20120419Comments.pdf

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
RECEIVED
21112 APR 19 AMII:37
UIL sioil
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) CASE NO. IPC-E-12-06
TO INCREASE ITS RATES TO RECOVER )
CERTAIN TRANSMISSION COSTS )
ASSOCIATED WITH FERC DOCKET NO. ) COMMENTS OF THE
ER06-787. ) COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of Record, Donald L. Howell II, Deputy Attorney General, and submits the following
Comments in response to Order No. 32489 issued on March 20, 2012.
BACKGROUND
On February 15, 2012, Idaho Power Company filed an Application for authority to increase
its rates to recover certain transmission costs associated with the outcome of the Company's Federal
Energy Regulatory Commission (FERC) rate case, FERC Docket No. ER06-787. The Company
seeks authority to amortize approximately $2.064 million in the existing deferral account over three
years. The Company calculates that recovery of this deferral account will increase its annual
revenue requirement by $688,156 for each year of the three-year period. The Company asks that
the amortization and rate changes for this case take effect on June 1, 2012.
STAFF COMMENTS 1 APRIL 19, 2012
In addition to this Application, the Company concurrently filed three other Applications.
See Case Nos. IPC-E-12-07, IPC-E-12-08, and IPC-E-12-09. Idaho Power requests that the rate
changes caused by these four Applications all take effect June 1, 2012. The Company states that
the four Applications cumulatively will result in a rate decrease for most customers. To be more
precise, the cumulative rate affects of the four cases is set out in the footnote below.'
1. 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 ratemaking treatment of three "Legacy Agreements." Order on Initial
Decision, 126 FERC ¶ 16,044 at ¶ 11 (January 15, 2009). Starting in the 1960s, Idaho 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.2 Both utilities built and now operate transmission lines from Bridger to their
respective service territories. Under the terms of the Legacy Agreements, Idaho Power charged
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 ALJ and FERC found that it was unreasonable for Idaho Power
'The proposed cumulative rate decrease by customer class is asserted to be: Residential, Sch. 1 (0.80%); Small
Business, Sch. 7(0.55%); Large Business, Sch. 9(1.07%); and Irrigation, Sch. 24(1.09%). The Company calculates
that the proposed cumulative impact will increase rates for the following customer classes: Industrial, Sch. 19,.65%;
Micron, Sch. 26,.66%; Simplot, Sch. 29,.68%; INL, Sch. 30,.68%; and Hoku (Block 2),.67%. See Application,
Atch. 3.
2 Idaho Power and PacifiCorp jointly own the Bridger facility
STAFF COMMENTS 2 APRIL 19, 2012
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 1129; Order No. 30940 at 2.
2.Prior PUC Cases
In response to FERC's 2009 Order, Idaho Power took three actions. First, the Company
filed a Petition for Rehearing with FERC.3 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. ER09-1335. Third, in July
2009, Idaho Power filed an application for an accounting order requesting that this Commission
authorize the deferral of unrecovered transmission costs that were denied by FERC. In Order No.
30940, the Commission authorized the deferral of the unrecovered transmission-related revenues
over a three-year amortization period with several conditions. 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 Case No. IPC-E-10-28, the Commission reduced the deferral balance to $2,064,469,
reflecting the modification of the two Legacy Agreements (discussed above) and other approved
adjustments. Order No. 32177 at 4, 7-8. 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 94
3.This Application
Consistent with Order No. 32177, the Company now requests that it be allowed to begin
amortization of the deferral account ($2,064,469) over three years effective June 1, 2012.
Application at ¶IJ 5, 7. Consequently, the Company requests that its annual revenue requirement be
increased by $688,156 per year for three years effective June 1, 2012. Id. at 8.
On December 27, 2011, FERC denied rehearing and affirmed its Initial Decision. See Application Atch. 1, Order
Denying Rehearing, 137 FERC ¶61,235 (Dec. 27, 2011).
See note 3.
Because the rate effects of this Application are being combined with three 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. at ¶ 9. The Commission granted Idaho Power a waiver of Rule 121.01 that generally requires that
each Application be accompanied by rate schedules showing the proposed changes in the tariff schedules. Order No.
32489 at 6.
STAFF COMMENTS 3 APRIL 19, 2012
STAFF ANALYSIS
Revenue Requirement
The deferral amount of $2,064,469 was approved in Order No. 32177. A three-year
amortization was also approved. However, no amortization start date was authorized due to the
ongoing FERC rehearing process related to the transmission rate under the Legacy Agreements.
The FERC order denying rehearing and affirming its initial decision makes the rehearing process
complete.
