20091109Gale Direct.pdf

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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AN ACCOUNTING ORDER TO AMORTIZE
ADDITIONAL ACCUMULATED DEFERRAL
INCOME TAX CREDITS
AND
AN ORDER APPROVING A RATE CASE
MORATORIUM.
Case No. IPC-E-09-30
I DAHO POWER COMPANY
DIRECT TESTIMONY
OF
JOHN R. GALE
1 Q.Please state your name and business address.
2 A.My name is John R. Gale and my business
3 address is 1221 West Idaho Street, Boise, Idaho.
4 Q.By whom are you employed and in what
5 capacity?
6 A.I am employed by Idaho Power Company ("the
7 Company") as the Vice President of Regulatory Affairs.
8 Q.Please describe your educational background
9 and business affiliations.
10 A.I received a BBA in 1975 and an MBA in 1981
11 from Boise State Uni versi ty. I maintain a close
12 affiliation with the uni versi ty and serve on the College of
13 Business and Economics' Advisory Council. I have also
14 attended the Public Utili ties Executive Course at the
15 University of Idaho and am now on the faculty of that
16 program leading the section on "Regulation and Ratemaking."
17 I am an active member of the Edison Electric
18 Institute's ("EEI") Rates and Regulatory Affairs Committee,
19 which is the committee that is concerned primarily with
20 regulatory issues and ratemaking methods. I am the current
21 Chair of this committee. I am also a member of EEI' s
22 Retail Energy Services Executive Advisory Committee.
23 Q.Please describe your work experience.
GALE, DI 1
Idaho Power Company
1 A.From 1976 to 1983, I was employed by the
2 State of Idaho primarily as an analyst in the Department of
3 Employment. In October 1983, I accepted a position at
4 Idaho Power Company as a Rate Analyst in the Rate
5 Department. I initially worked on rate design, tariff
6 administration, and line extension issues. In March 1990,
7 I was assigned to the Company's Meridian District Office
8 where I held the position of Meridian Manager, which was a
9 one-year cross training position established to provide
10 corporate employees with an extensive field experience. I
11 returned to the Rate Department in March 1991 and in June,
12 I was promoted to Manager of Rates. In July 1997, I was
13 named General Manager of Pricing and Regulatory Services.
14 In March 2001, I was promoted to Vice President of
15 Regulatory Affairs, my current position.
16 As Vice President of Regulatory Affairs, I oversee
17 and direct the acti vi ties of the Pricing and Regulatory
18 Services Department. These acti vi ties include the
19 development of jurisdictional revenue requirements, the
20 oversight of the Company's rate adjustment mechanisms, the
21 preparation of class cost-of-service studies, the
22 preparation of rate design analyses, and the administration
23 of tariffs and customer contracts. In my current position,
24 I have the primary responsibility for policy matters
GALE, DI 2
Idaho Power Company
1 related to the economic regulation of Idaho Power Company.
2 I have testified frequently before the Idaho Public
3 Utilities Commission ("the Commission") on a variety of
4 rate and regulatory matters. I have also testified before
5 or submitted direct testimony to the regulatory commissions
6 in Nevada and Oregon, the Federal Energy Regulatory
7 Commission ("FERC"), the Bonneville Power Administration,
8 and the United States Senate Committee on Energy and
9 Natural Resources.
10 Q.What is the purpose of your testimony in
11 this matter?
12 A.My testimony supports the settlement
13 Stipulation ("Settlement") filed in this case regarding the
14 establishment of regulatory and ratemaking mechanisms to be
15 in place until January 1, 2012. I will discuss the
16 development of the Settlement and explain its benefits to
17 the Company and its customers. The Settlement is Exhibit
18 No. 1 to my testimony.
19 Q.Please describe the genesis of the
20 Settlement.
21 A.Following the conclusion of Idaho Power's
22 last general rate case, Case No. IPC-E-08-10, the Company
23 contemplated the value of setting the Return on Equity
24 ("ROE") for Idaho regulatory matters at an agreed-upon
GALE, DI 3
Idaho Power Company
1 fixed level for a specified time period. The Company
2 believed this issue could be settled among the various
3 interested parties to Idaho Power's rate proceedings
4 because of the near proximity of the last Commission
5 decision in a fully-contested revenue requirement case.
6 Idaho Power determined this matter was ripe for discussion
7 with customer groups and Commission Staff. Establishing a
8 specified ROE to be fixed for a period of time is
9 beneficial because it removes a resource-intense and time-
10 consuming element from a rate case that may add little
11 value to the ultimate rate recovery decision, particularly
12 when the same issue was recently decided in a fully-
13 contested proceeding. Additionally, setting the ROE at a
14 fixed level helps to mitigate the size of a rate request by
15 avoiding the need for the utility to request a higher ROE
16 to respond to a lower recommended ROE that inevitably comes
17 from the Intervenors.
18 Q.Besides establishing a ROE with some shelf
19 life, was there another reason the Company wanted to talk
20 with its customers and the Commission Staff?
21 A.Yes. Due to ongoing circumstances related
22 to generally poor hydro conditions throughout this decade
23 and the difficulty of playing "catch-up" with costs that,
24 until very recently, were being driven by growing service
GALE, DI 4
Idaho Power Company
1 terri tory, Idaho Power determined that the time was right
2 to discuss an earnings sharing mechanism similar to one
3 that existed during the last half of the 1990s. The
4 Company asked customer groups and Commission Staff to
5 attend an informal meeting on September 3 to discuss this
6 possibility.
7 Q.Please describe the prior case in which
8 earnings sharing was discussed.
9 A.The docket for that case was IPC-E-95-11.
10 In that case, the earnings sharing mechanism was brought
11 before the Commission in the form of a settlement
12 Stipulation in September of 1995 ("1995 Settlement"). This
13 was a seven-party agreement that included the Commission
14 Staff, the Company, the United States Department of Energy,
15 the Commercial Utility Customers, Micron Technology, FMC
16 Corporation, and the Idaho Irrigation Pumpers Association.
17 The Commission approved the 1995 settlement on December 1,
18 1995, through Order No. 26216. A copy of the 1995
19 settlement Stipulation is provided as Exhibit No.2.
20 Q.What were the principal provisions of the
21 1995 Settlement?
22 A. There were four major provisions to the 1995
23 Settlement. The 1995 Settlement provided for the
24 accounting and ratemaking treatment related to an ongoing
GALE, DI 5
Idaho Power Company
1 significant Company reorganization. The 1995 Settlement
2 provided limited use of an accelerated amortization of
3 Accumulated Deferred Investment Tax Credits ("ADITC") for
4 purposes of supporting a minimum ROE level. The 1995
5 Settlement also provided for the sharing of earnings with
6 customers above a specified ROE level. And finally, the
7 1995 Settlement provided a rate moratorium that lasted
8 through December 1999.
9 Q.What were the circumstances leading up to
10 the 1995 Settlement?
11 A.Throughout the late 1980s and early 1990s,
12 southern Idaho experienced a prolonged series of drought
13 years with poor hydro conditions for generating
14 electrici ty. Accordingly, Idaho Power faced higher power
15 supply expenses due to more power purchases, fewer surplus
16 sales, and higher fuel costs as the Company relied more on
17 its coal plants to replace the diminished hydro production.
18 One result of the prolonged drought was the development,
19 and Commission approval, of the Company's Power Cost
20 Adjustment ("PCA") in 1992 with its first implementation in
21 the spring of 1993. The PCA helped to mitigate the
22 Company's power supply cost exposure in the poor hydro
23 years and provided benefits to customers in the better
24 ones.
