20200331Final_Order_No_34608.pdf

ORDER NO. 34608 1

Office of the Secretary
Service Date
March 31, 2020

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO STUDY
FIXED COSTS OF PROVIDING ELECTRIC
SERVICE TO CUSTOMERS
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)
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CASE NO. IPC-E-18-16

ORDER NO. 34608

In this Order, the Commission recognizes the Company filed a Fixed Cost Report and
grants intervenor funding.
PROCEDURAL BACKGROUND
On May 9, 2018, in Docket No. IPC-E-17-13, the Commission ordered Idaho Power
Company (“Idaho Power” or “Company”) to file a study with the Commission exploring fixed-
cost recovery in basic charges and other rate design options prior to its next general rate case.
On October 19, 2018, the Company filed a Petition to Initiate Docket requesting the
Commission initiate this docket “to facilitate stakeholder input on a comprehensive customer
fixed-cost analysis performed by the Company as envisioned by Order No. 34046.”
On November 9, 2018, the Commission issued a Notice of Petition and Notice of
Intervention Deadline. Order No. 34190.
On April 30, 2019, Commission Staff filed a Staff Report.
The Company and parties to this docket engaged in one prehearing conference and five
“settlement conferences.”1 Parties to this docket are the Company, Commission Staff, Idaho
Conservation League (“ICL”), Avista Corporation, NW Energy Coalition, Idaho Hydrolectric
Power Producers Trust dba IdaHydro (“IdaHydro”), Idaho Irrigation Pumpers Association, Inc.
(“IIPA”), Rocky Mountain Power, Vote Solar, City of Boise, Sierra Club of Idaho (“Sierra Club”),
Idaho Clean Energy Association (“ICEA”), Industrial Customers of Idaho Power (“ICIP”), and
Russell Schiermeier (collectively, “Parties”).
On September 30, 2019, the Company submitted its Fixed Cost Report (“Report”) and
Motion to Accept Fixed Cost Report.

1 As stated in the October 11, 2019, Decision Memo from Commission Staff, “Although the parties referred to their
meetings as “settlement conferences” throughout this case, parties also generally understood that the end result of
this docket was to be a study conducted by the Company, with input from stakeholders, to be filed with the
Commission for informational purposes. Therefore, settlement was not an aim of this case, but the parties did work
collaboratively to shape the scope of the document submitted by the Company.”

ORDER NO. 34608 2
On October 24, 2019, the Commission issued a Notice of Modified Procedure and
Notice of Comment Deadlines. Order No. 34466.
On January 21, 2020, comments were filed by Staff, City of Boise, ICEA, IIPA, Sierra
Club of Idaho, and joint comments of ICL, NW Energy Coalition, and Vote Solar.
On February 20, 2020, the Company filed reply comments.
BACKGROUND
In Order No. 34046 from Case No. IPC-E-17-13, the Commission stated
the Commission now orders the Company to undertake a
comprehensive customer fixed-cost analysis to determine the proper
methodology and ‘spread’ of fixed costs as they relate to the
Company’s customers. The Company, with input from interested
parties, shall outline the scope of the study that should include
exploring fixed-cost recovery in basic charges and other rate design
options.
Order No. 34046 at 23. The ordering paragraph in Order No. 34046 ordered the Company to “file
a study with the Commission exploring fixed-cost recovery in basic charges and other rate design
options prior to its next general rate case.” Order No. 34046 at 31. The Company, in its
Application, requested the Commission “initiate a docket and intervention period to facilitate
stakeholder input on a comprehensive customer fixed-cost analysis performed by the Company as
envisioned by Order No. 34046.”
On April 30, 2019, Staff reported to the Commission on progress in the case to date.
Staff reported,
The process has been collaborative. In addition to vigorous and
constructive discussions about issues that are critical to the
Company’s analysis, individual parties have conducted and
presented the results of their own detailed analyses for discussion.
Staff appreciates these parties’ willingness to conduct and present
their own analysis to the group.
Staff Report at 2. Staff noted the Company’s willingness to model proposals from intervenors and
stated there was a shared general understanding among the Parties regarding the scope of the study
to be completed by the Company. Staff stated,
Given the large number of possible rate designs, parties understand
that the Company intends to study a relatively small number of base
case designs, and then study how fixed cost recovery and other
attributes are impacted by changes to those base case designs. Base

ORDER NO. 34608 3
case rate designs will include the Company’s current rate designs,
rate designs informed by Cost of Service, a number of ‘end points’
used to exemplify the behavior of extreme variations to each design,
and a few specific rate designs that are of interest to parties. A list
of base case rate designs currently under discussion is included as
Attachment A.
Id. Staff also stated,
In addition to studying rate design attributes that are directly related
to fixed cost recovery, the Company will study additional attributes
that may be considered when adopting or modifying the Company’s
rate structure. These additional attributes include billing impacts
across customers with different usage patterns in each class, price
signaling impacts to conservation and peak reduction, and
implementation costs. A list of design attributes currently under
discussion is included as Attachment B.
Id.
THE FIXED COST REPORT
The Report discusses how the Company derived its 2017 Class Cost of Service
(“CCOS”) for purposes of the Report. The Company states it used a methodology consistent with
that approved by the Commission in the Company’s 2008 and 2011 general rate cases but modified
to account for Schedules 6 and 8, which were created in 2018, and for Company owned generation
sources added since 2011. Report at 13. The Company presented the revenue requirements for
each rate class and additional or reduced revenue collection required from each class to achieve
symmetry between the revenue requirement and revenue collections for each class. Report at 14,
Fig. 6. The Company then determined the proportion of revenue collected through customer,
demand, and energy charges based on existing rate designs, and compared its revenue collection
with the way its costs are incurred (either for customer, energy, or demand costs). The Company
presented this information “to indicate how close or far any class’s revenue collection proportions
are to the current CCOS study informed proportions.” Id. at 15. The Company states,
As demonstrated in Figure 8, the existing rate designs for the
company’s Residential, Small, Large General, Industrial, and
Irrigation classes do not collect the full fixed costs (customer and
demand related as calculated in the company’s 2017 CCOS) through
the fixed monthly service charge and variable demand-related
components of the rate design. This is especially true for Residential
and Small General Service customers; between 90 and 95 percent of
total revenue is collected through volumetric energy charges and yet

ORDER NO. 34608 4
approximately 70 percent of total costs to serve are fixed in nature.
Because the energy rate is the primary component for collection of
fixed costs related to generation, transmission, and demand-
classified and distribution, the recovery of fixed costs per customer
declines with any reduction in net energy usage and increases when
net energy usage is greater than expected. For the Residential and
Small General Service classes, the FCA corrects the misalignment
between the revenue collection and the cost structure by decoupling
the collection of fixed cost from the volumetric energy charges and
recoupling to customer counts.
Because changes to the CCOS methodology can result in different classifications of costs as either
demand or energy, the Company agreed to model specific changes to the CCOS methodology
requested by parties. The Company modeled three packages of proposed changes, or “scenarios,”
and analyzed the impacts of the changes. See Report at 16-24.
Next, the Company analyzed different rate design options. “The company considered
several potential rate designs and ultimately investigated different class-specific rate design
changes to improve fixed-cost collection through fixed components of rate design with an eye
towards reducing cross-subsidies.” Report at 25. The Company states the Residential and Small
General Service customer classes deserve the highest priority when considering rate design
changes because 90-95% of revenue collection from those classes is through volumetric charges,
whereas the Company states 70% of the costs to serve those classes are fixed. Id. at 26. After
describing the current rate structure for the Residential and Small General Service classes, which
has a volumetric energy charge and a fixed $5 per month customer charge, the Company analyzed
the impacts of moving to a rate design that would add an on-peak demand charge to be assessed
during the summer months and a Basic Load Charge (“BLC”) designed to recover distribution-
related costs. The Company calls this a three-part rate design.
The Company also studied two variations of Time of Use (“TOU”) rates for Residential
and Small General Service customers. Id. at 31-36. The Company studied “cost-based rate
designs” for each of its customer classes, which generally added or altered BLC’s and demand
charges to the rate design for each customer class. The Company compared its preferred cost-
based rate designs against current rate designs for each customer class and analyzed the alignment
of demand and customer costs collected through fixed charges and energy costs collected through
volumetric rates. Id. at 36-46. The Company discussed the billing impacts on low-income
customers of each proposed change to cost-based rates.

ORDER NO. 34608 5
COMMENTS
a. Staff and Intervenor Comments.
Comments were filed by Commission Staff, IIPA, City of Boise, ICEA, and Sierra
Club, and joint comments were filed by ICL, Northwest Energy Coalition, and Vote Solar
(collectively, “Commenting Parties”). Several key themes emerged while reviewing party
comments. Consequently, the Commission addresses the key concerns commonly raised by the
Commenting Parties.
Commenting Parties found the Report submitted by the Company to be one-sided.
“The Fixed Cost Report advocates a particular rate design that the Company refers to as ‘Cost of
Service Informed,’ often to the exclusion of an objective and comprehensive analysis of other rate
designs proposed by Parties.” Staff at 4. See also ICL at 3, City of Boise at 5, ICEA at 3, Sierra
Club at 6, IIPA at 2. Commenting Parties stated that the attributes to be studied, as determined by
the Parties and presented to the Commission in the April 30 Staff Report, were not given due
consideration, and therefore, public interest concerns were not adequately incorporated into the
Report. See ICL at 1, ICEA at 2, City of Boise at 5, IIPA at 1, Staff at 4. Commenting Parties
stated that if the Report reflected the Parties’ scoping effort, more attention would have been
focused on how rate designs can be used to control future cost growth. See ICEA at 2, Sierra Club
at 3. Additionally, Commenting Parties observed that more analysis of TOU rates would have
been appropriate because of the potential for TOU rates to lower overall system costs. See Sierra
Club at 18, ICEA at 11, Staff at 20.
Commenting Parties noted that the Company did not demonstrate, nor purport to
demonstrate, that it is not recovering its fixed costs. See ICEA at 6, Sierra Club at 6, Staff at 3.
Commenting Parties also stated that the Report does not adequately address the impact of the Fixed
Cost Adjustment on the Company’s ability to recover its fixed costs. See Staff at 9-12, ICL at 4,
ICEA at 5. Commenting Parties stated that the Commission should not rely on the Report as an
objective and comprehensive examination of the Company’s fixed-cost recovery, either now or
when the Company makes proposals to change its rate designs. See City of Boise at 3, Sierra Club
at 3, Staff at 4, ICEA at 4.

ORDER NO. 34608 6
b. Reply Comments of Idaho Power.
The Company states it solicited and incorporated the Parties’ feedback, the Report
complies with Order No. 34046, and that no additional process is necessary for the Commission
to find the Report satisfied the Order. Idaho Power Reply Comments at 3. The Company argues
that it did incorporate feedback from the Parties. The Company notes it ran the three CCOS
Scenarios requested by Parties and included the results in the Report. Id. at 4-6. The Company
states it “presented the [CCOS] studies and rate design options for educational purposes within the
Report, knowing these would be heavily litigated in a future rate proceeding.” Id. at 9. The
Company states it will present sufficient evidence for its proposed rate designs when it files its
next general rate case and Parties can then present their own positions. Id. at 15-16.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, -502
and -503. The Commission is “vested with power and jurisdiction to supervise and regulate every
public utility in the state and to do all things necessary to carry out the spirit and intent of the
provisions of [The Public Utilities Law].” Idaho Code § 61-501. The Commission is empowered
to investigate rates, charges, rules, regulations, practices, and contracts of public utilities and to
determine whether they are just, reasonable, preferential, discriminatory, or in violation of any
provision of law, and to fix the same by order. Idaho Code §§ 61-502 and 61-503.
a. The Commission Recognizes a Study was Filed in Compliance with Order No
34046.
The Commission has reviewed the record, including the Application, the Fixed Cost
Report, the April 30 Staff Report, the comments of the Commenting Parties, and the reply
comments of the Company. We recognize that a study was filed. The ordering paragraph of Order
No. 34046, which initiated this review of fixed-cost recovery, ordered the Company to “file a study
with the Commission exploring fixed-cost recovery in basic charges and other rate design options
prior to its next general rate case.” We find that the Company has complied with our previous
Order.
We recognize the significant efforts of all Parties, including the Company, in preparing
the Report. We understand the Parties’ critiques that the Report is something less than a
comprehensive and objective consideration of all perspectives. By simply recognizing that the
Company filed a study, we do not imply that the Report was exhaustive. We recognize that the