The deferral amount of $2,064,469 is confirmed and final. A three-year amortization results
in an annual amortization of $688,156. Staff recommends annual revenues be increased by
$688,156 effective June 1, 2012 as requested.
Revenue Allocation and Rate Design
For the purposes of Revenue Allocation and Rate Design, Idaho Power Company updated
the billing determinants for all customer classes. Idaho Power Company proposes to use forecast
billing determinants for the period June 1, 2012 through May 31, 2013. Overall, the forecast
showed reduced energy consumption relative to the amounts accepted by the Commission in the
recently completed 2011 general rate case (Case No. IPC-E-11-08). Although the forecast showed
an overall decrease, it showed increases for some individual customer classes. Attachment A shows
the energy amounts accepted by the Commission in the 2011 rate case and the amounts proposed by
the Company in this filing. The updated energy amounts include Schedule 4 and 5 customers in
Schedule 1. Demand amounts and numbers of customers were also updated. Hoku energy and
demand amounts were updated to reflect the recently approved Reformed Electric Service
Agreement. The Company is proposing to use the same updated billing determinants in all of the
following cases that are currently before the Commission.
Case No. IPC-E-12-06
Case No. IPC-E-12-07
Case No. IPC-E-12-08
Case No. IPC-E-12-09
Case No. IPC-E-12-12
Case No. IPC-E-12-13
Case No. IPC-E-12-14
Case No. IPC-E-12-17
OATT Revenue Shortfall (This Case)
Meter Depreciation
General Depreciation
Boardman
FCA (Fixed Cost Adjustment)
Revenue Sharing & Pensions
Langley Gulch Combustion Turbine
Power Cost Adjustment (PCA)
Because the amount of the increase proposed in this case is "relatively small" (i.e.,
$688,156), the Company proposes to spread the increased revenue requirement to customer classes
STAFF COMMENTS 4 APRIL 19, 2012
based on the percent of energy each class uses and to charge all customers an equal cents/kWh rate.
Application at 4. That rate is proposed to be $.000052/kWh. This results in a non-uniform
percentage increase that averages .08% as shown on Attachment B.
The Staff accepts the equal 0/kWh revenue allocation and rate design proposed by the
Company. The Staff also accepts the updated billing determinants proposed by the Company with
some reservation. The update represents what the Company expects during the first year that the
proposed rates will be in effect. The updated billing determinants should be the best information
available on which to base rates. On the other hand, the billing determinants have not been
reviewed and approved by the Commission. When energy and demand amounts change in a
general rate case, jurisdictional and class allocations change and Net Power Supply Expense
changes.
STAFF RECOMMENDATION
The Staff recommends that $2,064,469 be approved for recovery over three years with an
annual amortization of $688,156 as proposed by the Company. Staff further recommends that all
energy rates be increased by 0.000052 $/kWh. Staff recommends that these rates be effective
June 1, 2012 as the Company proposes.
Respectfully submitted this I day of April 2012.
Donald L. HTWell, 11
Deputy Attorney General
Technical Staff: Keith Hessing
Terri Carlock
i:umisc/comments/ipce 12.6dhkhtc comments
STAFF COMMENTS 5 APRIL 19, 2012
2011 2012-2013
Rate Case Forecasted
Normalized Normalized
Rate Energy Energy
Sch. wI Hoku Reformed Line
Difference Difference
Idaho Power Company
Calculation of Test Year Energy Differences
State of Idaho
kWh %
o(n():I A. rl 0) ct '....Q) Ci) ct
I - ht(D 0)
0 z t—Q 0
NiO. (Ci
Hrr
cr1 ca
No Tariff Description No. kWh (KVVfl)
Uniform Tariff Rates:
1 Residential Service
2 Master Metered Mobile Home Park
3 Residential Service Energy Watch
4 Residential Service Time-of-Day
5 Small General Service
6 Large General Service
7 Dusk to Dawn Lighting
8 Large Power Service
9 Agricultural Irrigation Service
10 Unmetered General Service
