20091002Application.pdf

BARTON L. KLINE
Lead Counsel
esIDA~POR~
An IDACORP Company
October 1, 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-09-28
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR AUTHORITY TO CONVERT SCHEDULE 54 - FIXED COST
ADJUSTMENT - FROM A PILOT SCHEDULE TO AN ONGOING,
PERMANENT SCHEDULE.
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
In addition, enclosed are an original and (8) copies ofthe 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 a Word version öfthe
aforementioned testimony.
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.
Very truly yours,(l~
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
BARTON L. KLINE (ISB No. 1526)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-388-6936
bkline(âidahopower.com
dwalker(âidahopower.com
RE-C t: 1\/. r=!)"" i. . '""'
2009 OCT -I PM 4: 39
IDAHO PUBUÇ
UTIUr'IES COMMISSION
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-09-28
AUTHORITY TO CONVERT SCHEDULE )
54 - FIXED COST ADJUSTMENT - FROM ) APPLICATION
A PILOT SCHEDULE TO AN ONGOING, )
PERMANENT SCHEDULE. )
)
Idaho Power Company ("Idaho Powet' or the "Company"), in accordance with
Idaho Code § 61-502, § 61-503, and RP 052, hereby requests that the Idaho Public
Utilties Commission ("I PUC" or the "Commission") issue an Order authorizing Idaho
Power to convert its current Schedule 54 - Fixed Cost Adjustment ("FCA") - from a pilot
schedule to an ongoing, permanent schedule.
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 efficiency and demand-side management (collectively, "DSM") "is
APPLICATION - 1
an integral part of least-cost electric service." (Order No. 30267 at 13.) Traditional rate
design, however, discourages utilties from reducing their sales volume by investing in
energy efficiency and DSM because they recover a large portion of their fixed costs
through their sales of kilowatt-hours of energy.
2. Recognizing this reality, the Commission opened an investigation in Case
No. IPC-E-04-15 to assess financial disincentives to utilty-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 citng 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 settlement stipulation for the implementation of a three-
year FCA pilot program applicable to Residential Service (Schedules 1, 4, and 5) and
Small General Service (Schedule 7) customers. The approved FCA mechanism allows
Idaho Power to separate or "decouple" collection of its fixed costs from its volumetric
energy sales and then provides a symmetrical "balancing" 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") also 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.
5. A copy of Schedule 54 is enclosed as Attachment No. 1 to this
Application. The Company is also filing the testimony of Mr. Scott Sparks, whose
testimony provides evidence in support of this Application.
IIi. PROPOSED CONVERSION FROM PILOT SCHEDULE
TO PERMANENT SCHEDULE
6. Since the Commission originally approved the FCA pilot tariff, the
Company has made two FCA rate change filings in which it showed how the FCA was
affecting the Company's DSM efforts. During the three-year period in which Schedule
54 has been in effect as a pilot schedule, Idaho Power has made strong progress in
improving and enhancing its efforts to promote energy efficiency and demand-side
management activities. In general, due in no small part to removal of the disincentive
provided by the FCA mechanism during the term of the FCA pilot, the Company has
increased the number of DSM programs it offers and substantially increased both its
investment in DSM activities and the megawatt-hour savings obtained via DSM.
APPLICATION - 3
7. These enhanced efforts to promote energy efficiency and demand-side
management are more particularly described in the accompanying testimony of Mr.
Scott Sparks, which is enclosed with this Application. The Company also requests that
the Commission take official notice of the Company's 2008 Demand-Side Management
Annual Report, which describes in greater detail how the Company has increased its
DSM efforts during the three-year life of the FCA pilot program.
IV. COMPANY PROPOSAL
8. The purpose of the Schedule 54 pilot was to test the FCA mechanism to
determine its efficacy in removing the unintended rate-design disincentive for the
Company to aggressively pursue DSM programs. Results from the first two years of the
pilot indicate that the true-up mechanism is working as intended and operating to
mitigate the unintended adverse effects of DSM by ensuring that the fixed costs the
Commission authorized the Company to recover are being recovered via the FCA
mechanism. The mechanism has proved to be fair to both the Company and its
customers, providing a refund in one year and a surcharge in the next. The
mechanism has also proven to be reasonable as the individual customer bil impacts,
both as surcharges and refunds, have been relatively smalL.
