HomeMy WebLinkAbout20120928Compliance Filing.pdf10 A W go R®
An IDACORP Company
LISA D. NORDSTROM
Lead Counsel JTLtTIESUJ! lnordstrom(idahopower.com
September 28, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-11-19 -Fixed Cost Adjustment Permanent Mechanism
Idaho Power Company's Compliance Filing, Motion to Approve Schedule 54,
and Motion to Adopt a Specific Fixed Cost Adjustment Methodology
Dear Ms. Jewell:
Enclosed for filing in the above matter are an original and seven (7) copies of Idaho
Power Company's Compliance Filing, Motion to Approve Schedule 54, and Motion to Adopt
a Specific Fixed Cost Adjustment Methodology.
In addition, enclosed are nine (9) copies of the Supplemental Direct Testimony of
Ralph Cavanagh filed in support of the above-referenced Motion. One copy of the
testimony has been designated as the "Reporter's Copy." Also, a disk containing a Word
version of Mr. Cavanagh's testimony is enclosed for the Reporter.
Very truly yours,
Lisa D Nordstrom
LDN:kkt
Enclosures
LISA D. NORDSTROM (ISB No. 5733)
JULIA A. HILTON (ISB No. 7740)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: (208) 388-5825
Facsimile: (208) 388-6936
lnordstrom(idahopower.com
ihiItoncidahopower.com
RE CE 1, V ED
20I? SEP 23 PM : 25
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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.
CASE NO. IPC-E-11-19
IDAHO POWER COMPANY'S
COMPLIANCE FILING, MOTION TO
APPROVE SCHEDULE 54, AND
MOTION TO ADOPT A SPECIFIC
FIXED COST ADJUSTMENT
METHODOLOGY
COMES NOW, Idaho Power Company ("Idaho Power" or "Company") and
hereby submits a compliance filing pursuant to Order No. 32505. Idaho Power also
moves the Idaho Public Utilities Commission ("Commission") pursuant to RP 56, Order
No. 32426, and Idaho Code § 61-307 to approve Schedule 54, Fixed Cost Adjustment,
("Schedule 54") with an effective date of November 1, 2012, and to adopt a specific
fixed cost adjustment ("FCA") methodology by March 29, 2013, to be effective for the
2013 FCA calendar year. This Compliance Filing and Motions to Approve Schedule 54
and to Adopt a Specific FCA Methodology are based on the following:
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -1
I. PROCEDURAL BACKGROUND
1.The FCA was originally approved in Commission Order No. 30267, Case
No. IPC-E-04-15, as a three-year pilot program to run from January 1, 2007, through
December 31, 2009. In Order No. 31063, Case No. IPC-E-09-28, the Commission
approved extending the pilot program for an additional two years, beginning January 1,
2010, and the FCA pilot program was set to expire as of December 31, 2011. On
October 19, 2011, Idaho Power requested that the Commission authorize the Company
to remove the temporary "pilot" status of Schedule 54 and convert the FCA to an
ongoing, permanent tariff schedule.
2.On November 2, 2011, the Commission issued a Notice of Application and
Notice of Intervention Deadline regarding Idaho Power's application. Petitions to
Intervene were timely filed by the Idaho Conservation League, Micron Technology, Inc.,
and the NW Energy Coalition, all of which were granted by the Commission in Order
No. 32402. The parties held a scheduling meeting on January 27, 2012, and
subsequently recommended the Commission proceed by modified procedure. The
Commission accordingly issued a Notice of Modified Procedure on February 14, 2012,
establishing a written comment period ending March 1, 2012, and a deadline of March
15, 2012, for filing reply comments. Order No. 32454.
