20120308order_no_32481.pdf

Office of the Secretary
Service Date
March 8,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-11-08
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC SERVICE )
IN IDAHO )ORDER NO.32481
_________________________________________________________________________________
)
On December 30,2011,the Commission issued final Order No.32426 in Idaho
Power Company’s 201 1 rate case.In that Order,the Commission directed Idaho Power to
modify the methodology for calculating certain distribution facilities charges and to file new
tariffs to conform with the Order.Order No.32426 at 31.On January 13,2012,the Company
filed new facility charge tariffs and proposed rate schedules.After reviewing the proposed
tariffs and schedules,the Commission approved the revisions at its public decision meeting on
January 30,2012.
On January 20,2012,Idaho Power filed a Petition for Clarification regarding the
Commission’s rate case Order No.32426.In essence,the Company asks the Commission to
approve several adjustments the Company made to the facility charge methodology.The
Company served its Petition on all the parties to the rate case.The only party to file a response
was the Commission Staff.Based upon our review of the Petition and Staffs Answer,we grant
Idaho Power’s Petition.
CLARIFICATION ISSUES
Idaho Power requested that the Commission “clarify”several issues related to Idaho
Power’s calculation of its facilities charges.The four issues are set out in greater detail below.
1.Facilities more than 31 years old.In Order No.32426,the Commission directed
that Idaho Power adjust its methodology for calculating facility charges to remove the rate of
return,depreciation,and income tax components for assets that have been fully depreciated,i.e.,
facilities that exceed the average 31-year life.Order No.32426 at 31.The Company modified
the facility charge methodology and calculated a new rate for facilities greater than 31 years old.
One of the issues that Idaho Power seeks to clarif’is its request that the proposed facility charge tariffs become
effective on the first day of the month following the Commission’s review of the tariffs filed January 13,2012,i.e.,
February 1,2012.Because the Commission approved the proposed tariffs at its January 30,2012 decision meeting,
there is no need to address this issue.Petition at ¶10.
ORDERNO.32481 1
Petition at ¶6.The Company calculated that the appropriate rate for these facilities is 0.59%and
utilized that rate in its tariffs filed on January 13,2012.
In its comments,Staff stated the Company correctly calculated the new rate as 0.59%.
In addition,Staff noted that further clarification was unnecessary because the Commission
approved this rate as part of Schedule 66 (Miscellaneous Charges,tariff page 66-4)at its decision
meeting on January 30,2012.Staff Comments at 2.
2.Annual Reconciliation.For purposes of determining whether facilities are older or
younger than 31 years,the Company indicated in its Petition that it does not record the specific
date or month when distribution facilities are installed.Idaho Power only tracks facilities based
upon the year such facilities are installed.Thus,the Company’s methodology assumes that all
facilities are installed for the “full year”regardless of the actual date such facilities were
installed.Petition at 7.Consequently,the Company requests the Commission approve that
reconciliation of the facilities occur once a year based upon “year-end”data.In addition,Idaho
Power requests that the customer’s monthly facility charge rates will be adjusted at the beginning
of each calendar year.2
Because the facility investment records only indicate the year that distribution
facilities are installed,Staff commented that the Company’s proposal is a reasonable approach.
Staff recommended that facilities be reconciled on an annual basis and that the distribution
facility charges be adjusted at the beginning of each calendar year.Consequently,Staff
recommended the Commission approve this reconciliation and rate adjustment procedure.Staff
Comments at 3.
3.Use of Year-End 2011 Facility Records.In calculating the changes to its facility
charge tariffs,the Company used year-end 2011 facility records to determine the appropriate
ratios for facilities that were younger than,or older than,31 years.Petition at ¶8.Idaho Power
requested the Commission approve this approach.Staff determined the Company’s approach is
reasonable and recommended the Commission approve the approach.In addition,Staff noted
the Commission “implicitly approved this approach when it approved the new tariff schedules on
January 30,2012.”Staff Comments at 3.
2 In Order No.32426,the Commission found that it was appropriate for the Company “to update all of the cost
components that comprise the facility charges in each future rate case Order No.32426 at 32.
ORDER NO.32481
4.Schedules 15 and 41.In the underlying rate case,the Company noted that it no
longer offers facility charge service to new customers under Schedule 15 (Yard Lighting)and
Schedule 41 (Street Lighting).Consequently,the Company requested that the Commission
approve a single facilities charge rate for each of these two schedules without regard to age of
the facilities.Petition at ¶9.
Staff determined that the Company’s proposal is a reasonable approach given that the
Company no longer offers facility charge service to new customers under Schedules 15 and 41.
Because the Company no longer collects the information,Staff believed that it was appropriate
to use the rate that applies to the lower-aged facilities (i.e.,less than 31 years).In addition,Staff
observed that the Commission approved this approach when it approved the new tariff schedules
on January 30,2012.Staff Comments at 3.
FINDINGS
Based upon our review of the Company’s Petition for Clarification,Staff’s Answer,
and the lack of any objections,we find that the changes to the methodology set out above are
reasonable and appropriate.We find it is reasonable to use year-end data to calculate facility
charges and that such charges be adjusted on an annual basis at the beginning of each calendar
year.We further find it reasonable to use year-end 2011 facility records to determine the age of
facilities.Finally,it is reasonable to calculate the facility charge for Schedules 15 and 41
customers without regard to the age of the facilities.Accordingly,we approve the changes to the
facility charge methodology.
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Petition for Clarification is granted as
set out above in greater detail.
ORDER NO.32481 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of March 2012.
MACK A.REDFORD.COMvllSSIONER
ATTE SF:
I (‘1
Jean D Jevell
Commission Secretary
bls/O:IPC-E-I 1-08 dh5 Clarification
!
RSHA H.SMITH,COMMISSIONER
PRESIDENT
ORDER NO.32481 4