GALE, DI 6
Idaho Power Company
1 Also during this time, there was considerable
2 general rate case acti vi ty in both Idaho and Oregon. The
3 Company filed a general rate case before this Commission in
4 1994 based upon a 1993 test year (Case No. IPC-E-94-05) and
5 in 1995 filed a single item case as the Twin Falls Hydro
6 Upgrade came on line (Case No. IPC-E-95-05). However,
7 despi te the general rate case acti vi ty and the
8 implementation of the PCA, the Company found that actually
9 earning the authorized ROE remained elusive. It was at
10 this point the revenue sharing concept embodied in the 1995
11 Settlement was introduced.
12 Q.What were the results of the 1995
13 Settlement?
14 A.The time period from 1995 through 1999 was
15 characterized by much improved hydro conditions, which,
16 along with the Company's reorganizational efforts,
17 translated to better earnings opportunities. Accordingly,
18 during the time period of the 1995 Settlement - 1995
19 through 1999 - no ADITC had to be used to support a minimum
20 ROE level.
21 In 1995 the actual ROE came within a dead band where
22 neither ADITC was used nor earnings were shared. The
23 results during the rest of the time period produced
24 customer benefits as follows:
GALE, DI 7
Idaho Power Company
1 Year ROE Earned Customer Benefit
2 1996 12.55%$4,890,515
3 1997 12.95%$7,571,946
4 1998 12.73%$6,372,411
5 1999 13.10%$9,025,295
6 Addi tionally, the Company's next Idaho general rate
7 case was ultimately deferred until 2003 because the Western
8 Energy Crisis of 2000 and 2001 put so much pressure on PCA
9 rates that trying to change general rates was not
10 practical.
11 Q.Will you please compare the circumstances in
12 1995 to the current situation?
13 A.As was the case in 1995, Idaho Power has
14 actively pursued rate recovery throughout this decade
15 through various mechanisms and general rate cases. Despite
16 an active regulatory agenda, the Company has not been able
17 to achieve its authorized rate of return in either its
18 Idaho or Oregon jurisdiction. Idaho Power presented
19 testimony from both internal and external witnesses
20 describing the Company's relative risks and supporting its
21 ROE position in the 2003, 2005, 2007, and 2008 filings.
22 These matters were fully litigated as part of the 2003 and
23 2008 test year determinations. While ROE evidence has not
24 been a significant driver in the ultimate revenue
GALE, DI 8
Idaho Power Company
1 requirement outcome, it often adds millions to a general
2 rate case request and is one of the more significant rate
3 case expenses.
4 Q.Does the Company have any ADITC currently on
5 its books that could be utilized under an arrangement
6 similar to the 1995 Settlement?
7 A.Yes. At this time Idaho Power has
8 significant amounts of ADITC on its books, $30 million of
9 federal and $43 million of state. The Company also expects
10 to accumulate more state investment tax credits during the
11 next several years.
12 Q.What happened at the September 3 meeting
13 with customers and Commission Staff?
14 A.The Company reviewed much of the information
15 just discussed with the group and presented a ratemaking
16 concept that would stabilize ROE through the use of an
17 agreed-upon ROE that would be used in any Idaho Power rate
18 filing for a fixed period of years. Idaho Power proposed
19 the potential use of ADITC in a prescribed manner to help
20 buttress Company earnings from a non-cash standpoint. In
21 return for shoring up the low side of ROE, Idaho Power
22 proposed to share earnings above a threshold amount with
23 its customers.
24 Q.What happened next?
GALE, DI 9
Idaho Power Company
1 A.The customers and Commission Staff presented
2 a reply to the Company on September 21 that emphasized the
3 customers' interest in a rate moratorium. The Company was
4 not able to respond on that day because it was in the
5 process of preparing a general rate case and had not yet
6 determined the revenue requirement that would be requested.
7 Q.Was the Company planning to file a general
8 rate case this fall?
9 A.Yes. Idaho Power had submitted a notice of
10 intent to the Commission on August 28, 2009, that expressed
11 the Company's intent to file on or after October 28, 2009.
12 The Company was actively preparing the general rate filing
13 during its discussions with the customers and Commission
14 Staff. Idaho Power's original earnings sharing concept did
15 not include a rate moratorium.
16 Q.Assuming a normal procedural schedule, when
17 would Idaho retail rates have changed to incorporate the
18 impact of a general rate case filed in late October?
19 A.Wi th an expected rate filing in late
20 October, one could anticipate that rates would be in place
21 by June 1, 2010, to coincide with the other annual rate
22 mechanism changes, including the PCA.
23 Q.Does the Company anticipate a rate decrease
24 for the PCA on June 1, 2010?
GALE, DI 10
Idaho Power Company
1 A.Yes. Idaho Power, Staff, and a number of
2 other informed parties anticipate a substantial PCA
3 decrease next spring. At the time of our settlement
4 discussions, the expected PCA decrease was valued at nearly
5 $160 million. At this writing our expectation has not come
6 down from that level.
7 Q.Once Idaho Power completed its revenue
8 requirement determination for the October 2009 general rate
9 case filing, what happened next?
10 A.Idaho Power analyzed a number of factors in
11 a side-by-side comparison of a general rate case proceeding
12 versus an alternative that included a rate case moratorium.
13 These factors included:(1) financial considerations, such
14 as the need for base rate relief to cover operating
15 expenses and adequate cash flow to maintain our financial
16 ratios, (2) customer rate impacts, and (3) the awareness
17 that a substantial rate reduction through the PCA would
18 likely occur on June 1, 2010. As a result of these
19 deliberations, the Company began to fashion a proposal that
20 could utilize the expected PCA decrease to provide
21 systematic benefits to both the customers and the Company.
22 The Company asked the customer groups and Commission Staff
23 to reassemble on October 13 to layout its proposal. From
24 there, negotiations progressed until final agreement was
GALE, DI 11
Idaho Power Company
1 reached on October 25. That same day, the Company provided
2 a Memorandum of Understanding and Final Term Sheet to the
3 parties involved.
4 Q.How did the Company evaluate its ability to
5 avoid a general rate case?
6 A.Idaho Power continues to be under pressure
7 to operate reliably without some additional general rate
8 relief. At the same time, the Company is well aware of the
9 current effects of the recession on its service area. As
10 Idaho Power prepared its general rate case, the Company
11 worked to mitigate the total revenue requirement wherever
12 it could. These mitigations included:( 1) pushing items
13 such as the second year deployment of Advanced Metering
14 Infrastructure ("AMI"), and pension funding into a separate
15 single-issue cases, (2) addressing an extremely large
16 increase to net power supply expense as part of next year's
17 PCA change, (3) deferring any request to increase the
18 amount of Construction Work in Progress ("CWIP") included
19 in rates until the future, and (4) filing with a stipulated
20 ROE. Without the above-mentioned mitigation steps, the
21 Company's general rate case filing would have requested a
22 rate increase of over 20 percent.
23 Q.How do these actions mitigate the Company's
24 revenue requirement?
