20140128Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283
Street Address for Express Mail:
472W WASHINGTON
BOISE ID 83702-5918
Attorney for the Commission Staff
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY TO IMPLEMENT
A SCHEDULE 19 SUBSTATION ALLOWANCE
AND TRANSMISSION VESTED INTEREST
(TARTFF ADVTCE NO. 13-08).
CASE NO. IPC-E-14.01
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through
its Attorney of record, Weldon B. Stutzman, Deputy Attorney General, and in response to the
Notice of Application and Notice of Modified Procedure issued in Order No. 32962 on January
7,2014, submits the following comments.
BACKGROUND
On December 23,2ll3,Idaho Power Company filed Tariff Advice No. l3-08, annual
compliance filing to update the substation allowance and vested interest provisions under
Schedule 79,Large Power Service. This is the Company's first annual compliance filing to
implement a substation allowance and vested interest provision for Schedule l9 customers as
required by Commission Order Nos. 32893 and 32914. The Company's filing is in response to
the Commission's Orders in Case No. IPC-E-13-09. The Commission in that case approved a
STAFF COMMENTS JANUARY 28,2014
request by Glanbia Foods, Inc. for an allowance against construction costs for upgrades to Idaho
Power' s transmission and substation facilities.
The filing consists of three new tariff sheets comprised of three sections: (l) defined
terms used in the substation allowance and transmission vested interest sections, (2) the
substation allowance section outlining when a customer would qualify to receive an allowance,
the maximum possible allowance, and how a customer will receive a refund, and (3) the
transmission vested interest section explaining when a customer would qualifu to receive a
vested interest and how vested interest charges would be calculated. Idaho Power proposed a
February 1,2014 effective date. A copy ofthe proposed tariffadditions is attached for reference.
STAFF REVIEW
Basic Tariff Structure and Defined Terms
The basic structure of the proposed additions to Schedule l9 is closely patterned after
Idaho Power's Rule H. However, where Rule H governs distribution line installations, the
additions to Schedule 19 govern transmission line installations. Defined terms have been added
to Schedule 19 that mirror comparable terms in Rule H. Staff believes the "Definitions" section
of the proposed tariff is satisfactory.
Substation Allowances and Refunds
In Case No. IPC-E-13-09, the Commission concluded Glanbia is entitled to an allowance
of $65,734 per MW multiplied by the 19 MW Glanbia planned to obtain through the new
facilities it is constructing. The amount of the allowance was based on the estimated cost per
MVA of a standard set of 30 MVA transformation facilities. Following the same procedure used
to compute an allowance for Glanbia, Idaho Power has computed a proposed allowance amount
of $64,580 for Schedule 19. The small difference between the allowance amount computed for
Glanbia and the new amount proposed for Schedule 19 can be attributed to minor changes in
costs of individual items comprising the standard set of transformation facilities in the time since
the Glanbia allowance was calculated. In addition, the Company has used an updated station
overhead rate to determine the Schedule 19 allowance amount. The Company states its
calculation of overhead is similar to the method used to calculate the Company's general
distribution overhead rate that is updated annually in the Company's Rule H New Service
Attachments and Distribution Line Installations compliance filing. Staff has reviewed the
STAFF COMMENTS JANUARY 28,2014
calculations of the proposed Schedule l9 allowance amount, including the updated overhead
rate, and believes they are accurate and consistent with orders in the Glanbia case.
In Order No. 32848, the Commission directed the parties to consider how to structure an
allowance so that large investments made by Idaho Power in new facilities do not become
stranded, creating a cost risk to Idaho Power's other customers if the customer later goes out of
business. In Order No. 32893, the Commission ordered the allowance to be credited against the
customer's bill over a five-year period. Staff and Idaho Power worked together to devise a
refund methodology in which the customer would receive a portion of the allowance in each year
based on the amount of load increase that actually materialized in each year. Exactly the same
refunding methodology developed in the Glanbia case has been proposed in the Schedule 19
tariff. Staff believes the methodology is fair and reasonable to both Idaho Power and the
customer, and achieves the Commission's objective of relieving other customers of risk.
Transmission Vested Interest
The transmission vested interest section explains when a customer would qualiff to
receive a vested interest and how vested interest charges would be calculated. The language in
this section has been adapted from very similar language contained in Rule H. One of the only
material differences from Rule H is to restrict the vested interests for transmission to situations in
which the customer is served by a radial feed. This restriction is necessary, Staff believes, for
administrative simplicity and to avoid exceedingly complex and perhaps inaccurate
determinations of how costs should be shared among subsequent transmission and/or distribution
customers. The only other material difference from Rule H is the removal of a distance ratio
from the vested interest calculation. This was necessary because new customers cannot connect
to transmission lines anywhere but at the ends (i.e., at substations), thus making a distance ratio
not applicable. Staff believes the transmission vested interest section of the proposed tariff
addition is consistent with the Commissions directives in the Glanbia case and appropriate for
application to all qualiffing Schedule 19 customers.
STAFF RECOMMENDATIONS
Staff recommends approval of the proposed additions to Idaho Power's Schedule l9
tariff. Although the Company has requested a February 1,2014 effective date, that date cannot
STAFF COMMENTS JANUARY 28,2014
be accommodaed given the established schedule for this case. Consequenfly, Staffrecommends
that an effective date be established as of the date of a final Commission Order in this case.
Respecttully submitted this Lbb*rof January 2014.
Weldon B. Stutznan
Deputy Attorney General
Technical Staff: Rick Sterling
i:umiso:oommcnts/ipocl4.lwsrps commcnts
STAFF COMMENTS JAI.IUARY 28,2014
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28TH DAY oF JANUARY 2014,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-14.01, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: [e-mail]
dockets(E i dahooo wer. com
SECRETARY
CERTIFICATE OF SERVICE