20120305Direct M. Larkin.pdf

2H2 p1’t4:i7
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO SHARE REVENUES )CASE NO.IPC-E-12-13
WITH CUSTOMERS IN CONFORMANCE
WITH ORDER NOS.30978 AND 32424.
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
MATTHEW T.LARKIN
1 Q.Please state your name and business address.
2 A.My name is Matthew T.Larkin.My business
3 address is 1221 West Idaho Street,Boise,Idaho.
4 Q.By whom are you employed and in what capacity?
5 A.I am employed by Idaho Power Company (“Idaho
6 Power”or “Company”)as a Regulatory Analyst II in the
7 Regulatory Affairs Department.
8 Q.Please describe your educational background.
9 A.I received a Bachelor of Business
10 Administration degree in Finance from the University of
11 Oregon in 2007.In 2008,I earned a Master of Business
12 Administration degree from the University of Oregon.I
13 have also attended electric utility ratemaking courses,
14 including The Basics:Practical Regulatory Training for
15 the Electric Industry,a course offered through New Mexico
16 State University’s Center for Public Utilities,and
17 Introduction to Rate Design and Cost of Service Concepts
18 and Techniques,presented by Electric Utilities
19 Consultants,Inc.
20 Q.Please describe your work experience.
21 A.I began employment with Idaho Power as a
22 Regulatory Analyst I in January 2009.As a Regulatory
23 Analyst I,I provided support for the Company’s regulatory
24 activities,including compliance reporting,financial
25
LARKIN,DI
Idaho Power Company
1 analysis,and the development of revenue forecasts for
2 regulatory filings.
3 In January of 2012 I was promoted to Regulatory
4 Analyst II.As a Regulatory Analyst II,my
5 responsibilities have expanded to include the development
6 of complex cost—related studies and the analysis of various
7 strategic regulatory issues.
8 Q.What is the purpose of your testimony in this
9 proceeding?
10 A.My testimony describes the Company’s proposed
11 implementation of the revenue sharing mechanism established
12 by the Idaho Public Utilities Commission (“Commission”)in
13 Order No.30978 in Case No.IPC—E-09—30,and modified by
14 Order No.32424 in Case No.IPC—E-11—22.My testimony
15 begins with a brief outline of the mechanism as established
16 in Case No.IPC—E—Q9—3Q and describes the outcome of
17 applying the mechanism to year-end 2009 and 2010 financial
18 results.Further,my testimony details the settlement
19 stipulation approved by Order No.32424 in Case No.IPC-E
20 11-22,which extends the mechanism through 2014 and
21 provides for a one-time modification to the revenue sharing
22 provision as it applies to year—end 2011 financial results.
23 My testimony concludes with the determination of 2011
24 revenue sharing benefits,the allocation of benefits to
25 individual customer classes,and the proposed inclusion of
LARKIN,DI 2
Idaho Power Company
1 class-allocated benefits in the 2012 Power Cost Adjustment
2 (“PCA”)filing.
3 I.BACKGROUND
4 Q.Please provide a brief description of the
5 revenue sharing mechanism established by Order No.30978 in
6 Case No.IPC—E—09-30.
7 A.On January 13,2010,the Commission issued
8 Order No.30978 approving the settlement stipulation filed
9 in Case No.IPC—E-09-30.Through this stipulation,a
10 mechanism was established to allow the Company to
11 accelerate the amortization of accumulated deferred
12 investment tax credits (“ADITC”)if the Company’s actual
13 Idaho jurisdictional year-end return on equity (“ROE”)fell
14 below 9.5 percent in any year from 2009 through 2011.This
15 mechanism also included a provision for revenue sharing if
16 the Company’s actual Idaho jurisdictional year-end ROE
17 exceeded 10.5 percent in any year over the same three-year
18 period.Per the terms of the stipulation,50 percent of
19 the Idaho jurisdictional year-end ROE in excess of 10.5
20 percent was to be shared with customers in the form of a
21 reduction in rates.