11 Street Lighting
12 Traffic Control Lighting
13 Total Uniform Tariffs
Special Contracts:
14 Micron
15 JRSimplot
16 DOE
17 Hoku - Block 1
18 Hoku - Block 2
19 Total Special Contracts
20 Total Idaho Retail Sales
1 5,003,578,752 4,896,272,827 (107,305,925) -2.1%
3 5,175,311 4,942,681 (232,630) -4.5%
4 743,939 0 (743,939) -100.0%
5 1,178,608 0 (1,178,608) -100.0%
7 148,946,670 144,888,296 (4,058,374) -2.7%
9 3,492,140,651 3,480,101,459 (12,039,192) -0.3%
15 6,562,095 6,481,376 (80,719) -1.2%
19 2,040,681,796 1,978,623,647 (62,058,149) -3.0%
24 1,679,776,734 1,720,204,410 40,427,676 2.4%
40 16,000,941 15,807,753 (193,188) -1.2%
41 23,018,849 23,165,568 146,719 0.6%
42 3,477,113 2,981,282 (495,831) -14.3%
12,421,281,459 12,273,469,299 (147,812,160) -1.2%
26 464,652,076 451,138,622 (13,513,454) -2.9%
29 180,758,797 203,558,197 22,799,400 12.6%
30 235,100,000 244,266,665 9,166,665 3.9%
32 370,006,219 0 (370,006,219) -100.0%
32 197,100,000 0 (197,100,000) -100.0%
1,447,617,092 898,963,484 (548,653,608) -37.9%
0
13,868,898,551 13,172,432,783 (696,465,768) -5.0%
(1) June 1, 2012 - May 31, 2013 Forecasted PCA Test Year
Idaho Power Company
Calculation of Revenue Impact
State of Idaho
OATT Deferral
Proposed to be Effective June 1, 2012
Summary of Revenue Impact
Current Billed Revenue to Proposed Billed Revenue
Line
No Tariff Description
Uniform Tariff Rates:
I Residential Service
2 Master Metered Mobile Home Park
3 Residential Service Energy Watch
4 Residential Service Time-of-Day
5 Small General Service
6 Large General Service
7 Dusk to Dawn Lighting
8 Large Power Service
9 Agricultural Irrigation Service
10 Unmetered General Service
11 Street Lighting
12 Traffic Control Lighting
13 Total Uniform Tariffs
14 Special Contracts:
15 Micron
16 J R Simplot
17 DOE
18 Hoku - Retail
19 Total Special Contracts
OCI)Q 4 -- Q 20 Total Idaho Retail Sales
CO rt
Ohfi C)
0 if 21 Hoku - Block 1 Energy
Hrr
(D
rtl Cfli
r'J
Total Percent
Rate Average Normalized Current Adjustments Prdposed Change
Sch. Number of Energy Billed Cents to Billed Total Billed Cents Billed to Billed
No. Customers (kWh) " Revenue Per kWh Revenue Revenue Per kWh Revenue
1 399,329 4,896,272,827 $397,700,569 8.123 $255,792 $397,956,361 8.128 0.06%
3 23 4,942,681 $381,220 7.713 $258 $381,478 7.718 0.07%
4 0 0 $0 0.000 $0 $0 0.000 0.00%
5 0 0 $0 0.000 $0 $0 0.000 0.00%
7 28,165 144,888,296 $14,990,300 10.346 $7,569 $14,997,869 10.351 0.05%
9 31,614 3,480,101,459 $196,754,244 5.654 $181,808 $196,936,052 5.659 0.09%
15 0 6,481,376 $1,173,934 18.112 $339 $1,174,273 18.118 0.03%
19 116 1,978,623,647 $83,660,290 4.228 $103,368 $83,763,657 4.233 0.12%
24 16,642 1,720,204,410 $109,785,557 6.382 $89,867 $109,875,424 6.387 0.08%
40 2,030 15,807,753 $1,096,245 6.935 $826 $1,097,070 6.940 0.08%
41 361 23,165,568 $2,959,897 12.777 $1,210 $2,961,107 12.782 0.04%
42 397 2,981,282 $142,887 4.793 $156 $143,043 4.798 0.11%
478,677 12,273,469,299 $808,645,142 6.589 $641,192 $809,286,334 6.594 0.08%
26 1 451,138,622 $17,176,418 3.807 $23,568 $17,199,986 3.813 0.14%
29 1 203,558,197 $6,727,934 3.305 $10,634 $6,738,568 3.310 0.16%
30 1 244,266,665 $8,393,976 3.436 $12,761 $8,406,737 3.442 0.15%
32 1 0 $2,835,760 0.000 $0 $2,835,760 0.000 0.00%
4 898,963.484 $35,134,087 3.908 $46,964 $35,181,051 3.914 0.13%
478,681 13,172,432,783 $843,779,229 6.406 $688,156 $844,467,385 6.411 0.08%
32 109,702,243 $6,764,240 6.166 $0 $6,764,240 6.166 0.00%
(1) June 1, 2012 - May 31, 2013 Forecasted PCA Test Year (Hoku Ad))
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19th DAY OF APRIL 2012,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. IPC-E-12-06, BY E-MAILING AND MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
JASON B WILLIAMS
LISA D NORDSTROM
IDAHO POWER COMPANY
P0 BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
[e-mail]
COURTNEY WAITES
GREG SAID /TIM TATUM
IDAHO POWER COMPANY
P0 BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
gsaid(idahopower.com
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE