20110418Decision Memo.pdf

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DECISION MEMORADUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
FROM: DON HOWELL
DEPUTY ATTORNY GENERAL
DATE: APRIL 15,2011
SUBJECT: IDAHO POWER'S PCA APPLICATION, CASE NO. IPC-E-11-06
On April 15, 2011, Idaho Power Company fied its annual Power Cost Adjustment
(PCA) Application. In the current Application, Idaho Power asserts that Itsannual "power
supply costs" have decreased below the normalized PCA rates. In other words, the Company
proposes to reduce the existing PCA rates by about $40 millon, or an average decrease in the
existing PCA rates of approximately 4.78%. This reduction includes the $10 millon offset
recently approved by the Commission in the Energy Efficiency Rider. Order No. 32217.
Based upon the PCA methodology, each customer class wil receive a different
percentage decrease. The table below shows the proposed decreases in the PCA rates for the
major customer classes:
Customer Group Current Proposed Percentage
(Schedule)PCARate PCARate Decrease
Residential (1)0.3114~/kWh .0289~/kWh 3.58%
Small Commercial (7)0.3114~/kWh .0539~/kWh 2.59%
Large Commercial (9S)0.3114~/kWh .0040~/kWh 5.38%
Industrial (19P)0.3114~/kWh (.0137)~/kWh 7.83%
Irrigation (24)0.3114~/kWh .0114~/kWh 4.72%
Application at Atch. 1. The PCA rates for Idaho Power's four special-contract customers
(Micron, Simplot, the Departent of Energy (INL), and Hoku) would also change. Under the
Company's proposal, the PCA rate for the four special-contract customers would decrease to:
DECISION MEMORANDUM 1
(0.0208)~/kWh for Micron; (0.0234)~/kWh for Simplot; and (0.0238)~/kWh for INL. Hoku's
PCA rate would be 0.1 195~/kWh.
Last month Idaho Power also submitted two applications that, if approved, would
increase base rates. The Company asked to increase its fixed-cost adjustment (FCA) and recover
expenses for its pension funding in a total amount of$14.7 milion, or a 1.74% increase.
Combining the proposed increases due to the FCA and pension expense, with the
PCA reduction wil result in an overall (base and PCA) rate reduction of more than $25 milion,
or a 3.03% decrease.
PROCESSING
Commission Rule 127 provides that the Commission wil determine whether the Staff
should a conduct a public workshop "(w)hen a public utility files an application to increase any
rate. . .." IDAPA 31.01.01.127. As noted above, the public workshops may be scheduled for
rate increases. In this particular case, Idaho Power has proposed a rate decrease. Consequently,
Staff does not believe a public workshop is warranted in this case.
The new PCA rate is normally effective on June 1 of every year. As in past years, the
Company has requested that its PCA Application be processed under Modified Procedure. Staff
concurs in the proposed effective date and in the use of Modified Procedure. Consequently,
Staff recommends that comments in this case be due no later than May 17, 2011, and reply
comments (if any) be due on May 24, 2011.
COMMSSION DECISION
Does the Commission wish to process Idaho Power's PCA Application via Modified
Procedure?
If yes, does the Commission wish to set comment dates of May 17 and reply
comments (if any) due May 24?
L
Don Howell
Deputy Attorney General
bls/M:IPC-E-II-06 _ db
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