20120208Comments.pdf

KRSTINE A. SASSER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6618
RECEIVED
10\2 FEB -8 PM 2: 59
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
IDAHO POWER COMPANY FOR AUTHORITY )
TO MODIFY ITS RULE H TARIFF RELATED )
TO THE GENERAL OVERHEAD RATE. )
)
)
CASE NO. IPC-E-12-03
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Kristine A. Sasser, Deputy Attorney General, and in response to the Notice
of Application and Notice of Modified Procedure issued in Order No. 32439 on January 18,2012,
in Case No. IPC-E-12-03, submits the following comments.
BACKGROUND
On December 29,2011, Idaho Power Company fied its anual compliance filing to update
charges and credits under Rule H, New Service Attachments and Distribution Line Installations or
Alterations. The Company fied this as Tariff Advice No. 11-05 and requested approval by March
1, 2012, so the updates could be effective March 15, 2012. i After reviewing the filing, Staff
recommended that the Commission process the tariff advice through the use of Modified
1 The Company is requesting a 14-day implementation period to update computer systems and prepare new
communication materials.
STAFF COMMENTS 1 FEBRUARY 8, 2012
Procedure because it appeared that some of the changes go beyond the usual "updates" of charges
and credits contemplated by Commission Order Nos. 30853 and 30955.
The Company proposes cost updates to the charges and credits outlined in Rule H, New
Service Attchments and Distribution Line Installations or Alterations. This is the annual compliance
fiing to update Rule H charges and credits as required by Commission Order Nos. 30853 and 30955.
In addition, the Company is proposing to remove metering costs from the calculation of
single-phase and three-phase allowances. The Company claims that metering costs are not charged on
Rule H work orders and, therefore, such costs are not appropriate when calculating Company-funded
allowances.
The Company is also proposing to add a new charge to the Other Charges section of Rule H.
The Company claims that the new, flat charge (Overhead Service Attachment Charge for Non-
Residence) would reduce overhead costs by eliminating the need for individual work orders each
time a request is made for overhead service attachments for non-residences.
The Company is also proposing minor "housekeeping" edits to the tariff as contemplated
by Commission Order Nos. 30853 and 30955.
ST AFF ANALYSIS
Metering costs
Idaho Power proposes to exclude metering costs from the single phase and three phase
allowances because they are not included in work order cost estimates. Metering costs include
both the cost of the meter as well as the labor involved in installng the meter. Historically, no
customers have been charged metering costs as part of an upfront work order cost. Instead,
because all customers require meters and because meters within the same customer class are so
similar, metering costs have been recovered through base rates charged to all customers.
Consequently, Staff agrees with the Company that it is appropriate to exclude metering costs in
computing single and three phase allowance amounts.
Staff recommends that the Company delete the phrase "Cost of new meter only" from the
Maximum Allowance per Service for Residential Non-residences and replace it with "$0.00" to be
consistent with the calculation of allowances for the other residential schedules.
STAFF COMMENTS 2 FEBRUARY 8, 2012
Flat charge for Residential Non-residence overhead service attachments
The Company proposes to implement a flat charge for overhead services to non-residence
structures. Curently, the charge is based on work order costs specific to each individual service
attachment request. The Company claims that "costs associated with these service attchment
requests rarely vary between customers, and therefore, a flat charge is appropriate" and this new
charge wil "reduce overhead costs for the Company." The Company did not provide support for
either of these claims.
In order to determine the extent that costs do var between customers, Staff requested the
actual costs for each non-residence overhead service attachment completed in the past year. Due
to difficulties in differentiating between overhead service attachments to residences and overhead
service attachments to non-residences, the Company provided a random sample of ten work orders
for overhead service attachments to non-residences. Staffs analysis is based on that random
sample of ten and assumes that the sample provided is representative of all the overhead service
attachments to non-residences completed in the past year.
The most expensive work order was roughly double the cost of the least expensive work
order ($229.36 and $115.34, respectively). Had the proposed flat charge of$181 been in effect,
then forty percent of customers would have paid more than their actual work order costs and sixty
percent of customers would have paid less than their actual work order costs. In other words, forty
percent of customers would have subsidized the attachment costs for the remaining sixty percent
of customers.
