20140328Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL

DATE: MARCH 24, 2014

SUBJECT: IDAHO POWER’S APPLICATION TO IMPLEMENT FIXED COST
ADJUSTMENT RATES EFFECTIVE JUNE 1, 2014 THROUGH MAY 31,
2015, CASE NO. IPC-E-14-03

On March 14, 2014, Idaho Power Company filed an Application to implement Fixed
Cost Adjustment (FCA) rates for electric service effective June 1, 2014 through May 31, 2015.
The Company asks the Commission to process the case by Modified Procedure.
The FCA enables Idaho Power to separate its fixed-cost revenues from its volumetric
energy sales. It lets the Company recover its fixed costs of delivering energy—as established in
its most recent general rate case—even when energy sales and revenue have decreased because
of energy efficiency and demand reduction efforts. The FCA allows the Company to surcharge
or credit customers when the Company’s fixed-cost recovery per customer increases or decreases
from the Commission-established base. The FCA rates are identified in tariff Schedule 54 and
apply to the residential and small general service customer classes.
The FCA 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 the 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’ most
DECISION MEMORANDUM 2
recent rate case. The difference between the authorized fixed-cost recovery amount and the
actual fixed costs recovered results in an adjustment each year to the FCA rate.
The Company says the 2013 FCA balance is $14,339,006.18 for the residential class
and $573,436.34 for the small general services class, for a total amount to be recovered of
$14,912,442.52. The proposed FCA deferral balance is an incremental increase above the FCA
balance currently collected in customers’ rates. Accordingly, the Company proposes to increase
FCA rates by 1.17% for the residential class and 1.20% for the small general service class, for an
overall change of 1.18%. The increase equates to a new FCA rate of 0.2913 cents per kWh for
the residential class and 0.3709 cents per kWh for the small general service class.
STAFF RECOMMENDATION
Staff recommends the Commission issue a Notice of Application and Notice of
Modified Procedure establishing a May 8, 2014 comment deadline and a May 15, 2014 reply
deadline. The Company advises Staff that it concurs with this approach.
COMMISSION DECISION
Should the Commission issue a Notice of Application and Notice of Modified
Procedure setting a May 8, 2014 comment deadline and a May 15, 2014 reply deadline?

M:IPC-E-14-03_kk