20100621Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARYLEGAL f
WORKNG FILE :I C- --E -/O-':L
FROM:BRYAN LANSPERY .
DATE:JUNE ll, 2010
RE:IDAHO POWER COMPANY COMPLIANCE FILING, REVISED
SCHEDULE 54, FCA
BACKGROUND
On June 4, Z01O, Idaho Power Company ("I PC") filed a revised tariff sheet for Schedule
54, the Fixed Cost Adjustent ("FCA"). IPC submitted updated values for Fixed Cost per
Customer ("FCC") and Fixed Cost per Eriergy ("FCE") due to Commission-approved chages in
base rates that went into effect on June 1. The FCC and FCE do not affect the FCA rates
approved by the Commission in Order NO.3 1 OS 1, but rather set the benchmark for the
prospective year's deferral balances!. IPC's filing corresponds to an anua increase of$ZO.61
and $7.79 per residential and small commercial customer, respectively, translating to a net
increase in authorized fixed costs of$S.8 milion over 2008 figures.
STAFF ANALYSIS
Though Sta has reviewed the revised tarff and the supporting documents, it believes
that processing the changes in FCC and FCE rates is beyond the scope of a compliance fiing for
a number of reasons, and better suited for modified procedure. First, the proposed raes are
based upon Commission Orders regarding inclusion of pension expenses (Order No. 31091),
advanced metering infrastructu investments (Order NO.3 1 097), and the increase in base rates
and power supply expenses (Order Nos. 30978 and 31042). Staff believes additional time is
necessary to review these proceedings to better ascertain which rate adjustments affect fixed cost
i More succinctly, the FCA rate recovers or credits the previous yea's deferrl balance while the FCC and FCE are
the basis for the current year's deferral balance.
DECISION MEMORANDUM - 1 -JUE 11,2010
recovery. Second, IPC relies on the ratio of fixed to total costs in base revenues from 2008, the
most recent general rate case, to appropriate the additional costs to each afected customer
category2. Again, Staff believes this practice warants fuher review. Finally, given the level of
interest in Case No. IPC-E-09-28, Staf believes suspending the filing and opening a c~se affords
outside parties an opportity to review and provide input into the FCA while still in the pilot
stage.
STAFF RECOMMENDATION
Staf requests tht the curent compliance fiing and requested effective date of June 1,
2010 be suspended and opened as a formal case and processed under modified procedure. Doing
so would permit interested paries an opportity to provide input, as well as faciltate a more
rigorous evaluation of what base rate increases should be covered under the curent fixed cost
recovery mechanism. Delaying the approval of new FCC and FCE rates does not afect the
collection of the 2009 deferral balance, nor does it unduly impact any accrual during the 2010
year as IPC can book an adjustment from June 1 forward to reflect the new rates once approved
by the Commission.
COMMISSION DECISION
Does the Commission wish to suspend Idaho Power Company's Compliance Filing for
Schedule 54, open a docket, and proceed under modified procedure?
~
i:dmemoslsuspend54
2 2008 represents the most recent IPC-Staff agreed upon Cost of Service stdy utilze in FCA evaluation.
DECISION MEMORANDUM - 2-JUE 11,2010