20190315Application.pdf

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An IDACORP Company
1221 W. ldaho St. (83702)
PO. Box 70
LISA D. NORDSTROM
Lead Counsel
I [e-mail]
March 15,2019
VIA HAND DELIVERY
Diane M. Hanian, Secretary
ldaho Public Utilities Commission
47 2 \N est Wash i ngton Street
Boise, ldaho 83702
Re: Case No. IPC-E-19-10
Fixed Cost Adjustment Rates for June 1,2019, through May 31 ,2020
ldaho Power Company's Application and Testimony
Dear Ms. Hanian
Enclosed for filing in the above matter please find an original and seven (7) copies
of ldaho Power Company's Application.
ln addition, enclosed are an originaland eight (8) copies of the Direct Testimony of
Connie G. Aschenbrenner filed in support of the Application. One copy of Ms.
Aschenbrenner's testimony has been designated as the "Reporter's Copy." A disk
containing a Word version of Ms. Aschenbrenner's testimony is enclosed forthe Reporter.
Also enclosed are eight (8) copies of a disk containing the Excel files of Ms.
Aschenbrenner's exhibits.
Lastly, four (4) copies each of ldaho Power Company's press release and customer
notice are also enclosed.
Very truly yours,
X-*Qz(,^u,r*:
LDN:csb
Enclosures
Lisa D. Nordstrom
Boise, lD 83707
f .:il tri:.i il{JLISA D. NORDSTROM (lSB No. 5733)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
I n o rd strom @ id a hopowe r. com
Attorney for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
: .;.; = I i5 Pll 3: 53
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORIry TO IMPLEMENT FIXED
COST ADJUSTMENT ('FCA") RATES
FOR ELECTRIC SERVICE FROM JUNE 1,
2019, THROUGH MAY 31 , 2020.
CASE NO. !PC-E-19-10
APPLICATION
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ldaho Power Company ("ldaho Power" or "Company"), in accordance with
ldaho Code S 61-502 and RP 052, hereby respectfully makes application to the ldaho
Public Utilities Commission ("Commission") for an order authorizing ldaho Power to
implement Fixed Cost Adjustment ("FCA") rates for electric service from June 1,2019,
through May 31 ,2020, and to approve the Company's corresponding Schedule 54, Fixed
Cost Adjustment. With this filing the Company proposes an approximate $19.2 million
increase for Residential and Small General Service customers, which represents a 3.64
percentl increase over current authorized revenue.
1 Percent increase over current authorized revenue includes the impacts of the Energy Efficiency
Rider in effect as of March 15,2019.
APPLICATION - 1
In support of this Application, ldaho Power represents as follows
I. BACKGROUND
1. ldaho Power and the Commission have long agreed that promotion of cost-
effective energy efficiency and demand-side management ("DSM") "is an integra! part of
least-cost electric service." See, e.9., Order No. 30267 at 13. Traditional rate design that
recovers fixed costs through each kilowatt-hour ('kwh") sold discourages utilities from
reducing their sales volumes through investment in energy efficiency and DSM.
2. Recognizing that "opportunities exist[ed] for improvements in operating
efficiency that would benefit the Company shareholders and its customers," the
Commission opened an investigation in Case No. !PC-E-04-15 to consider options for a
performance-based mechanism that adjusts revenues when annual energy consumption
is either above or below normal. Order No. 29558 at 1, citing Order No. 29505 at 68-69.
The FCA mechanism is the collaborative result of that case.
3. ln Order No. 30267 issued in Case No. IPC-E-04-15 on March 12, 2007,
the Commission approved a stipulation for the implementation of a three-year FCA pilot
program applicable to Residential Service (Schedules 1, 3, 4, and 5) and Small General
Service (Schedule 7) customers.2 On October 1,2009, the Company filed an application
seeking authority to convert Schedule 54, the FCA tariff schedule, from a pilot program
to an ongoing, permanent program. Case No. IPC-E-09-28. The Commission denied
ldaho Power's request to make the FCA mechanism permanent and, instead, extended
the pilot program for an additional two-year period. Order No. 31063. During the fifth
year of the pilot program, the Company filed an application in Case No. IPC-E-11-19 on
2 Following Order No. 34046's creation of Schedules 6 and 8 in May 2018, the FCA also applies to
these new customer classes for Residential and Small Commercial customers with on-site generation.
APPLICATION - 2
October 19,2011, seeking authority to convert the FCA to an ongoing, permanent
program. Order No. 32505, issued March 30,2012, approved the Company's request to
convert the FCA to a permanent program for the Residential and Small General Service
customers. The Commission's subsequent Order No. 32731 in that case directed that
the FCA mechanism continue with its existing methodology.
4. In Order No. 33295 issued in Case No. IPC-E-14-17, the Commission
approved a settlement stipulation that changed the methodology to calculate the leve! of
actual fixed costs recovered used to determine the FCA. The modification to the
calculation of the actual levelof fixed costs recovered replaced weather-normalized billed
sales with actual billed sales and began with the determination of the 2015 FCA. Order
No. 33295 also clarified the manner in which a discretionary 3 percent rate adjustment
cap is calculated.
5. ln this filing, the Company requests recovery of the 2018 FCA balance and
approval of the corresponding rates.
II. FCA MECHANISM
6. The FCA mechanism enables ldaho Power to separate, or "decouple," its
fixed cost revenues from its volumetric energy sales and provides symmetry through a
surcharge or credit when fixed cost recovery per customer, on an actual billed sales basis,
varies above or below a Commission-established base. !n otherwords, the FCA provides
a "true-up" of the collection of fixed costs per customer to recover the difference between
the leve! of fixed costs recovered on an actual billed sales basis by the Company through
rates and the level of fixed costs authorized for recovery in the Company's most recent,
applicable genera! rate case.
APPLICATION - 3
7. The FCA removes the financial disincentive that exists when the Company
invests in DSM resources and energy efficiency activities. On a system-wide basis, ldaho
Power achieved 183,378 megawatt-hours of incremental annual energy efficiency
savings in 2018, which is a slight decrease, 4.6 percent, from finalized savings achieved
in 2017.3
8. The FCA works identically for both the Residential and Small General
Service classes. For each class, the number of customers is multiplied by the fixed cost
per customer rate (FCC), which is established as part of determining the Company's
authorized revenue requirement in its most recent general rate case. The product of this
calculation establishes the "authorized fixed cost recovery" amount. This authorized fixed
cost recovery amount is then compared to the amount of fixed costs actually recovered
by ldaho Power. To determine the "actual fixed costs recovered" amount, the Company
multiplies the actual billed sales for each class by the fixed cost per energy rate (FCE),
as established in the Company's most recent applicable general rate case. The
difference between these two numbers (the "authorized fixed cost recovery" amount
minus the "actua! fixed costs recovered" amount) is the fixed cost adjustment for each
class.
III. PROPOSED 2019.2020 FCA RATE ADJUSTMENT (UNCAPPED)
9. The determination of the FCA deferral balance and calculation of
corresponding rates are described in the direct testimony and exhibits of Connie G.
Aschenbrenner ("Aschenbrenner Testimony") filed contemporaneously with this
Application.
3 2018 DSM Annual Report at 10 filed in Case No. IPC-E-19-11
APPLICATION - 4
10. The FCA is $33,522,802.44 for the Residential class and $1 ,265,473.451or
the Small General Service class, for a total amount of $34,788.275.89. Aschenbrenner
Testimony at 9, Exhibit No. 4. Because the proposed FCA deferral balance is above the
current FCA deferral balance of $15,606,711 currently collected in customers'rates,
ldaho Power is proposing to increase FCA rates for the Residential and Sma!! General
Service classes. Aschenbrenner Testimony at 13.
11. lf the full FCA rate increase is approved as proposed by the Company, this
increase equates to new FCA rates of 0.6598 cents per kWh for the Residential class and
0.8366 cents per kWh for the Small General Service class. Aschenbrenner Testimony at
11. The FCA rates would result in an annual increase of 3.64 percent from current billed
revenue for the affected customer classes; a typical residential customer using 950 kwh
per month will see an approximate $3.49 increase to their monthly bill. Aschenbrenner
Testimony at 12.
12. ldaho Power requests that the FCA rates become effective on June 1,2019,
coincident with the Company's Power Cost Adjustment and with the commencement of
seasonal rates. The Company requests that the FCA rates remain in effect until May 31,
2020.
13. The proposed FCA tariff (clean version), Schedule 54, is attached hereto as
Attachment 1 to this Application. The proposed Schedule 54 tariff in legislative format is
attached hereto as Aftachment 2.
IV. DISCRETIONARY FCA RATE ADJUSTMENT CAP
14. The proposed collection of $34,788,276 exceeds the mechanism's 3
percent cap on annual FCA rate increases, which the Commission may impose at its
APPLICATION - 5
option to carryover unrecovered deferred costs to subsequent years. Order No. 30267
at 13. Exhibit No. 5 details calculationa of the cap and resulting cost deferral.
15. When Idaho Power initially proposed that the cap be discretionary,s the
Company was mindful that the Commission has been careful to avoid a situation where
deferred cost recovery is compounded with a subsequent year's rate adjustments, often
referred to as "pancaking."
16. To minimize the potential for pancaking FCA rates and to reduce rate
volatility from one year to the next, ldaho Power recommends the Commission use its
discretion to implement the full rate change without use of the 3 percent cap. As
described on pages 16-18 of the Aschenbrenner Testimony, the Company makes this
recommendation based upon several known amounts that will likely impact customer
rates effective June 1,2019, including:
o A one-time 201912020 Power Cost Adjustment (.PCA") rate reduction
resulting from approximately $5 million of benefits from the revenue sharing mechanism
approved by Order No. 33149.
o A one-time 201912020 PCA rate reduction resulting in approximately
$2.7 million from temporary benefits associated with the Tax Cuts and Jobs Act of 2017
and its impact on the Company's Open Access Transmission Tariff rates.
o The proposed 1 percent reduction to the Company's Energy Efficiency
Rider collection (Case No. IPC-E-19-06), which is only slightly offset by the Company's
a As agreed to in the stipulation approved by the Commission in Order No. 33295, the Company
calculates the 3 percent cap on annual increases by dividing the proposed FCA deferral change by the
forecasted base rate revenue.
APPLICATION - 6
s Case No. IPC-E-04-15, Gale Direct Testimony, page 11.
proposed 0.11 percent increase attributed to rate impacts associated with the Company's
request (Case No. IPC-E-19-08) to recover incremental annual levelized revenue
requirement associated with its Valmy plant to become effective, if approved, on the same
date.
17. ldaho Power's recommendation to approve collection of the full FCA
balance is also based on recognition of the relationship that use per customer has on the
following year's FCA rates. While use per customer in 2018 was lower in comparison to
2017, driving this year's FCA increase, use per customer in 2018 was similar to the level
that existed in 2016. This year's uncapped FCA increase would simply reverse most of
last year's FCA collection decrease and bring the level of collection in line with that which
existed during the 201712018 collection period.
V. ALTERNATE 2019.2020 FCA RATE ADJUSTMENT (CAPPED}
18. Alternatively, if the Commission elects to implement the 3 percent cap, the
Company would seek to recover an incremental $14,329,186-$13,868,952 from the
Residential class and $460,233 from the Small General Service class. To recover the
authorized level of fixed costs, the FCA rate for the Residential class would be 0.5677
cents per kWh and the corresponding rate for the Small General Service class would be
0.7199 cents per kWh. The calculation of these rates is found in Exhibit No. 5.
19. In addition to these rates, the Company would defer a total of $4,852,379 in
2018 FCA amounts to collect in a future period-$4,553,522 from the Residential class
and $298,857 from the Smal! General Service customer class. Aschenbrenner Testimony
at21.
APPLICATION - 7
VI. COMPLIANCE WITH ORDER NO. 34079
20. ln the Company's 2017 FCA filing, Case No. IPC-E-18-02, the Commission
encouraged the Company to collaborate with Commission Staff ("Staffl') in advance of the
2019 FCA filing to address issues Staff raised in its comments. Order No. 34079 at 4.
On January 28, 2019, ldaho Power met with Staff to discuss concerns raised in its
comments filed in Case No. IPC-E-18-02. While the discussions covered severalaspects
of the FCA and included a robust exchange of views and ideas between the Company
and Staff, no specific modifications to the mechanism were discussed or agreed upon.
The Company remains committed to continuing discussions with Staff regarding the FCA
mechanism, if such discussions are deemed warranted by Staff or the Commission.
VII. MODIFIED PROCEDURE
21. ldaho Power believes that a technical hearing is not necessary to consider
the issues presented herein and respectfully requests that this Application be processed
under Modified Procedure; i.e., by written submissions rather than by hearing. RP 201,
ef seg. The Company has, however, contemporaneously filed the Aschenbrenner
Testimony and stands ready to present its testimony and support the Application if the
Commission determines that a technical hearing is required.
VI!I. COMMUNICATIONS AND SERVICE OF PLEADINGS
22. ln conformance with RP 125, this Application will be brought to the attention
of ldaho Power's customers by means of both a press release to media in the Company's
service area and a customer notice distributed in customers' bills, both of which
accompany this filing. The customer notice wi!! be distributed over the course of the
Company's current billing cycle, with the last notice being sent on or about April 23, 2019.
APPLICATION .8
ldaho Power will also keep its Application, testimony, and exhibits open for public
inspection at its offices throughout the state of Idaho. ldaho Power believes the above
procedures satisfy the Rules of Practice and Procedure of this Commission; however, the
Company will, in the alternative, bring the Application to the attention of its affected
customers through any other means directed by this Commission.
23. Communications and service of pleadings with reference to this Application
should be sent to the following
Lisa D. Nordstrom
Idaho Power Company
1221tNest ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
lnordstrom@j dahopower.com
Connie G. Aschenbrenner
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
casch en b re n n e r@ id ah o powe r. com
d ockets@ idahopower. com
IX. REQUEST FOR RELIEF
24. ldaho Power respectfully requests that the Commission issue an order (1)
authorizing that this matter be processed by Modified Procedure and (2) authorizing ldaho
Power to implement Fixed Cost Adjustment rates for electric service from June 1,2019,
through May 31 ,2020, as described above.
DATED at Boise, ldaho, this 15th day of March 2019.
t"
LISA D. NORDST
Attorney for ldaho Power Company
APPLICATION - 9
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPG-E-19-10
IDAHO POWER COMPANY
ATTACHMENT 1
PROPOSED TARIFF
ldaho Power Company Eleventh Revised Sheet No. 54-2
Cancels
|.P.U.C. No. 29, Tariff No. 101 Tenth Revised Sheet No. 54-2
SCHEDULE 54
F]XED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual fixed costs Recovered amount is computed by multiplying the actual energy load for
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small General Service Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1,3, 4,5, and 6) is 0.6598
cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedules 7 and 8) is
0.8366 cents per kWh.
EXPIRATION
The Fixed Cost Adjustment included on this schedule will expire May 31 ,2020
IDAHO
lssued per Order No.
Effective - June 1, 2019
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221West ldaho Street, Boise, ldaho
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-I9-1 0
IDAHO POWER COMPANY
ATTACHMENT 2
TARIFF IN LEGISLATIVE FORMAT
SCHEDULE 54
FIXED COST ADJUSTMENT
(Continued)
ACTUAL FIXED COSTS RECOVERED AMOUNT
The Actual fixed costs Recovered amount is computed by multiplying the actual energy load for
Residential and Small General Service customers by the appropriate Residential and Small General
Service FCE rate.
