20180406Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRE,TARY
COMMISSION STAFF
FROM:EDITH PACILLO
DEPUTY ATTORNEY GENERAL
DATE: APRIL 6,2018
SUBJECT:IDAHO POWER'S APPLICATION FOR AUTHORITY TO IMPLEMENT
FCA RATES FOR ELECTRIC SERVICE FROM JUNE 1,2018 THROUGH
MAY 31,2019, CASE NO. IPC-E-18-02
On March 15,2018, Idaho Power Company applied to implement new Fixed Cost
Adjustment (FCA) rates for electric service from June 1,2018 through May 31,2019, and a
corresponding revised tariff Schedule 54, Fixed Cost Adjustment. With its Application, Idaho
Power proposes to decrease FCA rates by 3.60 percent from current billed revenue for the affected
customer classes, with the average residential customer's bill decreasing by about $3.60 per month.
Idaho Power asks that its Application be processed by Modified Procedure.
BACKGROUND
Using traditional rate design, utilities recover fixed costsl through each kilowatt-hour
(kwh) sold, and are thus discouraged from reducing sales volume by investing in energy efficiency
and demand-side management. See Application at 2. The FCA is a rate adjustment mechanism
that separates or "decouples" Idaho Power's fixed-cost revenues from its volumetric energy sales.
See Id. at 3. This decoupling enables the Company to recover its fixed costs to deliver energy -
as set in its most recent general rate case - even when energy sales and revenues have decreased.
Order No. 33295 at l; see Application at 3.
Idaho Power's FCA program was first initiated in 2007, as a pilot program for
residential service and small general service customers. Application at 2. In 2012, the
Commission approved the Company's request to make the FCA a permanent program. Order No.
I "Fixed costs" are a utility's costs to provide service that do not vary with energy use, output, or
production, and remain relatively stable between rate cases.
DECISION MEMORANDUM I
32505. In 2015, the Commission approved a settlement stipulation that changed FCA calculation
methodology by replacing use of weather-normalized data with actual data, to ensure improved
accuracy. Order No. 33295 at 5; see Application at 3.
PROPOSED 2018-2019 FCA RATE ADJUSTMENT
Idaho Power proposes an FCA of $14,889,453.64 for the residential class, and
$820,771.46 for the small general service class, for a total of $15,710,225.10. Id. at 4. The
proposed FCA deferral balance is below the current FCA defenal balance collected in customers'
rates. Id. at 4. Thus, Idaho Power proposes an FCA rate decrease of 3.60 percent from current
billed revenue for the affected customer classes. Id. This 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. 1d
With its Application, Idaho Power submitted its proposed FCA tariff, in clean
(Attachment l) and legislative (Attachment 2) formats. Id. The Company also provided
supporting Direct Testimony of Pawel P. Goralski, a regulatory.analyst for Idaho Power.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with a comment
deadline of May 10,2018, and reply deadline of May 18, 2018.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with a
comment deadline of May 10,2018 and reply deadline of May 18, 2018?
Deputy Attomey General
IPCEl802_ntc of app_elpl
2DECISION MEMORANDUM