20140306Reply Comments.pdf

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An IDACORP Company
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LISA D. NORDSTROM
Lead Counsel
March 6,2014
VIA HAND DELIVERY
Jean D. Jewe!!, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-20
Base Level of Net Power Supply Expense - ldaho Power Company's Reply
Comments
Dear Ms. Jewell:
Enclosed forfiling in the above matter are an original and seven (7) copies of ldaho
Power Company's Reply Comments.
Sincerely,
K;"-0 /^ur,.-,--
Lisa D. NordstromL
LDN:csb
Enclosures
1221 W ldaho 5t. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nord strom @ ida hopower. co m
Attorneys for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO ESTABLISH A NEW
BASE LEVEL OF NET POWER SUPPLY
EXPENSE
CASE NO. IPC.E-13.20
IDAHO POWER COMPANY'S
REPLY COMMENTS
BEFORE THE !DAHO PUBLIC UTILITIES COMMISSION
ldaho Power Company ("ldaho Powed' or "Company") respectfully submits the
following Reply Comments in response to the Comments filed by the lndustrial
Customers of ldaho Power ("lClP") and Micron Technology, Inc. ("Micron") on February
20, 201 4 ("Joint Comments").
I. BACKGROUND
On November 1 ,2013, ldaho Power filed an application with
Utilities Commission ("Commission") requesting approval of
the
the
ldaho Public
Company's
determination of new normalized or "base level" Net Power Supply Expense ("NPSE") to
be utilized (1) to update base rates on June 1,2014, and (2) as the basis for quantifying
the 201412015 Power Cost Adjustment ("PCA') rates that would also become effective
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
June 1,2014. lf approved, the Company's proposed change in base level NPSE would
have no net impact to the overall revenue collected through customer rates and would
also be "revenue neutral" for all classes of ldaho customers.
On February 20,2014,lClP and Micron filed Joint Comments responding to the
Company's request. While their Joint Comments did not challenge the proposed update
to base level NPSE, lClP and Micron requested that the Commission require ldaho
Power to apply an allocation method based upon a class cost-of-service study. This
allocation approach, according to lClP and Micron, would be revenue neutral from an
ldaho jurisdictional sales perspective, but would not be revenue neutral for all classes of
ldaho customers. Joint Comments at 6.
II. REVENUE ALLOCATION
A. The Requested Update to Base Level NPSE Should Have No Net lmpact to
the Overall Revenue Collected Throush Customer Rates and Should Also
Be Revenue Neutral for AII Glasses of ldaho Customers.
The Company's request to change the level of normalized NPSE recovered in
base rates should be implemented in a manner that would result in no net change in
annual revenue and would have no impact to customer bills. lClP and Micron
requested in their Joint Comments that the Commission require ldaho Power to apply
an allocation method that is based upon allocation factors from the Company's 2011
cost-of-service study, which, if approved, would result in rate increases for some
customer classes and rate decreases for other customer classes. Most notably, ICIP
and Micron's proposed allocation methodology would result in an overall increase to
residential and irrigation customers' rates and a decrease in Large Power Service and
Special Contract customers' rates. Because ldaho Power's intent was to implement the
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
proposed change to base leve! NPSE in a manner that would be revenue neutra! for all
classes of customers, it did not prepare or file a current cost-of-service study that would
support the allocation method proposed by lClP and Micron. Rather, ldaho Power's
proposal maintains the same allocation relationships that exist today as established in
the Company's last general rate case, Case No. IPC-E-1 1-08. lt would be inappropriate
and beyond the scope of this proceeding to modify the allocation of total revenue
requirements between customer classes. Acceptance of the Company's proposal in
this case will allow for a much needed update to base rates to reflect significant and
ongoing increases to normalized NPSE without impacting customers' bills.
B. When Base Rates Were Adiusted to Reflect the Revenue Requirement
Associated with the Lanslev Gulch Power Plant. ldaho Power Applied a
Uniform Percentage lncrease to All Customer Glasses. Not an Enerqv
Allocation as Suqgested bv ICIP and Micron.
On page 4 of their Joint Comments, ICIP and Micron incorrectly present the base
rate adjustment associated with the addition of the Langley Gulch power plant (Case
No. IPC-E-12-14) as an example of "permanent and significant costs" that were
disproportionately assigned to high load factor customer classes on an energy-only
basis. ln fact, final Order No. 32585 directed ldaho Power to implement an annual
revenue increase "spread to each customer class on an equal percentage based upon
June 1 , 2012 base revenues." Order No. 32585 at 17. ldaho Power implemented the
Commission's directive in Order No. 32585 by applying a uniform percentage increase
to the demand and energy rates for each customer class. This had the effect of
maintaining the relationships between the demand and energy rate components for
each customer class that were established in the last general rate case, Case No. !PC-
E-11-08. Contrary to lClP and Micron's assertion, high load factor customers did not
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
receive a disproportionate share of the rate increase in the Langley Gulch revenue
requirement proceeding (Case No. IPC-E-12-14) through the use of an energy allocator.
il. coNcLUStoN
The Company believes that the Commission should reject the request by lClP
and Micron to require ldaho Power to apply an allocation method that is based upon
allocation factors from a 2011 cost-of-service study, as it would inappropriately result in
rate inereases for some customer classes and a rate decrease for other customer
classes without the guidance of a current, comprehensive class cost-of-service study.
Idaho Power respectfully requests that the Commission issue an order approving
the Company's determination of new normalized or "base level" NPSE to be utilized (1)
to update base rates on June 1, 2014, and (2) as the basis for quantifying the
201412015 PCA rates that would also become effective June 1, 2014. Further, the
Company requests that the Commission order the Company to implement the change in
base level NPSE in a manner that would have no net impact to the overall revenue
collected through customer rates and would also be "revenue neutra!" for all classes of
ldaho customers.
DATED at Boise, ldaho, this 6th day of March 2014.
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 6th day of March 2014 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Karl T. Klein
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customers of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street
Boise, ldaho 83702
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
Micron Technology, lnc.
Brian T. Hansen
HOLLAND & HART LLP
U.S. Bank Plaza, Suite 1400
101 South Capitol Boulevard
P.O. Box 2527
Boise, ldaho 83701 -2527
Thorvald A. Nelson
HOLLAND & HART LLP
6380 South Fiddlers Green Circle, Suite 500
Greenwood Village, Colorado 80111
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Christa Bearry, Legal Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 5