
Welfare representatives, 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." Idaho Power Petition, p. 23. The program
will focus on, and be limited to, energy efficiency education for customers who use electricity as
their primary source of home heating.
2. Calculation of the LGAR. The Commission s final Order does not explicitly state
a figure resulting from the load growth adjustment rate (LGAR), which is part of the Company
Power Cost Adjustment (PCA). The Company calculates an updated LGAR of $26.52/MWh
and asks the Commission to review and approve that amount for the LGAR effective February 1
2009.
Commission Discussion The Commission has reviewed the Company s calculation
of the LGAR and determined it is accurate, based on the revenue requirement approved in Order
No. 30722. However, the new revenue requirement resulting from the changes approved in this
Order affect the LGAR calculation. Accordingly, we clarify Order No. 30722 to state the
calculation of the LGAR to be $26.63/MWh, effective February 1 2009.
3. Tiered Rates for Master-Metered Customers. The Commission in Order No.
30722 approved a three-tiered residential rate, but did not consider application of the tiered rates
to master-metered customers. These master-metered customers, most commonly mobile home
and RV (recreational vehicle) parks, typically have tenants with submeters to measure their
ORDER NO. 30754
individual electricity consumption. Idaho Power charges only the master-metered customer, who
is responsible for billing the individual customers at the same rate as would Idaho Power if it
billed the individual customers. IDAP A 31.26.01.101.02. Idaho Power points out in its Petition
that the majority of usage by master-metered customers will fall within the highest priced rate
tier, while individual submetered customer usage may fall within the two lower tier rates. The
result is a shortfall between what Idaho Power charges the master-metered customer and the
amount that customer can collect from the individual customers.
The Commission addressed this problem when it implemented a three-tier rate
structure in 2001 , and the Company proposes a similar solution in this case. 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, to be billed at a flat energy
rate of 6.0061~ per kWh plus the $4 service charge. Idaho Power Petition, p. 25. Idaho Power
asserts this will allow master-metered mobile home and RV park owners to bill customers
consistent with the regular Schedule 1 residential tiered rates. Id.
Commission Decision The Commission grants Idaho Power s request to clarify
Order No. 30722 regarding implementation of rates for master-metered customers. We agree
with the Company s proposal to bill master-metered customers pursuant to a separate Schedule 3
Master-Metered Mobile Home Park Residential Service tariff. The energy rate we approve for
this schedule is based on the new revenue requirement we approve in this Order and is 6.0906~
per kWh. This is also the rate that master-metered customers should use when billing their
tenants.
4. Accounting for AFUDC. The Commission approved recovery of a portion of
Allowance for Funds Used During Construction (AFUDC) in the amount of $6.8 million
associated with the Hells Canyon relicensing effort. The Company requests clarification on how
to account for the AFUDC. Idaho Power proposes to record a monthly regulatory liability in
proportion to the test year Idaho monthly sales revenue as detailed in an attachment to its
Petition. Any deviation in revenue collected from the base AFUDC amount that occurs due to
changes in loads will be credited or collected from customers through the LGAR. Idaho Power
Petition, p. 26. Idaho Power also requests that the Commission clarify that the Company is
authorized a carrying charge to accrue on the portion of the regulatory liability that represents the
amount of AFUDC included in rates, and that the carrying charge rate will be the same rate used
ORDER NO. 30754
for AFUDC recorded as Construction Work in Process (CWIP) for financial accounting
purposes.
Commission Discussion The Commission has determined to clarify Order No.
30722 regarding the proper accounting for AFUDC approved for recovery by the Commission.
The Commission agrees with the Company s suggestion for clarification for accounting
treatment. The regulatory liability for the AFUDC amount included in rates may be recorded
monthly in proportion to the Idaho monthly sales revenues. We also accept the clarifications
requested on the AFUDC regulatory liability. Idaho Power is authorized to accrue a carrying
charge on the regulatory liability that represents the amount of AFUDC included in rates. This
carrying charge on the regulatory liability will be the same rate used for AFUDC recorded as
CWIP.
This is the first time this type of regulatory liability for inclusion of AFUDC in rates
has been approved. We direct the Company and Staff to review the accounting entries for this
mechanism to verify that the intended result from this mechanism is achieved and to avoid
unexpected issues being raised in a subsequent proceeding.
Final Revenue Requirement
The Commission in Order No. 30722 determined a revenue deficiency for Idaho
Power s Idaho jurisdiction operations in the amount of $20 878 884. Order No. 30722, p. 32.
With the corrections and adjustments we make in this Final Order on Reconsideration, the final
revenue requirement in this case is modified to increase by a total of $6 701 243 on a system
basis, or $6 138,581 on an Idaho basis. The total increase is as follows:
Idaho Earnings Deficiency with AFUDC $16 453 998
Idaho Revenue Deficiency $27 017 465
Percent Increase Required 01%
The resulting rates are shown in Attachments 1-3 to this Order. The increase in
revenue requirement for residential customers is spread to the summer commodity rates. For
other customer classes, the increase is applied uniformly to their energy rates, up to the 6% rate
cap we determined was reasonable in Order No. 30722.
ORDER NO. 30754
DOE'S Petition for Reconsideration
DOE asks the Commission to reconsider its cost-of-service determination. DOE
contends "the cost allocation methodology adopted by the Commission is unreasonable in that it
disproportionately allocates steam and hydro generation costs out of Idaho Power s high cost
summer months and into low cost non-summer months." DOE believes the Commission on
reconsideration should adopt the weighted 12 coincident peak method for allocating demand-
related costs. According to DOE, the cost allocation methodology adopted by the Commission is
unreasonable because it does not properly allocate hydro and steam generation costs during
summer and non-summer months. DOE Petition for Reconsideration
, p.
1. DOE also suggests
the Commission order the Company and Staff to hold cost-of-service workshops to further
investigate and discuss other cost-of-service issues raised by the parties in this case.
Commission Discussion The Commission notes that the arguments presented by
DOE in its Petition for Reconsideration are the same objections expressed by DOE in its direct
and rebuttal testimony. These objections were considered by the Commission in reaching its
decision to approve the 3CPI12CP cost-of-service methodology proposed by the Company and
recommended by Staff. We noted that "a cost of service study is not a perfect tool for assigning
system and service costs to customer classes," and found "the results of the 3CPI12CP study
represents a reasonable approximation of class revenue responsibility." Order No. 30722, pp. 34
36. In this case, the parties presented the Commission with several different cost-of-service
studies that contain similar principles, but produce varying results that favor at least one class of
customers
DOE argues that the use of an unweighted 12CP allocator is inappropriate because it
undermines the Commission s efforts to address Idaho Power s summer peak demand. DOE
Petition, p. 2. The 3CP demand allocator for the summer peak months of June, July and August
and the classification of Idaho Power s peaking resources as 100% demand-related are specific
aspects of the 3CP/12CP study that evidence a concern for reducing summer peak demand.
Thus, we are not persuaded by DOE's argument that the 3CPI12CP methodology actually
undoes the Commission s efforts to reduce Idaho Power s summer peak.
The Commission also finds that a renewed round of cost-of-service workshops is not
warranted at this time. In the final Order in Idaho Power s 2003 general rate case, IPC-03-
we "directed the parties to investigate the various components of cost-of-service to provide more
ORDER NO. 30754
definitive information regarding more appropriate cost responsibility." Order No. 29505, p. 51.
Subsequently, three workshops were held in 2004 and 2005 during which various parties
participated in "evaluating cost of service issues in the general rate proceeding" and issued a
Final Report outlining the results of their collaborative discussions. See The Parties Final
Report, IPC-04-, p. 1. We are not convinced another round of workshops would be
beneficial in addressing inherently difficult limitations in cost-of-service methodologies.
Having reviewed and carefully considered DOE's Petition, the Commission finds that
additional cost-of-service workshops are not warranted and reaffirms its previous finding that the
3CPI12CP methodology "is the most appropriate cost-of-service study." Order No. 30722 , p. 36.
ORDER
IT IS HEREBY ORDERED Idaho Power s Petition for Reconsideration is granted to
correct an error in the test year payroll calculation and increase the Company s revenue
requirement by $5 987,353. The Commission also grants Idaho Power request for
reconsideration on the calculation for double counting of some of the Power Generation Other
Expense and Distribution Other Expense accounts, and makes an adjustment as set forth in the
body of this Order.The Commission denies reconsideration of the other items identified in
Idaho Power s Petition for Reconsideration.
IT IS FURTHER ORDERED that Idaho Power s Petition for Reconsideration and/or
Clarification is granted to clarify the Commission s decisions in Order No. 30722, as discussed
and set forth in this Final Order on Reconsideration.
IT IS FURTHER ORDERED that Idaho Power shall file revised tariffs consistent
with this Order and the rates set forth in Attachments 1-3 to this Order, to be effective upon
filing, for service rendered on and after that date.
IT IS FURTHER ORDERED that the Department of Energy Petition for
Reconsideration is denied.
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by this
Order or other final or interlocutory Orders previously issued in this Case No. IPC-08-10 may
appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code 9 61-627.
ORDER NO. 30754
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /1-rh
day of March 2009.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
D. Jewell
Co mISSIOn Secretary
bls/O:IPC-O8-IO ws4 Reconsideration
ORDER NO. 30754
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