20200324Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9917
Street Address for Express Mail:
1133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE,ID 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
I.'ECEIVED
"ti'J ltfl,R ?t* Ptt 1: 33
' ,': 'i'iiliiilt*'un
IN THE MATTER OF'IDAHO POWER
COMPANY'S APPLICATION TO MODIFY
SCHEDULE 30, SPECIAL CONTRACT WITH
UNITED STATES DEPARTMENT OF
ENERGY
CASE NO. IPC.E.2O-01
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
On January l4,202},Idaho Power Company (Company or Idaho Power or IPC) applied
to the Commission for an order authorizingthe Company to (1) modiff Schedule 30-Electric
Service Rate for United States Department of Energy Idaho Operations Office{Schedule 30),
and (2) true-up charges related to the Company's Schedule 30 assets that have been suspended
since November 2015. The Company requested an effective date of April 1,2020.
On February 26,2)2},the Company filed an Amended Application seeking approval
under ldaho Code $ 6l-328 of an asset transfer related to the Company's Application to modiff
Schedule 30. The Amended Application ensures the asset transfer doesn't receive posthumous
Commission approval or disapproval, which could jeopardizethe outcome of the Commission's
decision regarding the modification of Schedule 30.
ISTAFF COMMENTS MARCH 24,2020
BACKGROUND
On August 21,2019, a transfer of title agreement was entered upon between the
Department of Energy (DOE) and the Company-transferring DOE-owned assets to the
Company. Nearly concurrent to the transfer between the DOE and the Company, the Company
transferred partial ownership of the same assetsl under a separate transfer of title agreement
entered between the Company and PacifiCorp on August 22,2019.
The Company supplies electricity to the DOE at Idaho National Laboratory through the
Antelope substation's transmission facilities under Schedule 30. Prior to the transfer agreements,
the Company, PacifiCorp, and DOE jointly or individually owned the Antelope substation assets
(Substation Assets) and PacifiCorp operated it. PacifiCorp's operation of the Substation, and the
assets located therein, flow from a Joint Ownership and Operating Agreement (JOOA). Before
the DOE to Idaho Power transfer, the Company's point of delivery to the DOE under Schedule
30 was at the DOE-owned assets at the Substation.
The DOE'ono longer wish[ed] to own, operate [or] maintain" its Substation Assets and
voluntarily transferred them to the Company at no cost. In turn, the Company transferred partial
ownership of the DOE's assets to PacifiCorp, again at no cost. Because of the change in
ownership of the assets transferred from DOE to the Company, the Company filed with the
Federal Energy Regulatory Commission (FERC) for an updated JOOA, which was approved on
October 21,2019.
After transferring its assets to the Company, the DOE no longer owns any Substation
Assets. The Company will continue to incur operating costs because it still serves the DOE. The
Company proposes to modiff Schedule 30 by adding a monthly Antelope Asset Charge (AAC)'
The AAC would include two components: l) PacifiCorp Pass-Through Charge (PPTC), and2)
Company Ownership Costs (OC). The AAC charge would enable the Company to recover its
costs to own, operate, and maintain the Substation Assets required to serve the DOE. PacifiCorp
would continue to operate the Substation and the assets located therein under the updated JOOA.
In Novemb er 2015, the Company and DOE agreed to suspend payment of pass-through
expenses related to Substation Assets until regulatory approvals were in place and the new
Schedule 30 charge had commenced. If the modifications to Schedule 30 are approved, the
I Regarding the assets transferred from Idaho Power to PacifiCorp, and for purposes of the Joint Ownership and Operating
Agreiment, the Weighted Average Ownership Percentage is 53.365% for Idaho Power and 46.635yo for PacifiCorp.
STAFF COMMENTS MARCH 24,20202
Company proposes to collect about $288,000 from the DOE for the suspended pass-through
charges the Company incurred on behalf of the DOE from PacifiCorp between November 2015
and December 2019.
STAFF REVIEW
Following review and analysis of the Company's Application, Staff recommends the
Commission: 1) authoizethe transfer of certain DOE assets previously transferred by the
Company to PacifiCorp as part of the IPC-PacifiCorp transfer of title agreement; 2) authorize the
Company's request to modiff Schedule 30 related to the Company's new proportional ownership
and operation of the previously owned DOE-assets at the Antelope Substation transmission
facilities; 3) authorize billing for the accrued suspended costs related to the transferred assets by
the Company between November 2015 and the effective date.
Staff s recommendations are based on 1) examination of the assets transferred by the
Company to PacifiCorp as part of the IPC-PacifiCorp transfer of title agreement specific to
compliance with ldaho Code $ 61-328;2) review and analysis of the methodology used to
recover costs by the Company under the AAC covered in Schedule 30; and 3) an audit of the
true-up billing for costs accrued by the Company over the suspended period. Details of Staff s
analysis are described below.
