20110421notice_of_application_order_no_32227.pdf

Office of the Secretary
Service Date
April 21.2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-1 1-06
AUTHORITY TO IMPLEMENT POWER )
COST ADJUSTMENT (PCA)RATES FOR )NOTICE OF APPLICATION
ELECTRIC SERVICE FROM JUNE 1,2011 )
THROUGH MAY 31,2012 )NOTICE OF
)MODIFIED PROCEDURE
)
_________________________________
)ORDER NO.32227
On April 15,2011,Idaho Power Company filed its annual power cost adjustment
(PCA)Application.Since 1993,the PCA mechanism has permitted Idaho Power to adjust its
PCA rates upward or downward to reflect the Company’s annual “power supply costs.”Because
about half of the Company’s generation is from hydropower facilities,Idaho Power’s actual cost
of providing electricity (its power supply cost)varies from year to year depending on changes in
Snake River streamfiows,the amount of purchased power,the market price of power,and other
factors.’The annual PCA surcharge or credit is combined with the Company’s “base rates”to
produce a customer’s overall energy rate.
In this PCA Application,Idaho Power calculates that its annual power costs have
decreased below the normalized PCA rates.After recovering its power costs,the Company
estimates that the existing PCA rates should be decreased by about $40.4 million,or an average
decrease in the existing PCA rates of approximately 4.78%.
In this Order the Commission decides to process the PCA Application using
Modified Procedure and establishes a deadline for written comments.The Company included
exhibits and the prefiled direct testimony of Matthew Larkin.Interested persons are invited to
comment on the PCA Application.
THE PCA MECHANISM
The annual PCA mechanism is comprised of three major components.First,PCA
rates are calculated to reflect projected power costs for the coming year using the Company’s
most recent Operating Plan.This method replaced the previous method that was based on
‘For example,the revenue from the sale of sulfur dioxide (S02)allowances are included in the PCA case.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227 I
streamfiow forecast and a regression formula derived from rate case data.Order No.30715.
While streamfiows still factor in the projected power costs,the new method should be more
reliable.In years of abundant snowpacks and streamfiows,the Company’s power supply costs
are usually lower because of the availability of relatively inexpensive hydro-generation.
Conversely,when streamflows or snowpacks are low.Idaho Power must rely increasingly upon
its other thermal generating resources and purchased power from the regional market.The
Company’s other thermal generating resources (coal and gas plants)and purchased power are
typically more costly than the Company’s hydro-generation.Projected power costs also include:
non-PURPA expenses and PURPA expenses;revenues from the sale of Renewable Energy
Credits (RECs)and sulfur dioxide (SO2)allowances;and the Hoku PCA adjustment for its first
block of energy (Order No.30748).Under the PCA mechanism,the Company may recover
95%of the difference between the projected power costs and the approved base power costs.
Order No.30715.
Second,because the PCA includes forecasted costs,the preceding year’s forecasted
costs are “trued-up”based upon the actual costs incurred during the prior year.Third,
“reconciliation”2 of the previous year’s true-up component under which any overrecovered or
underrecovered balance from the second component is credited to or collected from this year’s
PCA rate.This third component is designed to ensure the Company recovers the actual approved
costs.Consequently,ratepayers will pay for the actual amount of power sold by Idaho Power to
meet native load requirements —no more or no less.Order No.29334 at 4.Thus,ratepayers
receive a rate credit when power costs are low,but are assessed a rate surcharge when power
costs are high.
NOTICE OF PCA APPLICATION
A.The PA Components
YOU ARE HEREBY NOTIFIED that this year’s PCA Application includes the
forecast of projected power costs;a true-up of last year’s forecasted costs to reflect actual costs;
and reconciliation of the 20 10-2011 PCA year true-up.The Company calculates that the
adjusted PCA forecast amount is about $125.64 million which is $32,274,850 less than the PCA
base amount approved in Order No.31042.Thus,the aggregate rate for the non-PURPA
2 This reconciliation component is often referred to as the “true-up of the true-up.”
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227
expenses (shared at 95%)is a negative (0.2167)cents per kWh.Application at 4.The Operating
Plan’s quantification of PURPA expenses (tracked at 100%)is $3 6.949.600 greater than the
$62.8 million quantified in the power supply expenses approved in Order No.31042.This
results in a rate for PURPA expenses of 0.26 12 cents per kWh.Id.Consequently.the projected
forecast of the PCA rate is a credit of 0.0445 cents per kWh (.26 12 cents per kWh +(.2 167)
cents per kWh).Application at 4;Larkin Dir.at 6-8.
YOU ARE FURTHER NOTIFIED that Idaho Power reports that the difference
between last year’s forecast costs and actual costs (the true-up component)is $3,689,374.Id.at
5.This amount is divided by the projected jurisdictional sales of 13,478,411 MWh to arrive at a
surcharge of 0.0273 cents per kWh.Larkin Dir.at 9.
