20091105final_order_no_30941.pdf

Office of the Secretary
Service Date
November 5, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR AN
ACCOUNTING ORDER TO ESTABLISH
RATEMAKING TREATMENT OF
QUALIFYING REPORTING ENTITY
CONTRACTS
ORDER NO. 30941
CASE NO. IPC-09-
On May 29, 2009, Idaho Power Company filed an Application requesting an
Accounting Order associated with Qualified Reporting Entity (QRE) services. The QRE
services will be provided to renewable generation units located in the Idaho Power Balancing
Authority area that are under contract with Idaho Power to certify renewable energy credits
(RECs) in the Western Renewable Electricity Generation Information System (WREGIS). Idaho
Power requests an Order approving the proposed accounting and ratemaking treatment for
revenues and expenses associated with the QRE services.
Renewable Energy Credits (RECs) are tracked through WREGIS for various purposes
throughout many western states. The WREGIS process requires that a party, independent of the
owner of the renewable generation unit, supply WREGIS with the actual monthly MWHs (one
MWH equals one REC) that a renewable generation unit has delivered. Idaho Power has been
approved as a Qualifying Reporting Entity by the WREGIS administrator. This QRE
designation enables Idaho Power to use the WREGIS system to track the RECs from the Elkhorn
wind farm, the Raft River geothermal generation units and any other renewable units when
developed.
Owners of other renewable generation units within the Idaho Power Balancing
Authority have requested that Idaho Power provide QRE services for their projects. Idaho Power
is willing to provide these services under contract where the costs are fully compensated by the
party requesting the service. The Oregon Public Utility Commission (OPUC) in Docket No. UM
1394 considered several issues in addressing a similar request from parties. After several
workshops and rounds of comments, the Oregon parties compromised on a Qualified Reporting
Entity Agreement and entered into a Memorandum of Understanding (MOD). The OPUC Staff
proposed and parties agreed that the costs and revenues associated with QRE agreements will be
ORDER NO. 30941
treated as an "above-the-line" expense for ratemaking purposes. Idaho Power ultimately agreed
to the compromise position and signed the MOD. The MOD has a two-year review period, and
on or about March 15 2011 , parties in Oregon will convene a review workshop.
Idaho Power requests consistent treatment in Idaho. The Company proposes that the
following process and accounting be used to record expenses and revenues associated with
providing voluntary QRE services:
a. The Company s Delivery Finance group will create a yearly QRE services
work order that will have the following eight tasks:
1. Set-up Expenses - Idaho11. Set-up Revenue - Idaho
111. Monthly Reporting Expenses - Idaho
IV. Monthly Reporting Revenue - Idahov. Set-up Expenses - OregonVI. Set-up Revenue - Oregon
vii. Monthly Reporting Expenses - Oregon
viii. Monthly Reporting Revenue - Oregon
b. The account 415020 REV FM MJ&CW-QRE REPORTING will be used
to record the revenue.
c. The account 416020 EXP FM MJ&CW-QRE REPORTING will be used
to record the expenses.
d. If Delivery Finance provides QRE service for one of the Companygeneration resources, Delivery Finance will charge the Company s Power
Supply group via an internal accounting entry that will debit the revenue
account using a Power Supply cost center and will credit the revenue
account using a Delivery cost center. This is required by GAAP to
prevent Idaho Power from recognizing revenue from itself for external
financial reporting purposes.
e. Delivery Finance will directly bill all other project owners, including
Company affiliates, for QRE services.
f. One of the key elements of the QRE Agreement is the pricing mechanism
that enables Idaho Power to charge the actual cost to perform QREservices. All time and expenses incurred in providing QRE service to any
entity will be charged to the expense tasks on the work order. All revenue
billed for providing the QRE service will be credited to the revenue tasks
on the work order. Annually, Delivery Finance will analyze the expenses
(including overheads and profit) charged to the work order to determine if
the rates it charges for its services need to be adjusted.
ORDER NO. 30941
Staff reviewed the Oregon process and documents in UM 1394 including the
contracts and MOU. The Idaho Power estimated time requirements, costs and service charges
have also been reviewed.The contracts establish charges that will be based on full cost
recovery; however, data associated with providing the QRE service are estimated. The estimates
cover the expected costs and are designed to be revenue neutral. The Commission finds that
actual costs, allocation of costs and revenues for Idaho Power associated with the QRE services
and client contracts needs to be analyzed after the initial two-year period.
The Commission has determined it is reasonable to issue an Accounting Order
approving the above accounting and ratemaking process through the two-year review process
established in Oregon. Idaho Power is directed to file a full analytical report on the QRE
services covering client contracts, actual costs, allocation of costs, and revenues. The report
must be filed following the Oregon workshops but no later than October 31 , 20 II.
ORDER
IT IS HEREBY ORDERED that Idaho Power s request for an Accounting Order on
the proposed accounting and ratemaking treatment related to Qualified Reporting Entity services
is granted as conditioned in this Order.
IT IS HEREBY ORDERED that the process and accounting described above is
acceptable. This process will be evaluated on a prospective basis as recommended by Staff
following the two-year Oregon Memorandum of Understanding time line. To facilitate the
review of the above-the-line ratemaking treatment, Idaho Power shall file a full analytical report
on the QRE services covering client contracts, actual costs, allocation of costs , and revenues.
The report shall be filed following the Oregon workshops but no later than October 31 , 2011.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30941
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this brA
day of November 2009.
ATTEST:
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Commission Secretary
O:IPC-09-16 ws
ORDER NO. 30941
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D. KE PTON',PRE ENT
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MARSHA H. SMITH, COMMISSIONER
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MACK A. REDFORD, C
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