GALE, DI 12
Idaho Power Company
1 A.I will start with AMI. Since the Company
2 originally filed for the first year of AMI recovery as a
3 separate rate matter, it would simply continue with similar
4 one-issue filings in the second and third year of
5 deployment and keep the AMI impact out of a general rate
6 request. Pension funding has not been part of the Idaho
7 jurisdictional revenue requirement since the Commission's
8 final order in Case No. IPC-E-03-13; however, regulatory
9 accounting has been established to provide for rate
10 recovery once funding begins again. Because of the
11 potential for volatility in funding requirements over the
12 next number of years, Idaho Power has proposed a tracking
13 mechanism for pension investment that is before the
14 Commission in a separate docket, Case No. IPC-E-09-29.
15 By far the largest single element of the unmitigated
16 revenue requirement was the increase required for net power
17 supply expense, an annual increase of approximately $ 7 5
18 million by itself. While the Company knows recovery of
19 these increased expenses is needed due to higher fuel costs
20 for coal, increased PURPA expense, and the impact of lower
21 natural gas prices on the market price for the Company's
22 surplus sales, increasing the base net power supply expense
23 in a general rate case has a net benefit to the Company of
24 only 5 percent of the change. Accordingly, Idaho Power
GALE, DI 13
Idaho Power Company
1 held the net power supply expense constant in preparing its
2 general rate case with the thought of seeking to change
3 this amount in a separate proceeding that could be
4 implemented with next year's PCA change.
5 The Company also has the ability to request CWIP in
6 rates and has done so on a limited scale - the AFUDC on
7 relicensing of the Hells Canyon proj ect - in the last
8 general rate case, Case No. IPC-E-08-10. While CWIP helps
9 the Company through improved cash flow and customers
10 through rate smoothing, it can be viewed as a pay-me-now or
11 pay-me-later item. In trying to mitigate a high revenue
12 requirement, it is a logical item to postpone. Accordingly
13 all new CWIP was removed.
14 The last mitigation undertaken as part of developing
15 the Company's Idaho revenue requirement was utilizing the
16 10.5 percent ROE ordered in Case No. IPC-E-08-10 instead of
17 arguing for a higher amount.
18 Despite the mitigation plan, the October 2009
19 general rate case filing would still have been more than a
20 10 percent rate increase. Though justified from Idaho
21 Power' s perspective, the Company had to assess its ability
22 to successfully obtain that degree of rate relief in the
23 current economic environment.
GALE, DI 14
Idaho Power Company
1 Q.What is driving the need for a base rate
2 change?
3 A.There are three areas that drive the
4 increase:(1) a decrease in forecasted revenues as loads
5 did not materialize as expected, (2) ongoing pressure on
6 operating and maintenance expense as these costs continue
7 to be higher than the level authorized in Case No. IPC-E-
8 08-10, and (3) new plant additions since 2008.
9 Q.Please describe the provisions of the
10 current Settlement previously identified as Exhibit No.1.
11 A.The Settlement provides that the Company is
12 under a general rate moratorium with specified ongoing
13 exceptions. Under the moratorium, the Company cannot file
14 for a change to general rates, unless otherwise specified,
15 prior to January 1, 2012.
16 The Settlement provides for the establishment of a
17 10.5 percent ROE for regulatory matters through December of
18 2011. The Settlement provides for an equal sharing of
19 actual earnings in excess of 10.5 percent for the Idaho
20 jurisdiction between the Company's customers and
21 shareholders. Customers are to receive any earnings-
22 sharing benefit directly through rate reductions.
23 Concurrent with the potential for revenue sharing,
24 the Company has the ability to amortize additional ADITC
GALE, DI 15
Idaho Power Company
1 during the years 2009 through 2011 to support earnings when
2 the Idaho jurisdictional ROE is less than 9.5 percent. The
3 use of additional ADITC is constrained in several ways to
4 provide for a material amount of ADITC to remain after the
5 Settlement term is over. Every year ADITC use is
6 constrained to no more additional ADITC amortization than
7 is necessary to reach the 9.5 percent Idaho ROE previously
8 mentioned. Additionally, the 2009 ADITC is limited to a
9 maximum $15 million, 2010 and 2011 are limited further to
10 no more the $25 million, and the total ADITC used during
11 the three-year period cannot exceed $45 million. Unused
12 amounts in 2009 and 2010 may be carried over into
13 subsequent years subj ect to the previously described
14 limits.
15 Finally the Settlement provides for the ability to
16 distribute the expected 2010 PCA decrease in a specified
17 manner to address rate relief for customers, base rate
18 recovery for the Company, and establish a new normalized
19 net power supply expense level for both the Power Cost
20 Adjustment and base rates. Exhibit No. 3 isa worksheet
21 that shows how each increment of rate reduction will be
22 treated.
23 Q.Why would the Company agree to the
24 Settlement?
GALE, DI 16
Idaho Power Company
1 A.The Settlement should enable the Company to
2 remain financially heal thy while helping Idaho Power's
3 customers manage through a difficult time in the economy.
4 Idaho Power is optimistic about the potential for a
5 substantial PCA decrease and believes that the decrease can
6 be used productively to address both customer and Company
7 issues. The Company values the opportunity to set the net
8 power supply expense at a more appropriate level, which
9 will restore more symmetry to the mechanism. The Company
10 views the potential for obtaining base rate relief without
11 engaging in a contentious battle before the Commission,
12 gi ven the current economic circumstances, as a posi ti ve
13 element of the Settlement. The fact that Idaho Power can
14 participate in any earnings initiatives during the term of
15 the Settlement through the sharing mechanism is also
16 positive. In summary, Idaho Power maintains that the
17 Settlement represents creative and collaborative thinking
18 on behalf of all the parties involved.
19 Q.What do you think the customer benefits are?
20 A.First of all, the Company will delay a
21 general rate change until on or after January 1, 2012.
22 Secondly, the Settlement provides no base rate relief for
23 the Company unless there is a real customer rate reduction
24 through the PCA. Thirdly, setting a fixed ROE eliminates a
GALE, DI 17
Idaho Power Company
1 normally contentious and expensive portion of any rate
2 filing during the term of this Settlement. Fourthly,
3 customers have the assurance that the use of ADITC would be
4 limited. Customers will continue to have the benefit of
5 the ADITC amortization that is currently in existing rates,
6 which reduces allowed expenses. Additionally, customers
7 will have certainty that the Company will not be over
8 earning in the Idaho jurisdiction. And, finally, similar
9 to the 1995 Settlement, the customers have the opportunity
10 to share in any good earnings years.
11 Q.Do you believe that this Settlement is in
12 the public interest?
13 A.Yes. I believe it is one of the most
14 innovative and mutually beneficial endeavors that I have
15 ever been involved with in my career with the Company.
16 Q.Does this conclude your testimony?
17 A.Yes, it does.
GALE, DI 18
Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-09-30
IDAHO POWER COMPANY
EXHIBIT NO.1
BARTON L. KLINE (IS8 No. 1526)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O.8ox70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
bkline(ãidahopower.com
Inordstromtmidahopower.com
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 ACCOUNTING ORDER TO AMORTIZE
ADDITIONAL ACCUMULATED DEFERRAL
INCOME TAX CREDITS
AND
AN ORDER APPROVING A RATE CASE
MORATORIUM.
)
) CASE NO. IPC-E-09-30
)
) STIPULATION
)
)
)
)
)
This stipulation ("Stipulation") is entered into by and among Idaho Power Company
("Idaho Powet' or the "Company")i the Staff of the Idaho Public Utilties Commission
r'Staff')i the Idaho Irngation Pumpers Association, Inc. ("IIPAII), the Industrial Customers of
Idaho Power ("ICIP"), Micron Technology, Inc. ("Micronll), the United States Department of
Energy ("DOE"), the Community Action Partnership Association of Idaho ("CAPAI")i and
the Kroger Co. ("Kroget'). These entities are collectively referred to as the "Parties," and
individually as "Part.1I
STIPULATION -1
Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 1 of 18
i. INTRODUCTION
1. The Parties agree that this Stipulation represents a fair, just, and reasonable
compromise of contested issues and that acceptance ofthe Stipulation by the Idaho Public
Utilties Commission ("IPUC" or the "Commission") would be .in the public interest.