YOU ARE FURTHER NOTIFIED that the third PCA rate element is the
reconciliation of the previous year’s true-up.Last year the Company overcollected the PCA
deferral balance by $18,152,666.Application at 5;Larkin Dir.at 10.Dividing this amount by
the projected jurisdictional sales of 13,478,411 MWh.results in a PCA reconciliation credit of
negative (0.1347)cents per kWh.Id.
YOU ARE FURTHER NOTIFIED that in Case No.IPC-E-10-27,the Commission
authorized the Company to recover $10 million of deferred Energy Efficiency Rider (EER)costs
from this year’s PCA case.Idaho Power allocated the $10 million among the customer classes
based upon each class’s proportion of total base revenues for the PCA year (June 1,2011
through May 31,2012).Application at 15;Larkin Dir.at 10;Exh.No.3.
YOU ARE FURTHER NOTIFIED that combining the three components —the
projected power costs credit of 0.0445 cents,the true-up component of 0.0273 cents and the
adjusted reconciliation of negative 0.1347 cents results in a uniform PCA rate for the 2011-
2012 PCA year of negative (0.0629)cents per kWh.
B.The PA Rate Proposal
YOU ARE FURTHER NOTIFIED that Idaho Power has proposed to implement the
PCA rates on June 1,2011.The proposed PCA rate represents an overall average percentage
decrease of 4.78%but due to the equal cents/kWh adjustment and allocation of the $10 million
EER costs,each customer class will receive a different percentage decrease.The table below
shows the proposed decreases in the PCA rates for the major customer classes:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227 3
Customer Group Current Proposed Percentage
(Schedule)PCA Rate PCA Rate Decrease
Residential (1)0.31 14/kWh ,0289/kWh 3.58%
Small Commercial (7)0.31 l4/kWh .0539e/kWh 2.59°/a
Large Commercial (9S)0.31 14/kWh .00400/kWh 5.38%
Industrial (19P)0.3114c/kWh (.0137)0/kWh 7.83%
Irrigation (24)0.31 140/kWh .01 14ç/kWh 4.72%
Exh.No.2.The PCA rates for three of Idaho Power’s four special-contract customers would
also decrease.Under the Company’s proposal.the PCA rate for the special-contract customers
would be:(0.0208)cents per kWh for Micron;(0.0234)cents per kWh for Simplot;(0.0238)
cents per kWh for INL;and 0.1195 cents per kWh for Hoku.
YOU ARE FURTHER NOTIFIED that the Company also has pending two other
applications to change base rates.The first application is to recover the Fixed Cost Adjustment
(FCA)and the other is to recover pension costs.In these cases,the Company requests authority
to recover $14.7 million,or a base rate increase of 1.74%.If the PCA and the other two cases
are approved as filed,the Company calculates there will be an overall reduction in a customer
energy rate of 3.03%,or about $25 million per year.
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 vlodified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 3 1.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation in past PCA cases.
YOU ARE FURTHER NOTIFIED that the Commission does not intend to hold a
hearing in this proceeding unless it receives written protests or comments opposing the use of
Modified Procedure.Persons desiring a hearing must specifically request a hearing in their
written comments and state why Modified Procedure is inappropriate in this case.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
PCA Application may file a written comment in support or opposition with the Commission
no later than May 17,2011.The comment must contain a statement of reasons supporting the
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227 4
comment.Written comments concerning this Application shall be mailed to the Commission
and the Applicant at the addresses reflected below:
Commission Secretary Donovan E.Walker
Idaho Public Utilities Commission Jason B.Williams
P0 Box 83720 Idaho Power Company
Boise,ID 83720-0074 P0 Box 70
Boise,ID 83707-0070
Street Address for Express Mail:E-Mail:dwalker@idahopower,com
[e-mail]
472 W.Washington Street
Boise,ID 83702-5918 MatthewT.Larkin
Gregory W.Said
Idaho Power Company
P0 Box 70
Boise,ID 83707-0070
E-mail:mlarkin(idahopower.com
gsaid(Zi)idahopower.com
These 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’s PCA Application together
with the Company’s prefiled exhibits and the testimony of Matthew T.Larkin can be viewed at
the Commission offices and at the principal office of Idaho Power during regular business hours.
Idaho Power Company is located at 1221 West Idaho Street,Boise,Idaho ([phone]).
Idaho Power’s Application,prefiled testimony,and exhibits 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 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 §61-307,61-503,and 61-622.The Commission may enter any final Order
consistent with its authority under Title 61.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227 5
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 wishing to file comments must do so no later than May’17,2011.
YOU ARE FURTHER NOTIFIED that Idaho Power may file reply comments (if
necessary)no later than May 24,2011.
.cr
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this ‘2/
day of April 2011.
PAUL KJELL ER,PRESIDENT
MACK A.REDFORD,CO MISSIONER
Li
MARSHA H.SMITH,COMMISSIONER
ATTEST:
/4i /çj2
Jah D.JewelJ
Commission Secretary
bls/O:IPC-E-1 1-O6dh
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32227 6