20130522final_order_no_32811.pdf

Office of the Secretary
Service Date
May 22,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY’S REQUEST )CASE NO.IPC-E-13-06
FOR AUTHORIZATION TO IMPLEMENT )FIXED COST ADJUSTMENT (FCA)RATES )
FOR SERVICE EFFECTIVE JUNE 1,2013 )ORDER NO.32811
THROUGH MAY 31,2014 )
On March 15,2013,Idaho Power Company filed an Application to implement Fixed
Cost Adjustment (FCA)rates for electric service effective June 1,2013 through May 31,2014.
The FCA is a mechanism that allows Idaho Power to collect a portion of revenue separately from
its volumetric energy sales to pay certain fixed costs.The FCA creates a surcharge or credit
when fixed-cost recovery per customer varies above or below a Commission-established base.
The FCA rates are identified in the Company’s tariff Schedule 54 and are applicable to the
residential and small general service customer classes.The Company proposed an FCA rate of
0.1770 cents per kWh for residential customers and 0.2262 cents per kWh for small general
service customers,representing a decrease of 0.30%from current FCA rates.
The FCA mechanism functions by first identifying an authorized fixed-cost recovery
amount for the residential and small general service customer classes.This amount is a product
of the actual number of customers in each class multiplied by a fixed-cost per customer rate,
which is established as part of determining the Company’s revenue requirement in its most
recent general rate case.The authorized recovery amount is then compared to the amount of
fixed costs actually recovered by the Company,which is determined by multiplying the weather-
normalized sales for each class by the fixed-cost per energy rate,also established in the
Company’s most recent rate case.The difference between the amount authorized for fixed-cost
recovery and the amount actually recovered results in an adjustment each year to the FCA rate.
The Company’s Application states there is a 2012 FCA balance of $8,362,974 for the
residential class and $533,387 for the small general services class,for a total amount to be
recovered of $8,896,361.The FCA deferral balance is a small decrease below the amount
currently collected in customer rates through the FCA.Accordingly,the Company proposes an
FCA rate decrease of 0.30%for both the residential and small general service customer classes.
ORDERNO.32811 1
On April 3,2013,the Commission issued a Notice of Application and Notice of
Modified Procedure establishing a period for filing written comments on the Company’s
Application.Comments were filed only by Staff
The FCA operated under pilot status for three years beginning in 2007,and was then
extended for an additional two years to evaluate issues raised by Staff and other parties.See
Order No.31063.The FCA was subsequently approved as a permanent program in Order No.
32505.The Company’s current filing represents the sixth FCA rate adjustment and the first
since the Commission approved the mechanism as a permanent program.
Staff reviewed the Company’s filing and supporting testimony from Company
witness Harris,verified the calculation and use of the fixed-cost per customer (FCC)and fixed-
cost per energy (FCE)components,the accumulation of fixed costs deferred in 2012 and the
resulting balance of uncollected fixed costs.Staff verified that sales per customer for both
residential and small commercial classes were lower in 2012 in relation to the base year
established in the Company’s 2011 general rate case.The result is that weather-normalized
actual sales were below the necessary level to collect authorized fixed costs.
Residential and small commercial use per customer continued to decline when
compared to 2011 normalized consumption.For 2012,the residential class grew by roughly 1%
while class energy consumption remained flat.The decline in residential use per customer
results in an under recovery of authorized fixed costs and a positive FCA deferral balance.For
the small commercial class,the Company had a net loss of 184 customers,an approximate
reduction of 0.7%from 2011,and a decline in class energy sales of roughly 1.9%.
The Company proposed to spread the FCA surcharge uniformly to both customer
segments on an equal percentage basis,consistent with the previous FCA filings and
Commission Orders.Using weather-normalized forecasted sales for June 1,2013 through May
31,2014,the Company calculates that a surcharge of 2.12%over current residential and small
commercial base rates provides a sufficient opportunity to recover approved fixed costs.If the
recovery amounts for each class were allocated separately,residential customers would receive a
surcharge of 0.1837 cents per kWh,a 9%decrease over the current FCA rate of 0.2028 cents per
kWh.The small commercial customers would receive a 0.3720 cents per kWh surcharge,an
increase of over 43%.
ORDERNO.32811 2
On the record presented.the Commission has determined to approve the residential
FCA rate of 0.1 770 cents per kWh,and for commercial customers,the proposed FCA rate of
0.2262 cents per kWh.The record supports a finding that these FCA rates are fair,just and
reasonable and are adequate to give the Company the opportunity to collect its authorized fixed
costs in the coming FCA year.
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Application to implement an FCA
rate of 0.1770 cents per kWh for residential customers,and an FCA rate of 0.2262 cents per kWh
for small general service customers,is approved.These rates are effective June 1,2013 through
May 31,2014.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.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 May 2013.
PAUL Ki .LAND.PRESIDENT
MACK A.REDFORD,COMMISSIONER
y
U 4-a-L 0
MARSHA H.SMITH,COMMISSIONER
ATTEST:
/1 1 /1U/
Jean D Jee11
Commission Secretary
hIs()I PC-F-I 3-O6 s2
ORDERNO.32811 3