20120427final_order_no_32540.pdf

Office of the Secretary
Service Date
Apri’27,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-12-06
AUTHORITY TO INCREASE ITS RATES TO )
RECOVER CERTAIN TRANSMISSION )
COSTS ASSOCIATED WITH FERC )ORDER NO.32540
DOCKET NO.ERO6-787 )
On February 15,2012,Idaho Power Company filed an Application for authority to
increase its rates to recover certain transmission costs associated with the Company’s Federal
Energy Regulatory Commission (FERC)rate case,FERC Docket No.ERO6-787.In its
Application,the Company seeks authority to amortize approximately $2.064 million in an
existing deferral account over three years,and recover in rates $688,156 per year.The Company
asks that the amortization and rate changes for this case take effect on June 1,2012 and that the
Application be processed using Modified Procedure.
On March 20,2012,the Commission issued a Notice of Application and Notice of
Modified Procedure requesting that interested persons submit written comments no later than
April 19,2012.Order No.32489.The only comments filed were submitted by Commission
Staff.As set out below,we approve the amortization and recovery of these transmission costs
over three years.
BACKGROUND
A.The FERC Case
The historical background of the Company’s FERC rate case and the establishment of
the deferral account are set out in Order Nos.30940 and 32177,but the pertinent parts are
summarized here.In March 2006,Idaho Power filed an application with FERC requesting an
increase in its transmission rates subject to FERC’s jurisdiction.The Company proposed to
revise its Open Access Transmission Tariffs (OATT5)from “stated”rates to “formula”based
rates.Formula rates would be updated annually based upon Idaho Power’s cost to own,operate
and maintain its transmission facilities as reported annually in the Company’s FERC Form 1.
In the FERC proceeding,the parties were able to settle most of the issues but they
were unable to resolve the proper raternaking treatment of three “Legacy Agreements.”Order
on Initial Decision,126 FERC ¶61,044 at ¶11 (January 15,2009).Starting in the 1960s,Idaho
ORDER NO.32540 1
Power entered into three long-term transmission service contracts commonly referred to as the
“Legacy Agreements”with PacifiCorp regarding transmission service from the Jim Bridger
power plant in western Wyoming.1 Both utilities built and now operate transmission lines from
Bridger to their respective service territories.Under the terms of the Legacy Agreements,Idaho
Power charges PacifiCorp “facility fees”to use Idaho Power’s transmission facilities until 2025.
Id at ¶J 3-9;Order No.30940 at 2.
The federal Administrative Law Judge (AU)initially determined and FERC
subsequently affirmed that Idaho Power’s fees charged to PacifiCorp under the Legacy
Agreements were significantly lower than the OATTs rates Idaho Power proposed to charge
other customers for similar transmission services.The AU and FERC found that it was
unreasonable for Idaho Power to recover its transmission costs from other third-party
transmission customers while the Legacy Agreements contained rates that were considered
below cost.FERC found that Idaho Power must bear the under-recovery of transmission costs
on its own.Id.at ¶129;Order No.30940 at 2.
In response to FERC’s 2009 Order,Idaho Power took three actions.First,the
Company filed a Petition for Rehearing with FERC.Second,Idaho Power moved to amend
portions of the two Legacy Agreements which resulted in a reduction of about $5.728 million of
unrecovered transmission costs.See Order No.32177 at 3-4;FERC Docket No.ERO9-1335.
Third,in July 2009,Idaho Power filed an application (Case No.IPC-E-09-21)for an accounting
order requesting that this Commission authorize the deferral of unrecovered transmission costs
that were denied by FERC.
B.The State Proceedings
In the 09-21 case,the Commission authorized the deferral of the unrecovered
transmission-related revenues over a three-year amortization period with several conditions.
Order No.30940.The Commission found that no carrying charges should be authorized and that
the Commission “specifically reserves the right to determine in a future proceeding whether
Idaho Power may appropriately recover the deferred amounts from Idaho customers.”Order No.
30940 at 6 (Case No.IPC-E-09-21).
In 2011,the Commission authorized Idaho Power to reduce the deferral balance to
$2,064,469 to reflect the modification of the two Legacy Agreements (discussed above).Order
Idaho Power and PacifiCorp jointly own the Bridger facility.
ORDERNO.32540 2
No.32177 at 4.7-8 (Case No.IPC-E-10-28).The Commission further directed Idaho Power to
advise the Commission when FERC issued its Order on Rehearing so that the Commission could
consider a starting date for the three-year amortization of the deferral balance.Id.at 9.In
December 2011.FERC denied rehearing and affirmed its Initial Decision.Order Denying
Rehearing,Dockel Vo.ERO6-78E’-006.137 FERC ¶61.235 (Dec.27.2011).