22 Q.Did the mechanism established by Order No.
23 30978 result in any action following the completion of the
24 2009 or 2010 fiscal years?
25
LARKIN,DI 3
Idaho Power Company
1 A.No.In 2009 and 2010 the Company’s actual
2 Idaho jurisdictional year—end ROE was between 9.5 and 10.5
3 percent,resulting in no accelerated amortization of ADITC
4 or revenue sharing with customers.
5 Q.Have any modifications been made to the
6 revenue sharing mechanism since its inception in Case No.
7 IPC—E—09—30?
8 A.Yes.On December 27,2011,the Commission
9 issued Order No.32424,approving the settlement
10 stipulation filed by Idaho Power,Commission Staff
11 (“Staff”),and Micron Technology,Inc.(“Micron”)in Case
12 No.IPC-E-11—22.This stipulation modified and extended
13 the revenue sharing mechanism through 2014,continued
14 authorization for the Company to accelerate the
15 amortization of ADITC if earnings fall below 9.5 percent
16 over the same time period,and included a provision for a
17 one-time modification to the revenue sharing mechanism
18 based on year—end 2011 financial results.
19 Q.Please describe the one-time modification made
20 to the 2011 revenue sharing mechanism per the settlement
21 stipulation approved in Order No.32424.
22 A.As described above,the initial revenue
23 sharing mechanism established in Case No.IPC-E—09-30
24 directed the Company to share 50 percent of the Idaho
25 jurisdictional 2011 year-end ROE in excess of 10.5 percent
LARKIN,DI 4
Idaho Power Company
1 with customers in the form of an offset or reduction to
2 rates.When Case No.IPC-E—11—22 was filed in the fourth
3 quarter of 2011,the Company had experienced one—time
4 benefits that contributed to increased earnings for the
5 2011 fiscal year.Consequently,it was anticipated that
6 the Idaho jurisdictional 2011 year-end ROE would exceed the
7 revenue sharing threshold of 10.5 percent established in
8 Case No.IPC-E—09-30.
9 Given the expected level of revenue sharing
10 following the close of the 2011 fiscal year,the Company,
11 Staff,and Micron agreed through settlement negotiations to
12 a one—time modification to the mechanism established in
13 Case No.IPC—E-09—30,resulting in increased revenue
14 sharing potential based on year-end 2011 financial results.
15 As stated on pages 2 and 3 of the settlement stipulation
16 approved in Case No.IPC—E—11—22:
17 [The one—time adjustment]will set
18 aside 75 percent of the Company’s
19 share of the Idaho jurisdictional,
20 2011 year-end ROE in excess of 10.5
21 percent to be provided as a customer
22 benefit in the form of an offset to
23 amounts in the Company’s pension
24 balancing account to reduce the
25 amount that would otherwise need to
26 be collected in rates.
27
28 Alternately stated,in addition to the customers’50
29 percent share of the Idaho jurisdictional 2011 year-end ROE
30 in excess of 10.5 percent,customers would also receive 75
LARKIN,DI 5
Idaho Power Company
1 percent of the Company’s share of 2011 ROE in excess of
2 10.5 percent in the form of a reduction in deferred pension
3 expense.
4 II.QUANTIFICATION OF YEAR-END 2011 REVENUE SHARING
5 Q.Please describe the methodology used to
6 determine the Idaho jurisdictional 2011 year-end ROE.
7 A.The methodology used to determine the
8 Company’s Idaho jurisdictional 2011 year-end ROE is the
9 same methodology used for both the year—end 2009 and year-
10 end 2010 ROE determinations.First,the Company prepared a
11 full jurisdictional separation study (“JSS”)based on third
12 quarter financial information as of September 30,2011,and
13 jurisdictional allocation factors from the 2010 Federal
14 Energy Regulatory Commission Form 1 filing.The results of
15 this study were used to develop allocation factors for
16 various components of operating income and rate base.
