20160315Application.pdf

An toAcoRP company
LISA D. NORDSTROiII
Lead Counsel
[e-mail]
March 15,2016
RECEIVED
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VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-16-02
Fixed Cost Adjustment Rates for June 1,2016, Through May 31 ,2017
ldaho Power Company's Application and Testimony
Dear Ms. Jewell:
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
ln addition, enclosed are an original and eight (8) copies of the Direct Testimony of
Zachary L. Harris filed in support of the Application. One copy of Mr. Harris's testimony
has been designated as the "Reporte/s Copy." In addition, a disk containing a Word
version of Mr. Harris's testimony is enclosed for the Reporter.
Lastly, four (4) copies each of ldaho Power Company's press release and customer
notice are also enclosed.
Very truly yours,
,Xu^'/eabd"*-)
Lisa D. Nordstrom
LDN:kkt
Enclosures
LISA D. NORDSTROM (lSB No. 5733)
Idaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ ida ho power. co m
Attomey for ldaho Power Company
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORIry TO IMPLEMENT FIXED
cosr ADJUSTMENT (.FCA',) MTES FOR
ELECTRIC SERVICE FROM JUNE 1,2016,
THROUGH MAY 31,2017.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-16-02
APPLICATION
Idaho Power Company ("ldaho Powe/'or "Company'), in accordance with ldaho
Code S 61-502 and RP 052, hereby respectfully makes application to the Idaho Public
Utilities Commission ("Commission") for an order authorizing ldaho Power to implement
Fixed Cost Adjustment rates for electric service from June 1, 2016, through May 31,
2017 and to approve the Company's conesponding Schedule 54, Fixed Cost
Adjustment.
ln support of this Application, ldaho Power represents as follows:
APPLICATION.l
I. BACKGROUND
1. ldaho Power and the Commission have long agreed that promotion of
cost-effective energy efficiency and demand-side management ("DSM") "is an integral
part of least-cost electric service." See, e.9., Order No. 30267 at 13. Traditional rate
design that recovers fixed costs through each kilowatt-hour ('kwh") sold discourages
utilities from reducing their sales volume through investment in energy efficiency and
DSM.
2. Recognizing that "opportunities exist[ed] for improvements in operating
efficiency that would benefit the Company shareholders and its customers," the
Commission opened an investigation in Case No. IPC-E-04-15 to consider options for a
performance-based mechanism that adjusts revenues when annual energy
consumption is either above or below normal. Order No. 29558 at 1, citing Order No.
29505 at 68-69. The FCA mechanism is the collaborative result of that case.
3. ln Order No. 30267 issued in Case No. IPC-E-04-15 on March 12,2007,
the Commission approved a stipulation for the implementation of a three-year FCA pilot
program applicable to Residential Service (Schedules 1 ,3,4, and 5) and Small General
Service (Schedule 7) customers. On October 1, 2009, the Company filed an application
seeking authority to convert Schedule 54, the FCA tariff schedule, from a pilot program
to an ongoing, permanent program. Case No. IPC-E-09-28. The Commission denied
ldaho Powe/s request to make the FCA mechanism permanent and, instead, extended
the pilot program for an additional two-year period. Order No. 31063. During the fifth
year of the pilot program, the Company filed an application in Case No. IPC-E-1 1-19 on
October 19, 2011, seeking authority to convert the FCA to an ongoing, permanent
APPLICATION - 2
program. Order No. 32505, issued March 30, 2012, approved the Company's request
to convert the FCA to a permanent program for the Residential and Small Genera!
Service customers. The Commission's subsequent Order No. 32731 in that case
directed that the FCA mechanism continue with its existing methodology.
4. ln Order No. 33295 issued in Case No. IPC-E-14-17, the Commission
approved a settlement stipulation that changed the methodology to calculate the level of
actual fixed cost recovered used to determine the FCA. The modification to the
calculation of the actual leve! of fixed costs recovered replaced weather-normalized
billed sales with actual billed sales and began with the determination of the 2015 FCA.
5. ln this filing, the Company requests recovery of the 2015 FCA balance
and conesponding rates, and to update the Company's Schedule 54 to implement the
change in methodology from Order No. 33295 regarding the calculation of the actual
fixed cost recovered amount by replacing the term "weather-normalized" with the term
"actual".
II. FIXED COST ADJUSTMENT MECHANISM
6. The FCA mechanism enables ldaho Power to separate, or "decouple," its
fixed cost revenues from its volumetric energy sales, and provides symmetry through a
surcharge or credit when fixed cost recovery per customer, on an actual billed sales
basis, varies above or below a Commission-established base. ln other words, the FCA
provides a "true-up" of the collection of fixed costs per customer to recover the
difference between the level of fixed costs recovered on an actua! billed sales basis by
the Company through rates and the level of fixed costs authorized for recovery in the
Company's most recent, appllcable general rate case. The FCA removes the financial
APPLICATION - 3
disincentive that exists when the Company invests in DSM resources and energy
efficiency activities. On a system-wide basis, ldaho Power achieved 162,533
megawatt-hours of incremental annual energy efficiency savings in 2015, which is a 12
percent increase from savings reported in 2014.
7. The FCA works identically for both the Residential and Small General
Service classes. For each class, the number of customers is multiplied by the fixed cost
per customer rate (FCC), which is established as part of determining the Company's
allowed revenue requirement in the most recent general rate case. The product of this
calculation establishes the "authorized fixed cost recovery'' amount. This authorized
fixed cost recovery amount is then compared to the amount of fixed costs actually
recovered by ldaho Power. To determine the "actualfixed costs re@vered" amount, the
Company multiplies the actual billed sales for each class by the fixed cost per energy
rate (FCE) as established in the Company's most recent applicable general rate case.
