20180315Application.pdf

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An TDACORP Company
DONOVAN E. WALKER
Lead Counsel
dwalker@idahooower. com
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March 15,2018
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
47 2 W est Wash ington Street
Boise, ldaho 83702
Re: Case No. ]PC-E-18-02
Fixed Cost Adjustment Rates for June 1,2018, through May 31 ,2019
ldaho Power Company's Application and Testimony
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
In addition, enclosed are an original and eight (8) copies of the Direct Testimony of
Pawal P. Goralskifiled in support of the Application. One copy of Mr. Goralski's testimony
has been designated as the "Reporter's Copy." A disk containing a Word version of Mr.
Goralsk's testimony is enclosed for the Reporter.
Also enclosed are eight (8) copies of a disk containing the Excel files of Mr
Goralsk's exhibits.
Lastly, four (4) copies each of ldaho Power Company's press release and customer
notice are also enclosed.
Very truly yours,
DEW/KKT
Enclosures
PO. 8ox 70 (83707\
1221 W. ldaho 5t.
Donovan E. Walker
Boise, lD 83702
DONOVAN E. WALKER (lSB No. 5921)
Idaho Power Company
1221\Nest ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalker@ idahopower. com
Attorney for ldaho Power Company
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BEFORE THE !DAHO PUBLIC UT!LITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO IMPLEMENT FIXED
cosT ADJUSTMENT (.FCA") RATES
FOR ELECTRIC SERVICE FROM JUNE 1,
2018, THROUGH MAY 31,2019.
CASE NO. tPC-E-18-02
APPLICATION
ldaho Power Company ("ldaho Power" or "Company"), in accordance with ldaho
Code S 61-502 and RP 052, hereby respectfully makes application to the ldaho Public
Utilities Commission ("Commission") for an order authorizing ldaho Power to implement
FCA rates for electric service from June 1 , 2018, through May 31 , 2019, and to approve
the Company's corresponding Schedule 54, Fixed Cost Adjustment. With this filing the
Company proposes a $19.3 million decrease for Residential and Small General Service
customers. lf the FCA is approved as filed, a typical residential customer using 950
kilowatt-hours per month will see an approximate $3.60 decrease to their monthly bill.
ln support of this Application, ldaho Power represents as follows:
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APPLICATION - 1
APPLICATION - 2
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 volumes 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 annualenergy 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 Power'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
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 General 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 costs recovered used to determine the FCA. The modification to the
calculation of the actual level of fixed costs recovered replaced weather-normalized billed
sales with actual billed sales and began with the determination of the 2015 FCA.
5. !n this filing, the Company requests recovery of the 2017 FCA balance and
approval of the corresponding rates.
II. FCA MECHANISM
6. The FCA mechanism enables Idaho 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 otherwords, 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 actual billed sales basis by the Company through
rates and the level of fixed costs authorized for recovery in the Company's most recent,
applicable general rate case.
7. The FCA removes the financial disincentive that exists when the Company
invests in DSM resources and energy efficiency activities. On a system-wide basis, ldaho
Power achieved 191,471 megawatt-hours of incremental annual energy efficiency
savings in 2017, which is a 12 percent increase from finalized savings achieved in 2016.
8. 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
APPLICATION - 3
per customer rate (FCC), which is established as part of determining the Company's
authorized revenue requirement in its 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 recovered" 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 numbers (the "authorized fixed cost recovery" amount
minus the "actual fixed costs recovered" amount) is the fixed cost adjustment for each
class.
III. PROPOSED 2018-2019 FCA RATE ADJUSTMENT
9. The determination of the FCA deferral balance and corresponding rates are
described in the Direct Testimony of Pawel P. Goralski ("Goralski Testimony") filed
contemporaneously with this Application.
10. As shown on Exhibit No. 4 of the Goralski Testimony, the proposed FCA is
$14,889,453.64 for the Residential class and $820,771.46 for the Small General Service
class, for a total amount of $15,710,225.10. Goralski Testimony at 8. The proposed FCA
deferral balance is well below the current FCA deferral balance currently collected in
customers' rates. Accordingly, with this Application, ldaho Power is proposing an FCA
rate decrease for the Residential and Small General Service classes. The proposed FCA
rates would result in an annual decrease of 3.60 percent from current billed revenue for
the affected customer classes. Goralski Testimony at 11-12. This decrease equates to
new FCA rates of 0.2943 cents per kWh for the Residential class and 0.3704 cents per
kWh for the Small General Service class. Goralski Testimony at 10.
APPLICATION - 4
11. ldaho Power requests that the FCA rates become effective on June 1,2018,
coincident with the Company's Power Cost Adjustment and with the commencement of
seasonal rates. The Company requests that the FCA rates remain in effect until May 31,
2019.
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 Attachment2.
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 Goralski Testimony
and stands ready to present its testimony and support the Application if the Commission
determines that a technical hearing is required.
V. COMMUNICATIONS AND SERVICE OF PLEADINGS
14. !n conformance with RP 125, this Application will be brought to the attention
of ldaho Power's customers 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 current billing cycle, with the last notice being sent on or about April 20, 2018.
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
APPLICATION - 5
Company will, 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
Donovan E. Walker
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
dwalker@idahopower. com
Pawel P. Goralski
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
pqoralski@ idahopower. com
dockets@ id ahopower. com
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 1,2018,
through May 31 ,2019, as described above.
DATED at Boise, ldaho, this 1Sth day of March 2018.
OVAN E. WALKER
Attorney for ldaho Power Company
APPLICATION - 6
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
cAsE NO. IPC-E-19-02
IDAHO POWER COMPANY
ATTAGHMENT 1
PROPOSED TARIFF
ldaho Power Company Tenth Revised Sheet No. 54-2
Cancels
|.P.U.C. No. 29. Tariff No. 101 Ninth 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 load for
Residential and Small General Service customers by the appropriate Residential 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 0.2943
cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule 7) is 0.3704
cents per kWh.
The Fixed Cost Adjustment included on this schedule will expire May 31 ,2019
IDAHO
lssued per Order No.
Effective - June 1,2018
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho
EXPIRATION
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-19-02
IDAHO POWER COMPANY
ATTACHMENT 2
TARIFF IN LEGISLATIVE FORMAT
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual fixed costs Recovered amount is computed by multiplying the actual energy load for
Residential and Small General Service customers by the appropriate Residential 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
0.67282943 cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedule
7) is 0.8576320a cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule will expire May 31 ,20189
IDAHO
lssued per Order No. 3€777
Effective - June 1,20179
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho
ldaho Power Company Nin+hfedh Revised Sheet No. 54-2
Cancels
|.P.U.C. No. 29, Tariff No. 101 ErehthNinth Revised Sheet No. 54-2