Staff believes that these subsidies are not insignificant. Ten percent of customers would
have overpaid by more than fifty percent of their actual work order costs while an additional ten
percent would have overpaid by more than thirty percent. Conversely, ten percent of customers
would have underpaid by more than twenty percent and an additional ten percent would have
underpaid by more than fifteen percent of their actual work order costs. In dollar terms, the
largest amount that would have been overpaid under a flat charge is $65 and the largest amount
that would have been underpaid under a flat charge is $48.
The Company further claims that implementing a flat charge wil reduce overhead costs for
the Company as individual work orders wil no longer need to be developed in these cases. In
response to an audit request, the Company replied "The Company's general overheads wil not be
reduced as originally indicated."
STAFF COMMENTS 3 FEBRUARY 8, 2012
Due to the large variation in the costs associated with service attachment requests between
customers, Staff recommends that the Company continue charging customers their actual work
order costs instead of implementing a flat charge.
Cost Updates
In responding to audit requests from the Staff, the Company found errors in four of the six
distance charges for underground service attachments. The Company had calculated the charges
for 125 feet of cable instead of 100 feet of cable as specified in the tariff. Thus, the Company
proposed charges that were in excess of the properly calculated charges. The difference between
the proposed and corrected charges ranged from $5.29 to $44.03, in dollar terms, or 1.3% to
12.0%, in percentage terms.
These four charges represent a non-significant percentage (25 percent) of the proposed cost
updates. Staff recommends that the Company be directed to resubmit its proposal with the correct
charges.
For the most par, the proposed increases in charges reflect increases in the cost of
materials, most notably conduit and 1/0 cable. In fact, if the cost of materials had not risen, then
none of the charges would have increased by more than 1 percent.
Engineering charges do not include materials - they consist of wages, the cost of providing
benefits, and general overhead. Both wages and the cost of providing benefits increased, wages
increased by 2 percent and the cost of providing benefits increased by 8 percent. An increase in
the cost of providing health care benefits drove the increase in providing benefits. These increases
were mitigated by the small decrease in general overhead.
Line Installation and Service Attachment Allowances decreased due to the exclusion of
metering costs. Excluding metering costs led to decreases in both labor and material costs. There
were significant increases in the cost of other materials associated with the allowances, most
notably, the cost of switches for the three phase service increased by more than 50 percent because
the Company changed from installng porcelain switches to installng silcone switches. However,
these increases were dwarfed by the decreases due to the exclusion of meters.
Other Edits
In addition to small language edits, the Company proposed the following changes to the tariff
language:
STAFF COMMENTS 4 FEBRUARY 8, 2012
1. Correcting the definition of Terminal Facilities to indicate that underground service wire is
not included;
2. Adding in a new defined term, Connected Load, to clarify the calculation of Vested
Interest Charges.
The Company also proposed to add Schedule 3 to the preamble of Rule H. Schedule 3 covers
master metered mobile home park residential service and should have been included in Rule H
previously as work done for this schedule would fall under Rule H.
Staff does not oppose these changes.
RECOMMENDATIONS
Staff recommends that the Commission approve Idaho Power Company's proposal to
remove metering costs from the single and three phase allowance amounts and to delete the phrase
"Cost of new meter only" from the Maximum Allowance per Service for Residential Non-
residences and replace it with "$0.00."
Staff recommends that the Commission deny Idaho Power Company's proposal to add a
new charge, Overhead Service Attachment Charge for Non-Residence, to the Other Charges
section of Rule H.
Staff recommends that the Company be directed to resubmit its proposal regarding cost
updates to the charges and credits outlined in Rule H, New Service Attachments and Distribution Line
Installations or Alterations with the correct charges.
Staff recommends that the Commission approve the language changes to the tariff.
Respectfully submitted this ii: day of February 2012.
~fLl.~lA,
Kristine A. Sasser
Deputy Attorney General
Technical Staff: Cathleen McHugh
i:umisc:comments/ipceI2.3ksch comments
STAFF COMMENTS 5 FEBRUARY 8, 2012
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8TH DAY OF FEBRUARY 2012,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-12-03, BY E-MAILING AND MAILING A COPY THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
LISA D NORDSTROM
IDAHO POWER COMPANY
P.O. BOX 70
BOISE IDAHO 83707
E-MAIL: lnordstrom(iidahopower.com
SCOTT D SPARKS
GREGORY W SAID
IDAHO POWER COMPANY
P.O. BOX 70
BOISE IDAHO 83707
E-MAIL: ssparks(iidahopower.com
gsaid(iidahopower .com
Jn~
SECRETAR
CERTIFICATE OF SERVICE