17 Following the completion of the 2011 fiscal year,retail
18 revenues were directly assigned to each jurisdiction,and
19 the allocation factors from the third quarter JSS were
20 applied to all other year-end system financial figures to
21 determine year—end Idaho jurisdictional net rate base and
22 operating income.Common equity was then allocated
23 according to each jurisdiction’s proportion of net rate
24 base.Finally,the Idaho jurisdictional year-end ROE was
25 determined by dividing the Idaho—allocated earnings on
LARKIN,DI 6
Idaho Power Company
1 common stock by the Idaho-allocated portion of common
2 equity.
3 Q.Have you provided an exhibit demonstrating the
4 application of this methodology?
5 A.Yes.Exhibit No.1 provides a step-by-step
6 calculation of the Idaho jurisdictional ROE and subsequent
7 revenue sharing benefits based on year-end 2011 financial
8 results utilizing the methodology described above.
9 Q.What was the Company’s Idaho jurisdictional
10 2011 year-end ROE?
11 A.As shown on line 45 of Exhibit No.1,the
12 Company’s Idaho jurisdictional 2011 year—end ROE was 12.55
13 percent.
14 Q.Based on the terms of the settlement
15 stipulation approved in Order No.32424,does this indicate
16 the need for revenue sharing with customers?
17 A.Yes.The 12.55 percent Idaho jurisdictional
18 ROE is greater than the 10.5 percent trigger for customer
19 revenue sharing.
20 Q.Has the Company quantified the Idaho
21 jurisdictional 2011 year-end ROE in excess of 10.5 percent?
22 A.Yes.As displayed on line 61 of Exhibit No.
23 1,in 2011,the Company exceeded an Idaho jurisdictional
24 year—end ROE of 10.5 percent by $33,007,182.
25
LARKIN,DI 7
Idaho Power Company
1 Q.Per the terms of the settlement stipulation
2 approved in Order No.32424,what portion of the
3 $33,007,182 will be shared with customers?
4 A.As modified by the stipulation approved in
5 Order No.32424,revenue sharing based on year—end 2011
6 financial results will be provided to customers in two
7 components.The first component reflects customers’50
8 percent share of the Idaho jurisdictional 2011 year—end ROE
9 in excess of 10.5 percent allowed for in the original
10 revenue sharing mechanism approved in Case No.IPC—E-09-30.
11 This component,calculated at 50 percent of $33,007,182,
12 results in a customer benefit prior to tax gross—up of
13 $16,503,591.After tax gross-up,customers receive a total
14 rate reduction of $27,098,897.These amounts are displayed
15 in Exhibit No.1 on line 64.
16 The second customer benefit is the result of the
17 one-time modification to the revenue sharing mechanism per
18 the settlement stipulation approved in Order No.32424.As
19 described earlier in my testimony,this stipulation allowed
20 for customers to receive 75 percent of the Company’s 50
21 percent share of the Idaho jurisdictional 2011 year-end ROE
22 in excess of 10.5 percent in the form of an offset to the
23 Company’s pension balancing account.As shown on line 65
24 of Exhibit No.1,this amount was calculated as 75 percent
25 of the Company’s 50 percent share of $33,007,182,or
LARKIN,DI 8
Idaho Power Company
1 $12,377,693.After tax gross-up,customers receive a total
2 benefit of $20,324,173 in the form of a reduction to
3 deferred pension expense.After 2011 fiscal year earnings
4 were finalized,an accounting entry was made to reduce the
5 pension deferral balancing account by $20,324,173 with an
6 effective date of December 31,2011.
7 Q.What is the total benefit customers will
8 receive as a result of revenue sharing based on the
9 Company’s actual year-end 2011 financial results?
10 A.After tax gross-up,the combination of the
11 $27,098,897 reduction to rates and the $20,324,173
12 reduction to the pension balancing account results in an
13 overall customer benefit of $47,423,069.
