20090316Application.pdf

10ß9
*S11W~POR~
An IDACORP Company
DONOVAN E. WALKER
Corporate Counsel
March 13, 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-09-06
IN THE MA TTER OF THE APPUCA TION OF IDAHO POWER COMPANY
FOR AUTHORITY TO IMPLEMENT FIXED COST ADJUSTMENT ("FCA')
RATES FOR ELECTRIC SERVICE FROM JUNE 1, 2009, THROUGH MAY
31,2010.
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of the Company's
Application in the above matter.
In addition, enclosed are nine (9) copies of the testimony of Scott Sparks filed in
support of the Application. One copy of Mr. Sparks' testimony has been designated as the
"Reporter's Copy." Also enclosed is a disk containing Word versions of the
aforementioned testimony.
In addition, three (3) copies of the Company's press release have been enclosed.
Finally, I would appreciate it if you would return a stamped copy of this letter for my
file in the enclosed stamped, self-addressed envelope.
yours,cÇ(J~
Donovan E. Walker
DEW:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, 10 83702
DONOVAN E. WALKER (ISB No. 5921)
BARTON L. KLINE (ISB No. 1526)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
dwalker(5idahopower.com
bkline(5idahopower.com
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2009 MI'..R i 3 PM 4: 06
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-09-06
AUTHORITY TO IMPLEMENT FIXED )
COST ADJUSTMENT ("FCA") RATES ) APPLICATION
FOR ELECTRIC SERVICE FROM JUNE 1, )
2009, THROUGH MAY 31,2010. )
)
Idaho Power Company ("Idaho Powet' or the "Company"), in accordance with
Idaho Code § 61-502, § 61-503, and RP 052, hereby respectfully makes application to
the Idaho Public Utiities Commission ("IPUC" or the "Commission") for an Order
authorizing Idaho Power to implement Fixed Cost Adjustment ("FCA") rates for electric
service from June 1,2009, through May 31,2010.
In support of this Application, Idaho Power represents as follows:
I. BACKGROUND
1. Idaho Power and the Commission have long agreed that promotion of
cost-effective energy effciency and demand-side management ("DSM") "is an integral
APPLICATION - 1
part of least-cost electric service." Order No. 30267 at 13. Traditional rate design,
however, discourages utilities that recover their fixed costs through each kilowatt-hour
sold from reducing their sales volume through investment in energy effciency and DSM.
2. Recognizing that "opportunities exist(ed) for improvements in operating
effciency that would benefit the Company shareholders and its customers," the
Commission op ened an investigation in Case No. IPC-E-04-15 to assess financial
disincentives to utility-operated DSM programs and to consider options for a mechanism
that adjusts revenues when annual energy consumption is either above or below
normaL. Order No. 29558 citing Order No. 29505 at 68-69. The FCA mechanism is the
collaborative result of that docket.
II. FIXED COST ADJUSTMENT MECHANISM
3. In Order No. 30267 issued in Case No. IPC-E-04-15 on March 12,2007,
the Commission approved a Stipulation ("Stipulation") for the implementation of a three-
year Fixed Cost Adjustment pilot program applicable to Residential Service (Schedules
1, 4, and 5) and Small General Service (Schedule 7) customers. The FCA mechanism
allows Idaho Power to separate or "decouple" collection of its fixed costs from its
volumetric energy sales and provides symmetry through a surcharge or credit when
fixed cost recovery per customer varies above or below a Commission-established
base. In other words, the FCA wil "true-up" the collection of fixed costs per customer to
recover the difference between the fixed costs actually recovered through rates and the
fixed costs authorized for recovery in the Company's most recent rate case.
4. The FCA works identically for both the residential and small general
service classes. For each class, the average number of customers for the year is
APPLICATION - 2
multiplied by the fixed cost per customer rate ("FCC"), which is established as a part of
determining the Company's allowed revenue requirement in a general rate case. The
product of this calculation establishes the "allowed fixed-cost recovery" amount. This
allowed fixed cost recovery amount is then compared to the amount of fixed costs
actually recovered by Idaho Power. To determine the "actual fixed-costs recovered
amount," the Company takes weather-normalized sales for each class and multiplies
that sales figure by the fixed cost per energy rate ("FCE") as established in the
Company's general rate case. The difference between these two numbers (the
"allowed fixed-cost recovery" amount minus the "actual fixed costs recovered" amount)
is the Fixed Cost adjustment for each class. The proposed FCA tariff, Schedule 54, can
be found as Attachment No. 1 to this Application and as Exhibit No. 5 to the testimony
of Mr. Scott D. Sparks.
II. PROPOSED 2009-2010 FCA RATE ADJUSTMENT
5. As part of its enhanced efforts to promote energy effciency and demand-
side management, Idaho Power Company actively pursued numerous, additional
opportunities throughout 2008. These efforts are more fully described in the
accompanying testimony of Mr. Sparks and in the Company's 2008 Demand-Side
Management Annual Report.
6. The true-up amount for the residential class for January through
December 2008 is a positive $1,320,748.96, including accumulated interest as shown in
Exhibit NO.4 to Mr. Sparks' testimony. Because the residential true-up is a positive
number, it means that the rate of growth in the number of residential customers was
more than the rate of growth in the energy sales for that class; Le., the average use per
APPLICATION - 3
customer decreased. Therefore, if collected individually, the residential class would
receive an increase in additional fixed costs collected during the year amounting to a
0.42 percent increase in residential rates.
7. For the small general service class during January through December
2008, the FCA true-up is a positive $1,394,166.52, including accumulated interest as
shown on Exhibit NO.5 to Mr. Sparks' testimony. Because the small general service
class true-up is a positive number, this means that energy usage per customer has
decreased and that the Company has under-collected its fixed costs. The additional
revenue to be recovered from the Small General Service class would amount to a 10.29
percent rate increase. To be consistent with the methodology applied in the first year of
the FCA pilot, Case No. IPC-E-08-04, Order No. 30556, the Company is proposing a
combined rate increase for Residential and Small General Service customers of 0.0529
cents per kWh, or 0.82 percent.
8. Pursuant to the Stipulation approved by Order No. 30267, the
Commission-approved FCA adjustment wil be combined with the Energy Effciency
Services Charge into a single line item on customers' bils.
9. Idaho Power requests that the FCA rate become effective on June 1,
2009, coincident with Idaho Power's Power Cost Adjustment ("PCA") and with the
commencement of seasonal rates. The Company requests that the FCA rate remain in
effect until May 31,2010.
IV. MODIFIED PROCEDURE
10. Idaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
APPLICATION - 4
under Modified Procedure; Le., by written submissions rather than by hearing. RP 201,
et seq. If, however, the Commission determines that a technical hearing is required, the
Company stands ready to present its testimony and support the Application in such
hearing.
V. COMMUNCIATIONS AND SERVICE OF PLEADINGS
11. This Application has been and wil be brought to the attention of Idaho
Power's affected customers by means of news releases to media in the Company's
service area. The news release, a copy of which accompanies this Application, also
describes proposed rate changes associated with the Energy Effciency Rider and the
Company's AMI investment. The Company is currently preparing a customer bil insert
and wil file a copy with the Commission once it has been finalized. Idaho Power wil
also keep its Application, testimony, and exhibits open for public inspection at its
offces throughout the State of Idaho.
12. Communications and Service of Pleadings with reference to this
Application should be sent to the following:
Donovan E. Walker
Barton L. Kline
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
dwalker(5idahopower.com
bkline(Çidahopower.com
Scott D. Sparks
John R. Gale
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
ssparks(Çidahopower.com
rgale(Çidahopower.com
VI. REQUEST FOR RELIEF
13. Idaho Power respectfully requests that the Commission issue an Order:
(1) authorizing that this matter may be processed by Modified Procedure and (2)
APPLICATION - 5
authorizing Idaho Power to implement Fixed Cost Adjustment rates for electric service
from June 1, 2009, through May 31, 2010, as described above.
DATED at Boise, Idaho, this 13th day of March 2009.
APPLICATION - 6
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-09-06
IDAHO POWER COMPANY
ATTACHMENT NO.1
TARIFF
LEGISLATIVE FORMAT
Idaho Power Company
I.P.U.C. No. 29, Tariff No. 101
First Revised Sheet No. 54-2
Cancels
Original Sheet No. 54-2
SCHEDULE 54 .
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual Fixed Costs Recovered amount is computed by multiplying the weather-normalized
energy load for Residential and Small General Service customers by the appropriate Residential and
Small General Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small General Service Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 4, and 5) is
c=0.04570.052g: cents per kWh. The monthly Fixed Cost Adjustment for Small General Service
(Schedule 7) is c=0.04570.0529:= cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule will expire May 31, 202010.
IDAHO Issued by IDAHO POWER COMPANY
Issued per IPUC Order No. Nos. 30556, 3055Q and 30563John R. Gale, Vice President, Regulatory Affairs
Effective - June 1, 2008June 1, 2009 1221 West Idaho Street, Boise, ID
PROPOSED TARIFF
Idaho Power Company First Revised Sheet No. 54-2
Cancels
Original Sheet No. 54-2I.P.U.C. No. 29. Tariff No. 101
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual Fixed Costs Recovered amount is computed by multiplying the weather-normalized
energy load for Residential and Small General Service customers by the appropriate Residential and
Small General Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small General Service Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 4, and 5) is 0.0529
cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule 7) is 0.0529
cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule wil expire May 31,2010.
IDAHO
Issued per IPUC Order No.
Effective - June 1, 2009
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID