20180423notice_of_application_order_no_34040.pdf

Office of the Secretary
Service Date
April 23,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-18-06
OF IDAHO POWER COMPANY FOR )AUTHORITY TO IMPLEMENT POWER )NOTICE OF APPLICATION
COST ADJUSTMENT (PCA)RATES FOR )ELECTRIC SERVICE FROM JUNE 1,2018 )NOTICE OF
THROUGH MAY 31,2019 )MODIFIED PROCEDURE
)ORDER NO.34040
On April 12,2018,Idaho Power Company filed its annual power cost adjustment
(PCA)Application.The Company seeks an Order approving an update to Schedule 55 reflecting
a $22.6 million decrease in the PCA rates now in effect (or an average increase of approximately
1.90%),effective June 1,2018,through May 31,2019.If approved,a typical residential
customer's bill would decrease by about $1.29 per month.The Company requests that its
Application be processed under Modified Procedure.With its Application,the Company
included proposed tariffs,supporting exhibits,and the prefiled direct testimony of Nicole
Blackwell.
In addition to the PCA,the Company proposes two additional rate decreases--the
Company's annual Fixed Cost Adjustment (FCA),and a direct rate reduction resulting from tax
reform.If the Commission approves all three reductions as filed,residential customers will see a
total price decrease of 7.04%effective June 1,2018.
In this Order the Commission approves the request to process the PCA Application
using Modified Procedure and establishes deadlines for written comments.Interested persons are
invited to comment on the PCA Application.
THE PCA MECHANISM
The PCA mechanism permits Idaho Power to adjust its PCA rates upward or
downward to reflect the Company's annual "power supply costs."Due to its diverse generation
portfolio,Idaho Power's actual cost of providing electricity (its power supply cost)varies from
year to year depending on changes in such things as the river streamflow,the amount of
purchased power,fuel costs,the market price of power,and other factors.The annual PCA
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surcharge or credit is combined with the Company's "base rates"to produce a customer's overall
energy rate
The annual PCA mechanism is comprised of three major components.
First,projected power costs for the coming PCA year (June 1,2018,to May 31,
2019)are calculated using the Company's most recent "Operating Plan."The projected power
costs include:fuel costs;transmission costs for purchased power;Public Utility Regulatory
Policies Act of 1978 (PURPA)contract expenses;surplus sales revenues;and revenues from the
sale of renewable energy credits (RECs)and sulfur dioxide allowances.The Company may
recover 95%of the difference between the non PURPA projected power costs and the approved
base power cost,100%of the costs of its PURPA contracts,and 100%of its demand-side
management (DSM)incentive and conservation costs.See Order Nos.30715 and 32426 at 3.
Second,because the PCA includes forecasted costs,the preceding year's forecasted
costs are "trued-up"based upon the actual costs incurred during the prior year.
Finally,the Company reconciles the previous year's true-up by crediting to,or
collecting from customers through the PCA rate any surplus or deficit from the prior year's true-
up.This third "reconciliation"component (the "true-up of the true-up")ensures the Company
recovers its actual approved costs while ratepayers pay only for the actual amount of power that
the Company sold to meet native load requirements.In other words,ratepayers receive a rate
credit when power costs are low,and are assessed a rate surcharge when power costs are high.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that this year's PCA Application requests a total
revenue decrease of about $22.6 million for the 2018-2019 PCA year.The Company attributes
this year's PCA forecasted decrease to lower than anticipated power supply costs,better-than-
expected water conditions,and the elimination of a one-time refund of energy efficiency rider
funds provided through last year's PCA.Further,the Company forecasts that coal-fired
generation and expense are expected to decrease compared to last year's forecast.The 2018-2019
PCA forecast component to be collected from Idaho customers is $90,309,292.Application at 5-
6.
