20161114notice_of_application_order_no_33652.pdf

Office of the Secretary
Service Date
November 14, 2016
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE RATES DUE
TO REVISED DEPRECIATION RATES
FOR ELECTRIC PLANT-IN-SERVICE
-------------------
) CASE NO. IPC-E-16-23
)
) NOTICE OF APPLICATION
)
) NOTICEOF
) INTERVENTION DEADLINE
)
) ORDER NO. 33652
On October 21, 2016, Idaho Power Company filed an Application for an Order
granting it authority to adjust its Idaho jurisdictional base rates due to revised depreciation rates
for its electric plant-in-service. The proposed adjustment is an overall rate increase of 0.59
percent.1 The Company filed its Application concurrently with a request to approve a balance
account, tracking the incremental costs and benefits associated with the accelerated depreciation
schedule for the North Valmy power plant (Case No. IPC-E-24). Idaho Power intends to
facilitate a single rate change for customers with the simultaneous filings, and asks that the
Commission enter final Orders in both matters by April 1, 2017, to allow it to incorporate rate
impacts associated with the Applications in its April 14, 2017 Power Cost Adjustment filing.
The Commission now issues this Notice of Application and sets a deadline for Petitions to
Intervene.
BACKGROUND
As to a utility's electric plant, depreciation is "the loss in service value not restored by
current maintenance, incurred in connection with the consumption or prospective retirement of
utility plant in the course of service from causes that can be reasonably anticipated or
contemplated, against which [a utility] is not protected by insurance." Spanos Direct (Exhibit 3)
at 2. For financial and ratemaking purposes, Idaho Power periodically conducts studies to
determine depreciation rates for each plant account (i.e., the Company's various plant functions
such as steam, hydraulic, transmission, distribution, etc.). See id. at 3. The last major changes to
the Company's depreciation rates were approved by the Commission June 1, 2012, Order No.
1 As noted in Idaho Power's Errata, the 0.59 percent figure identified in Attachment No. 3 is correct; the 0.48
percent figure in the original Application at 5 was in error.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33652 1
32559 (adopting stipulation), and were based on the Company's electric plant-in-service on June
30, 2011. Application at 2.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that, in 2015, Idaho Power "conducted a new,
detailed depreciation study of all electric plant-in-service." Application at 2. The new study
("Study") was done by Gannett Fleming Valuation and Rate Consultants, LLC, as to Idaho
Power's electric plant-in-service as of December 31, 2015. Id The Study, attached as Exhibit 2
to the direct testimony of Gannett Fleming Vice President John Spanos, provides updates to "net
salvage percentages and service life estimates for all plant assets." Id Any depreciation
associated with the North Valmy plant due to its accelerated closing is addressed in Case No.
IPC-E-16-24, and not in this matter. Id. at 2-3.
YOU ARE FURTHER NOTIFIED that, based on the 2015 Study, Idaho Power seeks
authority to implement proposed revised depreciation rates and adjusted Idaho jurisdictional base
rates, effective June 1, 2017. Id at 2. Idaho Power's proposed depreciation rates are "based on
[a] straight line, remaining life method for all electric plant," as was used for the depreciation
rates agreed-to and adopted in Order No. 32559. Id at 3.
YOU ARE FURTHER NOTIFIED that the Company "is proposing an adjustment to
the book reserve of the general plant accounts," to address that rates consistent "with the
amortization period for general plant assets in service today, and those expected to be added in
the future, do not align with the actual book reserve." Id. The Company recommends a $7. 79
million adjustment to the book reserve of the Company's general plant account book, to bring it
"in line with the ages of the surviving plant-in-service." Id at 4. "Idaho Power proposes to
amortize this amount over a five-year period, resulting in an increase in amortization expense of
$1.56 million annually." Id
YOU ARE FURTHER NOTIFIED that if the Company's proposed depreciation rates
are adopted, and proposed reserve adjustment is amortized, its "annual depreciation and
amortization expense would increase about $5.69 million on a total system basis, or $5.50
million on an Idaho jurisdictional basis when applied to the Company's current [Commission­
approved] plant-in-service amounts." Id. The result would be "an increase in the Company's
Idaho jurisdictional revenue requirement of $6,672,588, as measured against the revenue
requirement approved in the Company's last general rate case." Id.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33652 2
YOU ARE FURTHER NOTIFIED that, in its Application, Idaho Power asks that the
incremental revenue requirement of$6,672,588 "be recovered from customers through a uniform
percentage increase to all base rate components except the service charge." Id. at 5. As shown
in Attachment No. 3 to the Application, the proposed change is an overall increase of 0.59
percent.
YOU ARE FURTHER NOTIFIED that the Company has filed "one set of proposed
tariff sheets specifying the proposed rates for providing retail electric service" to its Idaho
customers pursuant to this case and the Company's application concerning the North Valmy
plant. Id. The Company proposes that, when "final orders are received on both of the proposed
requests to change rates effective June 1, 2017, [it] will submit a compliance filing that will
include tariff sheets showing the cumulative impact of rate changes associated with both cases."
Id.
NOTICE OF DEADLINE TO INTERVENE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
must file a Petition to Intervene with the Commission pursuant to this Commission's Rules of
Procedure 72 and 73, IDAPA 31.01.01.072 and -.073. All Petitions to Intervene must be filed
no later than 21 days from the service date of this Order. Persons desiring to present their
views 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.
NOTICE OF PARTIES
YOU ARE FURTHER NOTIFIED that the following persons are designated as Idaho
Power's representatives in this matter:
Lisa D. Nordstrom
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, ID 83 707
E-Mail: [e-mail]
[e-mail]
Matt Larkin
Idaho Power Company
P.O. Box 70
Boise, Idaho 83 707
E-Mail: [e-mail]
YOU ARE FURTHER NOTIFIED that, once the deadline for intervention has
passed, the Commission Secretary shall prepare a Notice of Parties. Staff counsel will then
confer with the parties regarding a procedural schedule for this matter and shall report the
proposed schedule to the Commission.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33652 3
YOU ARE FURTHER NOTIFIED that the Application, attachments, and testimony
of John J. Spanos (plus 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 website at www.puc.idaho.gov. Click on the "File Room"
tab at the top of the page, scroll down to "Open Electric Cases," then click on either case number
as shown on the front of this document.
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in this matter shall file
a Petition to Intervene no later than 21 days from the service date of this Order. Once the
deadline for Petitions to Intervene has passed, the Commission Secretary shall prepare and issue
a Notice of Parties.
IT IS FURTHER ORDERED that, after the Notice of Parties has issued, Staff counsel
shall confer with the parties regarding a procedural schedule for this matter and shall report the
proposed schedule to the Commission.
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDER NO. 33652 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of November 2016.
ATTEST:
=ion Secretary
O:IPC-E-16-23 _djh
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ERIC ANDERSON, COMMISSIONER
ORDER NO. 33652 5
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