3.On March 30, 2012, the Commission issued Order No. 32505 that (1)
approved Idaho Power's Schedule 54 as a permanent program for the Residential and
Small General Service customers, (2) retained the three percent cap on FCA
adjustments, (3) ordered the FCA deferral balance be recovered or refunded equally
between the Residential and Small General Service customer classes, and (4) directed
that the FCA will be identified on customer bills as part of the Company's annual Power
Cost Adjustment line item adjustment. The Commission also directed Idaho Power to
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -2
6. Because the authorized level of recovery of fixed costs collected through
the FCA mechanism is a product of the average number of customers and the Fixed
Cost per Customer ("FCC"), the FCA mechanism captures and fairly allocates the risk of
fluctuations in economic activity that are not attributable to the Company's energy
efficiency efforts. Regardless of the economic environment, the FCA mechanism is
effective because it allows for recovery of no more than and no less than the
Company's authorized level of fixed costs as determined in a general rate case.
Consequently, Idaho Power recommends the Commission approve the FCA
methodology utilized in the pilot without change.
7.In support of Idaho Power's recommendation to maintain the existing FCA
methodology permanently, the supplemental direct testimony of Ralph Cavanagh
accompanies this filing. Mr. Cavanagh is a nationally recognized advocate of energy
efficiency, was directly involved with the initial development of the FCA, and has
remained supportive of the FCA mechanism throughout its pilot status. As explained in
his supplemental direct testimony, Mr. Cavanagh recommends maintaining the existing
FCA methodology permanently because it allocates risks associated with economic
trends unrelated to energy efficiency progress better than any available alternative.
8.Despite the fact that Idaho Power believes the existing FCA mechanism is
the most efficient and appropriate method to eliminate the financial disincentives to
pursuing all cost-effective DSM resources, the Company has made a good faith effort to
consult with parties, evaluate alternatives, and prepare a report (see Attachment No. 1)
that presents a potential method of adjusting the FCA mechanism to address the
capture of significant changes in load not related to energy efficiency programs as
directed by Commission Order No. 32505.
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -4
9.Idaho Power's alternative adjustment to the FCA mechanism would
maintain the current three percent cap on annual increases over base revenue while
introducing an additional symmetrical cap on the annual change in use per customer
("UPC Cap") of a plus or minus 2.00 percent deviation from the historical average
annual change in use per customer. The historical average annual change in use per
customer was -0.72 percent from 1992 through 2011. The effect of applying the plus or
minus 2.00 percent deviation to the average annual change in use per customer would
establish a lower bound of the UPC Cap at a -2.72 percent decrease in use per
customer and an upper bound of the UPC Cap of a 1.28 percent increase in use per
customer, which is more fully described in Attachment No. 1. The UPC Cap application
would be symmetrical around the mean of the historical average annual change in use
per customer to include both FCA collection and refund amounts.
10.Because the FCA is a use-per-customer mechanism, it logically follows
that an appropriate capping mechanism be based on changes in use per customer.
This approach would address significant changes in use per customer that may be
unrelated to energy efficiency activities. Any annual change in use per customer that
exceeds the UPC Cap acknowledges that factors other than Company promoted energy
efficiency activities likely contributed to that change in use per customer. Consequently,
the Company would not be allowed to collect balances that exceed the lower bound
while symmetrically limiting refunds to customers that exceed the upper bound. Should
the Commission wish to adopt an adjustment to the FCA methodology, the Company
believes that the implementation of the UPC Cap presented in Attachment No. I would
adequately respond to the Commission's previously stated desire to address the
capture of changes in load not related to energy efficiency programs without unduly
compromising the effectiveness of the FCA.
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -5
III. MOTION TO APPROVE SCHEDULE 54
II. Idaho Power requests the Commission approve its proposed tariff
Schedule 54 to be effective November 1, 2012, with updated FCC and Fixed Cost per
Energy ("FCE") amounts to be applied retroactively to January 1, 2012, in accordance
with Order No. 32426. The FCC and FCE amounts included on the proposed Schedule
54 were calculated according to the stipulated methodology approved by Order No.
32426. Idaho Power is not proposing to change the amount currently being collected in
rates. Instead, the Company is simply requesting that the updated FCC and FCE
components included in its proposed Schedule 54 be approved effective January 1,
2012, as allowed by Order No. 32426. The proposed Schedule 54 can be found as
Attachment No. 2.
