20081024Leckie Direct.pdf

BEFORE THE RECEJVED
ZOÐO OCT 24 PH 3= 23
IDAHO PUBLIC UTILITIES COMMISSION 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 SERVICE )
TO ELECTRIC CUSTOMERS IN THE STATE)OF IDAHO. )
)
)
)
DIRECT TESTIMONY OF JOE LECKIE
IDAHO PUBLIC UTILITIES COMMISSION
OCTOBER 24, 2008
1 Q.Please state your name and business address for
2 the record.
3 A.My name is Joe Leckie. My business address is 472
4 West Washington Street, Boise, Idaho.
5 Q.By whom are you employed and in what capacity?
6 A.I am employed by the Idaho Public Utilities
7 Commission (Commission) as an auditor in the Utilities
8 Division.
9 Q.What is your educational and experience
10 background?
11 A.I graduated from Brigham Young University with a
12 Bachelors of Science degree in Accounting. I worked for the
13 accounting firm Touche Ross in its Los Angeles office for
14 approximately one year. I then attended law school and
15 graduated from the J. Rueben Clark School of Law at Brigham
16 Young University with a Juris Doctorate degree.
17 I am licensed to practice law in the State of Montana. I
18 practiced law in the State of Montana for approximately 25
19 years. I have been employed at the Commission as an auditor
20 since March 2001. I have attended the annual regulatory
21 studies program sponsored by the National Association of
22 Regulatory Utilities Commissioners (NARUC) at Michigan State
23 University in August of 2001. I have attended several other
24 training courses sponsored by NARUC on regulatory accounting
25 and auditing.
CASE NO. IPC-E-08-10
10/24/08 LECKIE, J. (Di) 1
STAFF
1
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Q.What is the purpose of your testimony?
A.The purpose of my testimony is to present and
3 discuss adjustments to Idaho Power Company's financial
4 information that have an effect on the revenue requirement
5 recommendation in this case. I will present adjustments in
6 miscellaneous service revenues, payroll expense, employee
7 incentive compensation, 2009 salary structure adjustment,
8 rate base, depreciation expense, attorney fees, and director
9 fees. I will also discuss the escalation of rate base
10 additions valued at less than two (2) million dollars and
12
11 the Company's cost curtailment programs.
13 Miscellaneous Service Revenues?
Q.What adjustment are you proposing for Account 451-
14 A. In the Company's case this account was reduced by
15 13.99%, which resulted in a reduction of $566,667.
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16 Miscellaneous revenue is recorded in Account 451. The
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Company in its Methodology Manual (Company Exhibit No. 34,
page 2) describes the revenues that are recorded in this
account:
Description - Account 451 includes revenues for
all miscellaneous services and charges billed to
customers who are not specifically provided for in
other accounts. This includes fees for changing,
connecting or disconnecting services, and profit
on maintenance or installations on customers'
premises. Miscellaneous service revenues include
continuous service reversion charges, field visit
charges i return trip charges, returned check fees,
service connection charges, service establishment
charges, and application and processing fees
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 2
STAFF
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collected for new permits, new leases or requests
for easement relinquishments.
The Company used a three-year Compound Annual
Growth Rate (CAGR) applied to 2007 actual revenues resulting
in the reduction of 13.99%, and attributes the reduction to
slower customer growth anticipated in 2008. The Company
recorded $4,050,513 in revenues in 2007 (See Exhibit No.
113). The Company reduced this amount by the 13.99% or
$566,667, and used the difference of $3,483,846 as the
amount of miscellaneous service revenue in 2008.
I do not agree with this reduction of revenues and
I am recommending that the reduction in service revenue not
be allowed. Therefore, revenues received by the Company in
2008 should be increased by $566,667 and the revenue
def iciency of the Company should be reduced.
The reasons for my recommendation are based on the
actual history of this account. The Company has received
more than $3,483,846 in service income for the last four (4)
years. The average amount received by the Company over the
last eight (8) years is $4,067,043.
The reason given by the Company for its proposed
reduction is attributed to slower customer growth. This
reduction is not supported by any evidence that slower
customer growth will reduce this type of revenue. The
actual revenues for January to June 2008 are shown in
Exhibit No. 114. This Exhibit shows that as of June 2008,
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) ~3
STAFF
1 the total revenues for the first half of the year booked to
2 Account 451 are 49.9% of the total revenue booked to Account
3 451 in 2007.