ORDER NO. 34608 7
work was done and progress has been made. Any future reliance on the Report would necessarily
include consideration of the Parties’ comments. We also expect these concepts will be further
scrutinized when the Company proposes changes to its CCOS and rate designs in its next general
rate case.
b. The Commission Grants Intervenor Funding.
Commission decisions benefit from robust public input. It is “the policy of this state
to encourage participation at all stages of all proceedings before the commission so that all affected
customers receive full and fair representation in those proceedings.” Idaho Code § 61-
617A(1). Determinations for intervenor funding are to be based on Commission findings that the
intervenor materially contributed to the Commission’s decision, that the costs of intervention are
reasonable and would be a significant hardship for the intervenor if not recovered, that the
recommendations made by the intervenor differed materially from the recommendations of Staff,
and the testimony and participation of the intervenor addressed issues of concern to the general
body of users. See Idaho Code § 61-617A(2). The Commission has adopted rules implementing
this statute. See Commission Rule 161 through 165. The Commission, by statute and rule, is
limited to awarding $40,000 total per docket. Idaho Code § 61-617A, Commission Rule
165.01. The payment of awards is to be made by the utility and is an allowable expense to be
recovered from ratepayers in the next general rate case. Commission Rule 165.02, .03.
The Commission received timely petitions for intervenor funding from ICEA (in the
amount of $8,000), ICL (in the amount of $6,400), IIPA (in the amount of $38,221.45), and Sierra
Club of Idaho (in the amount of $6,878). We award intervenor funding based on the criteria set
out in Idaho Code § 61-617A and Commission Rule 165.01, the written comments of the Parties,
and the information provided in the petitions for intervenor funding.
Some intervenors itemize and explain their participation and contribution more than
others. We expect intervenors requesting funding to provide a sufficient explanation of their costs.
Based on the statutory criteria, we find it appropriate to award $8,000 to ICEA, $6,400 to ICL, and
$6,878 to Sierra Club of Idaho. We find that awarding the remainder of funding to IIPA, in the
amount of $18,722, is likewise reasonable. Although the request by IIPA is significantly greater
than the other intervenors, the record reflects that IIPA provided valuable insight regarding rate
design for the Irrigation rate class, and how rate design impacts energy usage by irrigators. We
find that all Commenting Parties raised issues of general concern to Idaho Power customers and

ORDER NO. 34608 8
provided valuable insight. We thank the Parties for their significant engagement and efforts in this
docket and look forward to further discussion of these important issues.
O R D E R
IT IS HEREBY RECOGNIZED that the Company filed a Fixed Cost Report, in
satisfaction of Order No. 34046.
IT IS FURTHER ORDERED that intervenor funding is awarded as follows: $8,000 to
ICEA, $6,400 to ICL, $6,878 to Sierra Club of Idaho, and $18,722 to IIPA.
THIS IS A FINAL ORDER. Any person interested in 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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 31st
day of March 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Diane M. Hanian
Commission Secretary
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