20110926Application SO2 Report.pdf

JASON B. WILLIAMS
Corporate Counsel
jwilliams(áidahopower.com
D
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An IDACORP Company
September 19,2011
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
NEW ASC""I.VIA HAND DELIVERY
Re: Case No. IPC-E-11-17
IN THE MATTER OF THE APPROPRIATE DISPOSITION OF PROCEEDS
FOR THE SALE OF IDAHO POWER COMPANY'S S02 EMISSION
ALLOWANCES IN CALENDAR YEAR 2011
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Report of Proceeds from Sales of S02 Emission Allowances in 2011 in the
above matter.\
Very truly yours,/¿(;Zc
an ~~ Wiliams
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Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
JASON B. WILLIAMS
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
jwilliamsCâidahopower.com
InordstromCâidahopower.com
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPROPRIATE )
DISPOSITION OF PROCEEDS FOR THE ) CASE NO. IPC-E-11-17
SALE OF IDAHO POWER COMPANY'S )
S02 EMISSION ALLOWANCES IN ) IDAHO POWER COMPANY'S
CALENDAR YEAR 2011. ) REPORT OF PROCEEDS FROM
) SALES OF S02 EMISSION
) ALLOWANCES IN 2011
)
1. In 2005, in Order No. 29852 issued in Case No. IPC-E-05-20, the Idaho
Public Utilties Commission ("Commission") granted Idaho Power Company ("Idaho
Power" or "Company") blanket authority to sell surplus sulfur dioxide ("S02") emission
allowances.
2. In Order No. 29852, the Commission also approved the accounting
treatment to be used by the Company to record the sales of surplus S02 emission
allowances from the time proceeds are received until the Commission determined the
appropriate ratemaking treatment of the proceeds.
3. In Order No. 29852, the Company was also directed to file a report with
the Commission within sixty days of the receipt of any proceeds from the sale of surplus
S02 emission allowances.
IDAHO POWER COMPANY'S REPORT OF PROCEEDS
FROM SALES OF S02 EMISSION ALLOWANCES IN 2011 - 1
4. Idaho Power has been able to sell S02 emission allowances in 2011.
Thus far in 2011, the Company has either sold and received payment for, or entered
into contracts for, the sale of a total of 6,216 surplus S02 emission allowances. The
total anticipated net proceeds from the sale of these allowances, after deducting
brokerage fees of $1 ,554, is $21,756.
5. In Order No. 30041 issued in Case No. IPC-E-05-26, the Commission
directed the Company to include S02 allowance sales proceeds in the Power Cost
Adjustment ("PCA") as an off-set to reduce the level of PCA rates. Like the then-
approved PCA sharing arrangement, 90 percent of the net proceeds were passed onto
customers, and 10 percent of the net proceeds were retained as a shareholder benefit.
In Order No. 32162 issued in Case No. IPC-E-10-20, the Commission modified the
sharing arrangement such that 95 percent of Idaho's jurisdictional share of the net sale
proceeds, including tax effects, was allocated to customers and the remaining 5 percent
share was allocated to Idaho Powets shareholders.
6. In Order No. 30041, the Commission approved a stipulation whereby
Idaho Power would record proceeds net of income taxes and transaction fees from
future S02 allowances sales in the PCA for purposes of calculating interest. To date,
Idaho Power has recorded sales in this manner. However, the Company is constantly
working through complex tax issues with the Internal Revenue Service and advisors as
appropriate, including issues related to the timing of recognition of income and
deductions. Through application of existing tax law and policy, the Company has
determined it is more appropriate to record the gross benefits (less transaction costs) of
the sale of excess S02 allowances. To the extent there are S02 allowances sales in a
given year and to the extent the sharing mechanisms of the PCA are triggered,
IDAHO POWER COMPANY'S REPORT OF PROCEEDS
FROM SALES OF S02 EMISSION ALLOWANCES IN 2011 - 2
customers wil benefit from this application of existing tax law and policy in that
customers will earn interest on the gross amount of the income generated by the S02
allowances as opposed to the net amount.
7. In this pleading, Idaho Power provides the Commission notice of (1) the
amounts of proceeds to be received so far and (2) that the Company intends to use the
same interim accounting for proceeds that the Commission approved in 2005.
8. In accordance with the accounting approved in the Commission's Order
No. 29852, the Company is utilzing the following accounting entries to record the sales
of surplus S02 emission allowances made thus far in 2011 as follows:
(1 )
To record the sale of emission allowances and establish a reserve for the Idaho
and Oregon portions in Account 254 with the Federal Energy Regulatory Commission
portion recognized immediately in Account 411.8.
143 Other Accounts Receivable
699 X00001 999143900 $XX.XX
254 Other Regulatory Liabilties
699 X00001 999254409 $XX.XX
411 .8 Gains from Disposition of Allowances
699 X00001 999 411804 $XX.XX
(2)
To record the receipt of cash from the sale of emission allowances.
131 Cash $XX.XX
$XX.XX143 Other Accounts Receivable
699 X00001 999143900
IDAHO POWER COMPANY'S REPORT OF PROCEEDS
FROM SALES OF S02 EMISSION ALLOWANCES IN 2011 - 3
(3)
To record Idaho Powets percentage share of the net proceeds from the sale of
emission allowances.
254 Other Regulatory Liabilties
699 X0001 999254409 $XX.XX
411800 Gains from Disposition of Allowance
699 XOOO 1 999 411804 $XX.XX
(4)
To transfer and separate Idaho and Oregon's jurisdictional percentage share of
the net proceeds from the sale of emission allowances.
254 Other Regulatory Liabilties
699 X0001 999254409 $XX.XX
254 Other Regulatory Liabilties - Idaho
699 XOOO 1 999 182323 $XX.XX
254 Other Regulatory Liabilities - Oregon
699 X0001 999 254411 $XX.XX
9. This report covers surplus S02 emission allowance sales during 2011 as
of the date of this filng. Contracts for sale of surplus S02 emission allowances entered
into after the date of this filng wil be included in a subsequent report.
Respectfully submitted this 19th day of September 2011.l
IDAHO POWER COMPANY'S REPORT OF PROCEEDS
FROM SALES OF S02 EMISSION ALLOWANCES IN 2011 - 4