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Home My WebLink About20101202notice_of_report_order_no_32129.pdfOffice of the Secretary Service Date December 2 2010 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPROPRIATE DISPOSITION OF PROCEEDS FROM THE SALE OF IDAHO POWER COMPANY'S S02 EMISSION ALLOWANCES IN CALENDAR YEAR 2010 NOTICE OF REPORT CASE NO. IPC-10- NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129 On June 14, 2010, Idaho Power Company first reported that it has sold (or entered into contracts for the sale of) 10 000 surplus sulfur dioxide (S02) emission allowances. The Company reported that it anticipates net proceeds (after deducting brokerage fees of $2 500) of $427 000. On September 7, 2010, the Company filed a second report stating that it sold 4 000 additional credits for $45 000 (after fees of$1 250). On November 12 , 2010, the Company filed a third report stating it sold 6 000 additional credits for $71 000 (after fees of$1 250). In summary, Idaho Power sold 20 000 S02 credits in calendar year 2010 and received net proceeds of $543 000 (after deducting fees of $5 000). Third Report at 2. Consistent with the Commission s prior Orders, the Company proposes to "share" the proceeds 95% to customers and 5% to shareholders. The Company also proposes to use Idaho s current jurisdictional percentage of 94.8% and to use the accounting treatment approved in the Commission s prior Order No. 29852. Application at'tl6. BACKGROUND A. The SOl Program In Order No. 29852 issued August 22, 2005, the Commission granted Idaho Power blanket authority to sell its surplus S02 emission allowances. Title IV of the Clean Air Act Amendments of 1990 establishes a national program for the reduction of acid rain. 42 u.S.c. ~~ 7651 et seq. The centerpiece of the acid rain program is the incentive- or market-based "cap and trade" S02 emission program. Under the cap and trade program, the Environmental Protection Agency (EP A) sets a cap or ceiling on the total amount of S02 emissions allowed nationwide. Based on this cap, EP A allocates a certain number of S02 emission allowances to thermal power NOTICE OF REPORT NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129 plant owners. Each allowance provides the authority to emit one ton of S02. Order No. 29852 at 1. Each year a thermal power plant owner must hold sufficient allowances to cover actual S02 emissions. A thermal power plant owner holding insufficient allowances to cover its annual emissions must purchase additional allowances or it is automatically fined and must surrender future year allowances to cover the shortfall. A thermal power plant holding surplus S02 allowances in a given year may save the surplus allowances or sell them. S02 emission allowances are fully marketable commodities and can be traded on the open market or in special EP A-sponsored auctions. Idaho Power has an ownership interest in three thermal power plants in the western United States that receive S02 allowances from EP A. Id. B. Prior Commission Orders In October 2005, the Commission initiated a proceeding to determine the appropriate ratemaking treatment of the S02 proceeds. In March 2006, interested parties stipulated that proceeds from Idaho Power s sale of S02 allowances should be included in the Company annual Power Cost Adjustment (PCA) "with 90% of the net proceeds to be passed onto customers, and 10% of the net proceeds to be retained as a shareholder benefit." In Order No. 30041 , the Commission approved the stipulation. The Commission found that the PCA "is the logical mechanism to track and distribute proceeds from the sale of excess S02 allowances. Order No. 30041 at 4. In Order No. 30715 issued January 9, 2009 , the Commission adopted changes to Idaho Power s Power Cost Adjustment (PCA) mechanism. In that Order the Commission adopted a Stipulation executed by parties in Case No. IPC-08-19 that agreed to several modifications of the Company s PCA. In particular, the parties agreed and the Commission approved changing the sharing methodology that assigns power purchase costs or benefits to customers and shareholders. "Since inception of the PCA, annual deviations in normal power supply costs have been shared 90%/1 0% by customers and Company shareholders, respectively. Order No. 30715 at 2. The Commission adopted the parties ' recommendation that the sharing percentage should be changed to a 95%/5% sharing percentage for customers and the Company, respectively. Id. at 5. In the Commission s last S02 Order No. 30790 issued May 1 2009 , the