14 III.CLASS ALLOCATION
15 Q.How does the Company propose to allocate the
16 $27,098,897 rate reduction to customer classes?
17 A.The Company proposes to allocate the
18 $27,098,897 rate reduction to customer classes based on
19 each class’s proportional share of forecasted base revenues
20 for the June 1,2012,through May 31,2013,sharing period.
21 Because the $27,098,897 benefit is revenue driven,
22 allocating these dollars proportionally to base revenues
23 aligns the allocation of the benefit with the driver of the
24 benefit.
25
LARKIN,DI 9
Idaho Power Company
1 Q.How was the appropriate level of base revenues
2 attributable to the Amended Electric Service Agreement
3 (“AESA”)with Hoku Materials,Inc.(“Hoku”)determined for
4 the purpose of allocating revenue sharing benefits?
5 A.On February 17,2012,the Company,Hoku,and
6 Staff filed a settlement stipulation in Case No.IPC-E-12-
7 02 requesting Commission acceptance of the terms of a
8 reformed AESA between the Company and Hoku.Under the
9 terms of the reformed AESA,Hoku’s monthly minimum billed
10 energy charge is set at $800,000 through June 2013,which,
11 as stated on page 5 of the stipulation,is “to be applied
12 by Idaho Power to First Block Demand,Second Block Demand,
13 and First Block Energy charges.”Further,on pages 5 and 6
14 the stipulation states,“Idaho Power’s accounting for each
15 of these components will be treated the same as the current
16 treatment for each component under the current AESA.”
17 For the purpose of allocating revenue sharing
18 benefits,the Company calculated base retail revenues for
19 the June 1,2012,through May 31,2013,sharing period
20 according to the terms of the filed settlement stipulation.
21 As stated above,expected payments from Hoku over the
22 twelve-month test period reflect charges associated with
23 First Block Demand,Second Block Demand,and First Block
24 Energy.Because First Block Energy charges are treated as
25 surplus sales for ratemaking purposes,they are not
LARKIN,DI 10
Idaho Power Company
1 included in the allocation basis for revenue sharing
2 benefits.The remaining two components,First Block and
3 Second Block Demand,were calculated for the June 1,2012,
4 through May 31,2013,time period.The total revenue
5 associated with these demand charges,calculated at
6 $2,835,760,was used as the allocation basis for Hoku’s
7 portion of revenue sharing benefits as displayed on line 23
8 of Exhibit No.2.
9 Q.Are the proposed allocation amounts in column
10 E of Exhibit No.2 subject to final Commission approval of
11 the settlement stipulation filed in Case No.IPC—E-12—02?
12 A.Yes.The revenue—based allocation reflects
13 the terms of the settlement stipulation as filed in Case
14 No.IPC—E-12—02,which is currently pending Commission
15 decision.Should the Commission choose to not approve the
16 contract or modify its terms,any resulting impact on
17 expected revenues from the Hoku AESA during the June 1,
18 2012,through May 31,2013,sharing period will have a
19 direct effect on the allocation of revenue sharing benefits
20 included in this filing.
21 Q.What is the impact of allocating the proposed
22 rate reduction to customer classes proportionally to base
23 revenues?
24 A.Exhibit No.2 details the allocation of the
25 $27,098,897 revenue sharing benefit to customer classes
LARKIN,DI 11
Idaho Power Company
1 proportionally to forecasted base revenues for the June 1,
2 2012,through May 31,2013,sharing period.As displayed
3 in column G of Exhibit No.2,each customer class receives
4 a decrease of approximately 3.25 percent relative to
5 current base revenues.
6 IV.RATE DESIGN
7 Q.How does the Company propose to include the
8 class—allocated revenue sharing benefits in rates?
9 A.With the exception of the Special Contracts
10 for Micron,Hoku,the U.S.Department of Energy,and J.R.
