20120302Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

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

FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL

DATE: MARCH 1, 2012

SUBJECT: IDAHO POWER’S APPLICATION TO INCREASE RATES TO
RECOVER THE BOARDMAN BALANCING ACCOUNT, CASE NO. IPC-
E-12-09

On February 15, 2012, Idaho Power Company applied to the Commission for an
order authorizing the Company to increase its rates to begin recovery of the Boardman balancing
account.1 The Company seeks to recover $1,583,373 in annual revenue, which the Company
says results in a uniform percentage increase of 0.18 percent to all customer classes. The
Company asks that the rate changes take effect on June 1, 2012, and that the case be reviewed
using Modified Procedure.
THE APPLICATION
Idaho Power owns 10 percent of the coal-fired, Boardman power plant in Oregon. On
February 15, 2012, the Commission authorized the Company to establish a balancing account
related to Boardman’s early closure, which is set to occur by December 31, 2020. Application at
2-3; Order No. 32457. The Company says the balancing account will let it track, on a
cumulative basis, the difference between revenues and expenses associated with the Boardman
shutdown. Application at 2. The Company says the balancing account also will ensure that
customers only pay for actual expenditures. Id. The Company is replacing the base rate revenue
1 The Company has concurrently filed three other applications. See Case Nos. IPC-E-12-06, IPC-E-12-07, and IPC-
E-12-08. The Company says these four filings will cumulatively decrease rates for most customers, with the
cumulative rate impact by customer class being: Residential Customers, (0.80%); Small General Service, (0.56%);
Large General Service (1.03%); Large Power, 0.54%; and Irrigation, (1.10%). See Application, Attachment No. 5.

DECISION MEMORANDUM 2
recovery associated with the Company’s existing investment in Boardman with a levelized
revenue requirement to be tracked in the balancing account. Id. at 2-3.
With this Application, the Company asks to recover the levelized revenue
requirement. This includes the return associated with Boardman capital investments net of
accumulated depreciation forecasted through Boardman’s remaining life, the costs of
accelerating the Boardman depreciation, and the decommissioning costs associated with the
Boardman shutdown. Id. at 3. The Idaho jurisdictional incremental annual change to base rates
the Company is requesting to recover in this proceeding is $1,583,373. Id. The Company
proposes to uniformly spread this amount to all customer classes and to recover it through a
uniform percentage increase to all base rate components except the service charge. Id. The
Company says the overall, Boardman-related rate change will be a 0.18% increase, and that the
per-customer class impact will be: Residential Customers, 0.18%; Small General Service, 0.17%;
Large General Service 0.19%; Large Power, 0.16%; and Irrigation, 0.19%. Id. at 3; Attachment
No. 5. The Company clarifies that its four, concurrently-filed applications will result in an
overall, customer rate decrease. See fn. 1, above.
With this Application, the Company filed a set of proposed tariff sheets that identifies
all four cases’ cumulative impact. The Company says it will make an appropriate, final
compliance filing when all final Orders are received. Id. at 3-4.
The Company also says it will keep its Application open for public inspection at its
Idaho offices, and that it will notify customers through a press release and bill inserts, with the
last notice to be sent on March 20, 2012. Id. at 4-5. The Company says, in the alternative, it will
bring the Application to the attention of customers as directed by the Commission. Id. at 5.
STAFF RECOMMENDATION
Staff is comfortable with the Company filing a single revised tariff instead of filing a
revised tariff in all four cases. Staff also believes the Company’s press release and customer bill
inserts will adequately notify customers of this proceeding.
Staff recommends the Commission issue a Notice of Application and Notice of
Intervention Deadline setting a 14-day intervention period. After the intervention period, Staff
will convene workshops with the Company and other parties to attempt to agree on appropriate
rates. After the workshops conclude, a Notice of Modified Procedure can be issued to establish a
comment period.

DECISION MEMORANDUM 3
COMMISSION DECISION
Should the Commission issue a Notice of Application and Notice of Intervention
Deadline, and then later issue a Notice of Modified Procedure after Staff, the Company, and
other interested parties have held workshops?

M:IPC-E-12-09_kk