20190226Reply Comments.pdf

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LISA D. NORDSTRON'I
Lead Counse!
[e-mail]
February 26,2019
VIA HAND DELIVERY
Diane Hanian, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re Case No. IPC-E-19-02
Annual Compliance Filing to Update the Substation Allowance under
Schedule 19, Large Power Service - ldaho Power Company's Reply
Comments
Dear Ms. Hanian:
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Reply Comments.
Very truly yours,
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Lisa D. Nordstrom
LDN:kkt
Enclosures
P.O. Box 70 (83707)
1221 W' ldaho St.
Boise, lD 83702
LISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I no rd strom @ ida h opower. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO
UPDATE THE SUBSTATION ALLOWANCE
UNDER SCHEDULE 19, LARGE POWER
SERVICE
CASE NO. !PC-E-19-02
IDAHO POWER COMPANY'S
REPLY COMMENTS
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ldaho Power Company ("ldaho Power" or "Company") respectfully submits the
following Reply Comments in response to comments filed by the ldaho Public Utilities
Commission ("Commission") Staff ("Staff') on February 19,2019.
I. COMMISSION STAFF'S COMMENTS
ldaho Power appreciates the comments provided in this case and notes that Staffs
review focused on three areas to determine the reasonableness of the Company's
proposed allowance amount: (1) the calculation method; (2) changes in direct material
cost; and (3) an audit of the overhead rate. Based on its review, Staff believes the
Company's calculation method complied with Commission orders and that the overhead
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
rate was accurate. Staff Comments at 2. However, Staff believes the Company's
proposed allowance overestimated transformer costs and instead recommended the
Commission approve Staffs proposed allowance of $69,397 per megawatt ("MW") versus
the Company's proposed allowance of $72,559/MW. /d. Additionally, Staff recommends
that the Company and Staff meet before the next annual filing to discuss potential
changes to the materials used to calculate the Substation Allowance. Staff Comments at
3.
II. IDAHO POWER'S RESPONSE
ln its initial filing in this matter, the Company updated the costs associated with
materials approved by the Commission in Order Nos. 23893 and 32914. As noted by
Staff, because the Company has not recently purchased a 30 MVA transformer, it instead
relied on a budgetary estimate as a prory in lieu of a firm quote or recent purchase price.
For estimating purposes, the Company typically relies on vendors to supply budgetary
quotes or engineering estimates for material that has not been purchased recently (as
was the case for the 30 MVA transformer). The Company's intention was to provide a
direct comparison to the budgetary estimate that was used for the cost of the 30 MVA
transformer in last year's advice filing to accurately reflect the relative change in market
prices. While the Company believes its method of relying on a budgetary estimate
resulted in a proposed allowance that is reasonable, it does not oppose the Commission
adopting Staffs recommended allowance of $69,397/MW.
Lastly, the Company wil! commit to work with Staff in advance of next year's update
to address concerns associated with the source of cost estimate data.
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
Iil. CONCLUSTON
ldaho Power appreciates the opportunity to respond to comments filed in this case
and respectfully requests that the Commission issue an order requiring the Company to
submit tariff sheets updating the Schedule 19 substation allowance to $69,397/MW.
DATED at Boise, ldaho, this 26th day of February, 2019.
SA D. NO
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 26th day of February 2019,1 served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Karl T. Klein
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Customerc of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
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Ki T utive Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
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