20101208Reply Comments.pdf

esIDA~POR~
An IDACORP Company
DONOVAN E. WALKER
Senior Counsel
dwalker~idahopower.com
December 8, 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-10-28
IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY TO
AMEND ACCOUNTING ORDER NO. 30940 AUTHORIZING THE DEFERRAL
OF TRANSMISSION COSTS ASSOCIATED WITH FERC DOCKET NO ER06-
787
Dear Ms. Jewell:
Enclosed for filng please find an original and seven (7) copies of Idaho Power
Company's Reply Comments in the above matter.
~(/~.
Donovan E. Walker
DEW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. ID 83707
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker~idahopower.com
Inordstrom~idahopower.com
L~F"Loft:
lUfOOEC -8 Pfl~:45
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 TO ) CASE NO. IPC-E-10-28
AMEND ACCOUNTING ORDER NO. 30940 )
AUTHORIZING THE DEFERRAL OF ) IDAHO POWER COMPANY'S
TRANSMISSION COSTS ASSOCIATED ) REPLY COMMENTS
WITH FERC DOCKET NO ER06-787. )
)
Idaho Power Company ("Idaho Powet' or "Company"), in response to Comments
of the Staff of the Idaho Public Utilties Commission ("Staff"), respectfully submits the
following Reply Comments.
On December 1, 2010, the Staff filed its Comments in this matter. Staff
recommends: (1) that the Company's request to change the start date of the
amortization period from January 1, 2011, to January 1, 2012, be denied; (2) that the
Company's request to reduce the initially approved deferral amount of $8,084,251 to
$2,064,469 be accepted conditioned upon not changing the beginning amortization date
from January 1, 2011, to January 1, 2012; and (3) if the beginning amortization date is
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
changed to January 1, 2012, as requested by the Company, that all amounts related to
periods prior to July 20, 2009, be disallowed from the deferral amount. As explained
below, Staff's recommendation should not be followed as it effectively eliminates any
possibility that at least one year of the amortized amount of unrecovered transmission
revenue could ever be recovered by the Company.
I. AMORTIZATION PERIOD
First, the Company appreciates Staffs recognition of the continuing efforts
expended by the Company in working to reduce the amount of unrecovered
transmission expenses in the deferral account from over $8 millon to just over $2
millon. Secondly, as stated in the Company's Application, Idaho Power is "not
request(ingl a determination of ratemaking treatment of the deferral with this filng," and
"is requesting to shift the beginning of the amortization period from January 1, 2011, to
January 1, 2012, when the Company could potentially include those costs in rates."
Application at p. 6 (emphasis added).
Staffs recommendation to begin amortization of the deferral outside of a time
when it is possible for the Company - and regardless of whether the Company has any
opportunity - to include the potential recovery of those amounts in rates is unlawful in
that it denies the Company the opportunity to seek recovery of deferred amounts. See
Order No. 29034 at p. 12 (discussing Commission finding that deferred accounting is a
mechanism to preserve expenses for future consideration and did not violate rate
increase moratorium) (quoting Order No. 28998 at pp. 2-3). Staff on the one hand is
recommending that it is appropriate to authorize a deferral of the unrecovered
transmission expense amounts, albeit subject to a ratemaking and recovery review in a
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
future proceeding, but, in effect, what Staff recommends by forcing amortization to start
with no possibilty for a corresponding rate recovery is a disallowance of at least one
year of the amortized expenses. Staff has now stated in two sets of Comments that it is
reasonable for the Company to track the unrecovered transmission expenses in a
deferral, and that the deferral be subject to a future ratemaking and recovery
determination. However, Staff now insists that amortization of that deferral start at
some time prior to when that ratemaking and recovery determination can be made or
requested. Additionally, Staff's recommended deferral is for a period of time that was
known equally as well by the Staff as by the Company to be a time during which the
Company is prohibited from seeking inclusion of those potential amounts in rates. The
effect of this recommendation is to prematurely disallow a portion of that potential
recovery.