YOU ARE FURTHER NOTIFIED that the Company calculated the proposed
decrease by combining the three standard PCA components---projectedpower cost,true-up,and
reconciliation-with the fourth,revenue-sharing component.The Company calculated the three
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standard PCA components to be:(1)projected power costs for the 2018-2019 PCA are
0.6315/kWh;(2)the negative 0.1398/kWh for the 2017-2018 true-up portion of the PCA;and
(3)the negative 0.0063/kWh for the PCA reconciliation.These three standard PCA components
combine for an approximate 0.4854/kWh charge for all rate classes.Id.at 6.The Company
noted that its Idahojurisdictional year-end ROE was below 10%and thus below the threshold for
revenue sharing.Id.at 7.
YOU ARE FURTHER NOTIFIED that on March 15,2018,the Company filed its
annual FCA in Case No.IPC-E-18-02.That filing proposes a $19.3 million decrease in current
billed revenue (approximately 3.60%)for Idaho Residential and Small General Service
customers.
YOU ARE FURTHER NOTIFIED that on April 12,2018,the Company filed a
Settlement Stipulation in the Commission's Investigation into the Impact of Federal Tax Code
Revisions (Case No.GNR-U-18-01).If the settlement stipulation is approved as filed,it will
result in a rate reduction of approximately $26.5 million (approximately 2.22%)for Idaho
customers.
YOU ARE FURTHER NOTIFIED that if the PCA,the FCA,and rate reduction
proposal associated with tax reform are approved as filed,the combined impact is an overall
decrease in current billed revenue of $69.3 million,or 5.81 percent.The impact by revenue class
is as follows:
Proposed 2018 Revenue Impactby Class:
Percentage Decrease from Current Billed Rates by Proposed Change
Fixed Cost Adjustment
Small Large
General General
Residential Service Service Large Power Irrigation
-3.60%-3.73%N/A N/A N/A
Power Cost Adjustment
Small Large
General General
Residential Service Service Large Power Irrigation
-1.29%-0.80%-2.20%-3.27%-1.91%
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Tax Reform
Small Large
General General
Residential Service Service Large Power Irrigation
-2.15%-2.10%2.29%-2.25%-2.33%
Total Combined Impact
Small Large
General General
Residential Service Service Large Power Irrigation
-7.04%-6.63%-4.48%-5.52%-4.25%
YOU ARE FURTHER NOTIFIED that Idaho Power has proposed to implement the
PCA rates on June 1,2018.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission's Rules
of Procedure,IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation in past PCA cases.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
PCA Application may file a written comment in support or opposition with the Commission
no later than May 3,2018.The comment must contain a statement of reasons supporting the
comment.Written comments concerning this Application shall be mailed to the Commission
and the Applicant at the addresses reflected below:
Commission Secretary Lisa Nordstrom
Idaho Public Utilities Commission Idaho Power Company
PO Box 83720 PO Box 70
Boise,ID 83720-0074 Boise,ID 83707-0070
E-Mail:[e-mail]
[e-mail]
Street Address for Express Mail:Matthew Larkin
Timothy Tatum
472 W.Washington Street Idaho Power Company
Boise,ID 83702-5918 PO Box 70
Boise,ID 83707-0070
E-mail:[e-mail]
[e-mail]
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ORDER NO.34040 4
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission's home page located at www.puc.idaho.gov.Click on "Case Comment Form"
located under the "Consumers"tab,and complete the comment form using the case number as it
appears on the front of this document.These comments must also be sent to Idaho Power at the
e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that Idaho Power may file reply comments (if
necessary)no later than May 10,2018.
YOU ARE FURTHER NOTIFIED that Idaho Power's PCA Application together
with the Company's prefiled exhibits and testimony can be viewed at the Commission offices
during regular business hours.Idaho Power's Application,prefiled testimony,and exhibits are
also available on the Commission's web site at www.puc.idaho.gov by clicking on "File Room"
and then "Electric Cases."
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code and specifically
1daho Code §§61-307,61-503,and 61-622.The Commission may enter any final Order
consistent with its authorityunder Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission's Rules of Procedure,IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons wishing to file comments must do so no later than May 3,2018.
IT IS FURTHER ORDERED that Idaho Power may file reply comments (if any)no
later than May 10,2018.
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ORDER NO.34040 5
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of April 2018.
PAUL K T
KRIÚINE RAPER,C MMISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
IPCE1806 bkl
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ORDER NO.34040 6