20201218Reconsideration_Order_No_34874.pdf

ORDER NO. 34874 1

Office of the Secretary
Service Date
December 18, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR A
DETERMINATION OF 2019 DEMAND-SIDE
MANAGEMENT EXPENSES AS
PRUDENTLY INCURRED
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CASE NO. IPC-E-20-15

ORDER NO. 34874

On March 13, 2020, Idaho Power Company (“Company”) applied to the Commission for
an order finding that the Company’s demand-side management (“DSM”) expenses for 2019 were
prudently incurred.
On October 30, 2020, the Commission issued Order No. 34827 approving the Company’s
2019 DSM expenses as prudent with the exception that the Company’s 2019 DSM labor expenses
exceeded the 2% cap on wage increases established in prior cases and disallowing $51,165 in 2019
DSM total labor expense.
On November 20, 2020, the Company filed a Petition for Clarification and/or
Reconsideration (“Petition”) about the (1) method for evaluating the 2% DSM labor cap, and (2)
establishing a new baseline to comply with Order No. 34827.
On November 30, 2020, Staff filed comments in response to the Company’s Petition
clarifying its position on DSM labor expense calculations. No other persons or entities filed
comments or Cross Petitions for Reconsideration and/or Clarification.
Now, having reviewed the record, the Commission grants Clarification and
Reconsideration of the issues raised by the Company regarding Order No. 34827. We find that
the submissions of the parties are sufficient to evaluate and address the concerns raised by the
Company on Clarification/Reconsideration.
BACKGROUND
The Commission issued final Order No. 34827 in this case on October 30, 2020. The
Commission found that all but $51,165 of the Company’s requested 2019 DSM expenses were
prudently incurred. The Commission explained that the Company’s labor expenses in 2019
exceeded the 2% cap established in Case No. IPC-E-17-03. Consequently, the exceeded labor
expense of $51,165 was disallowed.
ORDER NO. 34874 2

In Case No. IPC-E-17-03, the Commission stated “[r]ather than establishing a cap on the
Rider-funded labor expenses at 2016 levels, we find it reasonable to include actual wage increases
up to a 2% cap in the DSM rider.” (Emphasis added). See Order No. 33908. The Commission did
not order a specific method for applying the cap, nor did it determine a specific base year for which
the cap applied.
In Case No. IPC-E-18-03, Staff noted that the Company’s decision to apply the 2% cap to
the average labor expense per full time equivalent (“FTE”) followed the earlier labor adjustments
(2011-2016) but contradicted the Commission’s intent in Order No. 33908. Staff argued that if the
Commission intended to cap total labor rather than average labor per FTE, the Company’s Rider
expenses should be reduced. In reply, the Company disagreed that the Commission intended to
apply the cap to total labor expenses. The Company argued that Staff’s interpretation of Order No.
33908 would “remove the Company’s ability to properly increase labor resources for additional
energy efficiency program activity opportunities.” The Company argued the “2% cap should apply
to wages per FTE,” consistent with the Commission’s approved method in prior DSM labor
increases. (Emphasis added). The Commission implicitly adopted the reasoning of the Company
and found the amounts incurred for the year were prudent. See Order No. 34141.
The Commission did not discuss DSM labor costs in IPC-E-19-11 because labor expenses
did not exceed a 2% cap by any methodology. However, Staff’s comments in IPC-E-19-11 noted
a 1% decrease in total DSM labor expenses and a 1.3% increase of average labor expense per FTE.
THE COMPANY’S PETITION
The Company petitioned the Commission for Clarification and/or Reconsideration under
the Commission’s Rule of Procedure 325, IDAPA 31.01.01.325.1 Specifically, the Company
requested the Commission offer Clarification and/or Reconsideration of “the method the
Commission intends for the Company to apply when evaluating the level of labor to be recovered
through the Rider.”

1 IDAPA 31.01.01.325 states:

Any person may petition to clarify any order, whether interlocutory or final. Petitions for
clarification from final orders do not suspend or toll the time to petition for reconsideration or appeal
a final order. A petition for clarification may be combined with a petition for reconsideration or
stated in the alternative as a petition for clarification and/or reconsideration. The Commission may
clarify any order on its own motion.
ORDER NO. 34874 3

The Company argued the record does not support Order No. 34827 disallowing $51,165.
The Company stated the Commission “unreasonably relied on a misunderstanding of the
Company’s DSM labor expense calculation, rendering the findings in Order No. 34827 erroneous
and not supported by the record in this case.” The Company argued the DSM labor approach
discussed in Staff’s comments “does not conform with the Commission’s directives and
establishes a new methodology and baseline to measure future DSM labor expenses.”
The Company characterized Staff’s recommendation as evaluating the change in labor
expenses on a year-over-year basis, and not utilizing a 2016 baseline with 2% annual increases.
The Company insisted that it has applied the same methodology since Case No. IPC-E-17-03.
Since that case, the Company has utilized a 2016 baseline with an escalating 2% annual per FTE
increase.
The Company argued implementing a year-over-year 2% increase (as suggested by Staff)
has two major adverse and unintended consequences by (1) limiting operational flexibility; and
(2) creating a new annual baseline each year.
The Company stressed the operational flexibility afforded by a 2% annual increase based
on a 2016 baseline. In years it did not increase wages the full 2%, the Company’s interpretation
would still allow it to capture the 2% escalation for the benefit of the following year.
The Company also maintained that setting a new baseline every year would hinder the
Company’s flexibility to fully recognize employee performance and longevity.
STAFF’S COMMENTS
On November 30, 2020, Staff filed a response to the Company’s Petition. Staff discussed
the history of DSM wage increase calculations since Case No. IPC-E-17-03. Staff acknowledged
the Company’s interpretation that the cap on Rider-funded labor expenses was a cumulative cap
utilizing a 2016 base year escalated annually by 2%.
For its part, Staff has consistently calculated the annual 2% cap based on the previous
year’s average labor expense per FTE:
In 2018, the Company incurred $3,262,501 in Rider-funded labor expense: a 1%
decrease in total DSM labor expense charged to the Tariff Rider. However, on a
[FTE] basis, the average increase was 1.3%, indicating that employees charged less
of their time to the Tariff Rider. The Company’s labor expense is below the 2%
cap established by the Commission and Staff recommends it be approved.
Staff Comments in Case No. IPC-E-19-11 at 5.
ORDER NO. 34874 4

