20090407reconsideration_order_no_30768.pdf

Office of the Secretary
Service Date
April 7, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY TO INSTALL ADVANCED
METERING INFRASTRUCTURE (AMI)
TECHNOLOGY THROUGHOUT ITS SERVICE TERRITORY
CASE NO. IPC-08-
ORDER NO. 30768
On August 5 , 2008, Idaho Power Company ("Idaho Power" or "Company
submitted an Application for a Certificate of Public Convenience and Necessity ("CPCN"
pursuant to Idaho Code ~~ 61-502A, 61-503 , 61-525 , 61-526, RP 52, and RP 112, to install
Advanced Metering Infrastructure ("AMI") technology throughout its service territory,
authorization to accelerate the depreciation of the existing metering infrastructure and include the
corresponding operation and maintenance benefits as they occur.
On February 12 2009, the Commission issued its final Order granting the Application
for a CPCN. Order No. 30726. On March 5 , 2009, Idaho Power filed a Petition for
Reconsideration and/or Clarification of Order No. 30726. With this Order, the Commission
grants Idaho Power s Petition to clarify the Commission s certain specified language in Order
No. 30726.
Issues Presented for Reconsideration and/or Clarification
Idaho Power requests reconsideration and/or clarification of two issues: (1) the
Commission s intent regarding the offset of the authorized accelerated depreciation by the
anticipated operation and maintenance ("O&M") benefits; and (2) the Commission s intent
regarding the recovery of prudently incurred investment up to the capital cost commitment
estimate. Petition at 2-
1. Offset of O&M Benefits. In its Petition, Idaho Power expressed its concern that
the Commission s previous Order in this case may be interpreted by the financial community to
suggest that the "anticipated O&M benefits (from AMI installation) will outweigh, or completely
offset, the revenue requirement increase caused by the accelerated depreciation.Id. at 2.
According to Idaho Power, this could result in "complications for the Company in its attempts to
fund the very large capital investment required to continue moving forward with the AMI
ORDER NO. 30768
implementation.Id. Referencing the filed testimony of Company witness Waites, the
Company reiterated its position that the O&M savings associated with AMI installation will "act
to partially offset the revenue requirement impact, but they do not eliminate it." Id. at 3.
2. Recovery of Prudent Investment Up to the Capital Cost Commitment Estimate
Additionally, Idaho Power requested an "affirmative 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 million.
'"
Id. at 4. The
Company asserted that the inclusion of such specific language constitutes "one of the main
components and assurances that the granting of a (CPCN) Certificate accomplishes.Id.
Commission Decision and Findings
The Commission finds that Idaho Power s Petition for Reconsideration and/or
Clarification of Order No. 30726 complies with requirements found in Idaho Code ~ 61-626, as
well as the relevant Commission Rules of Procedure. IDAPA 31.01.01.325 and 331.
After reviewing Idaho Power s Petition, the Commission grants the Company
request for clarification regarding the two issues addressed in Order No. 30726. Accordingly,
the Commission expressly states that we do not anticipate that the O&M benefits associated with
AMI installation will be immediately sufficient to completely offset the increase in the
Company revenue requirement occasioned by the accelerated depreciation period.
Notwithstanding this clarification, the Commission maintains its view that a myriad of benefits
will ultimately flow from Idaho Power s installation of AMI, both in the near term and in the
future. See Order No. 30726 at 8.
Finally, to the extent that our prior Order may be interpreted otherwise, the
Commission expressly finds 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, up to the capital
cost commitment estimate of $70.9 million. Having clarified our final Order, reconsideration is
unnecessary.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Petition for Clarification of
Order No. 30726 is granted. The Commission does not anticipate that the immediate savings
derived from the implementation of Advanced Metering Infrastructure throughout Idaho Power
service territory will eliminate or wholly offset the increase in Idaho Power s revenue
ORDER NO. 30768
requirement caused by the authorized depreciation period. Idaho Power can expect, in the
ordinary course of events, to rate base the prudent capital costs of deploying AMI as it is placed
in service, up to the capital cost commitment estimate of $70.9 million.
THIS IS A FINAL ORDER ON RECONSIDERATION AND CLARIFICATION.
Any party aggrieved by this Order or other final or interlocutory Orders previously issued in this
Case No. IPC-08-l6 may appeal to the Supreme Court of Idaho pursuant to the Public
Utilities Law and the Idaho Appellate Rules. See Idaho Code ~ 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
?#.
day of April 2009.
. ~~
MACK DFORD, P SIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
ISSlon Secretary
O:IPC-O8-np3
ORDER NO. 30768