20111026notice_of_report_order_no_32385.pdf

Office of the Secretary
Service Date
October 26,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPROPRIATE )
DISPOSITION OF PROCEEDS FROM THE )CASE NO.IPC-E-11-17
SALE OF IDAHO POWER COMPANY’S SO2 )
EMISSION ALLOWANCES IN CALENDAR )NOTICE OF REPORT
YEAR 2011 )
)NOTICE OF
)MODIFIED PROCEDURE
)
_________________________________
)ORDER NO.32385
On September 19,2011,Idaho Power Company filed a report about the Company’s
sale of sulfur dioxide (S02)emission allowances in 2011.In this Order,the Commission seeks
public comments regarding the appropriate disposition and ratemaking treatment of revenues
derived from the sale of Idaho Power’s SO2 allowances.
BACKGROUND
A.The S02 Program
Title IV of the Clean Air Act Amendments of 1990 establishes a national plan to
reduce acid rain.42 U.S.C.§7651,et seq.The acid rain plan’s centerpiece is the incentive-or
market-based “cap and trade”S02 emission program.Under the cap and trade program,the
Environmental Protection Agency (EPA)caps the total amount of SO2 emissions allowed
nationwide.Based on this cap,EPA allocates a certain number of SO2 emission allowances to
thermal power plant owners.Each allowance provides a plant owner with authority to emit one
ton of S02.Order No.29852 at 1.
Each year a plant owner must hold sufficient allowances to cover actual SO2
emissions,If a plant owner has insufficient allowances to cover its annual emissions,it must
purchase additional allowances or it is automatically fined and must surrender future year
allowances to cover the shortfall.A plant owner with surplus SO2 allowances in a given year
either may save the surplus allowances or sell them.S02 emission allowances are fully
marketable commodities and can be traded on the open market or in special EPA-sponsored
auctions.Idaho Power has an ownership interest in three thermal power plants in the western
United States that receive SO2 allowances from EPA.Id.
NOTICE OF REPORT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32385 1
B.Prior Commission Orders
The Commission previously has issued Orders related to the sale of Idaho Power’s
surplus SO2 emission allowances.In 2005,the Commission first authorized Idaho Power to sell
the Company’s surplus S02 emission allowances.See Order No.29852.The Commission said
Idaho Power could account for the proceeds by booking them into Account 131 (Cash)flowing
to Account 236 (Taxes Accrued)and Account 254 (Other Regulatory Liabilities).See Order No.
29852 at 2,4.The Commission also required Idaho Power to report the S02 sale proceeds
within 60 days of receipt.Id.
In 2006,the Commission directed the Company to include SO2 allowance sales
proceeds in the Company’s annual Power Cost Adjustment (“PCA”)as an off-set to reduce the
level of PCA rates.Order No.30041.The Commission decided that,like the then-approved
PCA sharing arrangement,“90%of the net proceeds [were]to be passed onto customers,and
10%[were]...to be retained as a shareholder benefit.”Id.
In 2009,the Commission directed that a portion of the SO2 proceeds be used to
supplement the Company’s “Solar 4R Schools”program.Order No.30760.The Commission
also modified Idaho Power’s PCA mechanism by changing how customers and shareholders
were to share power purchase costs and benefits.Order No.30715.The Commission changed
the 90%/10%customer/shareholder allocation to 95%/5%.Id.
In 2011,the Commission applied this change in PCA allocation to the net proceeds
from the Company’s sale of S02 emission allowances during the 2010 calendar year.Thus,95%
of Idaho’s jurisdictional share of the net sale proceeds,including tax effects,was allocated to
customers,and the remaining 5%was allocated to shareholders.See Order No.32162.
NOTICE OF REPORT
YOU ARE HEREBY NOTIFIED that the Company reports it has sold or contracted
to sell 6,216 surplus S02 emission allowances in 2011.The Company states it expects to receive
$21,756 in net proceeds from the sale (after deducting brokerage fees of $1,554).The Company
says it will account for the proceeds using the same interim accounting method that the
Commission approved in Order No.29852 (briefly described in §B,below).Report at ¶4,7
and 8.
YOU ARE FURTHER NOTIFIED that the Company asserts the Commission
previously authorized it to record proceeds net of income taxes and transaction fees from future
NOTICE OF REPORT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32385 2
S02 allowances sales in the PCA for purposes of calculating interest.However.Idaho Power’s
review of tax law and policy has led the Company to determine that it is more appropriate to
record the gross benefits (less transaction costs)of the sale of excess S02 allowances.The
Company says that if S02 allowances sales exist and the PCA’s sharing mechanisms are
triggered,customers will benefit by earning interest on the gross amount of the income from the
S02 allowances instead of the net amount.Report at ¶6.
YOU ARE FURTHER NOTIFIED that the Company states it will file a subsequent
report that includes contracts for the sale of surplus SO2 emission allowances entered into after
the instant report was filed.Id.at ¶9.
NOTICE OF MODIFIED PROCEDURE
YOU ARE HEREBY NOTIFIED that the Commission has determined that the public
interest may not require a formal hearing for determining the appropriate disposition of the SO2
proceeds and will proceed under Modified 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.
YOU ARE FURTHER NOTIFIED that the SO2 report has been filed with the
Commission and is available for public inspection during regular business hours at the
Commission offices.The report also is available on the Commission’s web site at
pçidggpy by clicking on “File Room”and then “Electric Cases.”
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on the
appropriate disposition of SO2 proceeds or any individual Report may file a written comment in
support or opposition with the Commission within 21 days from the date of this Order.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 the SO2 report shall be mailed to the Commission and Idaho Power at the addresses
reflected below:
NOTICE OF REPORT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32385 3
Commission Secretary Jason Williams
Idaho Public Utilities Commission Lisa D.Nordstrom
P0 Box 83720 Idaho Power Company
Boise,ID 83720-0074 1221 West Idaho Street
P0 Box 70
Street Address for Express Mail:Boise,ID 83707-0070
E-Mail:[e-mail]
472 W.Washington Street jwilliams(didahopower.com
Boise,ID 83702-5918
Comments should contain the case caption and case number shown on the first page of this
Order.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 may file reply comments (if
necessary)no later than 28 days from the service date of this Order.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set,the Commission will consider the S02 report and the
appropriate disposition of the proceeds on their 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 §61-3 16,61-502,61-503,and 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.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons may file written comments within 21 days of the date of this Order.
NOTICE OF REPORT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32385 4
IT IS FURTHER ORDERED that Idaho Power may file reply comments (if
necessary)no later than 28 days from the date of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of October 2011.
ATTEST:
ommission Secretary
O:IPC-E-1 1-l7kk
NOTICE OF REPORT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32385
MACK A,REDFORD,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
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