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Home My WebLink About20090305Petition for Reconsideration.pdfDONOVAN E. WALKER Corporate Counsel eslDA~POR~ An IDACORP Company March 5, 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-08-16 Advanced Metering Infrastructure ("AMI') Technology Dear Ms. Jewell: Enclosed for filing please find an original and seven (7) copies of Idaho Power Company's Petition for Clarification and/or Reconsideration of Order No. 30726 in the above matter. I would appreciate it if you would return a stamped copy of this letter for Idaho Power's file in the enclosed stamped, self-addressed envelope. Vrt.. t ycours,~? Donovan E. Walker DEW:csb Enclosures P.O. Box 70 (83707) 1221 W. Idaho St. Boise, ID 83702 DONOVAN E. WALKER (ISB No. 5921) BARTON L. KLINE (ISB No. 1526) Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Telephone: 208-388-5317 Facsimile: 208-388-6936 dwalker(Çidahopower.com bkline(Çidahopower.com RECEI\/ Z039 MAR -5 PM~: 19 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 A ) CASE NO. IPC-E-08-16 CERTIFICATE OF PUBLIC CONVENIENCE ) AND NECESSITY TO INSTALL ADVANCED ) IDAHO POWER COMPANY'S METERING INFRASTRUCTURE ("AMI") ) PETITION FOR CLARIFICATION TECHNOLOGY THROUGHOUT ITS ) AND/OR RECONSIDERATIONSERVICE TERRIROTY ) OF ORDER NO. 30726 ) Idaho Power Company (hereinafter referred to as "Idaho Power" or "the Company"), petitioner herein, pursuant to RP 33, 325, 331, et seq., and Idaho Code Section 61-626, respectfully petitions the Commission for clarification and/or reconsideration of Order No. 30726, dated February 12, 2009, issued in Case No. IPC- E-08-16 ("the Order"). RP 325 provides that the Commission may clarify any order on its own motion, and that any person may petition to clarify any order. A petition to clarify does not toll the time in which to petition for reconsideration of a final order, but RP 325 states that the two may be combined and stated in the alternative. This Petition for IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 1 Clarification and/or Reconsideration is based on the following reasons and upon the following grounds: I. THE COMPANY SEEKS CLARIFICATION OF THE COMMISSION'S INTENT REGARDING THE OFFSET OF THE AUTHORIZED ACCELERATED DEPRECIATION BY THE ANTICIPATED OPERATION AND MAINTENANCE ("O&M") BENEFITS. Order No. 30726 authorizes the Company to accelerate the depreciation of its existing metering infrastructure over a three year period. Order No. 30726, p. 9. In the Decision and Findings section of the Order the Commission states: The Commission is not unsympathetic to the Company's concerns and is mindful of the relatively large capital expense Idaho Power estimates, approximately $70 millon, for this project. However, we must weigh those concerns along with the potential effect that an accelerated depreciation period might have on ratepayers. After reviewing the testimony and exhibits offered by the parties, we are convinced that the impact on the Company's annual revenue requirement caused by an accelerated depreciation period for the existing metering equipment can be adequately offset by the anticipated yearly Operation & Maintenance benefits. Id. The Company is concerned that this portion of the Order could be read to indicate that the Commission has concluded that the anticipated O&M benefits wil outweigh, or completely offset, the revenue requirement increase caused by the accelerated depreciation. The Company is also concerned that the financial community may also interpret the ordering language in this way, resulting in complications for the Company in its attempts to fund the very large capital investment required to continue moving forward with the AMI implementation. IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 2 The record for this case shows that while the anticipated O&M benefits, or "savings," do in fact act to partially offset the increased revenue requirement due to the accelerated depreciation, that the estimated 2009 revenue requirement is stil a net increase of $8.40 millon: "When the first year of accelerated depreciation is offset by the O&M benefits anticipated in 2009, the estimated 2009 revenue requirement is $8.40 milion, as shown on Exhibit NO.6." Waites, Direct, p. 10. The total O&M benefits for the three year deployment period are shown in Exhibit NO.4 to Company witness Waites' testimony to be $8.98 milion, while the accelerated depreciation for the same time period is shown to be $27.64 milion. Additionally, witness Waites testified that the estimate of annual revenue requirement for the additional plant to be included in rate base for the year 2009 is $3.82 milion, and shown on Exhibit NO.5. Waites, Direct, p. 8. This results in a total 2009 estimated revenue requirement of $12.22 millon. Consequently, the Company respectfully seeks clarification with regard to the Commission's intent regarding the degree to which O&M savings wil offset the impact of the authorized accelerated depreciation. The Commission should clarify its Order to confirm that it recognizes that AMI O&M savings act to partially offset the revenue requirement impact, but they do not eliminate it. II. THE COMPANY SEEKS CLARIFICATION OF THE COMMISSION'S INTENT WITH REGARD TO THE RECOVERY OF PRUDENTLY INCURRED INVESTMENT UP TO THE CAPITAL COST COMMITMENT ESTIMATE. The Request for Relief, Section 20 of the Company's Application, requests, among other things, an Order "granting the Company a Certificate of Public Convenience and Necessity to install Advanced Metering Infrastructure ("AMI") IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 3 technology throughout its service territory" and "authorizing that, in the ordinary course of events, Idaho Power can expect to rate base the prudent capital costs of deploying AMI as it is placed in service. . . ." Application, p. 11. This requested language is the "customary" language