Therefore, the Parties recommend that the Commission approve the Stipulation and all of
its terms and conditions without matenal change or condition.
II. BACKGROUND
2. On August 28, 2009, in accordance with RP 122, Idaho Power fied a notice
of intent to file a general rate case.
3. On September 21, 2009, the Parties met to discuss ways to establish an
agreed upon return on equity ("ROE") to be used in proceedings before the Commission for
a fixed period of time and, additionally, to pursue a regulatory mechanism that would
support the potential for the Company to actually achieve its authorized return level by
providing for certain sharing mechanisms. During that meeting, Staff and several .other
Parties expressed a desire to implement a moratorium on new general rate case filngs.
The Parties agreed to meet again if the Company could confirm that further discussions,
including rate case moratorium discussions, would be productive.
4. As a reSult of several follòw-up meetings, the .Parties have reached the
following settlement agreement:
1/
1/
II
II Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 2 of 18STIPULATION - 2
II. TERMS OF THE STIPULATION
5. Rate Case Moratorium.
5.1. Idaho Power wil not file a general revenue requirement case which
would result in a general rate adjustment becoming effective pnorto January 1,2012 (''the
moratorium").
5.2. The moratonum is not applicable to, and the Company may make
filngs with the Commission to adjust its revenue requirement and change rates to'become
effective prior to January 1; 2012, for the following:
(a) Annual Power Cost Adjustment ("PCA");
(b) Annual Fixed Cost Adjustment;
(c) Annual Advanced Metering Infrastructure Rate Adjustment;
(d) Annual Pension Expense Recovery;
(e) Energy Effciency Rider Adjustment;
(f) Recovery of governmentally imposed fees, such as franchise
agreements or local improvement district fees;
(g) Increased funding for low-income weatherization; and
(h) A filing (discussed in detail in paragraph 7.2.7 below) in which
the Company could request the authority to recover a portion of a potential shortall in the
Company's recovery of the $20 milion amount described in Section 7.1.2. This filing would
only be made if the 2010 PCA rate reduction is less than $40 milion and there is a PCA
rate reduction in June 2011.
(i) A filing to set the base rate level for net power supply expenses
as descnbed in Section 7.1.Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 3 of 18STIPULATION - 3
6. Return on Equity and Related Sharing.
6.1. The Parties agree that it would be just and reasonable for the
Commission to use a 10.5 percent ROE in any Idaho Power regulatory matter to be
determined by the Commission before December 31, 2011.
6.2. The Company intends to continue to optimize its operations to reduce
the likelihood it wil need to use the tools descnbed herein. Therefore, if during 2009,
2010, or 2011 the Company receives a financial benefit (e.g., regulatory fee refund,
material expense reduction, lawsuit settlement, etc.), such financial benefit wil be subject
to this Stipulation and wil benefi customers either by the sharing provisions in Section 6.3
or by reducing the Company's need to amortize additional accumulated deferred income
tax credits ("ADITC") to achieve a 9.5 percent ROE as provided in Section 8.
6.3. If the Company's actual earned return on year-end equity for the Idaho
jurisdiction during 2009,2010, or 2011 exceeds 10.5 percent, amounts in excess of a 10.5
percent return wil be shared equally between the Company's Idaho customers and the
Company. Any shared earnings which are allocated to customers wil be used to reduce
customer rates.
6.4. Forthe years 2009,2010, and 2011, there can be no additional AOITC
amortization as provided in Section 8 if the Company has shared earnings pursuant to
Section 6.3.
7. 2010 PCA Rate Adjustment and Related Shanng.
7.1. Setting the Base Level for Net Power Supply Expense. Prior to
implementing the June 1, 2010, PCA and effective with the coincident PCA rate change,
the Company wil file with the Commission a request to change the base level for net power
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPCSTIPULATION - 4 Page 4 of 18
supply expenses to be used prospectively for both base rates and PCA calculations. The
Parties wil thereafter make a good-faith effort to reach agreement on the maximum
change of the base level for net power supply expenses and submit any agreement to the
Commission for approvaL.
7.2. Sharing the PCA Reduction. The Parties anticipate that the June 1,
2010, PCA rate calculation wil indicate a substantial reduction in the PCA rates. However,
sharing the PCA rate reduction between the Company and its customers wil allow the
Company to implement the moratorium. As a result, the Parties agree that if they are
correct, and the 2010 peA computation results in a rate decrease, the June 1,2010, PCA
rate change wil be processed and allocated as follows:
7.2.1. The First $40 Milion. The amount of any PCA reduction up to
and including the first $40 milion of any 201 0 PCA rate reduction wil be allocated equally
between customers and the Company.
7.2.1.1.The Company's share of this PCA rate reduction
wil be applied to increase permanent base rates on a uniform percentage basis to all
customer classes and the special contract customers. Schedule 1 and Schedule 7
customer classes wil have any increase placed on their respective energy rates. This
increase in base rates wil remain in effect until new base rates, which are ordered in a
future Idaho Power Company general rate case, become effective.
7.2.1.2.The customers' share of this PCA rate reduction
wil be provided to customers as a direct customer net rate reduction based on the 2010
PCA rate change being offset by the rate increase described in Section 7.2.1.1.
STIPULATION - 5
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 5 of 18
7.2.2. $40 Millon to $60 Millon. All of the portion of any 2010
PCA rate reduction that is above $40 milion and up to and including $60 milion wil be
allocated to customers. The customers' share of this PCA rate reduction wil be provided
to customers as a direct customer rate reduction in the 2010 PCA rate change.
7.2.3. Above $60 Milion. The portion of any 2010 PCA rate
reduction which exceeds $60 milion wil be applied to absorbanv increase in the base
level for net power supply expenses. Section 7.1 describes how the base rate change wil
be initiated.
7.2.4. Should the 2010 PCA rate reduction exceed the $60 millon
amount plus the adjustment to the base level for net power supply expenses described in
Section 7.2.3, the next $10 millon of any such 2010 PCA rate reduction wil be allocated
equally between customers and the Company in the same manner as described in Section
7.2.1 above.
7.2.5. The portion of any PCA rate reduction which exceeds (1) the
sum of $60 milion plus (2) the amount of the increase in the base level for new power
supply expenses described in Section 7.2.3 plus (3) the final $10 millon sharing between
Company and customers described in Section 7.2.4 wil be allocated 100 percent to
customers. The customers' share of this PCA rate reduction wil be provided to customers
as a direct customer rate reduction in the 2010 PCA rate change.
7.2.6. Exhibit No.1, attached hereto, is a chart that shows howthe
above-described sharing amounts would be allocated between the Company and its
customers, depending on the amount of PCA reduction.
STIPULATION - 6
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 6 of 18
7.2.7. If the 2010 PCA rate reduction is less than $40 milion and, as
a result, the Company is unable to obtain its full $20 millon benefit described in Secton
7.2.1.1 and if the 2011 PCA rate should be a decrease from 2010 PCA rates, the Parties
agree that the Company can request that the Commission allocate one half of the
decrease to the Company up to the amount of the shortall from the $20 millon amount.