IV. MOTION TO ADOPT SPECIFIC FCA METHODOLOGY
12.Idaho Power respectfully requests the Commission issue its order
approving a specific FCA methodology in this proceeding by no later than March 29,
2013, to be effective beginning with the 2013 FCA calendar year. Should the
Commission choose to implement a change to the FCA, the Company believes that
such a change in the FCA methodology should be applied prospectively and not
retroactively.
V. CONCLUSION
13.The current FCA mechanism is an important component of a successful
and effective regulatory framework that has paved the way for the Company's
aggressive pursuit of energy efficiency activities. Any changes to the current FCA
methodology may inadvertently introduce a financial disincentive for pursuing all cost-
effective energy efficiency activities, which is counter to the original intent for the FCA
mechanism. If the Commission believes that an adjustment to the current FCA
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -6
methodology is warranted, adding a cap based on annual changes in use per customer
as presented in Attachment No. 1, would address the Commission's previously stated
concerns with the FCA without unduly compromising the effectiveness of this successful
mechanism.
14. Idaho Power requests that the Commission issue an order authorizing
either continued use of the existing FCA methodology, or in the alternative, the modified
methodology provided in Attachment No. 1, by March 29, 2013. To facilitate the
accounting required by the FCA, Idaho Power requests the Commission approve the
proposed Schedule 54 with the FCC and FCE amounts set by Order No. 32426 with an
effective date of November 1, 2012.
Respectfully submitted this 28th day of September 2012.
SA D.
NORD8LTROM
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 28th day of September 2012 I served a true and
correct copy of IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO
APPROVE SCHEDULE 54, AND MOTION TO ADOPT A SPECIFIC FIXED COST
ADJUSTMENT METHODOLOGY upon the following named parties by the method
indicated below, and addressed to the following:
Commission Staff
Weldon Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
NW Energy Coalition
Nancy Hirsh, Policy Director
NW Energy Coalition
811 First Avenue, Suite 305
Seattle, Washington 98104
Idaho Conservation League
Benjamin J. Otto
Idaho Conservation League
710 North Sixth Street
Boise, Idaho 83702
X Hand Delivered
U.S. Mail
Overnight Mail
FAX
X Email weldon.stuman(puc.idaho.ov
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email nancycnwenergy.orQ
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email bottoidahoconservation.orq
Carl B. Linvill, Ph.D. Hand Delivered
Director of Integrated Planning and Analysis X U.S. Mail
Aspen Environmental Group Overnight Mail
2655 Portage Bay East, Suite 3 FAX
Davis, California 95616 X Email clinvilkaspeneq.com
Micron Technology, Inc.
Thorvald A. Nelson
Frederick J. Schmidt
Brian T. Hansen
Mary V. York
HOLLAND & HART, LLP
6380 South Fiddlers Green Circle, Suite 500
Greenwood Village, Colorado 80111
Hand Delivered
X U.S. Mail
Overnight Mail
FAX
X Email tnelsonhol land ha rt. com
fschmidthollandhart.com
bhansenchol land ha rt. com
myorkholland hart.com
lnbuchananhol land hart.com
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -8
Richard E. Malmgren Hand Delivered
Senior Assistant General Counsel X U.S. Mail
Micron Technology, Inc. Overnight Mail
800 South Federal Way FAX
Boise, Idaho 83716 X Email remalmqrencmicron.com
Kimb ny Towe
Executive Assista
IDAHO POWER COMPANY'S COMPLIANCE FILING, MOTION TO APPROVE SCHEDULE 54,
AND MOTION TO ADOPT A SPECIFIC FIXED COST ADJUSTMENT METHODOLOGY -9
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-11-19
IDAHO POWER COMPANY
ATTACHMENT NO. I
Idaho Power Company
Report on Adjusting the Fixed Cost Adjustment Mechanism
Introduction
Pursuant to the Idaho Public Utilities Commission's ('Commission") Order No. 32505, Idaho
Power Company ("Idaho Power" or "Company") evaluated alternatives to the current Fixed Cost
Adjustment ("FCA") mechanism in response to perceived concerns that the mechanism
captures changes in load not related to the Company's energy efficiency programs. The
Company has analyzed the mechanism and has determined that the FCA is performing
effectively, as originally intended, and does not need to be altered. While the Company does
not agree that a change in methodology is needed, Idaho Power has prepared an alternative
FCA methodology for the Commission's review and consideration in compliance with Order No.