4 Staff believes that even under conditions of
5 slower growth that the annual service revenue should at
6 least be at 2007 levels. Therefore, Account 451,
7 Miscellaneous Service Revenue should not be reduced.
8 Q.What adjustment are you proposing to payroll
9 expenses?
10 A.I do not agree with the magnitude of the Company's
11 annualized payroll adjustment increasing payroll expense by
12 $2,593,733. The Company used a forecasted December 2008
13 payroll of $10,995,625 (this is based on two (2) pay
14 periods) and then annualized this amount (multiplied by 13
15 to account for 26 pay periods annually) to calculate the
16 annual payroll amount of $142,943,119.
17 I used the actual payrolls for August and
18 September 2008 with 2 pay periods in each month. I
19 determined the average payroll per pay period during these
20 two (2) months is equal to $5,419,365 or $140,903,490
21 annually. This is $2,039,629 less than the Company's
22 forecast. See Exhibit No. 115.
23 Because the payroll expense is less than the
24 Company's forecast, the payroll tax burden is also reduced
25 by $ 172 , 587 .
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 4
STAFF
1 The Company divides and allocates the payroll
2 costs to Operating Expenses (64.93%) and capitalized
3 Construction Work in Progress (CWIP). I recommend an
4 adjustment to the Operating Expenses. Therefore the total
5 reduction between the Company's position and what I am
6 recommending is the sum of $2,039,629 and $172,587 times the
7 expense allocation percentage of 64.93%, or $1,436,301. See
8 Exhibit No. 116.
9 I believe using the annualized average of the
10 actual payrolls for August and September 2008 is a better
11 representation of the actual payroll costs the Company will
12 incur than the Company's forecast of December 2008 payroll
13 annualized. August and September payrolls are the highest
14 payrolls to date in 2008. The basic difference between the
15 Company's calculation and my calculation is the starting
16 point of the annualization. I have used the actual, known
17 amounts of the payroll expense for August 2008 and September
18 2008, and the Company used a forecasted December 2008
19 starting point. The opportunity to overstate the amount of
20 the annualized payroll amount is greater with forecasted
21 numbers than with actual numbers.
22 Q.Did you make any adjustments to the incentive
23 expense?
24 A.Yes. The Company included in its request for
25 incentive compensation, an incentive rate of 4%. The
CASE NO. IPC-E-08-I010/24/08 LECKIE, J. (Di) 5
STAFF
1 Company testified that calculating the incentive at this
2 rate would remove incentive amounts above the normalized
3 incentive target rate. I calculated the incentive rate at
4 2% and determined that at 2%, the normalized incentive
5 expense would be reduced by $2,999,492. The payroll tax
6 burden on this amount is $253,808, resulting in a total of
7 $3,253,300. The Company does not pay incentive on its
8 entire payroll, but on only 98.64%, therefore the total of
9 $3,253,300 must be multiplied by this percentage to
10 determine the total decrease in incentive expense. The
11 total decrease to the incentive expense is $3,208,964. See
12 Exhibit No. 116.
13 The Company accrued $9,423,443 of incentive
14 expenses in 2007 and then used an annualizing growth factor
15 of 9.41% to calculate the projected accrual for incentive
16 expense for 2008 of $10,309,981. The Company in Exhibit No.
17 31, page 2 determined its 2008 incentive expense is expected
18 to be $6,418,111. Since the accrual of $10,309,981 exceeds
19 the expected expense of $6,418,111, the Company reduced the
20 operating expense increase for the 2008 annualized payroll
21 and the 2009 salary structure adjustment by the difference
22 of $3,838,832. When my recommended adjustment of a decrease
23 in the incentive expense of $3,208,964 is added to the
24 Company's reduction of $3,838,832, the total reduction in
25 operating expense should be $7,047,796, leaving $3.2 million
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 6
STAFF
1 in the test year for incentive pay.
2 I believe the incentive rate should be 2% instead
3 of the 4% proposed by the Company for the following reasons:
4 First, the Company and Staff were both parties to a
5 Stipulation filed in a previous case by the Company that
6 addressed the inclusion/ exclusion of incentive pay for
7 employees. Pursuant to the Stipulation filed in Case No.
8 IPC-E-05-28, the parties to that Stipulation agreed as
9 follows:
10 The Parties agree conceptually that it is
reasonable to include an employee pay-at-risk
or employee incentive component in test-year
revenue requirements so long as such incentive
component is based on goals that benefit
customers and the amounts payable for achieving
the goals are limited to reasonable "target" or
medium goals. Senior management pay-at-risk is
appropriately excluded from the test year revenuerequirement.
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16 According to the information provided by the Company to
17 Audit Request No. 77, the employees' incentive compensation
18 is based on four (4) goals: Customer Satisfaction, O&M
19 Expenses, Network Reliability, and Idaho Power Net Income.
20 The qualifying payout for achieving the target or medium
21 goal in each of the goals is as follows:
22 Customer Satisfaction 1.5%
23 O&M Expense 1.5%
24 Network Reliability 1.0%
25 Idaho Power Net Income 2.0%
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 7
STAFF
1 Since only those goals that benefit customers are considered
2 in determining incentive compensation, I have excluded the
3 payout percentages for O&M Expenses and Idaho Power Net
4 Income. In my calculation only the payout percentages for
5 Customer Satisfaction and Network Reliability are included.
6 It is clear that the payout percentage for Idaho Power Net
7 Income should not be included. I have excluded the
8 qualifying payout for maintaining or reducing O&M Expenses
9 because it should be a self - funding goal. When employees
10 achieve that particular goal of reducing O&M expenses, the
11 savings to the Company would be sufficient to fund the
12 incenti ve payout. This is true at least in the short run
13 and should be reflected especially during a period of
14 economic turmoil when everyone is expected to be
15 conservative.
16 If the target payout percentage is achieved in
17 both Customer Satisfaction and Network Reliability the
18 maximum percentage of incentive expense to include in
19 revenue requirement would be 2.5%. However, there is one
20 additional hurdle to the payment of this incentive
21 compensation. That hurdle requires earnings must be
22 sufficient for shareholders to receive a dividend payment of
23 $1.20 per year before the employees are entitled to any
24 incentive pay. This additional hurdle creates an element of
25 shareholder benefit that dictates the incentive payout
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 8
STAFF
1 percentages i and the payment of the incentive is not based
2 solely on goals that benefit customers. I therefore have
3 reduced the incentive percentage by 1/2% to the 2% that I
4 recommend be included in incentive compensation. Staff is
5 concerned that the overriding dividend restriction changes
6 the customer benefits received from the incentive programs
7 previously accepted for inclusion in rates. If employee
8 incentives are eliminated under this restriction, the total
9 program solely benefits shareholders. Employee actions will
10 then focus on earnings as the Net Income incentive program
11 will be the only one that impacts the employee pay
12 structure. If that becomes the case, Staff will recommend
13 no incentives be included in rates since the customer
14 benefit has been removed.
15 Q.Do you propose any adjustment to the Company's
16 request for a Salary Structure Adjustment (SSA) for 2009?
17 A.Yes, I have not included any increase for the 2009
18 SSA. The Company requested an additional $3,019,804 for the
19 2009 operating payroll. This increase represents a 3%
20 increase to 2008 gross payroll. The Company's proposal
21 violates long-standing ratemaking treatment that post test
22 year adjustments be known and measurable. The amount of the
23 adjustment, if any, is neither known nor measurable. In the
24 past, the Company has foregone employee raises for reasons
25 of economic prudency. This is an area Staff expects the
CASE NO. IPC-E-08-10
10/24/08
LECKIE, J. (Di) 9
STAFF
1 Company will closely monitor and limit under current
2 economic conditions, particularly those that have developed
3 since the Company filed this case. In Order No. 29505,
4 issued by the Commission in the Company's 2003 rate case,
5 the Commission specifically addressed the inclusion of an
6 SSA:
7 The Company acknowledged that current
financial conditions do, and we believe8 they ought to i dictate a tightening of the
Company's belt so to speak with regard to9 salaries. Because of this and the fact
that the SSA adjustment is neither known10 nor measurable at this time, the Commission
accordingly will remove $2,241,595 from test11 year expenses for the SSA.
12 Staff is also concerned with customers' reaction
13 when a company, particularly in a difficult economy, is
14 asking for additional revenues to give raises at a time when
15 it is also asking for an increase in rates. I discuss later
16 in my testimony my perception of the Company's minimal
17 efforts to reduce its operating costs. Therefore, I do not
18 believe that it is appropriate to fund in this case a 3%
19 blanket increase in employees' salaries for 2009.
20 Q.Is there any adjustment to rate base for that
21 portion of the payroll increase that is capitalized?
22 A.No. The Company divides and allocates the payroll
23 costs between the expense portion of the costs (64.93%) and
24 capitalized CWIP (35.07%). Those payroll costs that are
25 capitalized in CWIP are recorded in the individual work
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 10
STAFF
1 orders on an actual basis. Then when the CWIP is placed in
2 service, its total actual cost is capitalized.
