HomeMy WebLinkAbout20111019Application.pdfJASON B. WILLIAMS
Corporate Counsel
jwilliamstmidahopower.com
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1SIDA~POR~
An IDACORP Company
October 20, 2011
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-11-19
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR AUTHORITY TO CONVERT SCHEDULE 54 - FIXED COST
ADJUSTMENT - FROM A PILOT SCHEDULE TO AN ONGOING,
PERMANENT SCHEDULE
Dear Ms. Jewell:
Enclosed for filng please find an original and seven (7) copies of Idaho Power
Company's Application in the above matter.
In addition, enclosed are nine (9) copies each of the testimonies of Michael J.
Youngblood and Ralph Cavanagh filed in support of the Application. One copy of each of
the aforementioned testimonies has been designated as the "Reportets Copy." In
addition, a disk containing Word versions of Mr. Youngblood's and Mr. Cavanagh's
testimonies is enclosed for the Reporter.
Very truly yours,"".
JBW:csb
Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. 10 83707
JASON B. WILLIAMS (ISB No. 8718)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: (208) 388-5104
Facsimile: (208) 388-6936
jwilliamsßiidahopower.com
Inordstromßiidahopower.com
RECEIVED
iOll OCT 19 PM li: 20
Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR ) CASE NO. IPC-E-11-19
AUTHORITY TO CONVERT SCHEDULE )
54 - FIXED COST ADJUSTMENT - FROM) APPLICATION
A PILOT SCHEDULE TO AN ONGOING, )PERMANENT SCHEDULE. )
)
Idaho Power Company ("Idaho Powet' or "Company"), in accordance with Idaho
Code § 61-502, § 61-503, and RP 052, hereby requests that the Idaho Public Utilties
Commission ("Commission") issue an Order authorizing Idaho Power to convert its
current Schedule 54 - Fixed Cost Adjustment ("FCA") - from a pilot schedule to an
ongoing, permanent schedule.
In support of this Application, Idaho Power represents as follows:
i. BACKGROUND
1. Idaho Power and the Commission have long agreed that promotion of
cost-effective energy efficiency and demand-side management ("DSM") "is an integral
APPLICATION - 1
part of least-cost electric service." See, e.g., Order No. 30267 at 13. Traditional rate
design, however, discourages utilties from reducing their sales volume by investing in
energy efficiency and DSM because they recover a large portion of their fixed costs
through their sales of kilowatt-hours of energy.
2. Recognizing that "opportunities exist(ed) for improvements in operating
efficiency that would benefit the Company shareholders and its customers," the
Commission opened an investigation in Case No. IPC-E-04-15 to consider options for a
performance-based mechanism that adjusts revenues when annual energy
consumption is either above or below normaL. Order No. 29558 at 1, citing Order No.
29505 at 68-69. The FCA mechanism is the collaborative result of that docket.
3. In Order No. 30267 issued in Case No. IPC-E-04-15 on March 12, 2007,
the Commission approved a stipulation ("Pilot Stipulation") for the implementation of a
three-year FCA pilot program applicable to Residential Service (Schedules 1, 3, 4, and
5) and Small General Service (Schedule 7) customers. On October 1, 2009, the
Company filed an application seeking authority to convert Schedule 54, the FCA tariff
schedule, from a pilot program to an ongoing, permanent program. Case No. IPC-E-09-
28. The Commission denied Idaho Power's request to make the FCA mechanism
permanent and, instead, extended the pilot program for an additional two-year period.
Order No. 31063. The FCA pilot is currently set to expire on December 31,2011.
4. Idaho Power requested the authority in its most recent general rate case
filng, Case No. IPC-E-11-08 ("General Rate Case"), to make the FCA mechanism
permanent for Residential and Small General Service class customers. On September
23, 2011, Idaho Power submitted a Motion for Approval of Stipulation and Motion to
APPLICATION - 2
Open Fixed Cost Adjustment Case in the General Rate Case. Included in that filng was
a settlement stipulation ("GRC Stipulation") signed by all parties to the General Rate
Case except for one, who proposed a specific authorized revenue requirement for the
Company and the removal of the FCA permanency issue to a separate proceeding,
among other items. On October 13, 2011, the Commission issued Order No. 32380
which, granted Idaho Power's request to remove the FCA issues from the General Rate
Case and initiate a separate proceeding to consider issues related to the FCA, including
whether to make it a permanent mechanism for Residential and Small General Service
class customers. Idaho Power now submits this Application pursuant to Order No.
32380.