32505.
Executive Summary
The evaluation performed by Idaho Power examined the effectiveness of the current FCA
mechanism, as well as implications of implementing alternative methodologies. After evaluating
the current mechanism and the concerns, the Company concluded that introduction of an
additional cap based on annual changes in the average use per customer would be a
reasonable alternative to the FCA methodology if the Commission determined that a change
was necessary. The Company believes that this alternative would address the Commission's
concerns and maintain the integrity of the FCA true-up mechanism. This alternative cap
acknowledges that significant changes in use per customer may be attributable to external
factors other than Company promoted energy efficiency activities.
Current FCA Mechanism
The intended purpose of the FCA true-up mechanism is to eliminate the financial disincentives
that exist for the Company to pursue demand-side management ("DSM") programs and energy
efficiency activities. The current mechanism accomplishes this by severing the link between
energy sales and the level of recovery of authorized fixed costs. The current FCA applies only
to the Residential (Schedules 1, 3, 4, and 5) and Small General Service (Schedule 7) customer
classes, all of which recover the fixed costs allocated to those rate classes through the static
service charge and the volumetric energy billing components. Absent the FCA, any reduction in
energy consumption per customer resulting from the efforts of the Company to encourage the
efficient use of energy also results in the reduction in the level of recovery of authorized fixed
costs. In a similar fashion, an increase in the level of energy consumption per customer would
result in the Company recovering more fixed costs than the authorized level of recovery. The
mechanism has proven to be fair to both the Customer and the Company, providing both a
refund and a surcharge throughout the pilot years.
The current annual FCA true-up amount is determined according to the following formula:
FCA = (CUST X FCC) - (NORM X FCE)
Where:
FCA = Fixed Cost Adjustment
CUST = Actual number of customers, by class
FCC = Fixed Cost per Customer, by class
NORM = Weather-normalized energy, by class
FCE = Fixed Cost per Energy, by class
The FCA mechanism provides a true-up between the difference in the level of fixed cost
recovery authorized by the Commission (CUST X FCC) and the level of fixed costs actually
recovered through the weather-normalized energy consumed (NORM X FCE), essentially
becoming a use-per-customer metric.
The level of authorized fixed cost recovery is determined by the average number of customers
for each customer class multiplied by the FCC. The FCC is established during the
determination of the Company's revenue requirement in a general rate case and is the level of
fixed costs allocated to each customer.
The level of fixed costs actually recovered is determined by the Company's weather-normalized
energy sales for each class multiplied by the FCE rate, which is also established in a general
rate case. In years where customer growth was greater than energy growth (average use per
customer had decreased), an under-collection of the level of authorized fixed costs occurred
and the FCA true-up mechanism would collect the difference between the authorized level of
fixed cost recovery and the actual level of fixed costs recovered by Idaho Power during the year.
In years where energy growth was greater than customer growth (average use per customer
had increased), the FCA true-up mechanism would provide a refund to customers through a
rate reduction the following year for fixed costs recovered by the Company above the authorized
level of recovery.
Commission Staff indicated on page 5 of its comments dated March 1, 2012, in Case No. IPC-
E-1 1-19 that the current FCA structure is flawed because it does not account for changes in
energy consumption that may be attributable to factors other than the Company's DSM efforts
such as an economic recession. Idaho Power does not share Commission Staff's concern. As
previously stated, the FCA is a use-per-customer mechanism. Because the authorized level of
recovery for fixed costs collected through the FCA mechanism is a product of the average
number of customers and the FCC, the FCA mechanism captures and fairly allocates the risk of
fluctuations in economic activity that are not attributable to the Company's energy efficiency
efforts. As shown in the graph below, during the period of economic down-turn from 2006
through 2011, Idaho Power's customer growth rates slowed substantially. This is supported by
data from Moody's, LLC, which reflects a significant decrease in housing completions for single
family homes from 2006 through 2011.
