20150421notice_of_application_order_no_33285.pdf

Office of the Secretary
Service Date
April2l, 2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO IMPLEMENT POWER
cosr ADJUSTMENT (PCA) RATES FOR
ELECTRIC SERVICE FROM JUNE '.t,2015
THROUGH MAY 3I,2016
CASE NO. IPC-E.15.14
NOTICE OF APPLICATION
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 33285
On April 15,2015,Idaho Power Company filed its annual Power Cost Adjustment
(PCA) Application. Since 1993, the PCA mechanism has allowed the Company to adjust its
rates up or down to reflect the Company's annual "power supply costs." Because about half of
the Company's generation is from hydropower facilities, the Company's actual cost to provide
electricity (its power supply cost) varies from year-to-year depending on changes in Snake River
stream flows, the amount of purchased power, fuel costs, the market price of power, and other
factors.l
This year the Company calculates that its annual power costs have decreased below
the normalized PCA rates. According to the Company, if its Apptication is approved, the
Company's Idaho customers collectively would pay about $10.1 million (or O.9IVo) less for
electricity in the upcoming year than they do now, and a typical residential customer's bill would
decrease by about 479 per month. The Company's proposed PCA adjustments are reflected in an
updated Schedule 55, which is attached to the Application. The Company requests that the new
rates take effect on June 1,2015, and that the case be processed by Modified Procedure.
With this Order, the Commission provides an overview of the PCA mechanism,
summarizes this year's Application, and solicits written comments about the Application.
THE PCA MECHANISM
The annual PCA mechanism consists of three standard components.
First, the Company forecasts or projects its power costs for the PCA year (the 12-
month period from April through March) using its most recent "Operating Plan." Order No.
I For example, the revenue from the sale of sulfur dioxide (SO2) allowances.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285 l
30715. Projected power costs include: fuel costs; transmission costs for purchased power; Public
Utility Regulatory Policies Act of 1978 ("PURPA") contract expenses; surplus sales revenues;
and revenues from the sale of renewable energy credits ("RECs") and sulfur dioxide allowances.
The Company may recover 95Vo of the difference between the non-PURPA projected power
costs and the approved base power cost, IOOVo of the costs of its PURPA contracts, and l00%o of
its demand-side management ("DSM") incentive and conservation costs. See Order No. 30715,
Order No.32426 at 3.
Second, the Company "trues-up" the prior year's projected power costs based on the
Company's actual power costs during that year.
Third, the Company reconciles the prior year's "true-up" by crediting to or collecting
from this year's PCA rate any over-recovered or under-recovered balance from the prior year's
"true-up." This third "reconciliation" component ensures that the Company recovers its actual
approved costs while ratepayers pay only for the actual amount of power that the Company sold
to meet native load requirements. Order No. 29334 at 4.2 Thls, ratepayers receive a rate credit
when power costs are low, but are assessed a rate surcharge when power costs are high.
Besides the three standard components described above, a fourth "revenue sharing"
component also applies to the PCA. In 2010 and 2011, Commission Order Nos.30978 and
32424 established a mechanism by which the Company must share certain revenues with
customers. The first Order requires the Company to provide customers with 50Vo of any
earnings above a l0.5%o year-end return on equity ("ROE"). This customer "revenue sharing"
benefit serves as a customer credit against the standard PCA components to yield a combined
rate to be set forth in Schedule 55. The second Order requires the Company to provide an
additional customer benefit; specifically: (1) for actual year-end earnings greater than l07o ROE
up to and including l0.5%o in any year from 2012 through 2014, the earnings will be shared
equally between Idaho customers and the Company, with the customer revenue sharing benefit to
appear as a reduction to rates when the PCA takes effect; and (2) earnings above l0.5%o will also
be shared, with the customers receiving 15Vo of the Company's Idaho jurisdictional year-end
ROE above lO.SVo as an offset against amounts in the Company's Pension Balancing Account