3 Q. Did you review the Company's rate base amount in
4 its Application?
5 A.Yes, I reviewed the rate base accounts except for
6 the Materials and Supplies Account reviewed by Staff witness
7 Vaughn.
8 Q.What is the amount of rate base in the Company's
9 Application?
10 A.The Company is requesting a rate base of
11 $2,265,781,563. This is the 2008 adjusted rate base amount
12 that includes all of the adj ustments proposed by the
13 Company.
14 Q.Have you recommended any adj ustmentsto this
15 amount?
16 A.Staff witness Vaughn has recommended an adjustment
17 for the Materials and Supplies Account. Other than that
18 adjustment and the impact on Accumulated Depreciation caused
19 by the change in depreciation rates, I do not recommend any
20 adjustment to the Company's proposed rate base amount. I
21 discuss the methodology in determining the 2008 amount for
22 CWIP projects with a cost less than $2 million later in my
23 testimony but that discussion does not result in a
24 recommended adjustment.
25 Q.What adjustment did you propose for depreciation
CASE NO. IPC-E-08-I010/24/08 LECKIE, J. (Di) 11
STAFF
2
1 expense?
A.The Company filed a case before the Commission
3 specifically addressing the issue of the annual depreciation
4 rates for the Company's assets, Case No. IPC-E-08-6. That
5 case was concluded when this Commission issued Order No.
6 30639 on September 12, 2008. The Commission adopted a
7 Stipulation between the Company and Staff setting forth the
8 depreciation rates with an effective date of August 1, 2008.
9 Prior to the Commission issuing Order No. 30630, the Company
10 filed this rate case reflecting the depreciation rates it
11 had filed in the depreciation case.
12 The rates adopted in Order No. 30630 are different
13 for some assets than those rates used by the Company in its
14 filing of this rate case. Therefore, an adjustment is made
15 to update the depreciation expense to include the rates
16 adopted by Order No. 30639. The depreciation expense should
17 be reduced from a $471,026 increase (see Company's Exhibit
18 No. 31, page 3 of 6) to a $1,000,162 decrease (see Exhibit
19 No. 117 ¡Company's answer to Audit Request No. 113). Thus,
20 depreciation expense should be reduced by $1,471,189.
21
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Q.Does this adjustment affect any other accounts?
A.Yes, it will affect the Accumulated Depreciation
23 account or depreciation reserves. The Company included an
24 increase in the reserve of $227,440 when it filed its rate
25 case. With the reduction in depreciation expense, the
CASE NO. IPC-E-08-10
10/24/08 LECKIE, J. (Di) 12
STAFF
1 corresponding reserve would decrease by a negative $508,191.
2 The net effect on the reserve account is a decrease in the
3 reserve account of $735,595. This account reduces the
4 Company's rate basei therefore, a reduction in the reserve
5 account will increase rate base by $735,595.
6 Q.Did you review the Company's expenses for attorney
7 fees?
8 A.Yes.
9 Q.Did you make any adjustments in these expenses?
10 A.Yes, I found that the Company expended $192,364 to
11 the Dewey & Le Boeuf law firm (previously the Le Boeuf Lamb
12 and Green law firm) for services related to the stock plans
13 for Idaho Power Company and IDACORP. See Exhibit No. 118.
14 These legal charges related only to the stock plans of the
15 companies and were separated from other legal services that
16 were provided by the same firm. These charges are solely
17 related to the shareholder interests and not for customers'
18 benefi ts. Therefore, these expenses should be included
19 below the line and not part of the revenue requirement.
20 Q.Did you have any adjustment in the fees the
21 Company paid to the Company's directors?
22 A.Yes, the Company provides a plan where the
23 directors are allowed to defer any or all of their
24 director's fees earned. These fees are then deferred until
25 the director opts under the provisions of the plan to have
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 13
STAFF
1 the deferred fees paid to them. While the fees are deferred
2 under the provision of the plan, the fees earn interest at a
3 rate that is 3% over Moody's long-term corporate bond yield
4 average rate.
5 In 2007, the directors of Idaho Power earned
6 $337,676 in interest on deferred fees. Also in 2007, the
7 directors of IDACORP earned $186,721 in interest on deferred
8 fees. For the director fees for IDACORP, over 90% are
9 allocated back to Idaho Power. Therefore, the Company has
10 included at least $505,724 of interest expense that it paid
11 to its directors for the deferred directors' fees. The
12 interest rate paid in 2007 for the deferred amounts ranged
13 between 8.83% and 9.34%.
