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Home My WebLink About20111121Application.pdfLISA D. NORDSTROM Lead Counsel InordstromCQidahopower.com RECEI .esIDA~POR~ An IDACORP Company November 18, 2011 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilties Commission 472 West Washington Street Boise, Idaho 83702 Re: Case No. IPC-E-11-24 IN THE MATTER OF THE APPLICA TlON OF IDAHO POWER COMPANY FOR AUTHORITY TO MODIFY ITS RULE H TARIFF RELATED TO THE GENERAL OVERHEAD RATE FOR NEW SERVICE ATTACHMENTS AND DISTRIBUTION LINE INSTALLA TlONS OR AL TERA TlONS . 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 an original and eight (8) copies of the testimony of Scott D. Sparks filed in support of the Application. One copy of Mr. Sparks' testimony has been designated as the "Reportets Copy." In addition, a disk containing a Word version of Mr. Sparks' testimony is enclosed for the Reporter. Very truly yours, x¿~ Q Cr(l~ Lisa D. Nordstrom LDN:csb Enclosures 1221 W. Idaho St. (83702) P.O. Box 70 Boise. ID 83707 LISA D. NORDSTROM (ISB No. 5733) JASON B. WILLIAMS (ISB No. 8718) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5825 Facsimile: (208) 388-6936 Inordstrom((idahopower.com jwilliams((idahopower.com i: i: r. i: rir\ l- .... "= :._-1 2nl I tmV 18 PM~: 0 I 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-11-24 AUTHORITY TO MODIFY ITS RULE H ) TARIFF RELATED TO THE GENERAL ) APPLICATION OVERHEAD RATE FOR NEW SERVICE ) ATTACHMENTS AND DISTRIBUTION LINE ) INSTALLATIONS OR ALTERATIONS. ) ) Idaho Power Company ("Idaho Powet' or "Company"), pursuant to Idaho Code §§ 61-502 and 61-507 and Rules of Procedure 052, 121, and 123, hereby applies to the Idaho Public Utilties Commission ("Commission") for authority to modify the general overhead rate it charges in the Company's Rule H tariff governing New Service Attachments and Distribution Line Installations or Alterations ("Rule H"). The Company requests that the effective date of the updated charge coincide with the March 15, 2012, effective date of the Company's annual update of its Rule H charges and credits. In support of this Application, Idaho Power represents as follows: APPLICATION - 1 I. BACKGROUND 1 . The Company last filed an application for major changes to its Rule H tariff in 2008, Case No. IPC-E-08-22. The purpose of the application was to shift more of the cost burden for new service attachments and distribution line installations or alterations from general ratepayers to those customers requesting construction of these services. As part of that application, the Company proposed to remove the 1.5 percent cap on recovery of general overhead costs related to Rule H work orders. 2. Overhead costs are pooled costs that are incurred in support of the Company's construction process, but would be very difficult to directly associate to a particular construction job. These costs are accumulated and allocated back to construction jobs based on a cost allocation methodology described in the Direct Testimony of Senior Regulatory Analyst Scott D. Sparks that accompanies this Application. 3. In July 2009, the Commission partially approved the Company's application in Order No. 30853 and later reaffirmed its decision under reconsideration in November 2009 (Order No. 30955) with all approved changes taking effect on December 1, 2009. Although the Commission did not approve removal of the cap on recovery of general overhead costs, it did agree that "customers requesting Rule H line extensions should bear the overhead costs of those extensions." Order No. 30853 at 11. The Commission indicated that "the appropriate calculations and adjustments are best made during the Company's next general rate case to ensure the rates are set based on costs that do not include that portion of construction overhead belonging to Rule H work orders." Id. Unti then, the Commission instructed Idaho Power to use the existing general overhead rate of 1.5 percent. Id. APPLICATION - 2 4. As described on pages 30 through 41 of the Direct Testimony of Scott D. Sparks filed in general rate Case No. IPC-E-11-08, Idaho Power requested the Commission increase the general overhead rate for Rule H services from 1.5 percent to 22 percent. In paragraph 10 of the settlement stipulation filed on September 23, 2011, Idaho Power agreed to initiate a separate proceeding to increase overhead amounts paid by persons or entities requesting services on the Company's Rule H line extension tariff. This Application fulfils that portion of the settlement stipulation and is intended to faciltate further investigation and participation. II. PROPOSED RECOVERY OF GENERAL OVERHEADS 5. Consistent with its objectives in Case No. IPC-E-08-22, the Company proposes to remove the 1.5 percent limitation for recovery of general overhead costs in the "Work Order Cost" definition of Rule H in an effort to shift more of the cost burden for new service attachments and distribution line installations or alterations from general ratepayers to customers requesting construction for these services. This proposed change is reflected in the proposed and legislative versions of the Rule H tariff, which have been included as Attachment Nos. 1 and 2, respectively, to the Application. By removing the 1.5 percent limitation for recovery of general overhead costs and instead recovering the Company's full construction overheads under Rule H, the Company wil receive larger contributions in aid of construction ("CIAC") to offset the costs of providing these construction services. This wil ultimately reduce the Company's revenue requirement for general ratepayers and reduce additional upward pressure on rates. 6. Idaho Powets general overhead rate was capped at 1.5 percent in 1997 and has not been updated in the subsequent 14 years. When Case No. IPC-E-95-18 APPLICATION - 3 was filed in 1995, Idaho Power charged 17 percent. The Company's current general overhead rate for construction related to new service attachments and distribution line installations is 22 percent. Construction engineering costs are charged directly to each work order and are not included in the general overhead rate. 7. The Company is proposing to recover all actual general overheads costs related to construction under Rule H from the part requesting the construction service. If the Company updates its general overhead rate before a change is approved, the Company requests the Commission approve the most current general overhead rate for Rule H work orders at the time an update is approved and effective. Going forward, Idaho Power proposes to update its general overheads rate for construction under Rule H each time accounting adjustments (increases or decreases) are made to balance the Company's general overhead account. These updates would be automatically reflected in the Company's work order processing and accounting systems. In addition, the Company proposes to file its effective general overhead rates in all future annual Rule H updates of charges and credits to allow the Commission the opportunity to scrutinize the effective rate charged on Rule H work orders. 8. The Company requests that the removal of the general overhead cap be approved by March 1,2012, and become effective on March 15,2012, to coincide with the effective date of the Company's annual update of its Rule H charges and credits. Simultaneous implementation of these Rule H rate changes wil reduce administration time and costs associated with updating and testing computer systems. II. MODIFIED PROCEDURE 9. Idaho Power believes that a hearing is not necessary to consider the issues presented herein, and respectfully requests that this Application be processed APPLICATION - 4 under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201 et seq. If, however, the Commission determines that a technical hearing is required, the Company stands ready to present the Direct Testimony of Senior Regulatory Analyst Scott D. Sparks that accompanies this Application. iv. COMMUNICATIONS AND SERVICE OF PLEADINGS 10. Communications and service of pleadings with reference to this Application should be sent to the following: Lisa D. Nordstrom Jason B. Williams Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Inordstrom((idahopower.com jwilliams((idahopower.com Scott D. Sparks Gregory W. Said Idaho Power Company P.O. Box 70 Boise, Idaho 83707 ssparks((idahopower.com gsaid((idahopower.com V. REQUEST FOR RELIEF 11 . Idaho Power respectfully requests that the Commission issue an Order (1 ) authorizing that this matter may be processed by Modified Procedure and (2) approving the removal of the Rule H work order general overhead cap by March 1, 2012, to become effective on March 15, 2012, with the Company's annual update of its Rule H charges and credits. DATED at Boise, Idaho this 18th day of November 2011.X:l)~ LISA D. NORDS ROM Attorney for Idaho Power Company APPLICATION - 5 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 18th day of November 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 -t Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email Don.Howell((puc.idaho.gov Karl.Klein((puc. idaho.gov Industrial Customers of Idaho Power Peter J. Richardson Gregory M. Adams RICHARDSON & O'LEARY, PLLC 515 North 2ih Street (83702) P.O. Box 7218 Boise, Idaho 83707 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email peter((richardsonandoleary.com greg((richardsonandoleary.com Dr. Don Reading Ben Johnson Associates, Inc. 6070 Hil Road Boise, Idaho 83703 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email dr((benjohnsonassociates.com 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 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email elo((racinelaw.net Anthony Yankel 29814 Lake Road Bay Vilage, Ohio 44140 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email tony((yankel.net APPLICATION - 6 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 - 7 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email kboehm((BKLlawfirm.com jrh((battfisher.com Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email khiggins((energystrat.com Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email myork((hollandhart.com tnelson((hollandhart.com madavidson((hollandhart.com fschmidt((hollandhart.com Inbuchanan((hollandhart.com Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email remalmgren((micron.com Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email Arthur.bruder((hq.doe.gov Steven. porter((hq.doe.gov Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email detheridge((exeterassociates.com Community Action Partnership Association of Idaho Brad M. Purdy Attorney at Law 2019 North 17th Street Boise, Idaho 83702 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email bmpurdy((hotmail.com Idaho Conservation League Benjamin J. Otto Idaho Conservation League 710 North Sixth Street (83702) P.O. Box 844 Boise, Idaho 83701 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email botto((idahoconservation.org Snake River Allance Ken Miller Snake River Allance P.O. Box 1731 Boise, Idaho 83701 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email kmiller((snakeriverallance.org NW Energy Coalition Nancy Hirsh, Policy Director NW Energy Coalition 811 First Avenue, Suite 305 Seattle, Washington 98104 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email nancy((nwenergy.org Hoku Materials, Inc. Dean J. Miler McDEVITT & MILLER LLP 420 East Bannock (83702) P.O. Box 2564 Boise, Idaho 83701 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email joe((mcdevitt-miller.com heather((mcdevitt-miller.com Scott Paul, CEO Hoku Materials, Inc. One HokuWay Pocatello, Idaho 83204 Hand Delivered U.S. Mail _ Overnight Mail FAX -t Email spaul((hokucorp.com m-QrLiB:ordstrO APPLICATION - 8 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-E-11-24 IDAHO POWER COMPANY ATTACHMENT NO. 1 PROPOSED TARIFF Idaho Power Company First Revised Sheet No. H-4 Cancels Original Sheet No. H-4I.P.U.C. No. 29, Tariff No. 101 RULE H NEW SERVICE ATTACHMENTS AND DISTRIBUTION LINE INSTALLATIONS OR ALTERATIONS (Continued) 1. Definitions (Continued) Unusual Conditions are construction conditions not normally encountered, but which the Company may encounter during construction which impose additional, project-specific costs. These conditions may include, but are not limited to: frost, landscape replacement, road compaction, pavement replacement, chip-sealing, rock digging/trenching, boring, nonstandard facilities or construction practices, and other than available voltage requirements Costs associated with unusual conditions are separately stated and are subject to refund if not encountered. If unusual conditions are not encountered, the Company wil issue the appropriate refund within 90 days of completion of the project Upgrade is a request by a customer to increase capacity and/or size of Company-owned distribution facilities. Upgrades are eligible for Vested Interest Refunds. Vested Interest is the right to a refund that an Applicant or Additional Applicant holds in a specific section of distribution facilities when Additional Applicants attach to that section of distribution facilities. Vested Interest Charge is an amount collected from an Additional Applicant for refund to a Vested Interest Holder. Vested Interest Holder is an entity that has paid a refundable Line Installation Charge to the Company for a Line Installation. A Vested Interest Holder may also be an entity that has paid a refundable charge to the Company under the provisions of a prior rule or schedule. Vested Interest Refund is a refund payment to an existing Vested Interest Holder resulting from a Vested Interest Charge to an Additional Applicant. Vested Interest Portion is that part of the Company's distribution system in which a Vested Interest is held. Work Order Cost is a cost estimate performed by the Company for a specific request for service by an Applicant or Additional Applicant. The Work Order Cost wil include general overheads related to the management of construction. IDAHO Issued per Order No. Effective - March 15, 2012 Issued by IDAHO POWER COMPANY Gregory W. Said, Vice President, Regulatory Affairs 1221 West Idaho Street, Boise, Idaho BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC-E-11-24 IDAHO POWER COMPANY ATTACHMENT NO.2 TARIFF IN LEGISLATIVE FORMAT Idaho Power Company First Revised Sheet No. H-4 Cancels Original Sheet No. H-4I.P.U.C. No. 29, Tariff No. 101 RULEH NEW SERVICE ATTACHMENTS AND DISTRIBUTION LINE INSTALLATIONS OR ALTERATIONS (Continued) 1. Definitions (Continued) Unusual. Conditions are construction conditions not normally encountered, but which the Company may encounter during construction which impose additional, project-specific costs. These conditions may include, but are not limited to: frost, landscape replacement, road compaction, pavement replacement, chip-sealing, rock digging/trenching, boring, nonstandard facilities or construction practices, and other than available voltage requirements Costs associated with unusual conditions are separately stated and are subject to refund if not encountered. If unusual conditions are not encountered, the Company wil issue the appropriate refund within 90 days of completion of the project Upgrade is a request by a customer to increase capacity and/or size of Company-owned distribution facilities. Upgrades are eligible for Vested Interest Refunds. Vested Interest is the right to a refund that an Applicant or Additional Applicant holds in a specific section of distribution facilities when Additional Applicants attach to that section of distribution facilities. Vested Interest Charge is an amount collected from an Additional Applicant for refund to a Vested Interest Holder. Vested Interest Holder is an entity that has paid a refundable Line Installation Charge to the Company for a Line Installation. A Vested Interest Holder may also be an entity that has paid a refundable charge to the Company under the provisions of a prior rule or schedule. Vested Interest Refund is a refund payment to an existing Vested Interest Holder resulting from a Vested Interest Charge to an Additional Applicant. Vested Interest Portion is that part of the Company's distribution system in which a Vested Interest is held. Work Order Cost is a cost estimate performed by the Company for a specific request for service by an Applicant or Additional Applicant. The Work Order Cost wil include general overheads limited to 1.5 peroent. General overheads in e*Gess of 1.5 peroent wil be funded by the Companyrelated to the management of construction. IDAHO Issued by IDAHO POWER COMPANY Issued November 27, 2009per Order No. John R GaleGregorv W. Said, Vice President, Regulatory Affairs Effective - DeGemberMarch 1§, 200012 1221 West Idaho Street, Boise, Idaho