20131126notice_of_application_order_no_32932.pdf

Office of the Secretary
Service Date
November 26,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-13-20
AUTHORITY TO ESTABLISH A NEW BASE )
LEVEL OF NET POWER SUPPLY EXPENSE )NOTICE OF APPLICATION
)
)NOTICE OF
)MODIFIED PROCEDURE
)
________________________________
)ORDER NO.32932
On November 1,2013,Idaho Power Company applied to the Commission for an
Order authorizing the Company to increase its total system “base level”net power supply
expense (“NPSE”)from $199,993,778 to $305,684,869.’The Company would use the increased
NPSE to:(1)update base rates on June 1,2014;and (2)as the basis for quantifying 2014/2015
Power Cost Adjustment (“PCA”)rates that also would take effect June 1,2014.The Company
says the proposed NPSE increase would be revenue neutral for all customer classes,and would
not increase customers’bills.See Application at 1-2,3.and 5.
With this Order,the Commission summarizes the Application,solicits public input on
the Application,and orders that the case be processed under the Commission’s Rules of
Modified Procedure.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that the PCA is a rate mechanism that allows the
Company to recover from or return to customers the annual difference between actual NPSE and
the normalized,“base level”NPSE and then charges or returns the difference to customers
through a rate change each June 1.The Company says it has filed this Application to correct the
PCA rate,which the Company says is artificially high because the Company’s base rates
currently recover less NPSE than the normalized,base level NPSE.The base level NPSE
consists of Federal Energy Regulatory Commission (“FERC”)Accounts:501,Fuel (Coal);536,
Water for Power;547,Fuel (gas);555,Purchased Power;565,Transmission of Electricity by
On i’Jovernber 4,2013,the Company filed an Errata to Application that changed the proposed NPSE from
S404,684,869 to S305,684,869.This Order refers collectively to the application and errata as the “Application.”
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 I
Others;442,Hoku Materials,Inc.first block energy revenues;and 447,Sales for Resale.Id.at
2.
YOU ARE FURTHER NOTIFIED that the Company says the NPSE has not been
analyzed since 2010.At that time,the Commission reviewed and set the Company’s base level
NPSE at $220,770,137 on a total system basis.Since then,the NPSE has changed twice after the
Commission approved settlement stipulations.First,in 2011 the Commission approved a
settlement stipulation that set the Company’s NPSE at $208,100,936 on a total system basis.The
stipulation simply maintained the base level NPSE cost and revenue categories from 2010 while
adding expected Hoku revenue and demand response program incentive payments.Second,in
2012,the Commission approved a settlement stipulation that set the current base level NPSE of
$199,993,778 on a total system basis.The stipulated NPSE maintained the original 2010 load
and fuel cost but recognized that the Company had added the Langley Gulch power plant to its
generation resources.See Id.at 2-3,citing Order Nos.31042,32426,and 32585.
YOU ARE FURTHER NOTIFIED that the Company proposes to increase base level
NPSE to $305,684,869.The Company says it needs this increase because the NPSE recovery
level in base rates is considerably below the current,normalized NPSE level.The Company
explains that the NPSE’s components have significantly and permanently changed and increased
the base level,normalized NPSE level by about $100 million since 2010.The Company
currently recovers these ongoing,permanent costs through the PCA;but the PCA is designed to
let the Company recover (or return)fluctuating,annual power cost differences rather than long-
term,permanent costs.The Company thus wants to switch recovery of these costs from the PCA
to base rates.Id.at 3-4,citing Order No.32821 (expressing concerns with using the PCA to
recover long-term,ongoing costs).
YOU ARE FURTHER NOTIFIED that the Company says the base level NPSE has
increased since 2010 for three main reasons.First,the overall value of the Company’s surplus
power sales has decreased because lower market prices have limited the Company’s ability to
economically dispatch its thermal generating units.Second,the Hoku special contract ended in
2012,and the 2013 base level NPSE thus excludes Hoku revenue and load.Third,the
Company’s PURPA-related expenses have increased by 113%since 2010.Id.at 5.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 2
YOU ARE FURTHER NOTIFIED that the Company asks the Commission to
approve the proposed,base-level NPSE increase by March 31,2014.The Company says on
April 15,2014,it would apply to adjust the 2014/2015 PCA using the updated NPSE,and to
offset base rates by the same amount,effective June 1,2014.The Company explains that its
proposal is “revenue neutral”because the base rate increase would generate the same revenue
that the Company otherwise would have recovered through the PCA.Id.at 6.
YOU ARE FURTHER NOTIFIED that using the PCA’s 95.53%energy-based
allocation,Idaho’s share of the $105.7 million difference in system-level base NPSE would be
about $101 million.Because the Company intends its proposal to be revenue neutral,it will need
to adjust the $101 million difference to reflect the 95/5 customer-to-Company PCA sharing.The
total allowed PCA recovery would be $99.3 million.The proposal thus would result in a $99.3
million base rate increase,which includes a $1.7 million reduction to the $101 million difference
in Idaho jurisdictional base level NPSE.The Company says the “PCA sharing adjustment”
would continue to be reflected in base rates until the Company files its next general rate case or it
otherwise is adjusted by the Commission.Id.at 7.
YOU ARE FURTHER NOTIFIED that the Company proposes allocating the $99.3
million base rate increase using the PCA energy allocation method;that is,it would allocate the
base rate increase to each customer class in proportion to the class’s annual energy consumption.
Each class would thus contribute the same revenue to offset the NPSE as it would have
contributed through the PCA.Base rate revenues would increase by $99.3 million while PCA
revenues would decrease by $99.3 million.Id.at 7-8.
YOU ARE FURTHER NOTIFIED that the Company also proposes to increase the
Load Change Adjustment Rate (“LCAR”)from $17.64 per megawatt-hour (“MWh”)to $23.34
per MWh to reflect the change in base level NPSE collected through base rates.The LCAR
change would take effect June 1,2014.Id.at 8.
YOU ARE FUTHER NOTIFIED that the Company recounts that the Commission
previously ordered it to include transmission wheeling revenues and expenses in future PCA
calculations.Id.at 8,citing Order no.32821.The Company reiterates its view that the PCA
should not include wheeling revenues,and says it would be improper to set a base level for the
PCA’s wheeling revenue component in this case.Id.at 8-10.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 3
YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers,
testimonies and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices.The Application and
testimonies are also available on the Commission’s web site at www.puc.idaho.gov.Click on the
“File Room”tab at the top of the page,scroll down to “Open Electric Cases,”and then click on
the case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code.The Commission
may enter any final order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000 etseq.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 3 1.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application must file a written comment in support or opposition with the Commission by
February 20,2014.The comment must contain a statement of reasons supporting the comment.
In this regard,we have been advised that Commission Staff and the Company concur that the
transmission wheeling revenue issue is beyond the scope of this NPSE case.We agree.
Accordingly,persons who submit comments should refrain from discussing the wheeling
revenue issue here.The base level for third-party transmission revenues can be discussed and
established in the Company’s next general rate case.
YOU ARE FURTHER NOTIFIED that that the Company must file reply comments
(if any)by March 6,2014.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 4
YOU ARE FURTHER NOTIFIED that persons desiring a hearing must specifically
request a hearing in their written comments.Written comments concerning this Application
shall be mailed to the Commission and the Applicant at the addresses reflected below:
Commission Secretary Lisa D.Nordstrom
Idaho Public Utilities Commission Regulatory Dockets
P0 Box 83720 Legal Department
Boise,ID 83720-0074 Idaho Power Company
P.O.Box 70
Street Address for Express Mail:Boise,Idaho 83707
472 W.Washington Street E-mail:lriordstrorn(4idahopower.com
Boise,ID 83702-591 8 dockets(idahopower.com
Tim Tatum
Idaho Power Company
P.O.Box 70
Boise,Idaho 83707
E-mail:
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at www.puc.idaho.gov.Click the “Case Comment Form”
under the “Consumers”tab,and complete the comment form using the case number as it appears
on the front of this document.These comments must also be sent to Idaho Power at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set,the Commission will consider this matter on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion,may set the same for formal
hearing.
ORDER
IT IS HEREBY ORDERED that this matter be processed by Modified Procedure,
IDAPA 31.01.01.201 -.204.Persons who wish to comment on the Application must file their
written comments by February 20,2014.The Company must file reply comments (if any)by
March 6.2014.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 5
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of November 2013.
/
PAULJELLANDt.PRESIDENT
\1N IN
MACK A.REDFORD,MMtSSIONER
L
MARSHA H.SMITH,COMMISSIONER
ATTEST:
71 1
Yetn D.Jewell’;’
Commission Secretary
O:1PCE-I 3-2Okk
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32932 6