20121019Decision Memo2.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL

DATE: OCTOBER 9, 2012

SUBJECT: CASE NO. IPC-E-11-19
IDAHO POWER COMPANY’S COMPLIANCE FILING, MOTION FOR
ORDER APPROVING FIXED-COST ADJUSTMENT COMPONENT
RATES AND A MODIFICATION TO THE FIXED-COST ADJUSTMENT
METHODOLOGY

On September 28, 2012, Idaho Power Company filed a pleading entitled “Compliance
Filing, Motion to Approve Schedule 54, and Motion to Adopt a Specific Fixed-Cost Adjustment
Methodology.” The Commission in Order No. 32505 approved the Company’s application to
make the fixed-cost adjustment (FCA) a permanent program for residential and small general
service customers. The Commission also noted, however, that the FCA as structured is
imperfect, particularly in that it “does not isolate or identify changes in cost recovery associated
solely with the Company’s energy efficiency programs.” Order No. 32505, p. 6. The
Commission directed Staff and other interested parties to continue discussing possible
adjustments to the FCA, and directed Idaho Power to file a proposal to adjust the FCA to address
the deficiency identified by the Commission. Id. The Company’s filing responds to the
Commission directive in Order No. 32505 that the Company file within six months “a proposal
to adjust the FCA to address the capture of changes in load not related to energy efficiency
programs.” Order No. 32505, p. 9.
Idaho Power in its filing recommends the Commission approve the FCA
methodology as currently in place without change because it believes the existing mechanism is
the most efficient and appropriate method to eliminate the financial disincentives to pursuing all
DECISION MEMORANDUM 2
cost-effective DSM resources. Nonetheless, the Company’s filing includes an adjustment to the
FCA mechanism to address the capture of significant changes in load not related to energy
efficiency programs. The FCA mechanism currently includes a 3% cap on annual increases over
base revenue. The Company proposes to apply a symmetrical cap (plus or minus 2%) on the
change in annual use per customer where it deviates from the historical average annual change in
use per customer. Idaho Power Filing, p. 5. The Company contends that a capping mechanism
based on changes in use per customer “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.” Id. The Company
requests the Commission issue an Order approving a specific FCA methodology no later than
March 29, 2013.
Although the Company did not request Modified Procedure for consideration of its
adjustment to the FCA methodology, Staff believes it is important to allow interested parties to
respond to the Company’s proposal. Accordingly, Staff recommends the Commission issue a
Notice of Modified Procedure to invite written comments on the Company’s proposed
adjustment to the FCA, with a 45-day comment period.
COMMISSION DECISION
Should the Commission issue a Notice of Modified Procedure to process the
Company’s proposal to make an adjustment to the FCA methodology, providing a 45-day
comment period?

Weldon Stutzman
Deputy Attorney General

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