8. Accounting: ADITC Amortization.
8.1. For the years 2009, 2010, and 2011, if Idaho Power's actual Idaho
jurisdictional earned return on year-end equity falls below 9~5 percent, the Company will be
permitted to amortize an additional amount of state and federal ADITC by debiting Account
255 (ADITC) and crediting Account 420 (investment tax credits, a non-utilty income
account), in an amount, up to $45 millon over the above-referenced three year penod, that
would allow the Company to achieve a maximum actual ROE of9.5 percentforthe Idaho
jurisdiction. The dollar amount that could be used to increase the actual 2009 ROE to no
more than 9.5 percent is $15 milion.
8.2. If Idaho Power does not utilze the full $15 milion of additional
amortization of ADITC in 2009, the unused amount of the $45 millon maximum may be
carried forward for use in subsequent years through 2011. For example, if in 2009 Idaho
Power only amortized an additional $5 millon of accumulated ADITC to achieve a 9.5
percent ROE, it could utilze additional amortization of ADITC of $20 millon in 2010 and
$20 millon in 2011. Similarly, if Idaho Power does not use ADITC amounts available in
2010, the unused amount may be carried forward to 2011.
8.3. The additional amortization of ADITC cannot be greater than $25
milion in anyone year.
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 7 of 18STIPULATION - 7
8.4. Except for the permitted use of additional ADITC described herein, for
the years 2009,2010, and 2011, Idaho Power wil continue to amortize ADITC using the
same method employed immediately prior to the issuance of a Commission Order in this
matter.
8.5. In no event shall any additional amounts of ADITC amortized be
reflected in the utilty operating results of the Company for ratemaking purposes, financial
statement purposes, and for purposes of the Company's regulated books of account.
iv. ADDITIONAL PROVISIONS
9. The Parties agree that this Stipulation represents a compromise of the
positions of the Parties. Therefore, other than any testimony filed in support of the
approval of this Stipulation, and except to the extent necessary for a Part to explain before
the Commission its own statements and positions with respect to the Stipulation, all
statements made and positions taken in negotiations relating to this Stipulation shall be
confidential and wil not be admissible in evidence in this or any other proceeding.
10. The Parties submit this Stipulation to the Commission and recommend
approval in its entirety. Parties shall support this Stipulation before the Commission, and
no Part shall appeal a Commission Order approving the Stipulation or an issue resolved
by the Stipulation. If this Stipulation is challenged by any person not a party to the
Stipulation, the Parties to this Stipulation reserve the right to file testimony, cross-examine
witnesses, and put on such case as they deem appropriate to respond fully to the issues
presented, including the right to raise issues that are incorporated in the settlements
embodied in this Stipulation. Notwithstanding this reservation of rights, the Parties to this
STIPULATION - 8
Exhibit No.1
Case No. IPC-E-09-30
J. Gale,IPC
Page 8 of 18
Stipulation agree that they wil continue to support the Commission's adoption ofthe terms
of this Stipulation.
11. If the Commission rejects any part or all of this Stipulation, or imposes any
additional material conditions on approval of this Stipulation, each Part reserves the right,
upon written notice to the Commission and the other Parties to this proceeding, within
fourteen (14) days of the date of such action by the Commission, to withdraw from this
Stipulation. In such case, no Part shall be bound or prejudiced by the terms of this
Stipulation, and each Party shall be entitled to seek reconsideration of the Commission's
Order, file testimony as it chooses, cross-examine witnesses, and do all other things
necessary to put on such case as it deems appropriate.
12. No Party shall be bound, benefited or prejudiced by any position asserted in
the negotiation of this Stipulation, except to the extent expressly stated herein, nor shall
this Stipulation be construed as a waiver of the rights of any Part unless such nghts are
expressly waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Part of the validity or invalidity of any particular method, theory,
or principle of regulation or cost recovery. No Part shall be deemed to have agreed that
any method, theory, or principle of regulation or cost recovery employed in arrving at this
Stipulation is appropnate for resolving any issues in any other proceeding in the future. No
findings of fact or conclusions of law other than those stated herein shall be deemed to be
implicit in this Stipulation.
13. The obligations of the Parties under this Stipulation are subject to the
Commission's approval of this Stipulation in accordance with its terms and conditions and
upon such approval being upheld on appeal by a court of competent jurisdiction. Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 9 of 18STIPULATION - 9
14. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
DATED this 6th day of November 2009.
Idaho Power Company
By (s%£'~
Barton L. Kline
Attorney for Idaho Power Company
Idaho Irrgation Pumpers Association, Inc.
By
Eric Olsen
Attorney for Idaho Irrigation Pumpers
Association, Inc.
Micron Technology, Inc.
By
Conley E. Ward
Attorney for Micron Technology, Inc.
Idaho Public Utilities Commission Staff
By
Weldon Stutzman
Attorney for Idaho Public Utilty
Commission Staff
Industrial Customers of Idaho Power
By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
U.S. Department of Energy
By
Arthur Perry Bruder
Attorney for U.S. Department of
Energy
Community Action Partnership Association of The Kroger Co.
Idaho
By
Brad M. Purdy
Attorney for Communit Action
Partnership Association of Idaho
Energy Coaliion
STIPULATION -10
By
Kurt Boehm
Attorney for the Kroger Co.
Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 10 of 18
14. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
DATED this U 1~ day of November 2009.
Idaho Power Company
By
Barton L. Kline
Attorney for Idaho Power Company
Idaho Irrigation Pumpers Association, Inc.
By
Eric Olsen
Attorney for Idaho I rrigation Pumpers
Association, Inc.
Micron Technology, Inc.
By
Conley E. Ward
Attorney for Micron Technology, Inc.
Idaho Public Utilties Commission Staff
By lJ0z¿ ~
Weldon Stutzman
Attorney for Idaho Public Utilit
Commission Staff
Industrial Customers of Idaho Power
By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
u.s. Departent of Energy
By
Arthur Perry Bruder
Attorney for U.S. Department of
Energy
Community Action Partnership Association of The Kroger Co.
Idaho
By
Brad M. Purdy
Attorney for Community Action
Partnership Association of Idaho
Energy Coalition
STIPULATION - 10
By
Kurt Boehm
Attorney for the Kroger Co.
Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 11 of 18
14. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.~DATED this " day of November 2009.
Idaho Power Company
By
Barton L. Kline
Attorney for Idaho Power Company
Pumpers Association, Inc.
Eric Ols
Attorney for Idaho Irrigation Pumpers
Association, Inc.
Micron Technology, Inc.
By
Conley E. Ward
Attorney for Micron Technology, Inc.
Idaho Public Utilties Commission Staff
By
Weldon Stutzman
Attorney for Idaho Public Utility
Commission Staff
Industrial Customers of Idaho Power
By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
U.s. Departent of Energy
By
Arth ur Perry Bruder
Attorney for U.S. Department of
Energy
Community Action Partnership Association of The Kroger Co.
Idaho
By
Brad M. Purdy
Attorney for Community Action
Partnership Association of Idaho
Energy Coalition
STIPULATION - 10
By
Kurt Boehm
Attorney for the Kroger Co.
Exhibit No.1
Case No. IPC-E-09-30
J. Gale,IPC
Page 12 of 18
. .
14. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
DATED this day of November 2009.
Idaho Power Company Idaho Public Utilties Commission Staff
By By
Barton L. Kline
Attorney for Idaho Power Company
Idaho Irrigation Pumpers Association, Inc.
Weldon Stutzman
Attorney for Idaho Public Utilty
Commission Staff
Industrial Customers of Idaho Power
By By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
Eric Olsen
Attorney for Idaho Irrigation Pumpers
Association, Inc.
