20170531final_order_no_33770.pdf

Office of the Secretary
Service Date
May 31,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-16-23
AUTHORITY TO INCREASE RATES DUE )
TO REVISED DEPRECIATION RATES FOR )
ELECTRIC PLANT-IN-SERVICE )ORDER NO.33770
__________________________________________________________________________________
)
This case concerns Idaho Power’s request for Commission approval of its revised
depreciation rates for electric plant-in-service.On May 3,2017,Idaho Power Company filed an
unopposed Motion to approve a Settlement Stipulation in this case,signed by Idaho Power;
Commission Staff;Idaho Irrigation Pumpers Association,Inc.(IIPA);Micron Technology,Inc.;
the U.S.Department of Energy and the Federal Executive Agencies (DOE);and the Industrial
Customers of Idaho Power (ICIP)(collectively,the “Stipulating Parties”).The Idaho
Conservation League (ICL)and Sierra Club had no objection to,but did not sign,the Settlement
Stipulation.The Stipulating Parties agreed that the Settlement Stipulation,which results in no
associated change in retail rates,fully resolves this matter.Having reviewed the record,the
Commission approves the Settlement Stipulation in the public interest as a fair,just,and
reasonable resolution of this case.
BACKGROUND
Depreciation of a utility’s electric plant 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
to Application)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.32559 (adopting stipulation),and were based on the
Company’s electric plant-in-service on June 30,2011.Application at 2.In 2015,Idaho Power
“conducted a new,detailed depreciation study of all electric plant-in-service,”providing updates
to “net salvage percentages and service life estimates for all plant assets”as of December 31,
ORDER NO.33770 1
2015.Id.Depreciation associated with the North Valmy plant due to its accelerated closing was
raised in Case No.IPC-E-16-24.and not in this matter.Id.at 2-3.
THE APPLICATION
Based on the 2015 Study,Idaho Power requested authority to implement proposed
revised depreciation rates and adjusted Idaho jurisdictional base rates,effective June 1,2017.Id.
at 2.Idaho Power proposed depreciation rates “based on [a]straight line,remaining life method
for all electric plant,”as was used for the agreed depreciation rates adopted in Order No.32559.
Id.at 3.The Company proposed 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 recommended 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 proposed “to amortize this amount over a five-year period,
resulting in an increase in amortization expense of $1.56 million annually.”Id.
As proposed in its Application,the Company’s Idaho jurisdictional revenue
requirement would have increased “$6,672,588,as measured against the revenue requirement
approved in the Company’s last general rate case.”Id.Idaho Power asked that the incremental
revenue requirement of $6,672,588 (an overall increase of 0.5 9%)“be recovered from customers
through a uniform percentage increase to all base rate components except the service charge.”
Id.at 5.
The Commission issued an Order providing notice of the Application and setting a
deadline for interventions.Order No.33652.The Commission granted Petitions to Intervene
from IIPA,Micron Technology,ICL and Sierra Club,DOE,and ICIP.Order Nos.33659,
33670,33710,33673,and 33676.The Stipulating Parties conferred and agreed to process the
Application via Modified Procedure with agreed comment deadlines,which the Commission
adopted.Order No.33690.The Stipulating Parties engaged in settlement discussions in
February and April 2017,culminating in a Settlement Stipulation and Motion for approval
thereof that Idaho Power filed on May 3,2017.
THE SETTLEMENT STIPULATION
The Stipulating Parties agreed the Settlement Stipulation represents a “fair,just,and
reasonable compromise of the dispute(s)between the Parties,and that this Settlement Stipulation
ORDER NO.33770 2
is in the public interest”la’.at 2.The Stipulating Parties agreed to depreciation rates set forth in
Attachment I to the Settlement Stipulation,“which would result in no associated change in retail
rates.”Id.at 4.The Stipulating Parties further agreed to an effective date of June 1,2017,for
the rates set forth in Attachment 1,and that the agreement “represent[s]a compromise of the
differing depreciation methodologies,theories,and opinions presented in this case,and do not
necessarily reflect an endorsement of the underlying rationale for each adjustment by any of the
Stipulating Parties.”Id.
PUBLIC COMMENTS
The Commission received 11 timely comments in response to the notice of
settlement,Order No.33763,and one comment a day after the deadline.Each of these
comments supported efforts to close the Valmy plant by 2021,and generally to end the state’s
reliance on coal;they also advocated use and encouragement of renewable energy.One
comment was filed prior to the notice of settlement,although it is unclear whether the comment
was intended to specifically address this case.That comment asked that the Commission not
allow Idaho Power a rate increase.We note that the Settlement Stipulation to which the Parties
agreed or did not object,results in no rate increase.As always,we appreciate the public
comments in matters before us.The public’s input provides a more complete perspective for
evaluating and rendering decisions in the Commission’s cases.The comments received in this
matter are no exception.
DISCUSSION AND FINDINGS
The Commission has discretion to determine the manner in which it will consider
proposals of settlement.IDAPA 3 1.01.01.274.We find that the Settlement Stipulation before us
is the result of substantial negotiations in which all Stipulating Parties participated and to which
the Stipulating Parties either agreed or did not object.Also,we commend the Parties for their
considerable efforts in reaching agreement on the many complex issues raised in this case.We
therefore find that further proceedings are not necessary.
After reviewing the Settlement Stipulation and Motion,the Commission adopts and
approves the Settlement Stipulation as presented.We find that it appropriately resolves issues
regarding reasonable depreciation accruals to be booked in Idaho Power’s accounts going
forward.We further find that the Settlement Stipulation is a reasonable compromise of the
contested issues;by entering such agreement,the Stipulating Parties resolve such issues,
ORDER NO.33770 3
avoiding expense,inconvenience,and uncertainty of further litigation.We find that the
Settlement Stipulation is just,fair and reasonable,in the public interest,and in accordance with
the law and regulatory policy of this State.IDAPA 31.01.01.275 and .276.Accordingly,we
accept and approve the Settlement Stipulation proposed by the Stipulating Parties and resulting
in no customer retail rate change,without modification.
ORDER
IT IS HEREBY ORDERED that Idaho Power’s Motion to approve the Settlement
Stipulation is granted.The Commission adopts the revised depreciation accrual rates contained
in the Settlement Stipulation and its attachments.
IT IS FURTHER ORDERED that the depreciation rates approved by this Order shall
become effective on June 1,2017.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
ORDER NO.33770 4
DONE by Order of the Idaho Public Utilities Commission at Boise.Idaho this />
day of May 2017.
PAdt’KJELVA DER,PRESIDENT
KRAR:SIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
0:IPC-E-I 6-23dh3
ORDER NO.33770 5