II. FIXED COST ADJUSTMENT MECHANISM
5. The FCA works identically for both the Residential and Small General
Service classes. For each class, the average number of customers for the year is
multiplied by the fixed cost per customer rate ("FCC"), which is established as a part of
determining the Company's allowed revenue requirement in a general rate case. In this
filing, the Company is proposing to use the revenue requirement that was submitted as
part of the GRC Stipulation. The product of the calculation of the average number of
customers for the year and the FCC establishes the "allowed fixed cost recovery"
amount. This allowed fixed-cost recovery amount is then compared to the amount of
fixed costs actually recovered by Idaho Power. To determine the "actual fixed costs
recovered amount," the Company takes weather-normalized sales for each class and
multiplies that sales figure by the fixed cost per energy rate ("FCE"), which is also
established in a general rate case. The difference between these two numbers (the
APPLICATION - 3
"allowed fixed cost recovery" amount minus the "actual fixed costs recovered" amount)
is the Fixed Cost Adjustment for each class.
6. Making the FCA mechanism permanent removes the Company's financial
disincentive to acquire DSM resources. Severing the link between energy sales and the
recovery of fixed costs represents a logical evolution of historic ratemaking practices, an
evolution that allows Idaho Power to pursue both programmatic and non-programmatic
DSM initiatives without running the risk of financially harming its shareholders. Making
the FCA permanent sends the appropriate signal to Idaho Power that this Commission
believes the Company continues to be on the right track in its pursuit of DSM resources.
IIi. PROPOSED CONVERSION FROM PILOT SCHEDULE
TO PERMANENT SCHEDULE
7. Since the Commission originally approved the FCA pilot tariff, the
Company has made four FCA rate change filings in which it showed how the FCA was
affecting the Company's DSM efforts. During the five-year period in which Schedule 54
has been in effect as a pilot schedule, Idaho Power has made strong progress in
improving and enhancing its efforts to promote energy efficiency and DSM activities. In
general, due in no small part to removal of the disincentive provided by the FCA
mechanism during the term of the FCA pilot, the Company has increased the number of
DSM programs it offers and substantially increased both its investment in DSM activities
and the megawatt-hour savings obtained via DSM. These enhanced efforts to promote
energy efficiency and DSM as well as descriptions of the recognition the Company has
received for these efforts are more particularly described in the accompanying
testimony of Michael J. Youngblood, the Company's Manager of Cost of Service, and
Ralph Cavanagh, Energy Program Director for the Natural Resources Defense CounciL.
APPLICATION - 4
iv. COMPANY PROPOSAL
8. The purpose of the Schedule 54 pilot was to test the FCA mechanism to
determine its efficacy in removing the unintended rate design disincentive for the
Company to aggressively pursue DSM programs. Results from the first four years of
the pilot indicate that the true-up mechanism is working as intended and operating to
mitigate the unintended adverse effects of energy efficiency by ensuring that the fixed
costs the Commission authorized the Company to recover are being recovered via the
FCA mechanism. The mechanism has proved to be fair to both the Company and its
customers, providing both refunds and surcharges. The mechanism has also proven to
be reasonable as the individual customer bil impacts, both as surcharges and refunds,
have been relatively smalL.
9. In seeking authority to convert Schedule 54 to a permanent tariff, the
Company is requesting in this case that the FCA continue to be applicable only to the
Residential and Small General Service customer classes. For the first four years of the
FCA pilot, either the Commission ordered or the Company proposed to recover or
refund the FCA deferral balance equally to both of these customer classes. Under the
proposed permanent FCA mechanism, the Company proposes to true-up the
Residential and Small General Service FCA by combining the deferral balances of each
class and implementing rates for each class that represent a uniform percent change.
This method of recovery or refund is consistent with the first four years of the FCA pilot.
In addition, by combining the Residential and Small General Service FCA balances and
determining the rate adders based on an equal FCA rate adjustment for each class, the
APPLICATION - 5
overall rate impact to customers in these classes is a more representative total amount
of the required fixed cost recovery for each class.
10. Under the pilot, the Company was required to annually document the
specific ways in which it had increased its investment in energy efficiency and DSM as a
result of the FCA mechanism. In this filng, the Company is proposing to eliminate this
separate annual reporting requirement as issues related to the Company's acquisition of
energy effciency and DSM are comprehensively reported in the Company's annual
DSM reports filed with the Commission. In addition, the Company wil continue
reporting the monthly FCA balance as it has under the pilot and wil continue to file
annual applications seeking approval of FCA true-up balances. All other provisions wil
remain the same as they have been during the pilot period.
11. Because the current FCA pilot period is set to expire on December 31,
2011, Idaho Power seeks to make Schedule 54 an ongoing, permanent rate schedule
effective January 1, 2012. To appropriately track future FCA true-ups, Idaho Power
respectfully requests that the Commission issue its order approving this Application no
later than March 30, 2012, as requested by the parties that were signatories to the GRC
Stipulation. GRC Stipulation, 1f 10(b).