Micron Technology, Inc.
/
U.S. Department of Energy
By By
Arthur Perry Bruder
Attorney for U.S. Department of
Energy
Ward
or Micron Technology, Inc.
Community Action Partnership Association of The Kroger Co.
Idaho
By By
Kurt Boehm
Attorney for the Kroger Co.
Brad M. Purdy
Attorney for Community Action
Partnership Association of Idaho
Energy Coalition
STIPULATION -10
703192_1
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 13 of 18
11UV Ut. i:uu." ~... c;.. f" -..-_...-_. .. ....
14. This Stipulation may be executed in counterpart and each signed
counterpart shall constitute an original document.
H-
DATED this ,,- day of November 2009.
Idaho Power Company rdaho Public Utiliies Commission Staff
By
Barton L. Kline
Attorney for Idaho Power Company
By
Weldon Stutzman
Attorney for Idaho Public Utilties
Commission Staff
, Idaho Irrgation Pumpers Association. Inc.t .Industnal Customers of Idaho Power
By
Eric Olsen
Attorney for Idaho Irrigation Pumpers
Association, Inc.
By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
Micron Technology, Inc.u.s. Department of Energy
Byd4~
Steven A. Porter. .
Assistant General Counsel for
Electricity and Fossil Energy
:By .
, Conley E. Ward
Attorney for Micron, Inc.
..
Community Action Parnership Association of The 'Kro9~r Co.
Idaho By l : .
Kurt Boehm
Attorney for the Kroger Co.
By
Brad M. Purdy
Attorney for Community Action Partership
Asociation of Idaho Energy Coalition
STIPULATION - 10
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 14 of 18
14. This Stipulation may be executed in counterparts and each signed
counterpart shall constitute an original document.
DATED this 6th day of November 2009.
Idaho Power Company
By
Barton L. Kline
Attorney for Idaho Power Company
Idaho Irrigation Pumpers Association, Inc.
By
Enc Olsen
Attorney for Idaho Irrigation Pumpers
Association, Inc.
Micron Technology, Inc.
By
Conley E. Ward
Attorney for Micron Technology, Inc.
Community Action Partnership Association of
Idaho
By J3C2gBrad M. PùrdyL7
Attorney for Community Action
Partnership Association of Idaho
Energy Coalition
STIPULATION -10
Idaho Public Utilties Commission Staff
By
Weldon Stutzman
Attorney for Idaho Public Utilty
Commission Staff
Industrial Customers of Idaho Power
By
Peter J. Richardson
Attorney for Industrial Customers
of Idaho Power
u.S. Department of Energy
By
Arthur Perry Bruder
Attorney for U.S. Department of
Energy
The Kroger Co.
By
Kurt Boehm
Attorney for the Kroger Co.
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 15 of 18
~'
,,'
14. This Stipulation may be executed in counterpart and each signed
Arur Perr Bruder
Attorney for U.S. Department of
Energy
Community Action Partnership Association of The Kroger Co.
Idaho
conterpart shall constitute an original document.
fl
DATED this ~ day of November 2009.
Idaho Power Company
By
Barton L. Kline
Attorney for Idaho Power Company
Idaho.lnigation Pumpers Association, Inc.
By
Eric Olsen
Attorney for Idaho Irrgation Pumpers
Association, Inc.
Micron Technology, Inc.
By
Conley E. Ward
Attorney for Micron Technology, Inc.
By
,Brad M. Purdy
Attorney for Community Action
Partership Association of Idaho
Energ Coalition
STIPULATION ~ 10
Idaho Public Utilities Commisson Staff
By
Weldon Stutzan
Attorey for Idaho Public Utilty
Commission Staff
Industrial Customers of Idaho Power
By
Peter J. Richardson
Attey for Industal Custoers
of Idah Power
u.S. Department of Energy
By
By~
Attorney for the Kroger Co.
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 16 of 18
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-09-30
IDAHO POWER COMPANY
EXHIBIT NO.1 Exhibit No.1
Case No. IPC-E-09-30
J. Gale, IPC
Page 17 of 18
Settlement Proposal
Expected PCA Rate Reduction "'$160 millon
Expected Increase to Net Power Supply Expense -$75 million
PCA Reduction Company Customer NPSE
$220 $25 $120 $75
200 25 100 75
180 25 80 75
160 25 60 75
145 25 45 75
135 20 40 75
120 20 40 60
100 20 40 40
80 20 40 20
60 20 40 -
40 20 20 -
20 10 10 -
----
Exhibit No. 1
Case No. IPC-E-09-30
J. Gale, IPC
Page 18 of 18
Exhibit No. 1
Case NO.IPC-E-09-30
Stipulation. IPC
Page 1 of 1
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-09-30
IDAHO POWER COMPANY
EXHIBIT NO.2
.~ ~ ... .,'..,",! ..
BEFORE THE IDAHO PUBLIC UTILITIES COMlSIQN
IN TH MAl lER OF TH APPLICATION OF )
IDAHO POWE COMPAN FOR .AN ) CAS NO. IPC.E..95-11
ACCOUNG ORDER TO DEF AN , )
AMORTI EXORDINARY COSTS OF )
CORPORATE REORGANTION .A ) SETIEM STIULTION
APPROVAL TO MODIF AMORTITION )
METHODS FOR ACCUTE DEF )INSTM TAX CRITS )
)
:.
Purt to Rules 271-277 of the Commssion's Rules of Procedur (JAPA
31.01.01), the Idao Power Company (Idao Power; Company), the Staff of the Idao Public
Utities Commsion and the underigned intervenors to ths proceedin (herein collectvely
referd to as "te pares"), by and thugh their respectve cc;unel of record, hereby stpulate. .
as follows:
I. BACKGROUN
On Augut 3. 1995, Idao Power fied an Application for an accountig Orer from
the Idao Public Utities Commsion (Commsion) authorig the deferr and amortizon
of cost related to the corporate re~rgantiö? of the Company and for an Order approving the
modificaon of amorttion meth~ds for accumulated deferrd invesent ta credits (ADITe).
In addition, the Company proposed a. moraorium on genera rate incres and a sharg of
eargs in yea in which Idao Power's eargs exceeded a specifed leveL.
The Sta and each intervenor have conducted their own independent invesgatons
of the issues raed by Idao Powers Application. Based on those investigaons and based on
extenive negotiatons, an pares hereto believe tht the followig settement is in the public
interst and that its implementation wi result in ele:mc rates fo~ Idao Power Company tht are
fa~ just and reasonable. Furermore, ths settement is entered into in the spirt of compromie
and with the intent tht al pares hereto be bound by its term and conditions.
SETIEMENT STIULATION FORFlllNG .1
SEmEMENT
EXHIBIT 1
Case No.IPC-E-95-11
Poge 1 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale,.lPC
Page 1 of 12-
.: ....:.. ":
, "
,''-1..,. .......
. .' .II BASIS OF SETl
Idao Power proposes the followig accounti and ramaJång trent for cost
n:latcd to corp~te reoron. Fir the Company proposes to defe in Account 182.3 ,
'. (Rguatory, Asets), rergnizaon cost incmd in 1995, 1996 and 1997. Cost incud by
, . thc Compan fo paymnts to constats asg the Company in developin thc reorgantion
:,: . pla constats for employee counelig, lump su' C~mpCDato~ payment for volunta or
involun sepm.on, cost incurd by th Compan for benefit payme~ and other cha~
n:lad to employee separons, wi be defer. The Company proposes to defer only out-of.
pockt exenses, constats' fee and severace cost; not those cost ofIdao Power employees
who ar administerig the progr.
