20140220ICIP & Micron Comments.pdf

Peter J. Richardson ISB # 3195
Gregory M. Adams ISB # 7454
RICHARDSON ADAMS, PLLC
515 N. 27th Street
Boise,Idaho 83702
Telephone: [phone]
Fax: [phone]
[e-mail]
greg@ richardsonadams. com
Attorneys for the Industrial Customers of Idaho Power
Brian T. Hansen, ISB # 6087
Hou-nNo & Hanr LLP
Suite 1400, U.S. Bank Plaza
l0l South Capitol Boulevard
P.O.Box2527
Boise, Idaho 83701-2527
Telephone: [phone]
Facsimile: [phone]
Email : bthansen@hol landhart.com
Thorvald A. Nelson
Holr-aNo & Hanr LLP
6380 South Fiddlers Green Circle, Ste. 500
Greenwood Village, CO 801I I
Telephone: [phone]
Facsimile: [phone]
Email: tnelson@hol landhart.com
Attorneys for Micron Technology, Inc.
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
AUTHORITY TO ESTABLISH A NEW
BASE LEVEL OF NET POWER SUPPLY
EXPENSE
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.IPC-E-13-20
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
AND MICRON TECHNOLOGY, INC.
Pursuant to the Notice of Application and Notice of Modified Procedure issued by the
Idaho Public Utilities Commission ("Commission") on November 26,2013, the Industrial
Customers of Idaho Power ("lCIP"), by and through their attorney of record, Peter J. Richardson,
and Micron Technology, Inc. ("Micron") by and through its attorneys Holland & Hart LLP,
hereby provide the following comments. Idaho Power Company ("ldaho Power" or the
"Company") seeks approval for establishing new base level net power supply expenses as the
basis for quantifying its20l4l20l5 Power Cost Adjustment ("PCA") rates proposed to become
effective June I ,2014. ICIP and Micron respectfully request that the Commission consider
requiring that the rates be apportioned among customer classes based on ldaho Power's most
recent cost-of-service study rather than on the cents per kWh basis proposed by ldaho Power.
This would result in a more reasonable and equitable allocation of costs among consumers based
on a demand, as well as an energy, basis.
Idaho Power filed its Application on November I , 2013 (errata filed November 4, 2013)
seeking authorization to increase its total system "base level" net power supply expense
("NPSE") from $199,003,778 to $305,684,869. The Company would use the increased NPSE to
update base rates on June 1,2014. It would also use the updated NPSE to adjust the20l4l20l5
PCA. According to the Company:
If approved, the Company's proposed change in base levelNPSE would have no net
impact to the overall revenue collected through customer rates and would also be
"revenue neutral" for all classes of ldaho Customers. ... Idaho Power believes its
proposal in this case is a simple and effective way to address the Commission's concerns
regarding the PCA and would restore the PCA to its intended purpose with no impact to
customers' bills.l
The Company proposes to move the $99.9 million (on an ldaho jurisdictional basis) that has been
carried forward in the PCA's rates to proposed new base rates - all on a per kWh basis.
Since its inception, the PCA allocated year-to-year changes on an energy (per kwh)
I Direct testimony of Timothy Tatum, pp 3 - 4.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, TNC.
rPC-E-13-20
PAGE 2
basis. This is because the normally modest changes in the Company's net power supply costs
between rate cases are presumed to be generally energy related, rather than capacity related. The
end result of this per kWh allocation is that high load factor customers pay a higher percentage
increase than lower load factor customers when there is an increase in the PCA. Conversely,
higher load factor customers receive a higher percentage decrease in their rates when the PCA
rates decrease. For modest changes in net power supply costs between rates cases this approach
is reasonable and neither ICIP nor Micron are objecting to this methodology for PCA changes.
However, changes in base rates, such as that proposed here, have generally occurred
when the Company files for general rate relief with a full cost-of-service study that is used to set
base rates in subsequent PCA filings. A full cost-of-service study allocates rates among the
various customer classes based on both a demand and energy basis, and thus all rate classes are
impacted proportionately. Notwithstanding Idaho Power's proposalto change base rates outside
of a rate case, because the base power supply rates are changing, ICIP and Micron believe that
the approach used in rate cases should be applied here.
According to ldaho Power, the reason it is making the "revenue neutral" filing is:
The Company's currently approved normalized level NPSE included in base rates reflects
a 2010 normalized condition. Most of the individual cost and revenue components of
NPSE have changed significantly and permanently resulting in an overall increase in the
normalized levelofNPSE of approximately $100 million from the 2010 normalized
condition to the 2013 normalized condition. Because these increased expenses are not
reflected in base rates, such ongoing and permanent costs are instead currently being
recovered through the PCA annually.2
Because the base rate used in establishing the NSPE has not been updated since 2010, significant
and permanent changes in costs the Company has incurred have been assessed against ldaho
2 Id. at 4.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, INC.
rPC-E-13-20
PAGE 3
Power's customers on a kWh basis. One example of such permanent and significant costs is the
Langley Gulch power plant. If there had been a general rate case (with a cost-of-service study)
after those costs were incurred, then they would have all been allocated on either/or both an
energy allocator and a capacity (demand) allocator rather than just on an all energy allocator.