The Company reiterates its request from both Case No. IPC-E-09-21 and this
case that a three-year amortization be authorized to coincide with the time when the
deferral could potentially be included in rates. A directive to start amortization of a
deferred amount with no possibilty of inclusion in rates is the equivalent of a
disallowance of those amounts.
II. CALCULATION OF THE DEFERRAL AMOUNT
Staffs recommendation to disallow any amounts from inclusion in the deferral
amount that occurred prior to the Company's original Application in Case No. IPC-E-09-
21, the original deferral request for this matter, if the beginning date of the amortization
is changed is punitive. Staff had no such recommendation in its Comments upon the
original request and, in fact, stated, "The deferral as requested in the Application
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
acknowledges the extraordinary nature of these unrecovered transmission-related
revenues. Deferred accounting treatment for regulatory purposes is an appropriate, just
and reasonable means of providing the Company the opportunity to request and litigate
future recovery of unrecovered revenues caused by the FERC decision." Staff
Comments, Case No. IPC-E-09-21, p. 5. Staff now states that, "the revenue changes
subject to deferral are for previous years and up through May 2010." Staff Comments,
Case No. IPC-E-10-28, p. 6. "Rather than requiring the Company to present a detailed
analysis to distinguish retroactive dates compared to going-forward periods (along with
any other analysis to determine recoverabilty), Staff proposes the Commission simply
maintain the original amortization period beginning January 1,2011." Id.
The FERC Order on Initial Decision was issued on January 15, 2009. Idaho
Power filed a Petition for Rehearing with FERC on February 27,2009. FERC granted
the Petition for Rehearing on March 18, 2009, but also issued a tollng order that
effectively relieved it from acting for an indefinite period of time on Idaho Power's
request for rehearing. Idaho Power cannot predict when the FERC wil rule on its
request for rehearing or the ultimate outcome of this matter. Consequently, the
Company filed its original request for deferral in Idaho on July 20, 2009. The Company
filed its request in good faith and within a reasonable time of when the facts became
known to it - after the FERC decision went into effect - that gave rise to the revenue
deficiencies in its Idaho jurisdiction. The Company did this with full knowledge and
disclosure that efforts to reduce this revenue deficiency that had been attributed to the
Idaho jurisdiction were continuing, would be dilgently pursued, and would further
reduce the requested deferral amount prior to seeking its possible recovery in rates. It
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
is somewhat inconsistent of Staff to both recognize that the Company has reduced the
potential deferral amount from more that $8 millon to just over $2 milion but insist that
a portion of that amount be amortized with no possibility of inclusion in rates, and further
insist that if that recommendation is not followed, that any of those amounts that
accrued prior to the original Application be disallowed. As set forth in the original
Application, the Company made reasonable and prudent estimates, including hold-back
amounts, of its FERC jurisdictional revenues that were approved by Staff in the
Company's general rate cases. It was not until the decision was issued by FERC that
anyone could have reasonably had knowledge of the amount and magnitude of
resulting revenue deficiencies that would result and become the subject of the
Company's July 20, 2009, filing. The Company requests that Staff's proposal to
disallow from the deferral amount any adjustments that relate to periods prior to July 20,
2009, if the amortization period is changed, be rejected.
II. CONCLUSION
The Company has previously received authority to defer unrecovered
transmission expenses by the Commission. Staff is recommending that amortization of
the deferred amount start at a time prior to when any ratemaking or recovery
determination can be made or requested - eliminating any possibilty for the potential
recovery of those amounts. The Company respectfully requests that a three-year
amortization be authorized to coincide with the time when the deferral could potentially
be included in rates, January 1, 2012. A directive to start amortization of a deferred
amount with no possibilty of inclusion in rates is the equivalent of a disallowance of
those amounts.
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
DATED at Boise, Idaho, this 8th day of December 2010.
OVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 8th day of December 2010 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email Scott.Woodbury~puc.idaho.gov
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email peter~richardsonandoleary.com
greg~richardsonandoleary.com
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email dreading~mindspring.com
~q~
Donovan E. Walker
IDAHO POWER COMPANY'S REPLY COMMENTS - 7