FIXED COST ADJUSTMENT
The Fixed Cost Adjustment (FCA) is the difference between the Allowed Fixed Cost Recovery
Amount and the Actual Fixed Costs Recovered Amount divided by the estimated weather-normalized
energy load for the following year for Residential and Small General Sprvice Customers.
The monthly Fixed Cost Adjustment for Residential Service (Schedules 1, 3, 4, 5, and 6) is
0.29236598 cents per kWh. The monthly Fixed Cost Adjustment for Small General Service (Schedules
7 and 8) is 0.36798366 cents per kWh.
EXPIRATION
The Fixed Gost Adjustment included on this schedule will expire May 31 ,2919-.
IDAHO
lssued per Order Nlss. 34046r€4979
Effective - June 1,20189
lssued by IDAHO POWER COMPANY
Timothy E. Tatum, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, ldaho
ldaho Power Company +en+hEleventh Revised Sheet No. 54-2
Cancels
l.P.U.C. No. 29, Tariff No. 101 NinthTenth Revised Sheet No. 54-2
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An tDACORp Companv
ldaho Power Files Annual
Fixed Cost Adjustment
On lVarch 15, ldaho Power filed its annual Fixed
Cost Adjustment (FCA)with the ldaho Public Utilities
Commission (IPUC). This year's FCA filing requests an
increase of $19.2 million for Residential and Small General
Service customers. lf the FCA proposal is approved as
filed, a typical residential customer in ldaho using
950 kilowatt-hours per month will see about a $3.49
increase to their monthly bill beginning June l.
Overall lmpact of Proposed
Rate Changes Filed to Date
The FCA changes are in addition to ldaho Power's
Feb. 12 filing to decrease the ldaho Energy Efficiency
Rider (EE Rider) collection percentage, and its March
8 filing requesting an increase in rates associated with
the company's exit from its North Valmy Plant (Valmy).
The company also plans to file its annual Power Cost
Adjustment (PCA) for all customer classes this spring. All
changes, pending IPUC approval, will take effect iune 1.
rPercentages shown as filed ?May not sum due to rounding
FCA Background
The FCA is a true-up mechanism that separates energy
sales from revenue to eliminate financial disincentives for
ldaho Power to invest in demand-side management. The
FCA annually adjusts prices up or down based on changes
in energy use per customer during the previous year.
FCA'3.640/o 3.70%
Valmyt 0.11%O.1Oo/o
EE Ridert -0.900/o -0.9"to/o
2019 FCA REVENUE IMPACT BY CLASS I
Filing Small General ServiceResidential
Because ldaho Power encourages the wise use of
electricity through energy efficiency programs, energy
use per customer may decline. But even if customer
energy use goes down, ldaho Power still needs to recover
its fixed costs. Fixed costs include those associated with
infrastructure - things like generation plants, power lines,
substations and other equipment - as well as certain
administrative costs.
The FCA allows ldaho Power to recover an IPUC-authorized
level of fixed costs per customer. lf, because of reduced
energy use per customer during the prior year, the company
collects less than the authorized fixed-cost amount, it is
allowed to collect the difference through a surcharge. lf
the company collects more than the authorized amount, it
refunds the difference to customers through a credit.
Both scenarios have happened in the past. ln 2018, ldaho
Power collected less than the authorized fixed cost amount.
ln 2018, ldaho Power's energy efficiency programs saved an
incremental 183,378 megawatt hours - enough to power
almost 16,000 average-sized homes for an entire year.
ldaho Power values demand-side management, energy
efficiency and education programs. The FCA mechanism
allows us to pursue those programs without negative
financial impacts and provide a robust portfolio of options
for customers.
Opportunities for Public Review
ldaho Power's filing is a proposal subject to public review
and approval by the IPUC. Copies of the application
are available to the public at the IPUC offices (472 W.
Washington St., Boise, ldaho, 83702), ldaho Power offices
or on ldaho Power's website, idahopower.com, or
the IPUC website, puc.idaho.gov. Customers also may
subscribe to the IPUC's RSS feed to receive periodic updates
via email about the case. Written comments regarding
ldaho Power's application may be filed with the IPUC.
Thank you for reading this notice.
We value your business!
@ Printed on recycled paper.clmHo pc[,r,ER.
Ar1 IDACORP Compalry
@2019 ldaho Power
31 180-r-0028
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An IDACORP Company
NEWS RELEASE
ldaho Power Files Annual Fixed Cost Adjustment
BOISE, ldaho - On March 15, ldaho Power filed its annual Fixed Cost Adjustment (FCA) with
the ldaho Public Utilities Commission (IPUC). This year's FCA filing requests an increase of 519.2
million for Residential and Small General Service customers. lf the FCA proposal is approved as
filed, a typical residential customer in ldaho using 950 kilowatt-hours per month will see about
a Sg.+g increase to their monthly bill beginning June L.
2019 FCA Revenue lmpact by CIass
Percentage Change from Current Billed Rates
Residential Small GeneralService OverallChange
3.64%3.70%3.64Yo
The FCA changes are in addition to ldaho Power's February 12 filing to decrease ldaho Energy
Efficiency Rider collection percentage, and its March 8 filing requesting an increase in rates
associated with the company's exit from its North Valmy Plant. The Company also plans to file
its annual Power Cost Adjustment for all customer classes this spring. All changes, pending IPUC
approval, will take effect June 1.
The FCA is a true-up mechanism that separates energy sales from revenue to eliminate financial
disincentives for ldaho Power to invest in demand-side management. The FCA annually adjusts
prices up or down based on changes in energy use per customer during the previous year.
Because ldaho Power encourages the wise use of electricity through energy efficiency
programs, energy use per customer may decline. But even if customer energy use goes down,
ldaho Power still needs to recover its fixed costs. Fixed costs include those associated with
infrastructure - things like generation plants, power lines, substations and other equipment -
as well as certain administrative costs.
The FCAallows ldaho Powerto recoveran IPUC-authorized levelof fixed costs percustomer. lf,
because of reduced energy use per customer during the prior year, the company collects less
than the authorized fixed-cost amount, it is allowed to collect the difference through a
surcharge. lf the company collects more than the authorized amount, it refunds the difference
to customers through a credit. Both scenarios have happened in the past.
ln 2018, ldaho Power's energy efficiency programs saved an incremental 183,378 megawatt
hours - enough to power almost 16,000 average-sized homes for an entire year.
ldaho Power values demand-side management, energy efficiency and education programs. The
FCA mechanism allows us to pursue those programs without negative financial impacts and
provide a robust portfolio of options for customers.
P.O. Box 70 (83707)
1221 W. ldaho St.
Boise, lD 83702
Opportunities for Public Review
ldaho Power's filing is a proposal subject to public review and approval by the IPUC. Copies of
the application are available to the public at the IPUC offices (472 W. Washington St., Boise,
f daho, 837O2l,ldaho Power offices or on ldaho Power's website, idahopower.com, or the IPUC
website, puc.idaho.gov. Customers also may subscribe to the IPUC's RSS feed to receive
periodic updates via email about the case. Written comments regarding ldaho Power's
application may be filed with the IPUC.
About ldaho Power
ldaho Power, headquartered in Boise, ldaho, and locally operated since 1915, is an energy
company that employs approximately 2,000 people who serve nearly 560,000 customers
throughout a 24,000-square-mile area in southern ldaho and eastern Oregon. With 17 low-cost
hydroelectric projects as the core of its diverse generation portfolio, ldaho Power's residential,
business and agricultural customers pay among the nation's lowest prices for electricity.
IDACORP lnc. (NYSE: IDA), ldaho Power's independent publicly traded parent company, is also
headquartered in Boise, ldaho. To learn more, visit idahopower.com or idacorpinc.com.
Contact:Jordan Rodriguez
Com m u nications Specialist
208-388-2460
[e-mail]
1-800-458-1443 media line