20101110notice_of_application_order_no_32110.pdf

Office of the Secretary
Service Date
November 10 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO AMEND CASE NO. IPC-IO-
ACCOUNTING ORDER NO. 30940
AUTHORIZING THE DEFERRAL OF NOTICE OF APPLICATION
TRANSMISSION COSTS ASSOCIATED
WITH FERC DOCKET NO. ER06- 787 NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 32110
On October 13, 2010, Idaho Power Company filed an Application to change the
beginning of a three-year amortization period set out in accounting Order No. 30940 (Case No.
IPC-09-21) from January 1 2011 to January 1, 2012. In Order No. 30940 issued October 30
2009, the Commission authorized the Company to record and defer its unrecovered transmission-
related costs that were disallowed in a transmission rate case before the Federal Energy
Regulatory Commission (FERC) in Docket No. ER06- 787. In the present Application, the
Company requests that the Commission approve the deferral amounts and change the start of the
amortization period "by the end of 2010.Application at ,-r 13. Consequently, Idaho Power
requests that the Commission expedite its review of the current Application. The Company
further requests that the Commission process this case under Modified Procedure.
BACKGROUND
A. The FERC Proceeding
In March 2006, Idaho Power filed an application with FERC requesting an increase in
its transmission rates subject to FERC's jurisdiction. In its filing, the Company proposed to
revise its Open Access Transmission Tariffs (OA TT) from "stated" rates to "formula" based
rates. Formula rates would be updated annually based upon Idaho Power s total cost to own
operate and maintain its transmission facilities for its transmission customers. Order on Initial
Decision 126 FERC ,-r 61 044 (Jan. 15 , 2009). The "formula" rate methodology would use
financial data reported annually in the Company s FERC Form 1.
In the FERC proceeding, the parties were able to settle most of the issues but they
were unable to resolve the proper ratemaking treatment of three "Legacy Agreements.Id. at ,-r
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II. Starting in the 1960s, Idaho Power entered into three long-term transmission servIce
contracts commonly referred to as the "Legacy Agreements " with PacifiCorp to provide
transmission service from the Jim Bridger power plant in western Wyoming. Idaho Power and
PacifiCorp jointly own the Bridger facility. Both companies built and now operate transmission
lines from Bridger to their respective service territories.Under the terms of the Legacy
Agreements, Idaho Power charges PacifiCorp "use of facility fees" to use Idaho Power
transmission facilities until 2025. Id. at,-r,-r 3-9; Order No. 30940 at 2.
The FERC Administrative Law Judge (ALJ) initially determined and FERC
subsequently affirmed that Idaho Power s charges to PacifiCorp under the Legacy Agreements
were significantly lower than the OA TT rates Idaho Power proposed to charge other customers
for similar transmission services. This rate "disparity" between the lower rates in the old Legacy
Agreements and the higher OATT rates has grown over time. ,-r at 127. The ALJ found in his
initial order that it was unreasonable for Idaho Power to recover its transmission costs from other
third-party transmission customers while the Legacy Agreements contain rates for PacifiCorp
that are now considered below cost. Because its revenue recovery "was locked in" by the long-
term Legacy Agreements , FERC found that Idaho Power must bear the under-recovery of
transmission costs on its own. Id. ,-r 129; Order No. 30940 at 2.
In response to FERC's initial decision , Idaho Power took three actions. First, the
Company filed a Petition for Rehearing with FERC. FERC subsequently granted the rehearing
so it could consider the matter in greater detail. Docket No. ER06- 787-006. Second, Idaho
Power filed an application with FERC to amend portions of two Legacy Agreements which were
subject to change or re-negotiation. FERC Docket No. ER09-1335-000. Third, on July 20
2009 , Idaho Power filed an application for an accounting order requesting that this Commission
authorize the deferral of unrecovered transmission costs that were denied in FERC Docket No.
ER06- 787. The Company estimated its unrecovered transmission costs were approximately
$8.084 million for the period March 2008 through May 31 , 2010. The Company noted in its
prior application that if it is successful in recovering its transmission costs on rehearing at FERC
or by amending its Legacy Agreements, then the Company "will reduce the deferral" request or
balance. Id.
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ORDER NO. 32110
B. The Commission s Prior Accounting Order
The only comments filed in response to the Company s July 2009 request for an
accounting order were filed by the Commission Staff. The Staff noted that the FERC decision
has the effect of reducing the transmission revenue credited to Idaho customers in Idaho rate
cases. "With the FERC reconsideration and Legacy Agreement actions incomplete, Staff
believes that deferral accounting for these unrecovered transmission revenues is appropriate
through May 2010 as requested by Idaho Power. The question whether the deferred amounts
should be recovered from Idaho ratepayers is a matter that should be reserved for a future
proceeding." Order No. 30940 at
In issuing the accounting order, the Commission found
it reasonable to grant the Company s request for an Accounting Order
conditioned with Staffs recommendations. We authorize the deferral of the
unrecovered transmission-related revenues through May 31 , 2010, as
requested by the Company. . .. We find that an amortization period of three
(3) years is reasonable and that the amortization period should begin on
January 1, 2011.
. . . the Commission specifically reserves the right to determine in a future
proceeding whether Idaho Power may appropriately recover the deferred
amounts from Idaho customers. Granting the requested Accounting Order
will allow Idaho Power to pursue its two other recovery options at FERC
(rehearing and amending portions of the Legacy Agreements) while deferring
transmission-related costs/revenues.