Changing the base rates, as proposed by the Company, is the equivalent of performing a
'mini general rate case' without the benefit of a fully contested and finally approved cost-of-
service study that would be used to fairly allocate rate changes among customer classes. Here
the Company proposes to increase base rates by almost one third ($99 million) and to allocate
that amount among the customer classes on a per kWh basis.
The ICIP and Micron believe that this reallocation should be accomplished on a cost-of-
service basis and not on a cents per kWh basis, which may have been appropriate for the PCA,
but is not appropriate for base power supply expenses. The ICIP requested that ldaho Power run
a full cost-of-service study to determine the appropriate allocation of the additionalNPSE among
the customer classes in order to measure the impact of allocating rates among the customer
classes based on cost-of-service. Although the Company did not provide a full cost-of-service
run, it did provide the impact on inter-class rates based on the allocation factors taken from the
last Commission-approved class cost-of-service study. Importantly, ICIP and Micron are not
asking that these costs be applied on an acrossthe-board basis as approved by the Commission
in the last rate case. Rather, despite concerns that ICIP and Micron continue to have with ldaho
Power's current class cost-of-service methodology, ICIP and Micron are requesting that the
Commission at least use the most-recently approved methodology to calculate how these costs
should be included in base rates rather than simply applying this change on a pure per kWh basis.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, INC.
IPC-E- l3-20
PAGE 4
According to Idaho Power's response to the ICIP's first request for production, the
information reproduced in Table One is described as follows:
The attached Excel file presents the allocation of the incremental $99.3 million in Net
Power Supply Expenses ('NSPE") to customer classes utilizing the Company's class
cost-of-service methodology and allocation factors from its most recent general rate case,
Case No. IPC-E-I l-08 ("201I Rate Case").
Table One below summarizes the results of ldaho Power's calculations in response to the ICIP's
First Production Request, and displays the varying results of the Company's filing on each
customer class:
Tabb
Cost-ofrService Allocation for New
I
Base l,evel NPSE; IPC-E- I 3-20
TariffDescrbtion Rate
Sctedule Dolhr Chanee
Percent
Chanse
Uffirm TariffSchedules
Residenthl Service $4,254,206 0.9201
Snrall General Service 7 $16,244 0.1001
Large General Service 9 ($e r 4.826)-0j6%
Dtsk to Dawn Lieltins l5 (S I 1,882)-0.98%
Large Power Service l9 (s r .ee6.e7s)-1.64%
Apric uhural Irripation S ervrce 24 $603,292 0.4501
Unnretered General S ervice 40 $ 16,592 1.5801
Street Lishtins 4t (s74,ss2 )-2.12o/o
Traffic ControlListttns 42 $2,3s7 1.3401
Total Uniform Tariffi $ 1,893,456 0.1901
Special Contracts:
Micron 26 ($ I ,371,7281 -4.63%
J R Simplot 29 ($278,277)-3.02o/o
DOE 30 ($24i,4s 1 )-2.070
Total Special Contzcts ($ r,8e3.456)-3.14%
Chanse in Total Idaho Retail Sales $0 0.0001
As can be seen in Table One, allocating the $99.3 million proposed shift from the PCA into a
new level of higher base rates using cost-of-service guidance causes some slight shifts in class
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, INC.
IPC-E-13-20
PAGE 5
responsibilities. These shifts moderate the undue benefit the all-energy cents per kWh approach
provides to low load factor customers. This is the expected and correct result. This result also
highlights the fact that the high load factor customers have been consistently disadvantaged over
the last several years because of the allocation of the $99.3 million of base rate dollars in the
PCA on a per kWh basis rather than based on a class cost-of-service study in accordance with
established Commission practice.
The ICIP and Micron are not challenging the proposed update of base rates by shifting
the requested amount out of the PCA and into base rates. The ICIP and Micron do, however,
question the equity of the Company's advocating that rates be apportioned among customer
classes based on a cents per kWh basis and not, at a minimum, based on ldaho Power's most
recent cost-of-service study. While ICIP and Micron continue to have concems that ldaho
Power's methodology over-allocates costs to high load factor customers, never-the-less it is
certainly a more reasonable approach than essentially using an all-energy allocator to recover
what are clearly both demand and energy related costs. It should be noted that the ICIP and
Micron proposal allocating rates based on cost-of-service would still be a revenue neutral event,
and overall rates would not change. The difference is the Company's base rate costs would be
distributed among customer classes on a more equitable demand and energy basis. This mirrors
more closely what would occur in a general rate case with a full cost-of-service study approved
by the Commission. Thus, the ICIP and Micron respectfully request that the Commission require
Idaho Power to employ a more equitable allocation based on a cost-of-service study.
RESPECTFULLY SUBMITTED this February 2014.
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, INC.
IPC-E-13-20
PAGE 6
+ylo aay ot
zuCHARDSON ADAMS, PLLC
By
Peter J. Ri on behalf of
the lndustrial Customers of Idaho Power
HOLLAND & HART LLP,,&u)ll*
Brian T. Hansen on behalf of
Micron Technology, Inc.
CERTIFICATE OF SERVICE
I hereby certify that on the 20ft day of February 2}l4,copies of the foregoing Comments
of the Industrial Customers of Idaho Power and Micron Technology, Inc. were hand delivered to:
Lisa Nordstrom
Idaho Power Company
l22l West Idaho
Boise, Idaho 83702
Administrative Assistant
67767sJ
COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER AND MICRON
TECHNOLOGY, INC.
IPC-E-13-20
PAGE 7