that is sought in a request for a Certificate of Public Convenience and Necessity, and if a Certificate is ultimately granted, this language is typically included in the ordering language of the Order. See, Order No. 30201, pp. 17-18 (Evander Andrews Certificate); Case No. IPC-E-03-12, Order No. 29410, p. 16 (Bennett Mountain Certificate); Case No. IPC-E-03-12, Order No. 29422, pp. 2-3 (Bennett Mountain Certificate, Clarification Order). This request for "customary" ordering language also applies to the Company's Capital Cost Commitment Estimate, in that the Company seeks assurance that prudently incurred investment wil be recovered for the project and, in return, the Company makes the commitment that it wil not seek to include capital investment in its rate base that exceeds its Commitment Estimate. If the Company's actual investment exceeds the Commitment Estimate, the Company wil limit its request for recovery to that Commitment Estimate, unless the Company can demonstrate to the Commission's satisfaction that the additional investment is necessary and prudent. Order No. 30726 does not address this requested language, nor does it discuss the Company's Capital Cost Commitment Estimate. The Company recognizes the Order's language stating that, The Commission emphasizes that this Order does not address issues relating to the propriety or prudency of the actual costs associated with the installation of the AMI technology. Issues related to the Company's rate recovery for such costs wil be deferred until the Company makes a formal request to the Commission for recovery in its next IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 4 rate case or in a subsequent proceeding deemed appropriate by the Commission . . . . Order No. 30726, pp. 9-10. However, the Company seeks clarification and/or reconsideration, and respectfully requests an affrmative statement that: "In the ordinary course of events, Idaho Power can expect to ratebase the prudent capital costs of deploying AMI as it is placed in service, up to the Capital Cost Commitment Estimate of $70.9 millon." This statement is one of the main components and assurances that the granting of a Certificate accomplishes. It provides a statement of support that is necessary for the Company and the financial community as they move forward in obtaining and investing a substantial sum of capital into a project. The Company recognizes that the requested language does not remove the requirement that the Company's actual investments be prudently incurred nor does it take the place of any subsequent prudency review by the Commission, and rate request by the Company. Consequently, the Company respectfully requests that the Commission clarify and/or reconsider its issuance of a Certificate of Public Convenience and Necessity to install AMI technology throughout its service territory by including the express and affrmative statement that "in the ordinary course of events, Idaho Power can expect to ratebase the prudent capital costs of deploying AMI as it is placed in service, up to the Capital Cost Commitment Estimate of $70.9 millon." II. CONCLUSION Idaho Power respectfully requests that the Commission clarify and/or reconsider those portions of Order No. 30726 set forth above. With this Order the Commission has re-emphasized its very strong desire that Idaho Power install system-wide AMI IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 5 infrastructure: "The Commission strongly urges Idaho Power to move forward with all deliberate speed with its phased AMI implementation plan." Order No. 30726, p. 8. However, with the current economic crisis in the financial markets and the entire U.S. economy, compounded with Idaho Power's immediate and continued need to invest capital resources into other infrastructure that is required to meet its obligation to reliably serve its customers' needs, the additional burden of raising the nearly $71 millon of capital required to implement AMI system-wide on the proposed timetable is extremely challenging to say the least. Consequently, the Company respectfully requests: (1) clarification of the Commission's intent regarding the offset of the authorized accelerated depreciation through an acknowledgment that although the O&M savings do act to partially offet the revenue requirement impact, they do not eliminate it; and (2) that the Commission clarify and/or reconsider its issuance of a Certificate of Public Convenience and Necessity to install AMI technology throughout its service territory by including an express and affrmative statement that, "In the ordinary course of events, Idaho Power can expect to ratebase the prudent capital costs of deploying AMI as it is placed in service, up to the Capital Cost Commitment Estimate of $70.9 millon." Respectfully submitted this 5th day of March 2009. D N E. WALKER Attorney for Idaho Power Company IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 - 6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 5th day of March 2009 I served a true and correct copy of IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726 upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Neil Price, Esq. Deputy Attorney General Idaho Public Utilities Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 -2Hand Delivered U.S. Mail _ Overnight Mail FAX -- Email neil.price(Çpuc.idaho.gov Kroger Co. Michael L. Kurt Kurt J. Boehm BOEHM, KURTZ & LOWRY 36 East Seventh Street, Suite 1510 Cincinnati, Ohio 45202 Hand Delivered --U.S. Mail _ Overnight Mail FAX .l Email mkurt(ÇBKLlawfrm.com kboehm(ÇBKLlawfrm.com Kevin Higgins Energy Strategies, LLC Parkside Towers 215 South State Street, Suite 200 Salt Lake City, Utah 84111 Hand Delivered --U.S. Mail _ Overnight Mail FAX -2 Email khiggins(Çenergystrat.com ~Nd~ Donovan E. Walker IDAHO POWER COMPANY'S PETITION FOR CLARIFICATION AND/OR RECONSIDERATION OF ORDER NO. 30726-7