20121120Answer.pdf

RECEIVED
Peter J. Richardson (ISB # 3195) 1t112 20 j 3: 21 Gregory M. Adams (ISB # 7454)
Richardson & O'Leary, PLLC
515 N. 27th Street
4rj puBuc
COMMIStON UTL11tES
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
[e-mail]
Attorneys for the Industrial Customers of Idaho Power
BEFORE THE IDAHO
PUBLIC UTILITIES COMMISSION
)
IN THE MATTER OF THE APPLICATION OF) CASE NO. IPC-E-12-15
IDAHO POWER COMPANY FOR A )
DETERMINATION OF 2011 DEMAND-SIDE ) INDUSTRIAL CUSTOMERS OF IDAHO
MANAGEMENT ("DSM") EXPENDITURES ) POWER'S ANSWER TO IDAHO
AS PRUDENTLY INCURRED. ) POWER'S PETITION FOR
RECONSIDERATION OF ORDER 32667
COMES NOW, the Industrial Customers of Idaho Power ("ICIP"), and pursuant to the
Idaho Public Utilities Commission's ("Commission's") Rule of Procedure 331.05 hereby files its
Answer to Idaho Power Company's ("Idaho Power" or the "Company") Petition for
Reconsideration of Order No. 32667. This Answer is directed to Idaho Power's request for a
single-issue rate case on Idaho Power's decision to increase its labor related expenses for
demand-side management ("DSM"). ICIP opposes approval of increased labor expenses outside
the context of a general rate case, and therefore ICIP respectfully requests that the Commission
deny reconsideration of this issue.1
1 ICIP has not fully investigated the other issue regarding an alleged accounting error raised by Idaho
Power's Petition for Reconsideration. ICIP therefore takes no position on that issue.
ANSWER TO PETITION FOR RECONSIDERATION
IPC-E- 12-15
PAGE 1
BACKGROUND
In this case, Idaho Power sought the Commission's determination that Idaho Power had
prudently incurred $35,623,321 in Idaho Energy Efficiency Rider expenses and $7,018,385 in
Custom Efficiency incentive expenses. In its Comments, Commission Staff noted, "Wage and
salary increases for DSM rider-funded employees continue to be automatically passed on to
customers without the level of scrutiny and evaluation that occurs during the course of a general
rate case." Staff's Comments at 7. Staff recommended that the Company not fund any additional
wage increases through the Rider until the increases can be properly vetted through a general rate
proceeding. Id. In Order No. 32667, the Commission stated, "the Company has the burden of
proving that the increase in labor related expenses is reasonable. Based upon our review of the
record, we find that the Company has not yet carried its burden." Order No. 32667 at 9. "The
Company may, but need not, wait until a general rate case to provide such supporting
information." Id
In its Petition for Reconsideration (as modified by an Errata), Idaho Power argues that the
Commission erred in deferring a prudence determination of the $89,601 increased labor expense.
Idaho Power appears to assert that because its DSM programs have passed the three cost-
effectiveness tests set forth in the Memorandum of Understanding ("MOU") filed in Case No.
IPC-E-09-09, the Commission is now "altering the standard or review of such labor expense
increases and potentially applying a new standard in a retroactive manner." Idaho Power's
Petition for Reconsideration at 4.
ANSWER TO PETITION FOR RECONSIDERATION
IPC-E-12-15
PAGE 2
ARGUMENT
The Commission properly concluded that Idaho Power did not meet its burden to prove
that its increased labor expenses were prudent. Idaho law requires the Commission to ensure that
Idaho Power's rates are just and reasonable. See I.C. § 61-301; § 61-502. Idaho Power bears the
burden of proof. Because Idaho Power failed to meet its burden, the Commission had no choice
but to deny a prudency determination for the wage increase.
The MOU between Idaho Power and Staff filed in Case No. IPC-E-09-09 does not
support Idaho Power's Petition. Notably, ICIP opposed the MOU out of concern that, if
approved by the Commission, the MOU would relieve the utility of the need to prove the
prudence of its DSM expenditures. The Commission stated:
The Industrial Customers recognize that "even if a utility implements Staff's
prudency guidelines and evaluation framework in the Memorandum of
Understanding, the utility will still need Commission approval of the expenditures
in aformalfihing, such as !q genera l rate case." Industrial Customers Comments,
p. 7. The Industrial Customers and other interested parties will have an
opportunity in those proceedings to analyze and challenge the DSM evaluation at
issue, regardless whether the utility has evaluated and reported its programs
consistent with the terms of the MOU. Accordingly, we decline to discuss the
terms of the MOU, other than to recognize that the MOU has potential in
evaluating and reporting Idaho Power's DSM programs. The Commission 'sfuture
review ofparticular DSM programs should be assisted, but will not be replaced
by, Idaho Power's compliance with the terms of the MOU
Order No. 31039 at 3 (emphasis added).
Idaho Power is incorrect to assert that the MOU binds the Commission to any "standard
of review." The standard of review is the same as any other rate proceeding.
There is also no merit to Idaho Power's assertion that the Commission has
engaged in retroactive ratemaking to Idaho Power's detriment. "Whenever the
commission. . . shall find that the rates . . . are unjust, unreasonable, discriminatory or
ANSWER TO PETITION FOR RECONSIDERATION
IPC-E-12-15
PAGE 3
preferential, . . . , the commission shall determine the just, reasonable or sufficient rates..
• to be thereafter observed. . . ." I.C. § 61-502 (emphasis added). "[R]ates set by order
are final unless stayed and are determinative of all rights of the parties as long as they
remain in effect without regard to whether they are later altered or amended on rehearing
or altered or amended after being set aside on appeal." Utah Power & Light Co. v. Idaho
Pub. Util. Commn., 107 Idaho 47, 53, 685 P.2d 276, 282 (1984). No prior order deemed
Idaho Power's wage increases for 2011 to be reasonable and recoverable in rates. If
anything, the Commission's Order engaged in retroactive ratemaking to Idaho Power's
favor. The Commission determined that Idaho Power had failed to meet its burden to
demonstrate that the 2011 wage increases were reasonable. Yet the Commission
nevertheless provided Idaho Power an opportunity in some unspecified future
proceeding, or even something short of a formal proceeding, to demonstrate the prudence
of this past expenditure. ICIP and other parties will be prejudiced if Idaho Power can re-
litigate the reasonableness of expenses in its rates after failing to demonstrate prudence.
Finally, although the dollar amount at issue here is relatively small, ICIP objects
to single-issue rate cases, which appear to be occurring with some frequency. See Case
No. IPC-E-12-14 (placing Langley Gulch in rates); Case No. IPC-E-12-24 (requesting
capitalization of Customer Efficiency expenditures). Idaho Power could have sought
approval of wage increases in the general rate case that it filed in IPC-E-11-08. ICIP
agrees with Staff's Comments that Idaho Power should not side-step the scrutiny of a
general rate case through the limited review available in dockets such as the annual DSM
filing. The Commission should endorse this view.
ANSWER TO PETITION FOR RECONSIDERATION
IPC-E-12-15
PAGE 4
CONCLUSION
For the reasons stated above, ICIP respectfully requests that the Commission deny
reconsideration of the Commission's determination related to Idaho Power's labor expense
increase.
DATED this 20th day of November, 2012.
RICHARDSON AND O'LEARY, PLLC
By: P~6~0,
Peter J. Richardson
Gregory M. Adams
Attorneys for the Industrial
Customers of Idaho Power
ANSWER TO PETITION FOR RECONSIDERATION
IPC-E-12-15
PAGE 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 20th day of November, 2012, a true and correct copy of the
within and foregoing ANSWER TO IDAHO POWER'S PETITION FOR RECONSIDERATION OF
ORDER 32667 BY THE INDUSTRIAL CUSTOMERS OF IDAHO POWER IN CASE NO.IPC-E-12-15
was served in the manner shown to
Jean Jewell X Hand Delivery
Commission Secretary —U .S. Mail, postage pre-paid
Idaho Public Utilities Commission - Facsimile
472 W Washington - Electronic Mail
Boise ID 83702
Darlene Nemnich - Hand Delivery
Greg Said i_U.S. Mail, postage pre-paid
Idaho Power Company - Facsimile
P0 Box 70 X Electronic Mail
Boise, Idaho 83707-0070
[e-mail]
[e-mail]
Lisa D Nordstrom - Hand Delivery
Julia A Hilton s_U.S. Mail, postage pre-paid
Idaho Power Company - Facsimile
P0 Box 70 X Electronic Mail
Boise, Idaho 83707-0070
[e-mail]
jhilton@idahopower corn
Benjamin Otto - Hand Delivery
Idaho Conservation League XU.S. Mail, postage pre-paid
710 N 6th Street Facsimile -
Boise ID 83702 X Electronic Mail
botto@idahoconservation org
Karl Klein X Hand Delivery
Deputy Attorney General —U .S. Mail, postage pre-paid
Idaho Public Utilities Commission - Facsimile
472 W Washington - Electronic Mail
Boise ID 83702
Benjamin J Otto - Hand Delivery
Idaho Conservation League X U.S. Mail, postage pre-paid
710 North Sixth Street - Facsimile
Boise ID 83702 X Electronic Mail
[e-mail]
Ken Miller
Snake River Alliance
P0 Box 731
Boise ID 83702
[e-mail]
Hand Delivery
XU.S. Mail, postage pre-paid
Facsimile
Electronic Mail
~~ a)-A
Nina Curtis