14 Customers should not be responsible for paying a
15 premium of 3% over Moody's long-term corporate bond yield
16 average rate to the directors. The directors should not
17 receive an interest rate greater than the average rate the
18 Company would pay to any independent third party for a
19 similar amount. Any interest above the market rate for
20 funds should be a below-the-line expense and not included in
21 the revenue requirement. Staff therefore recommends that
22 the Company's expenses for the Board of Directors be reduced
23 by 3% of the interest earned on the deferred fees. This
24 would equal $15,172 ($505,724 x 3%).
25 Q.Do you have any other concerns about the
CASE NO. IPC-E-08-1010/24/08
LECKIE, J. (Di) 14
STAFF
1 Directors' fees?
2 A.In 2008, the Company increased the annual retainer
3 for board members from $30,000 to $35,000 and for the
4 chairman of the board from $94,000 to $105,000. The Company
5 has not included this increase in a specific known and
6 measurable adjustment for this rate case. However, I would
7 expect that this increase will be reflected in subsequent
8 cases. This is an area of expenses that I also discuss in
9 the cost containment portion of my testimony.
10 Q.Did you recommend any adjustment to the Company's
11 rate base annualization?
12 A.No, other than the impact on Accumulated
13 Depreciation, I do not recommend any adjustments to the
14 portion of rate base that I reviewed. I reviewed the plant
15 in service additions to rate base. Staff witness Vaughn
16 reviewed the Materials and Supplies portion of rate base and
17 has a recommended adjustment for that account.
18 The Company includes in its current rate base
19 amount the cost of projects it expects to put into service
20 by the end of 2008. Those projects are divided into two
21 groups: those costing more than $2 million and those
22 costing less than $2 million. The Company has included the
23 proj ects costing more than $2 million by including the cost
24 of the proj ect as a known and measurable adjustment. For
25 those projects with capital expenditures less than $2
CASE NO. IPC-E-08-10
10/24/08 LECKIE, J. (Di) 15
STAFF
1 million, the Company used a 6% increase to 2007 actual CWIP
2 closings to reflect its 2008 additions.
3 Although I have not recommended any adjustments to
4 the Company-proposed escalation in capital expenditure of
5 less than $2 million, I am not satisfied that this
6 methodology is reasonable going forward. I am specifically
7 concerned with regard to the CAGR application to the
8 previous year's numbers as the 2008 additions to rate base.
9 This methodology will eventually result in unreasonable
10 compounding of additions to rate base. While Staff
11 recognizes the need for investment to serve new customers,
12 and does not oppose the escalation in this case, the Company
13 should not consider this position as an agreement to the
14 methodology. I believe the Company and Staff should
15 continue to evaluate more appropriate known and measurable
16 methods of establishing rate base levels for this smaller
17 category of investments.
18 Q.Do you have any concerns about the Company's cost
19 containment efforts?
20 A.Yes. The Company-proposed cost containments in
21 the amount of $3,834,000 (Company's Exhibit No. 31, page 6
22 of 6). These containments are related to the delayed
23 filling of open employee positions, delayed training and
24 curtailed travel. This amount represents an approximate
25 reduction of only 0.68% in the Company's 2008 operation and
CASE NO. IPC-E-08-1010/24/08 LECKIE, J. (Di) 16
STAFF
1 maintenance expenses. In the Company's case many 2007 O&M
2 expense accounts, including A&G, are escalated by the 5-year
3 growth rate. This occurs prior to the proposed cost
4 containment proposal being reflected. In other words, the
5 Company proposes a 9.41% increase in O&M expenses and then
6 scales back its projected increase by 0.68% as a cost-saving
7 measure. In the current economic environment, I believe the
8 Company could be more active in finding ways to reduce its
9 growing expenses. As an example, I indicated earlier in my
10 testimony that I thought the Company could do more to reduce
11 payroll expense and director fees.
12 My review of the Board of Director Meeting Minutes
13 revealed that the minutes for the Idaho Power Company and
14 IDACORP meetings were almost identical. Rather than
15 duplicating efforts, the Company should explore ways to be
16 more efficient in delivering the necessary information to
17 the directors, and ultimately reduce overall costs.
18 Q.Are these the only areas you are recommending as
19 possibilities for cost containment?
20 A.No. Staff witness Vaughn discusses the need for
21 greater controls with P-cards and Staff witness Nobbs also
22 discusses potential ways to control costs in the 900
23 accounts. As stated above, I expect the Company will
24 continue to evaluate opportunities for cost containment.
25 Q.Does this conclude your direct testimony in this
CASE NO. IPC-E-08-I0
10/24/08 LECKIE, J. (Di) 17
STAFF
2
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A.Yes, it does.
CASE NO. IPC-E-08-10
10/24/08
LECKIE, J. (Di) 18
STAFF
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Idaho Power Company
Adjustment to 2007 Payroll and Incentive Operating Expenses
(11
Line
1) Operating Payroll (Various aee)
1 ST Payroll 2007
2 Annualized Payroll Growth Factor
3 Forecasted 2008 ST Payroll
6.50%
Company's
Calculation as per
Exhibit 31 Slatrs Calculation
$ 130,757,895 $130,757,895
8,501,976 $8,501,976
139,259,871 $139,259,871
10,995,625
$5,419,365
142,943,119 $140,903,490 $
3,683,248 1,643,619 $
311,666 139,078 $
3,994,914 $1,782,697 $
64.93%64.93%
$2,593,733 $1,157,431.76 $
DiffrenceNo.
4 Forecasted December 2008 Payroll
Average August and September 2008 Payroll
Annualized December 2008
Gross Adjustment to 2008
Add payroll tax ¡g
Total adjustment including payroll tax
Operating percent
Adjustment to Operating Expense
8.46%
5
6
7
8
9
10
2,039,629
2,039,629
172,587
2,212,217
64.93%
1,436,301
2)Incentive Expense (920 account))
Annualized December 2008 ST Payroll $142,943,119 $140,903,490 $2,039,629
11 Plus: 2007 Overtme Payroll 8,679,963 $8,679,963 $
12 Less:2007 Offcer Payroll 3,462,963 $
13 Times Annualized Payroll Growth Factor 6.50%3,688.128 $3,688,128 $
14 Total Payroll Excl Offcers 147,934,954 145,895,325 $2,039,629
15 Normalized Incentive Rate 4.00%2.00%
16 Normalized Incentive 5,917,398 2,917,906 $2,999,492
17 Payroll Tax on Normalized Incentive ¡g 8.46%500,713 $246.905 $253,808
18 Normalized Incentive Including Payroll Tax 6,418,111 $3,164,811 $3.253,300
19 Less: 2007 Incentive Accrual plus Tax 9,423,443 $
20 Times Annualized A&G Growth Factor 9.41%10,309,981 $10,309,981 $
21 Gross Adjustment (3,891,870)(7,145,170)$3,253,300
22 Times incentive operating percent 98.64%98.64%98.64%
23 Adjustment to Operating Expense for Incentive $(3,838,832)$(7,047,796)$3,208,964
24
Exhibit No. 116.
Case No. IPC-E-08-10
J. Leckie, Staff
10/24/08
Idaho Power Company Depreciation Expense
Annualized Forecasted
Depreciation Depreciation Annualizing Reserve
Account Account Description Expense Expense Adjustment Adjustment
301 Organization
302 Franchises and Consents 781,063.44 781,063.44
303 Miscellaneous Intangible Plant 6,565,595.64 5,749,532.26 816,063.38 408,031.69
TOTAL INTANGIBLE PLANT 7,346,659.08 6,530,595.70 816,063.38 408,031.69
310 Land and Land Rights 3,215.76 4,025.80 (810.4)(405.02)
311 5tructures and Improvements 2,023,495.56 2,821,703.46 (798,207.90)(399,103.95)
312 Boiler Plant Equipment 11,130,341.52 13,425,792.96 (2,295,451.44)(1,147,725.72)
314 Turbogenerator Units 3,269,330.76 3,879,695.47 (610,364.71)(305,182,36)
315 Accessory electric Equipment 836,061.84 852,930.99 (16,869,15)(8,434.57)
316 Mise Power Plant Equipment 476,398.68 283,470.23 192,928.45 96,46.23
TOTAL STEAM PRODUCTION PLANT 17,738,844.12 21,267,618.91 (3,528,774.79)(1,764,387.39)
330 Land and Land Rights
331 Structures and Improvements 3,882,556.68 3,570,897.63 311,659.05 155,829.53