9. In seeking authority to convert Schedule 54 to a permanent tariff, the
Company is requesting that the FCA continue to be applicable only to the Residential
and Small General Service customer classes. During the initial two years of the pilot
Schedule 54, the FCA balances for both classes were combined and the same FCA
rate adjustment applied to both classes. However, in this filng the Company is
requesting that the Commission determine that, beginning with the June 1, 2010, rate
APPLICATION - 4
change, FCA balances and annual rate-adjustment amounts for each class wil remain
separate so that each class is assigned its own fixed cost adjustment rate. The reasons
for applying the fixed cost adjustment to the Residential and Small General Service
classes separately is more particularly described in Mr. Sparks' testimony.
10. The Company proposes to continue reporting the monthly FCA balance to
the Commission as it does now and to continue to file annual applications seeking
approval of the FCA true-up balances. Because Idaho Power does not propose any
changes to the provisions of the current Schedule 54, it is not necessary to approve a
new tariff at this time. As it has done previously, the Company wil request approval of
new Schedule 54 rates on March 15, 2010, to implement the new rates on June 1,
2010.
V. COMMUNCIATIONS AND SERVICE OF PLEADINGS
11. Communications and service of pleadings with reference to this
Application should be sent to the following:
Barton L. Kline
Donovan E. Walker
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
bkline(âidahopower.com
dwalker(âidahopower.com
Scott D. Sparks
John R. Gale
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
ssparks(âidahopower.com
rgale(âidahopower.com
VI. REQUEST FOR RELIEF
12. Idaho Power respectfully requests that the Commission issue an Order:
(1) authorizing this matter to be processed by modified procedure; (2) authorizing Idaho
Power to convert its pilot Schedule 54 to a new permanent, ongoing Schedule 54. The
terms and conditions of the new permanent Schedule 54 wil be identical to the terms
APPLICATION - 5
and conditions currently in effect in the pilot Schedule 54; and (3) confirming that
beginning June 1, 2010, the Residential Class and the Small General Service class will
each pay their respective separate FCA rate.
DATED at Boise, Idaho, this 1st day of October 2009.
ß#~
BARTON E. KLINE
Attorney for Idaho Power Company
APPLICATION - 6
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-09-28
IDAHO POWER COMPANY
ATTACHMENT NO. 1
Idaho Power Company Second Revised Sheet No. 54-1
Cancels
First Revised Sheet No. 54-1
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
March 20, 2009 April 1, 2009
Per O.N. 30754
Jean D. Jewell SecretaryI.P.U.C. No. 29. Tariff No. 101
SCHEDULE 54
FIXED COST ADJUSTMENT
APPLICABILITY
This schedule is applicable to the electric energy delivered to all Idaho retail Customers
receiving service under Schedules 1, 3, 4, or 5 (Residential Service) or under Schedule 7 (Small
General Service).
FIXED COST PER CUSTOMER RATE
The Fixed Cost per Customer rate (FCC) is determined by dividing the Company's fixed cost
components for Residential and Small General Service Customers by the average number of
Residential and Small General Service customers, respectively.
Residential FCC
Effective Date
April 1, 2009
Rate
$451.28 per Customer
Small General Service FCC
Effective Date
April 1, 2009
Rate
$292.83 per Customer
FIXED COST PER ENERGY RATE
The Fixed Cost per Energy rate (FCE) is determined by dividing the Company's fixed cost
components for Residential and Small General Service customers by the weather-normalized energy
load for Residential and Small General Service customers, respectively.
Residential FCE
Effective Date
April 1, 2009
Rate
3.4841 ø per kWh
Small General Service FCE
Effective Date
April 1, 2009
Rate
4.7932 ø per kWh
ALLOWED FIXED COST RECOVERY AMOUNT
The Allowed Fixed Cost Recovery amount is computed by multiplying the average number of
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCC rate.
IDAHO
Issued Per Order No. 30754
Effective -April 1, 2009
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID
Idaho Power Company First Revised Sheet No. 54-2
Cancels
Original Sheet No. 54-2
IDAHO PUBLIC UTILITIES COMMISSIONApproved Effective
May 29, 2009 June 1, 2009
Per O.N. 30827
Jean D. Jewell Secretary
I.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, 3, 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 Order No. 30827
Effective - June 1, 2009
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, ID