Residential Customer Growth Rate
6.00%
0.00%
1 1 1.. 1,1'
—Customer Growth Rate
Regardless of the economic environment, the FCA mechanism is effective because it does not
allow for recovery of any more than the Company's authorized level of fixed costs.
The FCA true-up mechanism has effectively encouraged Idaho Power to actively pursue energy
efficiency activities, as is evident in the Company's DSM investments. Idaho Power was more
aggressive on energy efficiency activities than ever before. Between 2007 and 2010, the
Company increased the number of DSM programs from 20 to 25 and consistently increased
DSM expenditures. Case No. IPC-E-11-19, Youngblood Testimony, pp. 7, and 12-15 and
Exhibit No. 1.
Alternate FCA Methodologies
Commission Staff suggested on page 8 of its comments dated March 1, 2012, in Case No. IPC-
E-1 1-19, that the FCA balance should be equally shared between customers and the Company,
and proposed a 50 percent sharing methodology of the calculated FCA balance. The Company
evaluated this proposal and determined that Commission Staff's recommendation would
undermine the purpose of the FCA mechanism by introducing a one-way ratchet mechanism.
The Commission Staffs proposed approach would always result in additional cost recovery, and
function much like a lost revenue mechanism. It would also reintroduce the financial
disincentive to pursue energy efficiency initiatives because the Company would only be allowed
to recover 50 percent of deviations from the level of authorized fixed costs. Therefore, Idaho
Power would no longer be indifferent to its pursuit of energy efficiency activities.
The Company also evaluated reducing the current cap on annual revenue collection. The
current FCA mechanism includes a three percent cap on annual revenue collection ("Rate Cap")
with carryover of unrecovered deferred costs to subsequent years. The Rate Cap limits the
annual FCA balance to no more than three percent of base revenue. Reducing the Rate Cap
would result in issues similar to those that exist within the 50 percent sharing methodology
introduced by Commission Staff. Placing such limitations on the calculated FCA balance would
restrict the effectiveness of the mechanism and would not remove the financial disincentive for
the Company to pursue energy efficiency activities.
Idaho Power's Preferred Alternative
To address the concern that the FCA recovers fixed costs due to changes in load not related to
the Company's energy efficiency activities, the Company evaluated the use of an additional cap
for the calculated FCA balance. Capping the calculated FCA balance based on the change in
average use per customer ("UPC Cap") would limit the collection or refund of the balance due to
significant changes in energy use per customer that may not be associated with the Company's
DSM initiatives. By placing a cap on significant fluctuations in the annual use per customer
change, this concern is mitigated.
Any change in use per customer that exceeds the threshold established by the UPC Cap
acknowledges that factors other than Company promoted energy efficiency activities may
influence customers' energy use. The UPC Cap would be symmetrical to include restrictions for
both FCA collection and refund balances.
In determining an appropriate threshold for the UPC Cap, the Company was careful to balance
the objective of addressing the Commission's concerns regarding the FCA with the goal of
preserving the effectiveness of the mechanism. In pursuit of this balance, the Company
prepared an analysis of the annual change in use per customer for the residential customer
class using data from 1992 through 2011. As shown below, the largest increase in change in
use per customer over the previous year of 1.47 percent was in 2006 and the largest decrease
in change in use per customer from the previous year of 4.04 percent was in 2002, with the
average change in use per customer over the nineteen-year period being a decrease of 0.72
percent.
3
Change in Residential Year Over Year Use Per Customer
Weather Normalized
2.00% 1.47%
0.00%
-4.04%
-6.00% -
', ' b' < (o\ % °j 1.. ' bi < °
A frequency analysis was then performed to determine how often the various changes in use
per customer occur in order to derive a distribution curve. The analysis indicated that of the 19
years of data, 17 years experienced a change in use per customer within 2.00 percent of the
mean (a range of -2.72 percent to 1.28 percent), with one year outside on each end of the
range.