Based on its interpretation of the Commission’s findings and directives in the Company’s
2018 DSM case, in 2019 Staff applied the 2% cap to the previous year’s average labor increase
per FTE.
STANDARD OF REVIEW
A person may petition the Commission to reconsider its orders. See Idaho Code § 61-626;
Rules 331-333 (IDAPA 31.01.01.331-.333). Reconsideration allows the petitioner to bring to the
Commission’s attention any question previously determined and thereby affords the Commission
an opportunity to rectify any mistake or omission. Washington Water Power Co. v. Kootenai
Environmental Alliance, 99 Idaho 875, 879, 591 P.2d 122, 126 (1979); Rule 325. The petitioner
has 21 days from the date of the final Order in which to ask for reconsideration. Idaho Code § 61-
626(1). The petition must specify why it “contends that the order or any issue decided in the Order
is unreasonable, unlawful, erroneous or not in conformity with the law.” Rule 331.01. Further, the
petition “must state whether the petitioner . . . requests reconsideration by evidentiary hearing,
written briefs, comments, or interrogatories.” Rule 331.03. Any answers or cross-petitions must
be filed within seven days after the petition was filed. Rule 331.02 and .05.
Once a petition is filed, the Commission must issue an Order saying whether it will
reconsider the parts of the Order at issue and, if reconsideration is granted, how the matter will be
reconsidered. Idaho Code § 61-626(2). If reconsideration is granted, the Commission must
complete its reconsideration within 13 weeks after the date for filing petition(s) for
reconsideration. Idaho Code § 61-626(2). The Commission must issue its final Order on
reconsideration within 28 days after the matter is finally submitted for reconsideration. Id.
Additionally, any person may petition the Commission to clarify an order. Rule 325.
Petitions for clarification do not suspend or toll the timing requirements for petitions for
reconsideration. Id. Petitions for clarification may be combined with petitions for reconsideration.
Id.
COMMISSION DECISION AND FINDINGS
The Commission has reviewed the record in this case and its prior orders related to the
issues in the Company’s Petition. With this Order, we clarify what we intended in Order No.
34827. Also, upon Reconsideration of our analysis and findings, we confirm the Commission’s
original findings and conclusions.
ORDER NO. 34874 5

In Case No. IPC-E-17-03, Order No. 33908, we specifically declined to establish a cap on
DSM labor expenses at 2016 levels. Instead, we stated that the Company could “include actual
wage increases up to a 2% cap in the DSM rider.”
We again addressed the application of the 2% annual increase cap for DSM labor expenses
in Case No. IPC-E-18-03. In that case, the Company applied the 2% cap to average wage per FTE.
Order No. 34141. Staff argued that total labor expense increases should be capped at 2%, not
average wages per FTE. Id. The Commission affirmed the Company’s application of the 2% cap
and approved the Company’s proposed labor expenses as prudent. Id.
In the present case, the Company claims it followed the same approach by applying a 2%
increase cumulatively to a 2016 baseline. This Commission has not explicitly addressed whether
the 2% increase was intended to be applied year-over-year or cumulatively. To be clear, we never
intended to establish a baseline that would cumulatively increase from a certain year regardless of
the actual average wage increases. Instead, the intent was that the 2% cap would apply to the prior
year’s increase in average wages per FTE.
We still expect that the method for calculating DSM labor expenses will be reset in a
general rate case. However, in order to allow for determinations of prudently incurred DSM
expenses until the Company’s next general rate case, we find the Commission’s methodology as
stated herein to be reasonable and just. The Company shall apply the 2% cap to actual average
wages per FTE going forward. The baseline for the 2% cap shall be the prior year’s actual average
wages per FTE. Consequently, we continue to find it reasonable to disallow the amount above the
2% cap - $51,165 – of the Company’s 2019 DSM total labor expenses.
ORDER
IT IS HEREBY ORDERED that the Company’s petition for Clarification and/or
Reconsideration is granted. The Company shall apply the 2% cap for DSM labor expense increases
to the actual average wage per FTE based on the prior year’s average wage per FTE. The
Company’s 2019 DSM expenditures of $45,028,314 are approved as prudently incurred.
THIS IS A FINAL ORDER ON RECONSIDERATION. Any party aggrieved by this
Order may appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code § 61-627.
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ORDER NO. 34874 6

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 18th
day of December 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary
I:\Legal\ELECTRIC\IPC-E-20-15\orders\IPCE2015_final clairification_dh.docx