20090423Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283
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2U09APR 23 Pt', l: 59
Street Address for Express Mail:
472 WWASHINGTON
BOISE ID 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER APPROVING
AMORTIZATION OF FEDERAL AGENCY
ANNUAL FEES.
)
) CASE NO. IPC-E-09-10
)
)
) COMMENTS OF THE
) COMMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Weldon B. Stutzman, Deputy Attorney General, and in response to the
Notice of Application and Notice of Modified Procedure issued in Order No. 30769 on April 8,
2009, submits the following comments.
BACKGROUND
On April 2, 2009, Idaho Power filed an Application for an accounting order approving its
proposed accounting for amortization of federal agency fees refuded to the Company in 2006.
In the Company's recently concluded rate case, Order No. 30722 issued January 30, 2009, the
Commission directed the Company to amortize the approximately $3.2 milion credit it received
as reimbursement of Federal Energy Regulatory Commission (FERC) and other federal agency
fees. The Commission directed a five-year amortization period. Because Idaho Power received
the credit in September 2006, the Company alleges the amortization period should begin as of
STAFF COMMENTS 1 APRIL 23, 2009
October 2006. The Company requests an Order authorizing an amortization period that
commenced in October 2006 and will end in September 201 1.
STAFF REVIEW
The amortization period of five years (Order No. 30722) for the FERC agency fee
overpayments continues to be reasonable. Ths period is not at issue for these comments. The
question presented in the Application for an Accounting Order relates to the starting date of the
amortization for accounting puroses and the accounting entries. Idaho Power requests that the
amortization period begin October 2006, the month following receipt of the credit.
The Idaho jurisdictional portion of the credit is $3,104,016 with an amortization of
$51,734 per month. The anual amortization to Idaho customers of $620,808 ($653,202 system)
reduced the revenue requirement as established in the recent general rate case IPC-E-08-1 0,
Order No. 30722.
Idaho Power must properly reflect a multi-year amortization that will benefit customers
as a regulatory liabilty for financial accounting puroses. Idaho Power wil be required to
establish a regulatory liabilty on its books and in this instace fuly expense the unamortized
portion on its financial books as of Februar 1,2009, the effective date of Order No. 30722. If
the amortization star date of October 2006 is approved, the following entries (updated from
those presented in the Application) to record the unamortized Idaho jursdictional amount at
January 31, 2009 wil be made.
401 Operating Expense $1,655,475
254 Other Regulatory Liability $1,655,475
The entries for the monthly amortization amount of$51,734 for Februar 2009 through
September 2011 are unchanged from the Application.
As shown above, the Commission's decision results in a regulatory liabilty of
$1,655,475. Idaho Power reduced the expense booked in 2006 when the credit was received.
Therefore, an expense matching the regulatory liabilty must now be booked resulting in a
financial impact on earnings in 2009. The monthly amortization will reduce the regulatory
liabilty, matching the expense credit with the lower revenues being collected in base rates for
this credit.
STAFF COMMENTS 2 APRIL 23, 2009
CONCLUSION AND RECOMMENDATIONS
If Staff knew of the credit when it was received, it could have recommended deferred
accounting treatment similar to that seen with a deferred expense request. At that time an
amortization period beginning October 2006 would have been a reasonable option. When
considering the financial impact in 2009, Staff believes the Company's recommendation is
reasonable. In future requests for deferred expense treatment and Accounting Orders, the
staring date for amortization of those deferred expenses wil be closely evaluated for consistent
treatment.
Staff recommends the request for an Accounting Order be approved. The requested
amortization period of October 2006 though September 2011 should be accepted. The proposed
accounting entries with updated numbers should be approved to match the Febru 1, 2009
effective date of Order No. 30722.
Staff recommends a decision and Order be issued quickly to faciltate the required
accounting adjustment to the first quarer (Q 1) financial information. The corrected information
should be incorporated in the Q 1 earings release making an expedited Order necessar.
Respectfully submitted this 23rd day of April 2009.
o~Weldon B. Stutzman
Deputy Attorney General
Technical Staff: Terri Carlock
i:umisc:commentsipce09.! Owstc
STAFF COMMENTS 3 APRIL 23, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23RD DAY OF APRIL 2009,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-09-10, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
BARTON L KLINE
DONOV AN E WALKER
IDAHO POWER COMPANY
POBOX 70
BOISE ID 83707-0070
E-MAIL: bklineimidahopower.com
dwalkerimidahopower.com
JOHNRGALE
VICE PRESIDENT, REG. AFFAIRS
IDAHO POWER COMPANY
POBOX 70
BOISE ID 83707-0070
E-MAIL: rgaleimidahopower.com
Si il;n . Vç9:ASECRETARY
CERTIFICATE OF SERVICE