Residential UPC Change Frequency
greater -4% to -3.5% to -3% to -2.5% to -2% to - -1.5% to - -1% to - -.5% to 0 0 to .5% .5% to 1% to
than -4% -3.5% -3% -2.5% -2% 1.5% 1% .5% 1% 1.5%
To introduce a symmetrical UPC Cap, the Company used this -2.00 percent to 2.00 percent
deviation from the mean as the basis for the new cap. The cap was then calculated using the
2.00 percent total deviation applied to the historical average change in use per customer. The
lower bound of the UPC Cap is -2.72 percent (-0.72 percent average + -2.00 percent lower
frequency value) and the upper bound of the UPC Cap is 1.28 percent (-0.72 percent average +
2.00 percent upper frequency value). The UPC Cap would have limited the extreme decrease
in use per customer of 4.04 percent and the extreme increase of 1.47 percent. Outside the
caps, these occurrences would be attributed, in part, to external factors other than Company-
promoted energy efficiency that affected the large changes in use per customer. Any FCA
balance that results from exceeding the upper or lower bounds of the UPC Cap would be
forfeited by customers or the Company, respectively.
The current FCA mechanism includes a Rate Cap that limits the annual FCA balance to no
more than three percent of base revenue. To examine the impacts of the UPC Cap
methodology, both caps must be considered. The following table depicts the implications of
using two caps under a hypothetical decreasing use-per-customer scenario for the Residential
customer class. The data assumes that the beginning use per customer was 1,050 kilowatt-
hours ("kWh") per month.
Hypothetical FCA Calculation -2.72% Lower Cap -4% Decrease
FCA Calculation $7,240,948 $10,564,853
%of Base 1.84% 2.61%
Use per Customer (kWh per month) 1,021 1,008
Balance Deferred $0 $0
Company Forfeited $0 $3,323,905
Approved FCA Balance $7,240,948 $7,240,948
The lower cap reflects the maximum FCA balance that the Company would recover based on a
decrease in use per customer of 2.72 percent, which results in a maximum recoverable FCA
balance of $7,240,948. Assuming a 4.00 percent decrease in use per customer (the largest
decrease in use per customer during the 19 year period was 4.04 percent), the calculated FCA
balance would be $10,564,853. Because the maximum recoverable FCA balance allowed using
the UPC Cap would be $7,240,948, the excess balance of $3,323,905 would be forfeited by the
Company. The forfeited amount would be considered to be attributable to factors that influence
use per customer other than Company initiatives. The Company would defer any FCA balance
below the UPC Cap that exceeds the Rate Cap for future recovery.
The UPC Cap also applies to increases in use per customer and could limit the amount of a
refundable (negative) FCA balance. The following table depicts the implications of an increase
in use per customer.
Hypothetical FCA Calculation 1.28% Upper Cap 1.5% Increase
FCA Calculation ($3,146,254) ($3,717,551)
% of Base 0.80% 0.92%
Use per Customer (kWh per month) 1,0631 1,066
Customer Forfeited $0.00 1 ($571,296)
Approved FCA Balance ($3,146,254) ($3,146,254)
The upper cap allows for a maximum increase in use per customer of 1.28 percent, which would
result in a calculated FCA balance of negative $3,146,254. Assuming a 1.50 percent increase in
use per customer (the largest increase in use per customer during the 19 year period was 1.47
percent), the calculated FCA balance would be a negative $3,717,551. Because that amount
exceeds the upper cap, customers would not be refunded the excess balance of $571,296 but
would receive the maximum refund balance allowed by the upper cap of negative $3,146,254.
The use per customer is calculated by using the weather-adjusted (normalized) sales for the
calendar year and dividing by the average number of customers for that corresponding year. In
order to have one UPC Cap applicable to both the Residential and Small General Service
customer classes, the Company would calculate the change in use per customer using the
combined aggregate use per customer of both classes. These calculations would be part of the
Company's annual FCA filing. This would provide the basis for determining the year-over-year
change in use-per-customer comparison for subsequent years.
Conclusion
The current FCA mechanism is performing effectively and does not need to be altered. To
comply with Commission Order No. 32505, the Company has evaluated alternatives to the
mechanism to address the concerns expressed by the Commission and Commission Staff
regarding the FCA true-up mechanism without unduly compromising the effectiveness of the
mechanism. If the Commission determines that a change is necessary, the Company proposes
to introduce an additional UPC Cap to be used in conjunction with the current Rate Cap. This
modification to the current FCA true-up mechanism would allow for symmetry in the capping
methodology and protect customers from large rate changes (either increases or decreases),
while mitigating the impact of factors that may influence energy use other than Company-
initiated energy efficiency activities. A symmetrical UPC Cap would still encourage the
Company to actively pursue energy efficiency initiatives and would maintain the integrity of the
FCA true-up mechanism.
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-11-19
IDAHO POWER COMPANY
ATTACHMENT NO. 2
Idaho Power Company Third Revised Sheet No. 54-1
Cancels
I.P.U.C. No. 29, Tariff No. 101 Second Revised Sheet No. 54-1
SCHEDULE 54
FIXED COST ADJUSTMENT
APPLICABILITY
This schedule is applicable to the electric energy delivered to all Idaho retail Customers
receiving service under Schedules 1, 3, 4, or 5 (Residential Service) or under Schedule 7 (Small
General Service).
FIXED COST PER CUSTOMER RATE
The Fixed Cost per Customer rate (FCC) is determined by dividing the Company's fixed cost
components for Residential and Small General Service Customers by the average number of
Residential and Small General Service customers, respectively.
Residential FCC
Effective Date
January 1, 2012
Small General Service FCC
Effective Date
January 1, 2012
FIXED COST PER ENERGY RATE
Rate
$650.63 per Customer
Rate
$360.57 per Customer
The Fixed Cost per Energy rate (FCE) is determined by dividing the Company's fixed cost
components for Residential and Small General Service customers by the weather-normalized energy
load for Residential and Small General Service customers, respectively.
Residential FCE
Effective Date Rate
January 1, 2012 5.16020 per kWh
Small General Service FCE
Effective Date Rate
January 1, 2012 6.86330 per kWh
ALLOWED FIXED COST RECOVERY AMOUNT
The Allowed Fixed Cost Recovery amount is computed by multiplying the average number of
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCC rate.
IDAHO Issued by IDAHO POWER COMPANY
Issued per Order No. 32426 Gregory W. Said, Vice President, Regulatory Affairs
Effective - November 1, 2012 1221 West Idaho Street, Boise, Idaho
Idaho Power Company SecondThird Revised Sheet No. 54-1
Cancels
I.P.U.C. No. 29, Tariff No. 101 F#stSecond Revised Sheet No. 54-1
SCHEDULE 54
FIXED COST ADJUSTMENT
APPLICABILITY
This schedule is applicable to the electric energy delivered to all Idaho retail Customers
receiving service under Schedules 1, 3, 4, or 5 (Residential Service) or under Schedule 7 (Small
General Service).
FIXED COST PER CUSTOMER RATE
The Fixed Cost per Customer rate (FCC) is determined by dividing the Company's fixed cost
components for Residential and Small General Service Customers by the average number of
Residential and Small General Service customers, respectively.
Residential FCC
Effective Date Rate
I April 1, 2000January 1, 2012 $451.28650.63 per Customer
Small General Service FCC
Effective Date Rate I April 1, 2009January 1. 2012 $292.83360.57 per Customer
FIXED COST PER ENERGY RATE
The Fixed Cost per Energy rate (FCE) is determined by dividing the Company's fixed cost
components for Residential and Small General Service customers by the weather-normalized energy
load for Residential and Small General Service customers, respectively.
Residential FCE
Effective Date Rate
April 1, 2009January 1, 2012 3.48415.1602~ per kWh
Small General Service FCE
Effective Date Rate
April 1, 2000January 1. 2012 4-.T93M.86330 per kWh
ALLOWED FIXED COST RECOVERY AMOUNT
The Allowed Fixed Cost Recovery amount is computed by multiplying the average number of
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCC rate.
IDAHO Issued by IDAHO POWER COMPANY
Issued per Order No. 3075432426 John R. GaleGregory W. Said, Vice President, Regulatory Affairs
Effective - April 1, 2009November 1, 2012 1221 West Idaho Street, Boise, Idaho