332 Reservoirs,.Dams, Waterways 5,570,402.88 5,06,789.65 503,613.23 251,806.62
333 Waterwheel, Turbines, Generato 3,579,156.96 3,489,460.46 89,696.50 44,848.25
334 Accessory Electric Equipment 1,180,217.64 1,123,223.05 56,994.59 28,497.30
335 Mise Power Plant Equipment 46,364.64 371,962.61 94,402.03 47,201.02
336 Roads, Railroads and 8ridges 144,758.64 145,283.15 (524.51)(262.26)
TOTAL HYDRO PRODUCTION PLANT 14,823,457.44 13,767,616.55 1,055,840.89 527,920.46
340 LAND AND LAND RIGHTS
341 Structures and Improvements 283,877.76 235,449.09 48,428,67 24,214.34
342 Fuel Holders, Producers, Acces 164,802.72 144,584.06 20,218.66 10,109.33
343 Prime Movers 2,545,990.56 2,111,330.96 434,659,60 217,329.80
344 Generators 1,483,030.56 1,172,667.34 310,363.22 155,181.61
345 Accessory Electric Equipment 724,705.20 682,727.24 41,97796 20,988.98
346 Mise Power Plant Equipment 85,440.48 84,684.86 755.62 37781
TOTAL OTHER PRODUCTION PLANT 5,287,647.28 4,431,443.55 856,403.73 428,201.87
350 Land and Land Rights 470,713.68 490,038.21 (19,324.53)(9,662.26)
352 Structures and Improvements 742,387.44 606,528.10 135,859.34 67,929.67
353 Station Equipment 5,933,291.40 5,685,015.17 248,276.23 124,138.12
354 Towers and Fixtures 2,582,958.60 2,825,375.54 (242,416.94)(121,208.47)
355 Poles and Fixtures 2,541,253.20 2,577,578.52 (36,325.32)(18,162,66)
356 Overhead Conductors, Devices 2,786,607.60 2,758,541.01 28,066.59 14,033.29
359 Roads and Trails 3,132.60 3,288.56 (155.96)(7798)
TOTAL TRANSMISSION PLANT 15,060,344.52 14,946,365.11 113,979.41 56,989.71
360 Land and Land Rights
361 Structures and improvements 445,570.80 439,680.15 5,890,65 2,945.33
362 Station Equipment 3,100,949.28 2,719,036.52 381,912.76 190,956.38
TOTAL SUBSTATION EQUIPMENT 3,546,520.08 3,158,716.67 387,803.41 193,901.71
364 Poles, Towers and Fixtures 7,092,672.72 7,335,06.39 (242,391.67)(121,195.84)
365 Overhead Conductors, Devices 3,304,504.32 3,400,46.47 (95,960.15)(47,980.08)
366 Underground Conduit 929,997.00 936,306.75 (6,309.75)(3,154,87)
367 Underground Conductors, Device 3,484,734.36 4,192,639.68 (707,905.32)(353,952.66)
368 Line Transformers 6,06,161.24 6,086,015.80 (21,854.56)(10,927,28)
369 Services 1,705,061.28 1,874,543.54 (169,482.26)(84,741.13)
370 Meters 4,023,057.12 3,015,376.54 1,007,680,58 503,840.29
371 Installations, Cust Premises 25,96.16 177,430.87 (151,466.71)(75,733.36)
373 Street Lighting, Signal System 170,508.72 209,651.71 (39,142.99)(19,571.50)
TOTAL DISTRIBUTION LINES 26,800,660.92 27,227,493.75 (426,832.83)(213,416.43)
389 Land and Land Rights
390 Structures and Improvements 1,643,106.72 1,655,739.88 (12,633.16)(6,316.58)
391 Ofice Furniture, Equipment 8,407,251.24 7,941,489.97 465,761.27 232,880.64
392 Transportation Equipment 2,163,173.16 2,192,774.57 (14,800.71)
393 Stores Equipment 62,374.68 78,213.49 (15,838.81)(7,919.41)
394 Tools, Shop, Garage Equipment 228,119.04 326,506.31 (98,387.27)(49,193,64)
395 Laboratory Equipment 593,134.68 651,086.30 (57,951.62)(28,975.81)
396 Power Operated Equipment 621,497.28 608,114.73 6,691.28
397 Communication Equipment 2,063,745.48 2,666,301.88 (602,556.40)(301,278.20)