12. The Company has contemporaneously filed with this Application the
testimony of Messrs. Youngblood and Cavanagh. Idaho Power stands ready to present
its testimony and support the Application in a technical hearing if the Commission
determines that such technical hearing is required.
APPLICATION - 6
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
13. Communications and service of pleadings with reference to this
Application should be sent to the following:
Jason B. Willams
Lisa D. Nordstrom
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
iwilliams~idahopower.com
Inordstromßiidahopower.com
Michael J. Youngblood
Zachary L. Harris
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
myoungbloodßiidahopower.com
zharrisßiidahopower. com
VI. REQUEST FOR RELIEF
14. Idaho Power respectfully requests that the Commission issue an Order
authorizing Idaho Power to convert its pilot Schedule 54 to a new permanent, ongoing
Schedule 54 as described herein
DATED at Boise, Idaho, this 19th day of October 2011.
\
î
o B. WILLIAMS
ney for Idaho Power Company
APPLICATION - 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 19th day of October 2011 I served a true and
correct copy of the within and foregoing APPLICATION upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Donald L. Howell, II
Karl T. Klein
Deputy Attorneys General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Dr. Don Reading
Ben Johnson Associates, Inc.
6070 Hil Road
Boise, Idaho 83703
Idaho Irrigation Pumpers Association, Inc.
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
201 East Center
P.O. Box 1391
Pocatello, Idaho 83204-1391
Anthony Yankel
29814 Lake Road
Bay Vilage, Ohio 44140
APPLICATION - 8
-2 Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-2 Email Don.HoweIlßipuc.idaho.gov
Karl. Kleinßipuc. idaho. gov
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U.S. Mail
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FAX
-2 Email peterßirichardsonandolearv.com
gregßirichardsonandolearv. com
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U.S. Mail
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FAX
-2 Email drßibenjohnsonassociates.com
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-2 Email eloßiracinelaw.net
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-2 Email tonyßiyankel.net
The Kroger Co.
Kurt J. Boehm
BOEHM, KURTZ & LOWRY
36 East Seventh Street, Suite 1510
Cincinnati, Ohio 45202
Kevin Higgins
Energy Strategies, LLC
215 South State Street, Suite 200
Salt Lake City, Utah 84111
Micron Technology, Inc.
MaryV. York
HOLLAND & HART, LLP
101 South Capital Boulevard, Suite 1400
Boise, Idaho 83702
Richard E. Malmgren
Senior Assistant General Counsel
Micron Technology, Inc.
800 South Federal Way
Boise, Idaho 83716
The United States Department of Energy
Arthur Perry Bruder, Attorney-Advisor
United States Department of Energy
1000 Independence Avenue SW
Washington, DC 20585
Dwight D. Etheridge
Exeter Associates, Inc.
10480 Little Patuxent Parkway, Suite 300
Columbia, Maryland 21044
APPLICATION - 9
Hand Delivered
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FAX
-2 Email kboehm~BKLlawfirm.com
irhßibattisher.com
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-2 Email khigginsßienergystrat.com
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-2 Email myork~hollandhart.com
tnelson~holland hart. com
madavidsonßihollandhart.com
fschmidt~hollandhart.com
Inbuchananßiholland hart. com
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-2 Email remalmgren~micron.com
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-2 Email Arthur.bruderßihq.doe.gov
Steven. porterßihq .doe. gov
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-2 Email detheridgeßiexeterassociates.com
Community Action Partnership
Association of Idaho
Brad M. Purdy
Attorney at Law
2019 North 1th Street
Boise, Idaho 83702
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-2 Email bmpurdyßihotmail.com
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street (83702)
P.O. Box 844
Boise, Idaho 83701
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-2 Email bottoßiidahoconservation.org
Snake River Allance
Ken Miler
Snake River Allance
P.O. Box 1731
Boise, Idaho 83701
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-2 Email kmiler~snakeriverallance.org
NW Energy Coalition
Nancy Hirsh, Policy Director
NW Energy Coalition
811 First Avenue, Suite 305
Seattle, Washington 98104
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-2 Email nancyßinwenergy.org
Hoku Materials, Inc.
Dean J. Miler
McDEVITT & MILLER LLP
420 East Bannock (83702)
P.O. Box 2564
Boise, Idaho 83701
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-2 Email ioe~mcdevitt-miller.com
heatherßimcdevitt -miller. com
Scott Paul, CEO
Hoku Materials, Inc.
One Hoku Way
Pocatello, Idaho 83204
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-2 Email spaul~hokucorp.com
~Jaso . . iam
-~~--
APPLICATION - 10