Order No. 30940 at 6 (emphasis added).
THE CURRENT APPLICATION
YOU ARE HEREBY NOTIFIED that in its current Application, Idaho Power states
that it has amended two of the Legacy Agreements with PacifiCorp. Idaho Power terminated one
of the Legacy Agreements (the Restated Transmission Service Agreement - RST A) and replaced
the old contract rate with its OA TT rate in a new RST A contract effective June 13 2009. Idaho
Power asserts that this change decreased the estimated deferral balance by approximately $2.
million. Application at ,-r 4; Atch. 2. In another Legacy Agreement (the Interconnection and
Transmission Service Agreement - ITSA), Idaho Power increased the old legacy rates to higher
OA TT point-to-point service rates on August 19 2009. Idaho Power reports that the amendment
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of the ITSA decreases the deferral by approximately $2.918 million. Application at ,-r 5; Atch.
YOU ARE FURTHER NOTIFIED that Idaho Power reports in its current Application
that it found errors in the calculation of its OA TT formula rate for the 2006, 2007 and 2008 test
years. "The errors in the OA TT formula rate overstated the Company s calculation of additional
revenues received as a result of the termination of the RTSA as well as the calculation of
additional of ITSA revenues. . . ." Application at ,-r 7. The Company also noted that it is in the
process of issuing refunds for the OA TT errors. In addition, the errors in the OA TT rates also
caused the Company to miscalculate the original deferral calculation. Id. at,-r 8. The "net change
of the deferral based on the actual OATT rates in effect is a $360 055 reduction.Id.
YOU ARE FURTHER NOTIFIED that the Company calculates that the current
deferral balance is $2 064 469. Below is a summary of the proposed changes to the deferral
balance.
DEFERRAL ITEM DEFERRAL AMOUNT
Initial Deferral Estimate 084 251
New R TSA Deferral Change 810 178)
New ITSA Deferral Change 918 448)
R TSA Revenue Correction 361
ITSA Revenue Correction 538
OA TT Deferral Correction (360 055)
Total Current Deferral 064,469
Source: Application at 5
Idaho Power respectfully requests authorization of the deferral amount of $2 064,469 of
unrecovered transmission revenues.Id. at,-r 9.
YOU ARE FURTHER NOTIFIED that the Company also requests that the beginning
of the three-year amortization period shift from January 2011 to January 2012. The
Company maintains that prior to receiving the Commission s accounting Order No. 30940, Idaho
Power began settlement discussions "and entered into a stipulation committing that it would not
file a general revenue requirement case which would result in a general rate adjustment to
become effective prior to January 2012.Id. at ,-r 10. The Company is requesting a
I In July 20 10, FERC approved the parties' settlement that included the rate changes in the ITSA and R TSA
contracts. FERC Docket No. ER09-1335.
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ORDER NO. 32110
postponement in the beginning of the amortization period "(b )ecause the Stipulation does not
allow the Company to recover the deferred transmission costs now. . . .Id.
YOU ARE FURTHER NOTIFIED that Idaho Power filed the present Application
using the case number from last year s application for an accounting order in Case No. IPC-
09-21. Staff notes that accounting Order No. 30940 was a "Final Order" issued October 30
2009. Staff recommended that this pleading be treated as a new case because it seeks to amend
an existing accounting order.See Rule 53; IDAPA 31.01.01.053.We agree with Staffs
recommendation and find that the current Application constitutes a new case. The case caption
shall be modified and this case shall be identified as Case No. IPC-I0-28.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 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 Application and supporting workpapers
have been filed with the Commission and are available for public inspection during regular
business hours at the Commission offices. The Application is 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 this
Application may file a written comment in support or opposition with the Commission within
twenty-one (21) days from the service date of this Notice.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 this Application
shall be mailed to the Commission and the Applicant at the addresses reflected below:
2 On November 1, 2010, the Industrial Customers of Idaho Power (ICIP) filed a Petition to Intervene in this case.
We direct the Commission Secretary to make a pen and ink change on the ICIP Petition noting the corrected case
number, Case No. IPC-1O-28.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32110
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise ID 83720-0074
Street Address for Express Mail:
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
PO Box 70
Boise ID 83707-0070
E-mail: dwalker~idahopower.com
lnordstrom~idahopower. com
472 W. Washington Street
Boise ID 83702-5918 Courtney Waites
Greg Said
Mike Youngblood
Idaho Power Company
PO Box 70
Boise ID 83707-0070
E-mail: cwaites~idahopower.com
gsaid~idahopower .com
my 0 ung b I ood~i dahopo wer. co m
All 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 (as the Applicant) may file reply
comments within twenty-eight (28) days from the service date ofthis Order.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its 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 ~ 61-524. 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.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32110
ORDER
IT IS HEREBY ORDERED that this matter be processed under Modified Procedure
and persons desiring to comment on Idaho Power s Petition shall file written comments with the
Commission within 21 days of the service date of this Order. Idaho Power may file reply
comments within 28 days ofthe service date of this Order.
IT IS FURTHER ORDERED that this matter be treated as a "new case " assigned
Case No. IPC-I0-28, and that the case caption be amended as shown on page 1 of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of November 2010.
~iL
MD. KEMPT SIDENT
MARSHA H. SMITH, COMMISSIONER
~'S~
MACK A. REDFORD, COMMISSI
ATTEST:
bls/O:1PC-10-28 dh
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 32110