Commission allocated all of the S02 proceeds to offset the PCA balance. In a previous case, the Commission NOTICE OF REPORT NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129 had used a portion of the S02 proceeds to fund a two-year energy education proposal that began at the start ofthe 2009 school year. Order No. 30790 at 3. In Order No. 30790, the Commission found that "it is not appropriate to set aside additional S02 proceeds for energy education (programs) until the two-year pilot project has been evaluated.Id. The two-year pilot will be completed in June 2011. NOTICE OF MODIFIED PROCEDURE YOU ARE HEREBY NOTIFIED that the Commission has determined that the public interest may not require a formal hearing for determining the appropriate disposition of the S02 proceeds and will proceed under Modified Procedure pursuant to Rules 20 I through 204 of the Idaho Public Utilities Commission s Rules of Procedure, IDAPA 31.01.01.201 through .204. The Commission notes that Modified Procedure and written comments have proven to be an effective means for obtaining public input and participation. YOU ARE FURTHER NOTIFIED that the S02 Reports have been filed with the Commission and are available for public inspection during regular business hours at the Commission offices. The Reports are also available on the Commission s web site at www.puc.idaho.gov by clicking on "File Room" and then "Electric Cases. YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the appropriate disposition of S02 proceeds or any individual Report may file a written comment in support or opposition with the Commission within 21 days from the date of this Order. The comment must contain a statement of reasons supporting the comment. Persons desiring a hearing must specifically request a hearing in their written comments. Written comments concerning any of the S02 Reports shall be mailed to the Commission and Idaho Power at the addresses reflected below: Commission Secretary Idaho Public Utilities Commission PO Box 83720 Boise, ID 83720-0074 Street Address for Express Mail: 472 W. Washington Street Boise, ID 83702-5918 NOTICE OF REPORT NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129 Lisa D. Nordstrom Donovan E. Walker Idaho Power Company 1221 West Idaho Street PO Box 70 Boise, ID 83707-0070 Mail: Inordstrom(fYidahopower.com dwalker(fYidahopower. com Comments should contain the case caption and case number shown on the first page of this document.Persons desiring to submit comments via e-mail may do so by accessing the Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions icon and complete the comment form using the case number as it appears on the front of this document. These comments must also be sent to Idaho Power at the e-mail addresses listed above. YOU ARE FURTHER NOTIFIED that Idaho Power may file reply comments (if necessary) no later than 28 days after the service date of this Order. YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the time limit set, the Commission will consider the S02 Reports and the appropriate disposition of the proceeds on their merits and enter its Order without a formal hearing. If written comments are received within the time limit set, the Commission will consider them and, in its discretion, may set the same for formal hearing. YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant to the Commission s jurisdiction under Title 61 of the Idaho Code and specifically Idaho Code ~~ 61-316 , 61-502 , 61-503 , and 61-524. The Commission may enter any final Order consistent with its authority under Title 61. YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted pursuant to the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq. ORDER IT IS HEREBY ORDERED that this case be processed under Modified Procedure. Interested persons may file written comments within 21 days of the date of this Order. IT IS FURTHER ORDERED that Idaho Power may file reply comments (if necessary) no later than 28 days after the date of this Order. I Following the filing of the Company s first SO2 Report, the Commission received five e-mail comments. These comments are part of the record in this case and do not need to be resubmitted. NOTICE OF REPORT NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129 DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this day of December 2010. ~/. ~~ D. KEMPTO IDENT MARSHA H. SMITH, COMMISSIONER \ZSP MACK A. REDFORD, COMMISSIONER ATTEST: j a D. Jewel C mmission Secretary bls/O:IPC-IO-20 dh NOTICE OF REPORT NOTICE OF MODIFIED PROCEDURE ORDER NO. 32129