398 Miscellaneous Equipment 335,291.52 288,331.72 46,959.80 23,479.90
TOTAL GENERAL EQUIPMENT PLANT 16,117,693.80 16,408,558.85 (274,64.19)(145,432.53)
TOTAL ELECTRIC PLANT IN SERVICE 106,722,027.24 107,738,409.09 (1,000,162.99)(508,190.91)
Amortization of Disallowed Costs (296,299.32)(296,299.32)ExhibifNo.117
TOTAL DEPRECIATION & AMORTIZATION 106,425,727.92 107,442,109.77 (1,000,162.99)(508,190.91)Case No. IPC-E-08-10
1. Leckie, Staff
10/24/08
IDAHO POWER COMPANY
Adjustment for Attorney Fees for Stock Plans
Attorney Fees Paid for ipeo & IDAeORP Stock Plans
3/19/2007 LE BOEUF LAMB GREENE
6/21/2007 LE BOEUF LAMB GREENE
7/23/2007 LE BOEUF LAMB GREENE
8/29/2007 LE BOEUF LAMB GREENE
9/27/2007 LE BOEUF LAMB GREENE
10/23/2007 LE BOEUF LAMB GREENE
11/16/2007 DEWEY & LEBOEUF
12/28/2007 DEWEY & LEBOEUF
$14,285.30 030052
$41,317.79 060052
$28,427.87 070052
$19,183.13 080052
$32,148.00 090052
$22,709.64 100052
$15,278.43 110052
$19,013.85 120052
$192,364.01
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (lPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
STOCK PLANS (IPCO & IDACORP)
ExhiBit N 0:118
Case No. IPC-E-08-10
J. Leckie, Staff
10/24/08
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 24TH DAY OF OCTOBER 2008,
SERVED THE FOREGOING DIRECT TESTIMONY OF JOE LECKIE, IN CASE
NO. IPC-E-08-10, BY MAILING A COPY THEREOF , POSTAGE PREPAID, TO THE
FOLLOWING:
BARTON L KLINE
LISA D NORDSTROM
DONOV AN E WALKER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: bkline(iidahopower.com
Inordstrom(iidahopower.com
dwalker(iidahopower.com
PETER J RICHARDSON
RICHARDSON & O'LEARY
PO BOX 7218
BOISE ID 83702
E-MAIL: peter(irichardsonandoleary.com
RANDALL C BUDGE
ERIC L OLSEN
RACINE OLSON NYE ET AL
PO BOX 1391
POCATELLO ID 83204-1391
E-MAIL: rcb(iracinelaw.net
elo(iracinelaw.net
MICHAEL L KURTZ ESQ
KURT J BOEHM ESQ
BOEHM KURTZ & LOWRY
36 E SEVENTH ST STE 1510
CINCINATI OH 45202
E-MAIL: mkurz(iBKLlawfrm.com
kboehm(iBKLlawfrm.com
BRAD M PURDY
ATTORNEY AT LAW
2019N 17TH ST
BOISE ID 83702
E-MAIL: bmpurdy(ihotmail.com
JOHNRGALE
VP-REGULATORY AFFAIRS
IDAHO POWER COMPANY
PO BOX 70
BOISEID 83707-0070
E-MAIL: rgale(iidahopower.com
DR DON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL: dreadingCimindspring.com
ANTHONY Y ANKEL
29814 LAK ROAD
BAY VILLAGE OH 44140
E-MAIL: yankelCiattbi.com
KEVIN HIGGINS
ENERGY STRATEGIES LLC
PARKS IDE TOWERS
215 S STATE ST STE 200
SALT LAKE CITY UT 84111
E-MAIL: khiggins(ienergystrat.com
LOTH COOKE
ARTHUR PERRY BRUDER
UNITED STATE DEPT OF ENERGY
1000 INDEPENDENCE AVE SW
WASHINGTON DC 20585
E-MAIL: lot.cookeCihg.doe.gov
arthur. bruderCihq .doe. gOY
CERTIFICATE OF SERVICE
DWIGHT ETHERIDGE
EXETER ASSOCIATES INC
5565 STERRTT PLACE, SUITE 310
COLUMBIA MD 21044
E-MAIL: detheridge(ßexeterassociates.com
DENNIS E PESEAU, Ph.D.
UTILITY RESOURCES INC
1500 LIBERTY STREET SE, SUITE 250
SALEM OR 97302
E-MAIL: dpeseau(ßexcite.com
CONLEY E WARD
MICHAEL C CREAMER
GIVENS PURSLEY LLP
601 W BANNOCK ST
PO BOX 2720
BOISE ID 83701-2720
E-MAIL: cew(ßgivenspursley.com
KEN MILLER
CLEAN ENERGY PROGRA DIRECTOR
SNAKE RIVER ALLIANCE
PO BOX 1731
BOISE ID 83701
E-MAIL: kmiler(ßsnakeriverallance.org
CERTIFICATE OF SERVICE