2 This reconciliation component has been referred to as the "true-up of the true-up."
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285 2
that the Company otherwise would collect from customers through rates. See Order Nos. 30978
and32424.3
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that the Company asks the Commission to approve
a $63.1 million PCA amount for 2015-2016. This amount includes an $8.0 million revenue
sharing rate credit and a $4.0 million DSM Rider adjustment, and represents a decrease in total
billed revenue of $10.1 million (a 0.9l%o reduction). The Company's major customer classes
would be impacted as follows:
Proposed 2015 Revenue Impact by Class:
Decrease from Current Billed Rates
Residential
Small
General
Service
Large
General
Service
Large
Power Irrigation
Overall
Chanse
(0.45Vo)Q.077o\(I.l1%o\(l.83vo)0.917o\(O.9l%o\
Source: Application Attach. 2, Revenue Impact Summary; See also, News Release
filed with Application.
The percent decrease to billed revenue for the Company's three special contract customers
during the PCA year would be as follows: Micron-(2.22%o); Simplot-(2.45%o); DOE (INL)-
(2.3tvo).
YOU ARE FURTHER NOTIFIED that to recover the new PCA amount, the
Company proposes a new, 0.54050/kwh PCA rate for the 2O15-2016 PCA year. The Company
calculates the new PCA rate by combining the three standard PCA components referenced above
(i.e., forecasted power costs, "true-up," and reconciliation of the "true-up"). The Company
continues to apply a DSM Rider-related $3,970,036 PCA credit to maintain the revenue
neutrality associated with the June 2OI4 update to normalized NPSE included in base rates that
was approved by Order No. 33000. The Company claims this adjustment results in a uniform
rate credit for all customer classes of (0.0286) cents per kwh. In addition, the Company applies
the revenue sharing component as specified in Order Nos. 30978 and 32424. The Company
maintains its Idaho jurisdictional 2014 year-end ROE was ll.l9%o; thus, under the revenue
sharing component customers would receive a $24,692,279 total benefit consisting of a
3 Order No.32424 extended the revenue sharing mechanism through 2014. On October 9,2014, the Commission
extended the mechanism, with modifications, beyond 2014. See Order No. 33149, Case No. IPC-E-14-14. The
modified mechanism will take effect with fiscal year-end 2015 financial results.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285 3
$16,693,134 offset to the Company's pension balancing account and a 57,999,145 revenue
sharing rate credit. The Company claims the revenue sharing rate credit reduces the 2015-2016
PCA calculation by about $7.6 million.
YOU ARE FURTHER NOTIFIED that the Company says that if its Application is
approved, the new PCA rates would decrease the Company's annual billed revenue from
customers by $10.1 million.
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. These documents are also
available on the Commission's web site at www.puc.idaho.eov. 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, including ldaho
Code $$ 61-501 and -503. 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 et seq.
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 through204 of the Idaho Public Utilities Commission's Rules
of Procedure, IDAPA 3 I . 0 1 .0 1 .20 1 through .204.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission by
Friday, May 15, 2015. The comment must contain a statement of reasons supporting the
comment. 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 Company at the addresses reflected below:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285
Commission Secretary Lisa D. Nordstrom
Idaho Public Utilities Commission Regulatory Dockets
PO Box 83720 Idaho Power Company
Boise, Idaho 83720-007 4 PO Box 70
Boise,ID 83707
Street Address for Express Mail: Email: [e-mail]
dockets@ idahopower. com
472 W . Washington Street
Boise, ID 83702-5918 Timothy E. Tatum
Gregory W. Said
Idaho Power Company
PO Box 70
Boise, ID 83707
E-mail : ttatum@ idahopower. com
[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 or Question
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 the Company at the
e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the Company shall file reply comments, if
any, by Wednesday, May 20,2015,
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 Application be processed under Modified
Procedure, Rules 201-204,IDAPA 31.01.01 .201-.204. Persons interested in submitting written
comments must do so by May 15, 2015. The Company may file a reply no later than May 20,
201s.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 2ln
day of April20l5.
ATTEST:
O:IPC-E-15-14 kk
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
oRDER NO. 33285
PRESIDENT
, COMMISSIONER
KRISTINE RAPER,MMISSIONER