. Idao Power prposes to anorte the reorgaization costs over a period not to exceed
te year and the month commencing October 1, 1995 ~ follows:
Cost incurd in 1995 wi be amorted over the period October 1, 1995
thug December 31, 2005.
Costs incurd in 1996 wi be amorted over the period Janua 1, 1997
'thugh December 31, 2005.
Costs incured in 1997 wil be amorted over the period Janua 1, 1998
though December 31, 2005.
Idao Power also requested an Order from the Commssion that, for the year 1995
thugh 1998, whenever Idao Power's actu total system eared retum on year end common
èquity fal below 11.5%, the Company would be permttd to modify its amorttion methods.
(i.c~ accelerate the amorttion) for st and fedcra ADITC by debitig Account 255 (ADITC)
an crditig Account 420 (Ivestment Tax Credits), in an amount tht would result in the
Company eag, on an actu basis, an, I i .5% retu on equity.
In the event the Company's retu oil equit for an year durg the period 1995
thoug 1998 mes above i 1.5%, Idao Power proposed that it would not utize any accclerad
amorttion of stte or federa ADitC. The Company would contiue to amort ADrrC to
operag income as it ha in the pas (As noted below, the tie period durng which Idaho
Power may accelerate ADITC has been extended to include the year i 999).
SETIME S1lULTION FOR
mlNG 2
SETlEENT
EXHIBIT 1
Case No.IPC-E-95-1 L h.b.t N 2
Poge 2 OF 1J Ex i I . o.Case No. IPC-E-09-30
J. Gale, IPC
Page 2 of12
,~!--...\
II APPROVAL RECOMMENDATION
The paes have negotied th Settement Stip.uIon as an integrd document and
recommend th the Commsion a~o;Pt it in it enti~. Accordgly, th Setemt Stiulatpn
is exsly conditioned upon it acceptace by the Commion without modcaon. To the
ext th th Application and it accompanyig teony and e:xõits confct with the te
of th Settemnt Stipulaton, the te of the Settemen Stiulon sh pre
IV. TE AN CONDmONS OF SEIT AGR
A. Deferr and amorttion of corporate reorganition cost
The pares hereby agre to the deferr and amortzation of corporae reorg~tion
cost as proposed by Idao Power and identied in Section II of ths Settement Stipulaton.
B. Litation on Amount of Amorttion of ADITC
Idaho Power is herby lited in the amount of state and federal ADITC it may
accelerte for amorttion puroses to a tota of $30 millon for the year 1995-1999.
c. Retu on Equity and . Sharing of Eargs
For puroses of th Agrement, the term ueargs" sha be calculated based on the
Company's act year end results of opei,itions which include the results of the Federa Ener
..
Reguatory Commssion (FRC) jurdiction wholesale operaons. The reults of the PEC
wholese operations wi be spead to the Company's reta jurdictons. Eags do not
include the results of operations frm the Company's Nevada or Orgon judictons with tDeir
associated PEC alocations. The Oregon and Nevada exclusion wil be accomplished by (1)
seperag ac fiancial reults usg a Jurdictona Seperaons Study based on the same
alocaon methodology as orderd by the Commsion in Idao Powers la gener rate case
(Case No. IPC-E-94-S) and (2) computg either the ADITC or the shared ea on an Idaho-
sepeted basis.
SE1T\.NT STIULA nON FORFILING .3
SETLEMENT
EXHIBIT 1
Case No. IPC-E-95-11
Page 3 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale, IPC,
Page 3 of 12
~...r-.: ~
For the year 1995 thugh 1999, Idao Power wi mae a fo fi~ for review., .
by al pares, of it caculatons of eamgs, along wi supportg workaper, with the
. . Co~ion by the 1st day of Apri of the followi yea. Copies of th fi sli be sent to
al signry pares to th Settemet Stipulon. In th event the ComPans ae eags
for a precedig year exceed 11.75% retu on yea end common equity, th Company shal
refu-SO% of the exes co~ncg on Ma 15th of ea yea, iI conjuncton with its peA
ra adjusent Said refud sba be made on a.unorm peentae bas to each cuomer c~~.
Furerore, wi the exception of FMC Coioraon, sad refud sha be alocat with eah
rate schedule th ha a sepa demd an ener chage, solely on the energ component.
FMC may, in its dicretion, elect to have the retid alocaed to either demad or ener or both
and sha notify the Company ac~ordigly.
D. Rate Moratonum
Idaho Power's base rates wi not be chaged prior to Janua 1, 2000 (the
"morao~umj. Th moraorium is not inteded to afect the Company's Power Cost Adjustment
(PCA) mechasm nor probiòit any par from litinitig a trcker proceedig in the event of
signcant changes in local, state and federa ta'Xes or frchie fees. Furermore, the
moratorium does not apply to the followlg the exceptions: (1) a legislatively imposed
surcharge for hydro relic ensing, (2) application by Idao Power, or any other par, requestg
chages in the maer in whch Demad Side Management charges.ar recovered and, (3) the
recovery by Id~o Power of costs related to cataphic events which ar outsde the control of.
the Company.
E. Impact on Servce Qualty
Idao Power agees that its quaty of serce wi not dimh either as a result of
the Corporate reorgantion at isue in th proceedig or as a rest of ths Settement
Stipulaton. The Company wil work with the Còmnion Sta and other inted pares to
develop formal objective and cutomer-focused cieria by which to meas and evaluate
performance with respect to service quaty and cusomer relatons. With one year from the
date of ths Settement Stipulation, Idao Powe wil develop and implement a system for
SETIEME STIULTION FOR
FIING 4
SEmEMENT
EXHIBIT 1
Case No. IPC-E-95-11
Page 4 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale, IPC
Page 4 of 12-
..--""-,,
collectg, resolving and ang, in a tiely and effcien maier, inorm compla fied
.,
by cumers dicty with the Compan or. thug the Commsion.
Furerore, Idao Power ag to noti afctd cumer ~d the Commsian
of ~y decion to close or reduce the hour of operon at an Idao Powe ~fñce th is open
to th public at leas 30 days pror to the effeCe da of its acton.
.,. Revenue Neutr Prceedigs . ,
Th Settemen Stiulon ~ not prnt an par hereo, includig Idao Power,
frm inti ai purg before the Commsion an proceedi tht is reenue neut to the
Company as a whole. Any chges to reenue alocaon among cumer clases shl be
supportd by cost of servce pnnciples. In adtion, th Settement Stipultion sha not relieve
Idaho Power from its obligation to conduct a cost-of-servce study as dicted by the Commssion
in O~er No. 25880 (see p. 35), issued in Case No. IPC-E-94-5.
i
G. atipulati~n Bindig on Successors
Ths Settement Stipulation sha be bindig on the pares, their assign and/or
successors in interest.
v. EFFCT OF SETTLEi'lNT/CONDITIONS
The pares undersd tht this Settement is not bindig on the Commission in nig .
on Idao Power's Application in ths cae. Th Stipultion is alo conditioned upon acceptace,. .
by th Inte Revenue Service and the Idao Stae Tax Commsion of the Company's proposed
modifcaton of amortn methods for ADITC.
VI EXCUTON OF STIPULTION
Th Settement Stipulon may be cxecutëd in countear.
"
:".- .
..
'.
..
i
!
,i
I:1.
'!
SETLEMENT
EXHIBIT 1
Case No. IPC-E-95-11
Page 5 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale,-LP..
