20100316Application.pdf

DONOVAN E. WALKER
Senior Counsel
dwalkertiidahopower.com
1SIDA~POR~
An IDACORP Company
March 15,2010
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-10-07
IN THE MA TTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR AUTHORITY TO IMPLEMENT FIXED COST ADJUSTMENT ("FCA'J
RATES FOR ELECTRIC SERVICE FROM JUNE 1, 2010, THROUGH MAY
31,2011
Dear Ms. Jewell:
Enclosed for fiUng please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
In addition, enclosed are nine (9) copies of the testimony of Scott D. Sparks filed in
support of the Application. One copy of Mr. Sparks' testimony has been designated as the
"Reporter's Copy." In addition, a disk containing a Word version of Mr. Sparks' testimony is
enclosed for the Reporter.
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Donovan E. Walker
DEW:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkerayidahopower.com
Inordstrom ayidahopower.com
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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 ) CASE NO. IPC-E-10-07
AUTHORITY TO IMPLEMENT FIXED )
COST ADJUSTMENT ("FCA") RATES FOR ) APPLICATION
ELECTRIC SERVICE FROM JUNE 1,2010, )
THROUGH MAY 31, 2011. )
)
Idaho Power Company ("Idaho Powet' or the "Company"), in accordance with
Idaho Code §§ 61-502, 61-503, and RP 052, hereby respectully makes AppUcation to
the Idaho Public Utilties Commission ("I PUC" or the "Commission") for an Order
authorizing Idaho Power to implement Fixed Cost Adjustment ("FCA") rates for electric
service from June 1,2010, through May 31,2011.
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 ("DSM") "is an integral
APPLICATION -1
part of least-cost electric service." Order No. 30267 at 13. Traditional rate design,
however, discourages utilties that recover their fixed costs through each kilowatt-hour
sold from reducing their sales volume through investment in energy efficiency and DSM.
2. Recognizing that "opportunities exist(ed) for improvements in operating
efficiency that would benefit the Company shareholders and its customers," the
Commission opened an investigation in Case No. IPC-E-04-15 to consider options for a
performance-based mechanism that adjusts revenues when annual energy
consumption is either above or below normaL. Order No. 29558 citing 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 Stipulation ("Stipulation") for the implementation of a three-
year Fixed Cost Adjustment pilot program applicable to Residential Service (Schedules
1, 3, 4, and 5) and Small General Service (Schedule 7) customers. This is the third
year of the three-year pilot program. On October 1, 2009, the Company filed an
Application seeking authority to convert Schedule 54, the FCA, from a pilot program to
an ongoing, permanent program. Case No. IPC-E-09-28. That case is stil pending.
4. The FCA mechanism allows Idaho Power to separate or "decouple"
collection of its fixed costs from its volumetric energy sales and provides symmetry
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
APPLICATION - 2
actually recovered through rates and the fixed costs authorized for recovery in the
Company's most recent rate case.
5. The FCA works identically for both the Residential and Small General
Service classes. For each class, the actual number of customers is 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") as 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. The proposed FCA tariff (clean form), Schedule 54, is attached hereto as
Attachment No. 1 to this Application. The Schedule 54 tariff in legislative format is
attached hereto as Attachment NO.2
II. PROPOSED 2010-2011 FCA RATE ADJUSTMENT
6. As part of its continuing efforts to promote energy efficiency and demand-
side management, Idaho Power actively pursued numerous, additional opportunities
throughout 2009. These efforts are more fully described in the accompanying testimony
of Mr. Sparks and in the Company's 2009 Demand-Side Management Annual Report.
7. The FCA for the Residential class is an increase of $5,173,650.54, as
shown in Exhibit NO.5 to Mr. Sparks' testimony. Because the Residential true-up is a
APPLICATION - 3
positive number, it means that the rate of growth in the number of Residential
customers was more than the rate of growth in the energy sales for that class, Le., the
average use per customer decreased. Therefore, if collected individually, the
Residential class would receive an increase in additional fixed costs collected during the
year amounting to a 1.57 percent increase in Residential rates.
8. The FCA for the Small General Service class is an increase of
$1,165,110.54, as shown on Exhibit NO.5 to Mr. Sparks' testimony. Because the Small
iGeneral Service class true-up it a positive number, this means that energy usage per
customer has decreased and thtt the Company has under-collected its fixed costs. The
additional revenue to be recovefed from the Small General Service class would amount
to an 8.49 percent rate increasel. To be consistent with the methodology applied in the
first two years of the FCA pilot, the Company is proposing a combined rate increase for
Residential and Small General Service customers of 1.85 percent, which equates to an
additional 0.1218 cents per kWh for the Residential class, and an additional 0.1535
cents per kWh for the Small General Service class.
9. Pursuant to the Stipulation approved by Order No. 30267, and consistent
with the methodology applied in the first two years of the FCA pilot, the Commission-
approved FCA adjustment wil be combined with the Energy Effciency Services Charge
into a single line item on customers' bils.
10. Idaho Power requests that the FCA rate become effective on June 1,
2010, coincident with Idaho Powets Power Cost Adjustment ("PCA") and with the
commencement of seasonal rates. The Company requests that the FCA rate remain in
effect until May 31, 2011.
APPLICATION - 4
IV. MODIFIED PROCEDURE
11. Idaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectully requests that this Application be processed
under Modified Procedure, Le., 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
12. This Application wil be brought to the attention of Idaho Powets
customers by means of both a press release to media in the Company's service area
and a customer notice distributed in customers' bils, both of which are included herein
as Attachment NO.3. The customer notice wil be distributed over the course of the
Company's current biling cycle, with the last notice being sent on April 21, 2010. In
addition to describing this filng, these customer communications also describe recently
proposed rate changes associated with Advanced Metering Infrastructure ("AMI", and
the recovery of pension expense. Idaho Power wil also keep its Application, testimony,
and exhibits open for public inspection at its offices throughout the state of Idaho. The
above procedures are deemed by Idaho Power to satisfy the Rules of Practice and
Procedure of this Commission; however, the Company wil, in the alternative, bring the
Application to the attention of its affected customers through any other means directed
by this Commission.
13. Communications and service of pleadings with reference to this
Application should be sent to the following:
APPLICATION - 5
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
dwalkerayidahopower.com
Inordstromayidahopower.com
Scott D. Sparks
Greg Said
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
ssparksayidahopower.com
gsaidayidahopower. 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)
authorizing Idaho Power to implement Fixed Cost Adjustment rates for electric service
from June 1, 2010, through May 31 , 2011 as described above.
DATED at Boise, Idaho, this 15th day of March 2010.
uJ~
DONOVAN E. WALKER
Attorney for Idaho Power Company
APPLICATION - 6