Asset Transfer
Idaho Code $ 6l-328 specifically requires Commission authorization for the transfer of
electric utility assets whether merged, sold, leased, assigned or transferred, directly or
indirectly, in any manner whatsoever. As such, Staff believes the assets transferred by the
Company to PacifiCorp within the IPC-PacifiCorp transfer of title agreement are subject to
Idaho Code $ 6l-328, and for the Company to satisfu the requirements of ldaho Code
$ 61-328(3) it must show that:
(a) The transaction is consistent with the public interest;
(b) The cost of and rates for supplying service will not be increased by reason of such
transaction; and
(c) The applicant for such acquisition or transfer has the bona fide intent and financial
ability to operate and maintain said property in the public service.
aJSTAFF COMMENTS MARCH 24,2020
The Company, in its Amended Application, provided the following to support for the
IPC-PacifiCorp transfer subject to the three provisions of ldaho Code $ 61-328 outlined above:
(a) Subject to the Joint Ownership and Operating Agreement, the reallocation of
ownership percentages will allow the utilities to more efficiently operate the
transmission sYstem;
(b) Given the instantaneous nature of the transfer agreement(s), those assets transferred
as part of the IPC-PacifiCorp transfer of title agreement were never recognized within
the Company's accounting records and as such were never used to develop any
current or previously charged customer rates of the Company; and
(c) PacifiCo{p as another Idaho regulated electric utility, has the bona fide intent and
financial ability to operate and maintain transferred assets in public service.
Following examination of the Amended Application and reviewing the Company's
supporting arguments for each provision, Staff believes the Company has met the requirements
defined by ldaho Code $ 61-323(3) and therefore recommends the Commission approve the
transfer to PacifiCorp.
Schedule 30 Methodology
Based on its review of Mr. Mark Annis's testimony and the Company's response to
Production Request No. 4, Staff verified that the components of the AAC reflect the allocated
costs to provide service to DOE facilities. The first component of the AAC is the PPTC' The
PPTC bitled to DOE matches the amount that PacifiCorp charges Idaho Power. Staff verified
that the PPTC is calculated in accordance with the updated JOOA.
The second component of the AAC is the OC. Staff verified that the OC matches the
levelized charge required to cover property and income taxes and provide a return of and on
invested capital. Staff agrees that the Company's use of Idaho's retail rate of return rather than
the Open Access Transmission Tariff rate of return better reflects the cost of serving an Idaho
customer. Also, the Company applies the property tax rate to the asset acquisition value instead
of the net book value. Staff believes this approach more accurately reflects actual property tax
liabilities. Staff notes that the methodology for calculating the OC is like the method used to
calculate the Monthly Common Equipment Charge in the JOOA. The Company provided
documentation that DOE agrees with the calculation approach'
STAFF COMMENTS MARCH 24,20204
Staff believes the provision to update the AAC annually on October t helps ensure that
charges continue to accurately track cost-of-service.
Audit True-up Charges
Staff reviewed the information provided by the Company to veriff the true-up for the
pass-through billing from PacifiCorp to the Company for operation of the DOE's assets of
approximately $288,000, for the period from November 2015 through December 2019 and finds
the Company's calculation to be reasonable.
The Company has not charged the DOE for the costs of owning, maintaining, and
operating the DOE-related equipment since October 2015. The Company suspended the PPTC
to the DOE starting in November 2015 until the negotiations for the 2019 asset transfer were
completed. Idaho Power and the DOE agreed to suspend the billing until the asset transfers
received the required approvals and the updated Schedule 30 was authorized.
The Company has recorded an accounts receivable amount of approximately $288,000
for the charges from November 2015 through December 2019. The DOE was apprised
periodically of the amount of the charges. Staff has reviewed the supporting documentation and
calculations and the charge is reasonable. Staff notes that the true-up will be updated to reflect
the full amount as of the effective date.
STAFF RECOMMENDATION
Staff recommends the Commission:
l. Authorize the transfer of assets made from the Company to PacifiCorp under the IPC-
PacifiCorp transfer of title agreement finding that the asset transfer conforms to Idaho
Code $ 6l-328;
2. Authorize the Company's request to modifu Schedule 30, as filed, with an effective
date of April1,2020; and
3. Authorize billing for the accrued suspended costs related to the transferred assets by
the Company between November 2015 and the effective date.
STAFF COMMENTS MARCH 24,20205
Respectfully submitted this ZqlL day of March 2020.
4U 4/c-F,.- Dayn Hardie
Deputy Attorney General
Technical Staff: Rick Keller
Kathy Stockton
Bentley Erdwurm
i:umiso/commcntVipce20. I dhrkklsbe comments
6STAFF COMMENTS MARCH 24,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 24TH DAY OF MARCH 2020,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO. IPC-E-2}-OI, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOrSE rD 83707-0070
E-mail: [e-mail]
dockets@idahopower. com
W CHRIS HARVEY
DOE OFFICE OF CHIEF COUNSEL
1955 FREMONT AVE
MAIL STOP I2O9
IDAHO FALL ID 83402
E-mail: [e-mail]
TIMOTHY E TATUM
MATT LARKIN
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-mail : [e-mail]
mlarkin@ idahopower. com
FEDERAL ENERGY MANAGEMENT
PROGRAM
E-MAIL ONLY
[e-mail]
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CERTIFICATE OF SERVICE