11 Simplot,Inc.(“Special Contracts”),the Company proposes
12 to include the class—allocated revenue sharing benefits
13 listed in column E of Exhibit No.2 as an offset to 2012
14 PCA rates effective June 1,2012,through May 31,2013.
15 The allocated dollar amounts are divided by each class’s
16 expected kilowatt-hour (“kwh”)usage over the twelve-month
17 sharing period to derive an offset to PCA rates in effect
18 over the same time period.The resulting rate offset will
19 coincide with any PCA rate change,resulting in an
20 individual cents-per-kwh rate for each rate class
21 reflecting PCA recovery less the class—allocated portion of
22 revenue sharing benefits.Total revenue sharing benefits
23 credited under the proposed rates will be subject to the
24 true-up portion of the PCA in the same manner as other PCA
25 components.Column F of Exhibit No.2 contains proposed
LARKIN,DI 12
Idaho Power Company
1 class—specific revenue sharing rates to be included as part
2 of the Company’s 2012 PCA filing.
3 Q.What is the Company’s proposal for providing
4 revenue sharing benefits to its Special Contracts?
5 A.Rather than providing revenue sharing benefits
6 to Special Contracts through a volumetric rate,the Company
7 proposes to provide Special Contracts a flat dollar-per-
8 month credit in twelve equal portions to serve as an offset
9 to monthly invoices billed for June 2012 through May 2013
10 usage.This revenue credit is calculated at one-twelfth of
11 the total revenue sharing benefit allocated to each Special
12 Contract as displayed in column E of Exhibit No.2.
13 Q.Why is the Company proposing to provide
14 revenue sharing benefits to Special Contracts through a
15 flat dollar-per-month credit rather than a volumetric
16 cents-per-kWh rate in the same manner as other rate
17 classes?
18 A.The Company’s four Special Contracts are
19 comprised of four individual large load customers.When
20 rates are set for these customers,they are based on
21 expected electric usage for each customer over the
22 applicable test period.Consequently,recovery of costs,
23 or,in this case,the crediting of benefits,is subject to
24 the usage of a single customer for each respective Special
25 Contract.When a Special Contract’s usage is largely
LARKIN,DI 13
Idaho Power Company
1 uncertain for the test period,it results in increased risk
2 of under—or over-crediting benefits to that customer if
3 benefits are provided through a volumetric cents-per-kwh
4 rate.
5 Due to uncertainty surrounding energy consumption
6 for the Hoku AESA over the twelve—month test period,the
7 Company does not currently possess a sufficient kWh
8 estimate upon which to base a volumetric cents-per-kwh
9 credit.Therefore,providing a flat dollar—per-month
10 credit to 1-loku’s invoices over the June 2012 through May
11 2013 time period removes the risk associated with under-or
12 over—crediting revenue sharing benefits due to large
13 variances in actual usage.
14 The Company’s proposal to provide flat dollar-per—
15 month credits to the remaining three Special Contracts
16 provides consistent treatment among all Special Contract
17 customers,while maintaining a twelve-month effective
18 period that is consistent among all rate classes.Because
19 Special Contracts are comprised of single customers and are
20 not expected to shift between rate classes over the twelve-
21 month test period,providing a flat dollar-per-month credit
22 is both a practical and accurate way to provide revenue
23 sharing benefits to these customers.
24
25
LARKIN,DI 14
Idaho Power Company
1 Q.Why is it not appropriate to provide flat
2 dollar-per-month credits to customers in all other rate
3 classes?
4 A.The calculation and application of flat
5 dollar—per-month credits to customers taking service under
6 general tariff schedules is problematic for two primary
7 reasons.The first issue arises in determining the
8 appropriate flat dollar—per-month credit amount for
9 individual customers belonging to rate classes with
10 multiple customers.Under the Company’s proposal,revenue
11 sharing benefits are allocated to customer classes
12 proportionally to forecasted base revenues for the June 1,
13 2012,through May 31,2013,test period.Base revenues are
14 forecasted using the Company’s retail revenue forecast
15 model,which forecasts revenues on a rate class basis.
16 Determining customer—specific,dollar—per-month credit
17 amounts would require the calculation of forecasted base
18 revenues on a customer-by-customer basis,which is beyond
19 the level of granularity provided in the current load and
20 revenue forecast models.Alternately,the Company could
21 provide equal dollar-per-month credits to all customers
22 within a rate class,but this is also problematic.This
23 approach would result in inequalities within each rate
24 class,as benefits would be allocated to individual
25 customers equally regardless of usage within each class;
LARKIN,DI 15
Idaho Power Company
1 i.e.,the largest customers within a rate class would
2 receive the same dollar—per—month credit as the smallest
3 customers within a rate class.The Company’s proposal for
4 providing revenue sharing benefits accounts for class
5 responsibility for overall revenue sharing benefits and
6 individual customer responsibility for class—allocated
7 benefits within each rate class.
8 The second issue with flat dollar-per—month credits
9 for all rate classes arises due to the potential for
10 customers taking service under general tariff schedules to
11 shift between levels of service.Unlike Special Contracts,
12 which typically remain static under their respective
13 Electric Service Agreements,customers in other rate
14 classes have the potential to shift between tariff
15 schedules;for example,it is possible for a customer
16 taking service under Schedule 19 to reduce its usage and
17 shift to Schedule 9.If revenue sharing benefits are
18 provided through flat dollar—per-month credits,problems
19 could arise when monthly credit amounts change for
20 individual customers as they shift between schedules.By
21 providing revenue sharing benefits through a volumetric
22 cents-per—kWh rate,if a customer shifts between rate
23 classes,the overall revenue credit provided would still be
24 tied to that individual customer’s energy usage.This
25 approach maintains the connection between the revenue
LARKIN,DI 16
Idaho Power Company
1 sharing benefit provided and the individual customer’s
2 contribution to overall retail sales.
3 Q.Does this conclude your testimony?
4 A.Yes.
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LARKIN,DI 17
Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.IPC-E-12-13
IDAHO POWER COMPANY
LARKIN,DI
TESTIMONY
EXHIBIT NO.I
Idaho Power Company
2 Revenue Sharing Calculation
0 For the Twelve Months Ended December 31,2011
5
6
Actual September30,2011
TOTAL
I Actual December31,2011
TOTAL
7 snnpe mo SY5TEM £800
e “SU9tAeARYOFRESULTS”’
TOTAL COMBINEDRATE eASE 2,514,221537 2,327,399,058
16
Il OPERATINGEXPENSES
Ix
IA
20
25
23
25
26
27
26
20 OPERATING INCOME
36
31
36 INCOME BEFORE INTEREST CHARGES
37 LESS INTEREST CHARGES
30
36 NET INCOME
40
41 ACTUALTEAR-END RESULTS -BEFORE ITC ADJUSTMENT
42 EARNINGSON COMMON STOCK
43 COMMON EQUITY AT YEAR END
44
45 RETURN ON YEAR-END COMMON EOUITY
46
47 EARNINGS ON COMMON STOCK Q SSS ROE
46 EARNINGSON COMMON STOCK Q 1S.SS ROE
58
Si ACTUAL YEAR-END RESULTS-AFTER ITC ADJUSTMENT
52 INVESTMENT TAX CREDIT ADJUSTMENT
53 ADJUSTED EA,RNINGS ON COMMON STOCK
S4 ADJUSTED COMMON EQUITY ATYEAR-END
55 ADJUSTED RETURN ON YEAR-ENDCOMMON EQUITY
56
57
58
56
5°
61
62
63
64
ES
66
57
68
669,777,914 6SS,690,S24
1 13,SS1 742 1E5,448,4S1
E,3E1,132 5,969,626
28,594,715 26,237,SSE
28,065
35,377,618 32,823,209
(1,131,S34)(1,551,154)
(57,754,420)(53,445,254)
(803,160)(715,978)
812j51,606 766,155,213
235,932,432 219,524,020
5,967,745 5,570,745
241,900,177 225,094,768
25,494,072 23,59S,453
(2,696,486)(2,510,271)
264,687,761 246,274,951
71,555,112 65,775,293
193,632,649 180,499,656
193,532,645 190,499,658
1,553,1S2,197 1,437,597,427
12.47%12.55%
94.5%
93.3%
93.8%
9S.8%
0.0%
02.8%
92.9%
92.5%
89.1%
93.1%
92.6%)L 9)
93.1%)L32)
52.6%(L 8)
52.6%)L9)
147,544,709 136,581,256 (L43 ‘5.5%)
163,075,731 150,958,230 )L43 ‘10.5%)
(48,926,622))L47-L42)1)1-9.5%)
131,971,037
1,399,168,65S
9.50%
Exhibit No.I
Case No.IPC-E-12-13
M.Larkin,IPC
Page 1 of 1
II DEVELOPMENT OF NET INCOME
12 OPERATING REVENUES
13 RETAIL SALES REVENUES Inst 441.1 Rev)
14 OTHER OPERATING REVENUES
is TOTALOPERATING REVENUES
92.6%
635,304,219 Direst Assign
126,636,926 89.5%
761,941,145
SeptemberAllooalions)RaliSs
I Updatefigures in RED I
801,643,565 619,177,174 DireEl Assign
187,040,474 169,502,059 89.0%
1,048,684,038 985,679,233
OPERATION 9 MAINTENARCE EXPENSES
DEPRECIATION EXPENSE
AMORTIZATION OF LIMITED TERM PL.ART
TAXES OTHER THOR INCOME
REGULATORY DEBITSICREDITS
PROVISION FOR DEFERRED INCOMETALES
INVESTMENT TM CREDIT ADJUSTMENT
FEDERAL INCOME TAXES
STATE INCOME TAXES
TOTAL GPERATINGEXPENSES
697,981,069
142,257,884
810,238,853
526,340,944
84,271,510
4,665,365
20,695,579
21,074
25,775,067
(073,218)
(51,704,525)
(1,626,455)
608,565,341
497.397.599
78,938,975
4,378,374
19,700,060
23,914,065
(810,902)
(47,846,754)
(1,449,905)
573,911,128
94.5%
93.3%
93.8%
90.8%
0.0%
92.6%
92.9%
92.5%
69.1%
ADD IERCO OPERATING INCOME
32 OPERATING INCOME BEFOREOTHER INCOME ADD DEDUCTION:
33 ADO MUDO EQUITY
34 ADD OTHER INCOME AND DEDUCTIONS
201,673,612 188,030,017
802.867 762,911 95.0%
252,476,478 188,792,927
95.0%
IF IDAHO RETURN ON COMMON EQUITY (Line 45)o9,5%
ADDITIONAL ITO ADJUSTMENT )AornuaIed)IlL S2 is negative.thnn S ii positive,then smaller of LX2 or 025,000 055
IF IDAHO RETURN ON COMMON EOUITY (Lice 45)s19.5%
IDAHO EARNINGS GREATER THAN 1S.SX%ROE II L42-L48 isnegative,then X,if positive,then L42-L48 33,007,162 )L42-L48(I(1-10.S%(
Per Order#32424:AflerTox Tax Gross Up
CUSTOMER SHARE -50%)Redustion to ratnsi 16,503,591 27,098,897
*ADDITIONAL CUSTOMER SHARE -75%OF ODMPARY’S 50%SHARE (ReductionIn Pension eoponsel 12,377,693 20,324,173
COMPANY’S S-lADE-50%IAone—iimn aotuEment apie0 in 2011 to aIIow7N%otthe Company’s SS%sEam 454 OiossmemberetOl 4,125,898
DM10 EARNINGS GREATERYHAN IS.S0%ROE 33.007,182
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.IPC-E-12-13
IDAHO POWER COMPANY
LARKIN,DI
TESTIMONY
EXHIBIT NO.2
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