20140701notice_of_intervention_deadline_order_no_33068.pdf

Office of the Secretary
Service Date
July 1.2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION’S )
INQUIRY INTO IDAHO POWER COMPANY’S )CASE NO.IPC-E-14-17
FIXED COST ADJUSTMENT MECHANISM )
)NOTICE OF
)INTERVENTION DEADLINE
)
)ORDER NO.33068
_______________________________________________________________________________________
)
On May 30,2014.the Idaho Public Utilities Commission issued Order No.33047 in
Idaho Power Company’s Fixed Cost Adjustment (FCA)case,IPC-E-14-03.As part of that
Order,the Commission directed:“that a separate docket be opened to allow Commission Staff,
the Company,and other interested persons to further evaluate Staffs concerns about the FCA
mechanism (including the weather-normalization,customer count,rate adjustment cap,and
cross-subsidization issues)and whether the FCA is effectively removing the Company’s
financial disincentive to aggressively pursue energy efficiency programs.”Order No.33047 at 8.
With this Order.the Commission opens this docket,sets a 14-day intervention
deadline,and directs Staff to convene an informal prehearing conference with the parties.
BACKGROUND
The FCA is a rate adjustment mechanism that separates the Companys fixed-cost
revenues from the Companys volumetric energy sales.The FCA enables the Company to
recover its fixed costs to deliver energy—as set in its most recent general rate case—even when
energy sales and revenues have decreased.1 Under the FCA,the Company credits customers
when the Companys actual fixed-cost recovery has increased from the Commission-established
base.On the other hand,the Company surcharges customers when the Companys actual fixed
cost recovery has decreased from the base.The Company’s FCA rates are specified in tariff
Schedule 54 and apply to the residential and small general service customer classes.
In the Company’s last FCA case.IPC-E-14-03,the Commissions Staff recommended
that the Commission approve the Company’s FCA request.But Staff also recommended that the
‘A utility’s “fixed costs”are its costs to provide service that do not vary with energy use,output,or production and
remain relatively stable between rate cases.
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33068
Commission re-evaluate the FCA mechanism for future application because Staff believes the
mechanism is fundamentally flawed in the following respects:
•Weather-Normalization Adjustment.The weather-normalization
adjustment in the FCA permits the Company to significantly over recover
the fixed costs that the Commission authorized it to recover in the last
general rate case;
•Customer Count Methodology.By calculating allowed fixed costs based
on the average number of customers,the Company overstates the “typical”
number of customers that it serves in a month.The Company should use
the median to more accurately represent its actual customer count.Further,
the Company’s FCA calculations ignore that high energy use customers
have been switching from the small general service class (Schedule 7)to
the large general service class (Schedule 9),which artificially inflates the
Company’s FCA recovery by inappropriately lowering per customer use
in the small general service class for FCA purposes;
•Rate-Adjustment C’ap.The FCA “incorporates a 3%cap on annual
increases with carryover of unrecovered deferred costs to subsequent
years.”See Order No.30267.Staff notes the Company calculates the rate
increase and cap using forecasted sales and revenues,which results in a
layering effect that continuously increases the FCA deferral balance from
year-to-year,understates the magnitude of the cumulative FCA rate
change on customers,and annually increases the absolute dollar amount
represented by the 3%cap;
•Cross-Subsidization.The Commission intended for the FCA to apply in a
manner that minimizes cross subsidies across rate classes.See Order
30267,at 6.But the FCA is calculated in a manner that leads the
residential and small general service classes to subsidize fixed-cost
shortfalls from the other classes.
Order No.33047 at 4.Staff also expressed concern that the FCA no longer serves its intended
purpose of removing the Company’s perceived financial disincentive to investing in energy
efficiency and DSM,that the FCA has harmed customers far more than it has benefitted them,
and that the FCA’s efficacy has diminished in proportion to the Company’s declining energy
efficiency investments and savings.See id.at 8-12.
The Commission ultimately approved the Company’s FCA Application.See id.at 7.
But the Commission acknowledged Staff’s concerns:
While we approve of the Company’s Application,we continue to
acknowledge that the FCA is an imperfect mechanism that warrants
monitoring,discussion and review.See Order Nos.32505 at 6 and 32731 at 4,
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33068 2
Case No.IPC-E-ll-19.We thus intend to open a separate,future docket to
allow Commission Staff the Company.and other interested persons to further
evaluate Staffs concerns about the FCA mechanism (including the weather-
normalization,customer count,rate adjustment cap,and cross-subsidization
issues)and whether the FCA is effectively removing the Company’s financial
disincentive to aggressively pursue energy efficiency programs.
Id.The Commission then ordered that a new case be opened to address these issues.Id.at 8.
NOTICE OF INTERVENTION DEADLINE
YOU ARE HEREBY NOTIFIED that with this Order,the Commission is opening
the new case referenced above.
YOU ARE FURTHER NOTIFIED that persons desiring to become parties in this
matter to conduct formal discovery or present evidence or cross-examine witnesses at any
hearing must file a Petition to Intervene with the Commission under Commission Rules of
Procedure 72 and 73,IDAPA 31.01.01.072 and -.073.The Petition to Intervene must be filed no
later than 14 days from the service date of this Order.Once the intervention deadline runs,a
notice shall issue identifying the parties to this case,and Commission Staff shall convene an
informal prehearing conference for the parties.Following the prehearing conference,the
Commission will issue further Orders as needed to process the case.Persons desiring to present
their views in this case without parties’rights of participation and cross-examination are not
required to intervene and may present their comments without prior notification to the
Commission or the parties.
YOU ARE FURTHER NOTIFIED that all documents filed in this case will be
available for public inspection during regular business hours at the Commission offices,and on
the Commission’s web site at Click on the “File Room”tab at the top of
the page,scroll down to “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 Commissions jurisdiction under Title 61 of the Idaho Code.The Commission
may enter any final order consistent with its authority under Title 61.
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33068 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /
day of July 2014.
PAUL KJELLANDiR(REST NT
MACK A.RED RD,C STONER
6L /iL
MARShA H.SMITH,COMMISSIONER
ATTEST:
I
Jean D.Jewell
Commission Secretary
N:IPC-E-14-17 kk
NOTICE OF INTERVENTION DEADLINE
ORDER NO.33068 4