20180702final_order_no_34100.pdf

Office of the Secretary
Service Date
July 2,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-17-16
OF IDAHO POWER TO ESTABLISH A )METHOD OF RECOVERY FOR COSTS )ORDER NO.34100
ASSOCIATED WITH PARTICIPATION IN )THE WESTERN ENERGY IMBALANCE )MARKET )
On November 14,2017,Idaho Power Company applied to the Commission for an
Order authorizing the Company to establish an interim method of recovery of costs associated
with participation in the Western Energy Imbalance Market (EIM)through a temporary rate
component in Tariff Schedule 55,the Power Cost Adjustment.Application at 1.The Company
requested that the Application be processed by Modified Procedure and that fmal order be issued
on the request by March 31,2018.Id.at 6.Previously,the Commission set a December 13,
2017,intervention deadline.Order No.33938.No intervenors appeared.
On February 13,2018,Staff notified the Commission that it had reached a settlement
with the Company.On February 20,2018,the Commission issued Order No.33989 vacating the
schedule.On May 24,2018,the Company filed a settlement stipulation,and requested approval
by June 29,2018.
THE APPLICATION
The Company stated that participation in the western EIM will achieve net power
supply expense (NPSE)benefits,which will automatically flow to customers through the
Company's annual Power Cost Adjustment (PCA)mechanism when the Company begins
participating in the market in April 2018.Application at 3-4.The Company reported that it has
incurred,and will continue to incur,incremental costs to prepare for and participate in the
western EIM.Id.The Company thus requested approval to recover the incremental costs related
to participation in the western EIM through a temporary rate component in Schedule 55,until the
costs and benefits are reflected in base rates.Id.The Company explained that this method will
match the benefits that customers receive with the costs incurred by the Company to provide
those benefits.Id.
ORDER NO.34100 1
In its Application,the Company requested that the Commission approve a temporary
rate component that would be based on its annual estimate of EIM-related,Idaho-jurisdiction
revenue requirement.Id.at 5.The Company also requested approval of an annual EIM-related
true-up mechanism adjustment to the Power Cost Adjustment going forward.
THE PROPOSED SETTLEMENT
Through settlement,the Company and Commission Staff agreed that the Company
will not include forecasted or estimated EIM participation costs or benefits in Schedule 55,as
proposed in its Application.Rather,the Company agreed that it will add an EIM-related monthly
revenue requirement to its monthlyPCA deferral calculation based on actual EIM participation
costs after it has incurred those costs,to be reflected in its monthly net power supply expense
(NPSE)until that amount is fully embedded in base rates.
The parties further agreed that,as of April 1,2018,the Company will cease deferring
incremental EIM participation operations and maintenance start-up costs,and will begin
deferring the monthly revenue requirement associated with EIM participation to the PCA
deferral account.A portion of the deferred tax non-cash reduction approved by the Commission
in Order No.34071 will be used to offset the EIM Regulatory Asset account.The Company
agreed that the entire EIM deferral amount will be offset in 2018.The EIM revenue requirement
calculation will include rate base (return on and return of)and operating costs incurred.Upon
approval by the Commission,the above provisions will be effective as of the beginning of the
April 2018 PCA deferral period.
COMMENTS
Staff and the Company came to an agreement,which is reflected in the settlement
stipulation.Staff provided comments reviewing the process and supporting the settlement.
Staff reported to the Commission that the recovery method in settlement eliminates
the need to forecast EIM participation costs,and instead uses actual costs.The Company will
utilize its existing deferral mechanism for NPSE in the PCA,and EIM benefits will
automatically flow into the PCA through those accounts.According to Staff,the settlement will
allow the costs of EIM participation to be recovered at the same percentage as benefits are
included.
Staff further pointed out that through settlement,the Company agreed that the annual
EIM benefits reported by CAISO and automatically included in the PCA will be used to set a
ORDER NO.34100
soft cap for the actual annual EIM revenue requirement included in the PCA deferral.Amounts
that exceed benefits on an annual basis will be identified in the annual PCA filing.The Company
will have an opportunityto justify excess costs by a prudency determination by the Commission
at a later time.
The Company filed a brief reply supporting the Settlement.The Company argued that
the agreement is a reasonable resolution to pass costs and benefits of participation in the western
EIM to customers.It further asserted that the settlement provides proper matching of the costs
and benefits of participation in the EIM by incorporating these amounts into the PCA deferral
mechanism,coincident with the Company's participation.Finally,the Company submitted that
the agreement achieves a result that limits potential negative financial impact on the Company
and aligns with the Commission's decision in Case No.IPC-E-16-19.
In sum,Staff and the Company,the only parties to the case,fully support the
agreement as fair,justand reasonable and in the public interest.
COMMISSION FINDINGS
The Commission reviews settlements consistent with Commission Rules 271-280.
Further,the Commission is not bound by any agreement of the signing parties.Rather,the
Commission will independently review the proposed settlement to decide whether to approve it,
reject it,or state conditions under which to accept it.The proposed settlement's proponents bear
the burden to prove that it is just,fair,and reasonable,in the public interest,or otherwise in
accordance with law or regulatory policy.
Based upon our review of the Application,the proposed Settlement,and the
comments,the Commission finds it is fair,just and reasonable to approve the settlement,and
grant Idaho Power an EIM recovery mechanism.We find that the recovery of EIM participation
costs should be based on actual costs,and not a forecast.With this Order,the Company may
begin deferring the monthly revenue requirement associated with EIM participation to its PCA
deferral account beginning April 1,2018 to coincide with Idaho Power's participation in the
EIM.Furthermore,the Company will use a portion of deferred tax non-cash reduction associated
with the 2017 Tax Act to offset the EIM Regulatory Asset account,and the entire EIM deferral
amount will be offset in 2018.See Order No.34071.
The Commission acknowledges the soft cap for the actual annual EIM revenue
requirement included in the PCA deferral.This mechanism allows for further Commission
ORDER NO.34100 3
scrutiny when costs exceed benefits during a PCA year.The Company will have an opportunity
to show that excess costs were prudentlyincurred and,therefore,recoverable from customers
through the PCA.
ORDER
IT IS HEREBY ORDERED that the proposed settlement allowing for EIM cost
recovery through the PCA deferral account is approved.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues fmally
decided by this Order)may petition for reconsideration within twenty-one (21)days of the
service date of this Order with regard to any matter decided in this Order.Within seven (7)days
after any person has petitioned for reconsideration any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
ORDER NO.34100 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of July2018.
PAEl KJEI L \NDER.PRESIDENT
KRlfl IN I ER,Ml IS IONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane Hanian
Commission Secretary
IPCEI716 11nal bk
ORDER NO.34100 5