C’.The Current Application
In this Application,the Company requested that it be allowed to begin amortization of
the defelTal account balance of 2.064.469 over three years effective June 1.2012.Application
at ¶J 5,7.Consequently,the Company proposed that its annual revenue requirement be
increased by 5688.J56 per year for three years.The Company calculated that the overall average
increase in base rates caused by this request is .08%.2 Because the requested increase in the
annual revenue requirement is relatively modest.the Company proposed to increase only the
energy charge portion of customer rates by .0052 cents per kWh.Id.at ¶8.17.
As noted in Order No.32489.the Company filed the present Application concurrently
with three other cases.See Case Nos.IPC-E-12.-07 (AMI depreciation):IPC-E-12-08 (new
depreciation rates);and IPC-E-12-09 (Boardman).Because the rate effects of this Application
are being combined with other applications,the Company filed a single-set of proposed tariff
schedules in Case No.IPC-E-12-09 specifying the proposed cumulative effect of all the
applications.Id.¶9;Atch.2-3.On March 2 and again on April 13.2012.Idaho Power filed
three more cases requesting rate changes all with a proposed effective date of June 1,2012.See
Case Nos.IPC-E-12-12 (FCA);IPC-E-l2-13 (Revenue Sharing);and IPC-E-12-17 (PCA).
STAFF COMMENTS
Staff recommended that the Company’s Application be approved.Staff noted that the
Company proposed to use an updated billing determinant (projected customer usage)based on
the percent of energy each class uses.Staff Comments at 4-5.Staff confirmed recovering the
2 The Company initially indicated that the rate effects from this Application would be uniforrn”to all customerclasses.On March 14,2012,the Company amended its Application to reflect that the proposed increase in this casewasnotauniformpercentageincreasetoallcustomerclasses.
In Order No.32489.the Commission granted the Company waiver of Rule 121.01 that generally requires thatproposedratesbefiledwitheachcase.Given the offsetting effects of the four applications and the proposedeffectivedateforeachtobeJune1,2012,the Commission found that there was good cause to grant Idaho Power awaiverofRule121.01.
ORDER NO.32540 3
annualized amount of $688,156 results in a proposed rate of $.0052 per kWh.While Staff
recognized that the proposed billing determinants have not been reviewed and approved by the
Commission,Staff noted that these determinants have been recently updated.Consequently,
Staff recommended that all energy rates be increased by $.000052 (.00052 cents)per kWh
effective June 1,2012.
DISCUSSION
Based upon our review of the Application and Staff comments,we approve the
Company’s Application to amortize the deferral balance of $2,064,469 over a three-year period
beginning June 1,2012.During the three-year amortization period,the Company may recover
$688,156 per year for three years by increasing customers’energy rate by .0052 cents per kWh.
Because the rate increase approved in this Application is being combined with the other
proposed rate adjustments proposed to be effective June 1,2012,we specifically reserve
approval of the actual rate adjustments until such time as we have completed our review of Case
Nos.IPC-E-12-07,IPC-E-12-08,and IPC-E-12-09,and the consolidated tariff schedules in the
12-09 case.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company’s Application to increase its
rates to recover the transmission costs in the deferral account is approved as set out in greater
detail above.The Company is authorized to increase its energy rates by .0052 cents per kWh.
IT IS FURTHER ORDERED that the Commission expressly reserves its approval of
the proposed cumulative changes to tariff schedule rates for this case and cases IPC-E-12-07,
IPC-E-12-08,and IPC-E-12-09 (as contained in Attachments 2 and 3 to the 12-09 case)until the
Commission has completed its review of the aforementioned cases.If the Commission’s final
Orders in the 12-07,12-08,or 12-09 cases result in a modification to the proposed tariff
schedules contained in Attachments 2 and 3 of the 12-09 case,the Company shall immediately
submit revised tariff schedules that conform to the Commission’s Orders in these cases.Revised
tariff schedules shall not become effective until they have been submitted to the Commission for
its final review and approval.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)or in interlocutory Orders previously issued in this Case No.IPC-E-12-06
may petition for reconsideration within twenty-one (21)days of the service date of this Order
ORDER NO.32540 4
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this case.Within seven (7)days after any person has petitioned for reconsideration,any other
person may cross-petition for reconsideration.See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this ‘‘/
day of April 2012.
2r
I
PAUL KJEULANDR,PRESIDENT
MACK A.REDFj,OMMISSIONER
i @ta,8L
MARSHA H.SMITH,COMMISSIONER
ATTEST:
LL
Jean D Jewell
Commission Secretary
bls/O:IPC-E-1 2-06dh2
ORDER NO.32540 5