HomeMy WebLinkAbout20090721Application.pdfesIDA~POR~
An IDACORP Company
DONOVAN E. WALKER
Corporate Counsel
20ng J
lOA-HO P
UTIUTIES C
July 20, 2009
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-09-21
IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY
FORAN ACCOUNTING ORDER AUTHORIZING THE DEFERRAL OF COSTS
ASSOCIA TED WITH THE FERC ORDER ON INITIAL DECISION (DOCKET
NO. ER06-787)
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
(
onovan E. Walker
ftlcx
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: 208-388-5317
Facsimile: 208-388-6936
dwalker(Cidahopower.com
bkline(Cidahopower.com
RECEIVED
2009 JUl20 PM~: 46
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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 AN ) CASE NO. IPC-E-09,.21
ACCOUNTING ORDER AUTHORIZING )
THE DEFERRAL OF COSTS ASSOCIATED ) APPLICATION
WITH THE FERC ORDER ON INITIAL )
DECISION (DOCKET NO. ER06-787) )
)
Idaho Power Company ("Idaho Power" or the "Company"), in accordance with
Idaho Code § 61-524 and RP 52, hereby respectfully makes Application to the Idaho
Public Utilities Commission ("I PUC" or the "Commission") for an accounting Order
authorizing the deferral of costs associated with the Federal Energy Regulatory
Commission ("FERC") Order on Initial Decision, Docket No. ER06-787.
In support of this Application, Idaho Power represents as follows:
I. INTRODUCTION
1. On March 24, 2006, Idaho Power submitted an Open Access
Transmission Tariff ("OATT") filling to the FERC requesting an increase in transmission
APPLICATION - 1
rates. In the filing, the Company proposed to move from a fixed rate to an annually
updated formula rate to determine the total transmission revenue requirement. The
formula rate reflects Idaho Power's total cost to own, operate, and maintain the
transmission facilities used for providing Open Access Transmission Service to
transmission customers. The formula rate allows for transmission rates to be updated
each year based on financial and operational data Idaho Power is required to file
annually with the FERC in its Form 1. Idaho Power's filing was opposed by several
affected parties.
2. Effective June 1, 2006, the FERC accepted rates based on the formula for
Idaho Power amounting to an annual revenue increase of $11 milion based upon 2004
test year data. The transmission rates were accepted subject to refund pending the
ultimate outcome of the hearing and settlement process.
3. On August 8, 2007, the FERC approved a settlement agreement by the
parties on all issues except the treatment of contracts for transmission service that
contain their own terms, conditions, and rates that were in existence before the
implementation of OATT in 1996 ("Legacy Agreements"). This settlement reduced the
estimated annual revenue increase to approximately $8.2 millon based on 2004 test
year data. Approximately $1.7 milion collected in excess of these new transmission
rates between June 1,2006, and July 31,2007, was refunded with interestto customers
in August 2007.
4. The Company currently has three Legacy Agreements, all with PacifiCorp,
dating back as far as 1974. The Company's position regarding the Legacy Agreements
has been that the revenues received from the contracts pre-dated the OA TT and
APPLICATION - 2
therefore should be credited against the total transmission revenue requirement
attributed to OA TT customers and that the contract demands of the Legacy Agreements
should not be included in the load divisor of the rate formula. Idaho Power proposed
that they be reflected in the OA TT formula as revenue credits. In contrast, the
customers' proposal was that the Legacy Agreements were a service of the OA TT even
though revenues from the agreements were not subject to the OATT and that those
agreements should be reflected in the load denominator of the OA TT formula at their
contract demand values. According to the customers, any allocation to the Legacy
Agreements that is not funded under the contract is not their responsibility. This
position creates a gap where full recovery of the revenue requirement cannot be
achieved.
5. On August 31, 2007, the FERC Presiding Administrative Law Judge
("ALJ") issued an initial decision ("Initial Decision") with respect to the treatment of the
Legacy Agreements. The ALJ's Initial Decision was to put the Legacy Agreements into
the denominator at their usage level rather than the contract demand, a position
generally between the Company and the customers' proposal, but further reducing the
new transmission rates. The Company, as well as opposing parties, appealed the Initial
Decision to the FERC. If implemented, the Initial Decision would have required the
Company to make additional refunds, including interest, of approximately $5.4 millon
(including $0.4 milion of interest) for the June 1, 2006, through December 31, 2008,
period. The Company reserved this entire amount in order to make a future refund in
this amount should the Initial Decision be implemented by the FERC.
APPLICATION - 3
6. On January 15, 2009, FERC issued its Order on Initial Decision ("FERC
Ordet' which upheld the Initial Decision of the ALJ in most respects but modified the
Initial Decision in one respect that was unfavorable to Idaho Power. The decision
requires Idaho Power to include the contract demands associated with the Legacy
Agreements in the OA TT formula rate divisor rather than crediting the revenue from the
Legacy Agreements against Idaho Power's transmission revenue requirement, which
further reduces the transmission service rates to FERC jurisdictional customers.
Consequently, Idaho Power was required to make refunds to FERC jurisdictional
transmission customers in the total amount of $13.3 millon (including $1.1 millon in
interest) for the period since the new rates went into effect in June 2006. The ordered,
refunds were made by the Company on February 25, 2009.