Page 5 of 12-
SETT'v STIPULTION FORFILlNG .s
,--, .
;....... ..... ...;,--.,
,"". ~
DATE at Boise, Idao th;1 .day of Septeber:199S.
ez'~d¡;t/... ,. ~~~om ~~..;....,=:~~ .
. : Ido Pulic Uties' Commsion Sta .' "
.,
'Lae A. Gollomp
Asist Genra'Counel
. Unied States Deparent of Energy
Ronad L. Wilam
Commerc Utity Cusmers
Peter J. Richaon
Indusal Customer of Idao Power
John J. McFadden
Micron T~chnoiogy
Conley Ward
FMC Corporation
Rada C. Budge
Idao Irgation Pumpers Assoc., Inc.
.
"1d/-¡PC-E-9;i- t 1.b
._'
SETTEME S1TULTION FOR
FIING 6
SEmEMENT
EXHIBIT 1
Case No. IPC-E-95-11exhibit No.2
Poge 6 OF Base No. IPC-E-09-30
J. Gale, IPC
Page 6 of 12--
,..,r~
PATED at 'BoÎ:e, Idaho this )0 ty of Sepember 1995.
Lm D. Ripley
Ido Power Company
Lawrnce Á. GoDomp
Aat Geiir: Counel
United States Deparent of Ener
Pet J. Richardson
IniitraJ Cusomm or Ida Power
Conley Ward
fMC Corporaon
yli.1PU.,S.II.!i
SETTEMENT STIPULTION FORF~rnG ,
. ~-, /-~_......"i.. ,/iL..1I£¿ ~Bra M. Pur - -
Deput Attmey Gener
Idu Public UûIlies Common SLa '.
RoWd L. W"il
Commer Utiity Cuitomer
John I. McFaddeu
Micron Technology
Radall C. Budge
Idao IIgatlon Pumpe Assoc... Inc.
I
SEIlEMENT
EXHIBIT 1
Case No.IPC-E-95-11
Page 7 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale, IPC
Page 7 of 12-
... . It
~,
!
~
DATE at Dois Idao th
-
La D. R.pleyIdao POWC C~pmy
Lawrce A. aollamp
AsiStt Genera Coum=l
t1Dicd Staes Depat or Uu
Peter i. Richarson
Irusal CUStome of Idaho Pnwer
Cunlcy Ward
FMC Corporation
"Wl-tl-lii..
St!TTnMT STIPULATION FORFILING 6
r'
cl of Septer 1995.
Kra M. Pu
Depin Aaoniy Ge
Ida Pulic Uties CoJ.~ui Sta
~ttJ~Ronad. L. Will
Commcrçio1 Utiity Customer
John 1. McFadden
Micrn Techlogy
RadoU C. Budge
Idaho Irngstion Pupers Assoc., In.
SETLEMENT
EXHIBIT 1
Case No.IPC-E-95-11
Page B OF 11 Exhibit No.2Case No. IPC-E-09-30
J. Gale, IPC
Page 8 òf~T
,..,
I. .25' 95 ¡MON) 14: 19 MOORE 1 M". .IDDEN eTn
1,',
... '0'TEL:208 ~~L ..P.004,-- -
DATE at Boise. Idaho ~y ofScpt=ber 1995.
La D. RipleyIda Powe Com
~ce A. Gollomp
Asisit Geic: Counel
UnIt!d States Depa:ent of Eicrg
Peter 1. 'Rchdson
Iidustat Cusmers of Idaho Powe
Cauley War
FMC COIporation
vI-ø2.ts-i tJip£
~'l et1Iii'" ....-- . -_.- ---
-
Bra M. Purdy
Deput Attmey Ge .
Idaho Pulic Utities Commsion Sta
Ronald L. Wilams
Commial Utiit Customers
Rand: C. Bucge
Ido hrgation Pumpers Assoc., Inc.
SErlEMENT
EXHIBIT 1
Case No.IPC-E.95-11
Page 9 OF 11 Exhibit No. 2
Case No. IPC-E-09-30
J. Gale; IPC
Page 9 of 12
....,..--,\
DATED at Boise, Ida th
Lar D. Ripley
Iclaho Power Compay
Lawrnce A. Gollomp
Assistat Genen Couiel
United Sta Deparent of Energ
Peter J. Richaron
Inustr Customers of lcl Powe
uJ~Q
wl4.lP.E.S.1 i .~
SETTEMæ sT~uiAnON FOR
FILING
,r--\
àay of Septeber 1995.
Brad M.. Puy
Deput Attmcy Geera
Idao Public Utities Commsion Sta
Ronald L. Williams
Commercial Utiity Customers
lohn 1. McFaden
Micron Technology
Radall C. Budge
Idao Irgation Pupers Assoc.. In.
SETLEENT
EXHIBIT 1
Case No. IPC-E-95-11
Page 10 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale,IPC
Page 10 of 12'
6
. . 5E 21 -95 11;.$2 RAii-"',. N"
DATE It Bois Idao this
Lin D. lipley
Icl Power Compm)'
Lawrence A. Gollomp
Assiiwn Geer Couzi:l
UDite Sia~ Depai: of' E."1C1Jj
Pete J. lüc:cn
Industr Cusiom of Idao Power
Conley ward.
FMC Ccrporaiicc.
.w"-JP8-S-II.~,.
SETTEM STIPlJnON FOR.
FIING
;~'l".c:
c!y or Seer 1995.
-
Brå M. Pury
D11'WJ Aiiy Gener .
IGuo Public UiiBtia Commiioi Sta
lonari L. WU1iam
Ccer=ia! Utity Cgstem~
John '" McPacc1ln
Mic::i Ti;1oloiy
~a,~
Aadall C. Buclge
Idaho hrptOZl Pumper Assoc., Inc.
'.
,
SBTEMENT
EXHIBIT 1
Case No.IPC-E-95-11
Page 11 OF 11 Exhibit No.2
Case No. IPC-E-09-30
J. Gale, IPC
Page 11 of 12
:'_~-:27-95 16: 3_1
Fr-..,.,r"P.02
....
.-
:t
DATED at Boise. Idaho this,,? day of'September 1995.
Lar D. Ripley
Idaho Power Company
Bra M. Purdy
Deputy Attrney General
Idaho Publiç Utilities Commssion Sta
wre ce . 0 omp
Assistat General Counel
United States Deparent of Energ
Ronald L. Wiliams
Commcm:ial Utility Customers
Peter J. Richardson
Industral Customers of Idaho Power
John 1. McFadden
Micron Technology
Conley Ward
FMC CorPoration
Randall C. Budge
Idaho lnigation Pumpers Assoc., Inc.
vld/.iic.E-9S.II.'"
SETTLEMENT STIPULATION FOR
FILING 6
SETLEMENT
EXHIBIT 1
Case No. IPC-E-95-lkhibit No.2
Page 12 Case No. IPC-E-09-30
J. Gale, IPC
Page 12 of 12
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-09-30
IDAHO POWER COMPANY
EXHIBIT NO.3
Settlement Proposal
Expected PCA Rate Reduction "'$160 millon
Expected Increase to Net Power Supply Expense "'$75 million
PCA Reduction Company Customer NPSE
$220 $25 $120 $75
200 25 100 75
180 25 80 75
160 25 60 75
145 25 45 75
135 20 40 75
120 20 40 60
100 20 40 40
80 20 40 20
60 20 40 -
40 20 20 -
20 10 10 -
----
Exhibit No.3
Case No. IPC-E-09-30
J. Gale, IPC
Page 1 of1