20180413Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
DATE: APRIL 13,2018
SUBJECT: IDAHO POWER,S ANNUAL POWER COST ADJUSTMENT
CASE NO. IPC.E.18.O6
On April 12,2018,Idaho Power applied for an Order authorizing the Company to
implement its Power Cost Adjustment (PCA) rates effective June 1,2018, through May 31,
2019.If approved, the Company's PCA adjustment would decrease rates in all customer classes,
with an average residential customer's bill decreasing by about $1.29 per month.
Since 1993, the PCA mechanism has allowed the Company to adjust its rates up or
down to reflect the Company's annual "power supply costs." Because about half of the
Company's generation is from hydropower facilities, the Company's actual cost to provide
electricity (its power supply cost) varies from year-to-year depending on changes in stream
flows, the amount of purchased power, fuel costs, the market price of power, and other factors.
The Company states that if the Application is approved, its Idaho customers
collectively would pay about $22.6 million (1.90%) less for electricity in the upcoming year than
they do now. The Company's Application would impact major customer classes as follows:
Proposed 2018 Revenue Impact by Class:
Percentage Decrease from Current Billed Rates
Residential
Small
General
Service
Large
General
Service Large Power Irrigation
Overall
Charqe
-1.29%-0.80%-2.20%-3.27%-1.91%-1.90%
DECISION MEMORANDUM I
In addition to the PCA, the Company proposed two additional rate decreases-its
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 7.04Yo effective June l, 2018. Other customer classes are impacted as follows:
Proposed 2018 Revenue Impact by Class:
Percentage Decrease from Current Billed Rates by Proposed Change
Fixed Cost
Power Cost ustment
Tax Reform
Total Combined ct
The Company attributes this year's PCA forecasted decrease to lower than anticipated
power supply costs, better-than-expected water conditions, creating lower-cost hydro generation,
and the elimination of a one-time refund of energy efficiency rider funds provided through last
year's PCA. The Company's proposed PCA adjustments are reflected in an updated Schedule 55,
which is attached to the Application. The Company requests that the new rates take effect on
June I , 2018, and that the case be processed by Modified Procedure.
2
Residential
Small
General
Service
Large
General
Service Large Power Irrigation
-3.60%-3.73%N/A N/A N/A
Residential
Small
General
Service
Large
General
Service Large Power Irrigation
-1.29%-0.80%-2.20%-3.27%-1.91%
Residential
Small
General
Service
Large
General
Service Large Power Irrigation
-2.15%-2.10%-2.29%-2.25%-2.33%
Residential
Small
General
Service
Large
General
Service Large Power Irrigation
-7.04%-6.63%-4.48%-5.52%-4.25%
DECISION MEMORANDUM
STAFF RECOMMENDATION
Staff concurs with the use of Modified Procedure. Given the expedited nature of this
case, and current demands on Staff, Staff recommends a May 3,2018, comment deadline and a
May 10, 2018, reply deadline.
COMMISSION DECISION
Does the Commission wish to process the PCA Application by Modified Procedure
with a May 3, 2018, comment deadline and a May 10, 2018, reply deadline?
Brandon
Deputy Attorney General
I:\Legal\ELECTRICVPC-E- I 8.06UvlemosuPCE I 806_bk Ldoc
3DECISION MEMORANDUM