II. OATT REVENUE TREATMENT IN IDAHO JURISDICTIONAL
REVENUE REQUIREMENT DETERMINATIONS
7. For Idaho jurisdictional revenue requirement determinations, revenues
from third parties (non-state jurisdictional) received through the OA TT are booked to
FERC Account 456 - Other Electric Revenues. In effect, these revenues, which are
referred to as "revenue credits," are a direct offset to the Company's overall revenue
requirement. If the "revenue credits" are overstated, as is the case here because of the
retroactive nature of the FERC's decision, then the Company's overall revenue
requirement comes up short, including the Idaho jurisdictional revenue requirement
authorized by the Commission in Case No. IPC-E-08-10. In preparation of the last two
general rate cases, the Company included an estimate of OA TT revenues from third
parties based on the forecasted OATT rate less a reserve. In Case No. IPC-E-07-08,
the Company included $18,929,711 of annual transmission revenues in FERC Account
APPLICATION - 4
456 to represent those revenues expected during the test year, which was in effect from
March 1, 2008, through January 31, 2009. Case No. IPC-E-07-08, Schwendiman,
Exhibit No. 29, p. 9. In Case No. IPC-E-08-10, the Company included $16,285,765 of
annual transmission revenues in FERC Account 456 to represent those revenues
expected during the test year, which went into effect February 1, 2009, and are stil in
effect. This estimate was based on the ALJ's Initial Decision. Case No. IPC-E-08-10,
Schwendiman, Exhibit No. 46, p. 9.
8. The FERC Order issued on January 15, 2009, had a significant impact on
actual third-party transmission revenues the Company received from June 2006 to date
and the revenues the Company is currently receiving from OA TT customers. Rates for
Customers in Idaho included the Company's conservative and good faith estimate,
which was authorized by the FERC, subject to refund, of approximately $20.24/kW year
and $19.73/kW year to calculate the annual third-party transmission revenue credits in
Case Nos. IPC-E-07-08 and IPC-E-08-10, respectively. With the FERC Order, those
rates were retroactively adjusted down to the current rate of $13.81/kW year. The
combined impact is an overstatement of the revenue credits to Idaho Power's Idaho
retail jurisdiction of $8,084,251 for the March 2008 through May 2010 time period. (See
Attachment No.1.) The $8,084,251 represents the excess revenue credits included in
the calculation of the Company's Idaho customers' rates from March 2008 through May
2010. As a result of the FERC redetermining past OATT rates, the Company, in its last
general rate case, credited back more third-party revenues than what is ultimately being
recovered.
APPLICATION - 5
II. ACCOUNTING TREATMENT
9. In order to correct for this unexpected difference, the Company requests
to defer the amount related to the difference between the forecasted third-part
transmission revenues included in the Company's test years and those third-part
revenues actually received until such time as the test year is updated and rates are
changed, which is expected to be through May 2010. As the Commission stated in the
Company's last general rate case, in order to preserve the potential to recover
significant, unexpected costs in future rates, the Company must request a deferral
order. Order No. 30754, p. 5, Case No. IPC-E-08-10. The Company estimates the total
unrecovered transmission revenues for the Idaho jurisdiction through May 31, 2010, wil
be $8,084,251. The Company stil has contested issues with the FERC Order and is
taking measures to address these issues. If the issues are resolved in the Company's
favor, the Company wil reduce the deferraL. However, due to the financial impact on
the Company, Idaho Power is obligated to address the unrecovered transmission
revenues immediately.
10. Idaho Power is requesting to amortize the unrecovered transmission
revenues on a straight-line basis over a 3-year period beginning June 1, 2010. Such an
amortization is appropriate because this timeframe is similar to that of the resolution of
the initial OATT filing. Therefore, the Company seeks an accounting order authorizing
the deferral of the unrecovered transmission-related revenues associated with the
FERC Order through May 2010 and amortization of these costs over a period of 3 years
beginning upon their inclusion in rates.
APPLICATION - 6
11. Idaho Power proposes to account for the unrecovered transmission
revenues by charging them to Account 182.3, Other Regulatory Assets, and amortizing
these amounts to Account 407.3, Regulatory Debits, upon their inclusion in rates. Prior
to inclusion in rates, Idaho Power proposes to accrue a carrying charge using the
Company's most recent return on rate base.
iv. MODIFIED PROCEDURE
12. Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under Modified Procedure, i.e., 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
13. 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~idahopower.com
bkline~idahopower.com
Courtney Waites
Greg Said
Mike Youngblood
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
cwaites~idahopower.com
gsaid(Cidahopower.com
myoungblood~idahopower.com
VI. REQUEST FOR RELIEF
14. Idaho Power respectfully requests that the Commission issue an Order:
(1) authorizing that this matter may be processed by Modified Procedure and (2)
APPLICATION - 7
authorizing the deferral of unrecovered transmission revenues related to the Company's
FERC Order as set forth above.
DATED at Boise, Idaho, this 20th day of July 2009.
&7~~
DONOVAN E. WALKER
Attorney for Idaho Power Company
APPLICATION - 8
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-09-21
IDAHO POWER COMPANY
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