The difference between these two numberc (the "authorized fixed cost recovefl'
amount minus the "actual fixed costs recovered" amount) is the fixed cost adjustment
for each class.
III. PROPOSED 2016.2017 FCA RATE ADJUSTMENT
8. The determination of the FCA defenal balance and coresponding rates
are described in the Direct Testimony of Zachary L. Hanis ("Harris Testimony") filed
contemporaneously with this Application.
9. As shown on Exhibit No. 4 of the Hanis Testimony, the proposed FCA is
$26,897,109 for the Residential class and $1 ,157,433 for the Small General Service
class, for a total amount of $28,054,542. Hanis Testimony at 10. The proposed FCA
APPLICATION - 4
defenal balance is an incremental increase above the cunent FCA defenal balance
cunently collected in customerc' rates. Accordingly, with this Application, Idaho Power
is proposing a FCA rate increase for the Residentia! and Small General Service classes
to a!!ow the Company an opportunity to recover its authorized revenues as determined
by the FCA mechanism. The proposed FCA rates would result in an increase to total
billed revenue, including the FCA, for the affected customer classes of 2.20 percent.
Hanis Testimony at14.
10. To be consistent with the FCA methodology applied in previous phases of
the FCA, and in compliance with Order No. 32505 wherein the Commission directed the
Company recover or refund the FCA defenal balance equally between the Residential
and Small General Service customer classes, the Company is proposing a combined
rate increase for Residential and Smal! General Service customers of 2.2O percent
above current rates. This increase equates to new FCA rates of 0.5416 cents per kWh
for the Residential class and 0.6875 cents per kWh for the Small General Service class.
Harris Testimony a|12.
11. ldaho Power requests that the FCA rates become effective on June 1,
2016, coincident with ldaho Powe/s Power Cost Adjustment and with the
commencement of seasonal rates. The Company requests that the FCA rates remain
in effect unti! May 31,2017.
12. The proposed FCA tariff (clean version), Schedule 54, is attached hereto
as Attachment 1 to this Application. The Schedule 54 tariff in legislative format is
attached hereto as Attachment 2.
APPLICATION - 5
IV. MODIFIED PROCEDURE
13. ldaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
under Modified Procedure, i.e., by written submissions rather than by hearing. RP 201,
ef seg. The Company has, however, contemporaneously filed the Hanis Testimony and
stands ready to present its testimony and support the Application if the Commission
determines that a technical hearing is required.
V. COMMUNIGATIONS AND SERVICE OF PLEADINGS
14. ln conformance with RP 125, this Application will be brought to the
attention of ldaho Powe/s customerc by means of both a press release to media in the
Company's service area and a customer notice distributed in customers' bills, both of
which accompany this filing. The customer notice will be distributed over the course of
the Company's cunent billing cycle, with the last notice being sent on or about April 21,
2016. ldaho Power will also keep its Application, testimony, and exhibits open for public
inspection at its offices throughout the state of ldaho. ldaho Power believes the above
procedures satisfy the Rules of Practice and Procedure of this Commission; however,
the Company wi!!, in the alternative, bring the Application to the attention of its affected
customers through any other means directed by this Commission.
15. Communications and service of pleadings with reference to this
Application should be sent to the following:
Lisa D. Nordstrom
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
I no rd stro m @ idahopowe r. co m
dockets@idahopower. com
Zachary L. Hanis
ldaho Power Company
P.O. Box 70
Boise, ldaho 83707
zharris@ idahopower.com
APPLICATION - 6
VI. REQUEST FOR RELIEF
16. ldaho Power respectfully requests that the Commission issue an order (1)
authorizing that this matter be processed by Modified Procedure and (2) authorizing
ldaho Power to implement Fixed Cost Adjustment rates for electric service from June 1,
2016, through May 31 , 2017, as described above. To allow ldaho Power the ability to
test and implement the new rates in its billing system, the Company requests the
Commission issue its order by May 27,2016.
DATED at Boise, ldaho, this 15h day of March 2016.
APPLICATION - 7
BEFORE THE
IDAHO PUBLIC UTILITIES GOMMISSION
GASE NO. IPC-E-16-02
IDAHO POWER COMPANY
ATTACHMENT 1
PROPOSED TARIFF
ldaho Power Company Eighth Revised Sheet No. 34-2
Cancels
|.P.U.C. No. 29. Tariff No. 101 Seventh Revised Sheet No. 54-2
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual fixed costs Recovered amount is computed by multiplying the actual energy Ioad for
Residential and Small General Service customers by the appropriate Residentia! and Small General
Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small General Service Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 3, 4, and 5) is 0.5416
cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule 7) is 0.6875
cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule wil! expire May 31 ,2017.
IDAHO
lssued per Order No.
Effective - June 1, 2016
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho
BEFORE THE
IDAHO PUBLIG UTILITIES GOMMISSION
cAsE NO. IPG-E-16-02
IDAHO POWER COMPANY
ATTACHMENT 2
TARIFF !N LEGISLATIVE FORMAT
ldaho Power Company Sev,enU+Ejghth Revised Sheet No. 54-2
Cancels
I.P.U.C. No. 29. Tariff No. 1OlSi*hSeventh Revised Sheet No. 54-2
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual fixed costs Recovered amount is computed by multiplying the weather
nerme+izedacllgg! energy load for Residential and Small General Service customers by the appropriate
Residentia! and Small General Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small Genera! Service Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 3, 4, and 5) is
0.32585416 cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule
7) is 0.40996875 cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule will expire May 31 ,20192.
IDAHO
lssued per Order No. 33302
Effective - June 1,201&
lssued by IDAHO POWER COMPANY
, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho