20210617Final_Order_No_35077.pdf

ORDER NO. 35077 1

Office of the Secretary
Service Date
June 17, 2021

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

On January 22, 2021, Idaho Power Company (“Company”) applied for an accounting
order authorizing it to defer Idaho’s jurisdictional share of incremental costs associated with its
wildfire mitigation and insurance expenses. The Application includes a comprehensive overview
of the Company’s efforts to assess wildfire risk, discussion of necessary actions and measures to
mitigate wildfire risk, and identification and examination of incremental operations and
maintenance expenses associated with implementing and completing wildfire mitigation efforts
(“Wildfire Plan”).1 The Company requested its Application be processed by Modified Procedure.
On February 22, 2021, the Commission issued a Notice of Application and Notice of
Modified Procedure establishing public comment and Company reply deadlines. Eight public
comments were received in addition to Staff’s comments. The Company filed a reply.
Having reviewed the record, the Commission issues this Order authorizing the
Company to defer its Idaho jurisdictional incremental expenses associated with its wildfire
mitigation and insurance costs.
THE APPLICATION
The Company proposed to shift its approach to vegetation management in recognition
that climate, weather, urban-wildland encroachment, and vegetation growth are all expected to
continue changing.
The Wildfire Plan uses the Fire Potential Index (“FPI”) to support operational decision
making to reduce wildfire threats and risks.2 During fire season, the FPI will be calculated and
issued each weekday to help Company personnel in planning and preparation.

1 The Company’s Application includes a copy of the 2021 Wildfire Mitigation Plan.
2 The FPI produces a score from 1-16. Scores of 1-11 are green “lower fire potential;” scores of 12-14 are yellow
“elevated fire potential;” and scores of 15 or 16 are red “highest fire potential.”
IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR AN
ACCOUNTING ORDER AUTHORIZING
THE DEFERRAL OF INCREMENTAL
WILDFIRE MITIGATION AND INSURANCE
COSTS
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CASE NO. IPC-E-21-02

ORDER NO. 35077
ORDER NO. 35077 2

The Company’s wildfire mitigation strategy includes internal procedural measures to
prevent accidental ignition and spread of wildfires. The Wildfire Plan includes operational
mitigation practices for deploying temporary operating procedures for transmission lines during
fire season; developing operational strategies for management of distribution lines during periods
of elevated fire risks and during fire season; and evaluating a Company-specific approach to Public
Safety Power Shutoffs (“PSPS”) to determine the appropriateness and operation of PSPS as a tool.3
The Company’s Wildfire Plan also includes management of certain conditions related
to its transmission and distribution (“T&D”) facilities. This will be accomplished through asset
management programs and vegetation management. The asset management programs include
visual inspections, line protection, asset replacement, and system hardening. Under the Wildfire
Plan, the Company will continue to visually inspect its transmission lines using helicopter (aerial),
on-the-ground, wood pole inspection treatment, cathodic protection and inspection, and thermal
imaging inspection methods. The Company will also use unmanned aerial vehicles (drones) with
high-definition cameras in certain situations. For distribution lines, the Company will use visual
inspections, wood distribution pole inspection and treatment, and line equipment inspections.
A major component of the Company’s proposal is to implement and achieve a
consistent three-year vegetation management cycle across its entire service area. For FPI yellow
or red zones (see fn n.2) the Company would employ enhanced vegetation management practices
including annual patrols to identify immediate pruning needs, mid-cycle pruning during year two
for fast growing species, increased incentives for customers who own trees that regenerate foliage
faster than the three-year trimming cycle, clearing and sterilizing the soil around certain
distribution poles, and performance of post-trimming audits on all pruned trees.
The Company has identified incremental operations and maintenance (“O&M”)
expenses related to mitigating wildfire risk as set forth in the Wildfire Plan. The expenses are
grouped into these categories: (A) quantifying Wildland Fire Risk; (B) Situational Awareness; (C)
Mitigation—Field personnel Practices; (D) Mitigation T&D; (E) Enhanced Vegetation
Management; and (F) Communication. In the next five years, the Company estimates it will incur

3 PSPS is generally defined as the proactive and planned de-energization of lines when extreme risk conditions are
forecasted.
ORDER NO. 35077 3

approximately $46.6 million in incremental O&M expenses to implement these measures. The
Company seeks to defer Idaho’s jurisdictional share of incremental expenses.4
The costs associated with enhanced vegetation management are the largest incremental
wildfire mitigation expense. The Company estimates spending approximately $42.7 million on
incremental vegetation management expenses over five years. The Company noted that its actual
expenses for vegetation management have been increasing faster than authorized amounts in recent
years. The Company notes several factors are pushing vegetation management costs upward
including additional growth (vegetation and population), shortages of qualified labor,5 and
increased resource costs. The Company seeks to defer Idaho’s jurisdictional share of incremental
vegetation management costs above a base level of 2019 actual costs.
The Company proposes testing the three-year enhanced vegetation management cycle
for four or five years to verify that a shorter cycle can be maintained, and expected benefits are
realized.
The Company stated that its insurance premiums, had remained consistent until 2020
when there was a notable increase in the cost of its premiums partially due to a new “wildfire
load.”6 The Company expects its insurance expenses to continue to increase in the coming years.
The Company requested authority to defer its Idaho jurisdictional share of actual incremental costs
of insurance premiums above 2019 levels. The Company noted that it could not accurately forecast
increased insurance premiums beyond 2021.
The Company also identified capital expenses for system hardening. The Company will
work to “harden” its infrastructure by replacing small conductor and associated hardware. For
transmission lines 138 kilovolt and above, the Company may convert wood poles to steel. The
Company requested authority to defer actual depreciation expenses associated with incremental
capital investments made under the Wildfire Plan.
The Company will review and update its wildfire risk assessment biennially.

4 The Company proposes to continue to pay for baseline levels of O&M escalated annually for inflation out of its
existing budget and does not seek deferral of those costs.
5 The Company’s Application cites two factors contributing to the shortages in labor: (1) special requirements to trim
trees near power lines and equipment that require special certifications and training; and (2) increased demand for
vegetation management services in the western US—including California where labor rates are higher.
6 The wildfire load was $1 million and has been included by insurers who insure utilities that they deem operate in
high-risk areas.
ORDER NO. 35077 4

THE COMMENTS
Staff and eight members of the public filed timely comments. The Company replied.
1. Staff’s Comments
Staff reviewed the Company’s Wildfire Plan ultimately recommending Commission
approval of the Company’s Application to allow the deferral of prudently incurred incremental
O&M costs, incremental insurance expenses, and depreciation expenses associated with wildfire
mitigation. Staff’s comments discuss the Wildfire Plan including elements of wildfire
preparedness and prevention, vegetation management, and wildfire response and communication.
Staff’s comments analyzed the forecasted cost to implement the Wildfire Plan and
proposed accounting treatment. Staff noted the Company’s cost forecast to implement and execute
the Wildfire Plan included approximately $34.8 million for capital expenditures and approximately
$69.8 million for O&M expenditures, insurance costs, and depreciation expense.
Staff discussed major drivers increasing the forecasted operating expenses in addition
to implementing a new Wildfire Program. The Company anticipated insurance premiums would
continue to increase along with the risk of wildfires in the region. Staff stated the exact insurance
premium increases are uncertain, but agreed insurance is necessary to protect customers. Staff
noted the Company asked to defer the Idaho’s jurisdictional share of actual incremental insurance
costs above 2019 levels. In its Application the Company estimated 2021 insurance costs based on
current premiums through mid-year 2021 when renewals occur, and then applied an increase based
on a broker-provided high-level estimate. The Company also included a new wildfire load of $1
million at mid-year 2021. For 2022-2025 the Company did not provide a forecast for its insurance
premiums, instead using a flat annualized estimate for the incremental costs based on a full year
of increased premiums.
Staff noted the Company asked for authorization to defer the Idaho jurisdictional share
of actual incremental O&M expenses and depreciation expenses necessary to implement and
carryout the wildfire mitigation measures. For vegetation management, the Company proposed to
defer its Idaho jurisdictional share of incremental vegetation management expenses above the base
level using 2019 actual costs adjusted annually for inflation. Staff stated the Company would track
actual expenses and incremental wildfire-related capital expenditures incurred after the filing date
of the Application to Federal Energy Regulatory Commission (“FERC”) Account 182.3, of which
ORDER NO. 35077 5

the prudence would be determined in a future rate proceeding. The Company did not request a
carrying charge on the deferral balance.
Staff supported the Company’s efforts to reduce the financial effects of future wildfires
using a deferral mechanism for its incremental O&M, insurance, and depreciation expenditures.
Staff believed the Commission should have the opportunity to review any Wildfire Plan
expenditures for prudency before they are recovered.
Staff expressed concerns about an open-ended deferral when it is uncertain when the
Company will file its next general rate case. Staff stated the deferral balance for the Wildfire Plan
will reach approximately $70 million after five years according to the Company’s Application.
Staff suggested limiting the deferral period to either five years or when rates go into effect
following the Company’s next general rate case, whichever is first. Staff stated this would provide
an opportunity for the Commission to review expenses and determine prudency while protecting
customers from a growing regulatory asset. Staff also believed the amortization period should also
be determined in a future rate proceeding.
2. Public Comments
The Commission received six public comments all supporting the Company’s efforts
to address the effects of wildfire in Idaho.
Idaho Conservation League (“ICL”) filed public comments recommending
Commission approval of the Company’s Application with slight modifications.7 ICL called the
Wildfire Plan “a good example in making proactive changes to prevent an incident instead of
retroactively mitigating after the incident has occurred.” ICL recommended the Company amend
its Wildfire Plan to include more specific collaboration between land management agencies where
the Company’s infrastructure is located. ICL noted that all the land management agencies already
have their own wildfire assessments and mitigation plans in place, but the Company’s Wildfire
Plan does not mention how it plans to coordinate with the agencies aside from its plan to concede
if formal decisions for wildfire restrictions are issued by agencies.
ICL argued the Company should proactively collaborate in agency management
planning processes. ICL suggested that participation with local, state, and federal land
management agencies may enable the Company to leverage utility investments with other planned
public spending to improve wildfire resiliency. ICL recommended the Company explore

7 The Idaho Conservation League did not intervene in this case but filed public comments.
ORDER NO. 35077 6

participating in the Shared Stewardship Advisory Group (“Group”) under which the Forest Service
and State of Idaho are working. ICL believed the Company may be able to coordinate its Wildfire
Plan with various aspects of the Group’s purpose. Additionally, ICL saw an opportunity for the
Company to become involved in planning for forest management in national forests since the
Company has rights-of-way with upcoming maintenance work planned. ICL also recommended
the Company present its Wildfire Plan to planning bodies in each national forest, learn about the
existing five-year plans, and develop a cooperative approach to wildfire mitigation with the
appropriate land management agencies. ICL recommended the Idaho Forest Restoration
Partnership for collaborative efforts.
ICL also recommended the Company coordinate with the Bureau of Land Management
(“BLM”) to see if there are any cheatgrass management or ecologically-sound fuel reduction
projects planned in or around the Company’s rights-of-way. ICL mentioned programs the BLM is
implementing and suggested the Company may be able to work collaboratively with the BLM to
address common issues in and around the Company’s transmission rights-of-way. ICL
recommended working with BLM and the Rural Fire Protection Association to collaborate and
provide coordinated wildfire responses.
3. Company Reply
The Company replied noting Staff and public support for its Wildfire Plan and
acknowledging ICL’s suggestions. The Company stated that it “initiated agency discussions with
Idaho’s [BLM] Fire Management staff during development of the [Wildfire Plan].” The Company
stated those meetings helped it gain an understanding of the BLM’s priorities for fire protection,
identify relevant datasets for planning, establish a rapport with the BLM’s fire staff, and initiate
discussion about potential future collaborative fire mitigation projects. The Company also stated
it had met with several state level BLM personnel and continues to work with the BLM to identify
outreach strategies to educate BLM staff and solicit feedback.
The Company stated that it joined the Idaho Wildfire Board (“Board”), a group of state,
local, and federal agencies. The intent of the Board is to bring together different agencies and
entities working on wildfire management in Idaho. The Company stated the Board had its first
meeting in April 2021. The Company noted that it intends to leverage its participation to extend
Wildfire Plan coordination with the Forest Service, Idaho Military Division, Federal Emergency
Management Agency, Idaho Department of Lands, and BLM.
ORDER NO. 35077 7

Regarding ICL’s recommendation to explore joining the Group, the Company states it
has engaged with the Group and will continue to follow its progress, even though the Group’s
mission exceeds the purpose of the Wildfire Plan.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-501, 61-
502, and 61-503. 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.
As asserted by the Company, the threat of wildfires across the west has been increasing
and will continue to do so. Increased threat of wildfire coupled with more development in the
wildland-urban interface, creates a significant threat to areas inhabited by humans. Whether a
wildfire is started from utility equipment or by any other cause the potential consequences are
extremely high. As demonstrated by recent western wildfires, the resulting loss of life and property
damage, including damage to energy infrastructure and the disruption of power service can be
catastrophic. It is, therefore, reasonable to target high-risk areas using the FPI criteria with
increased focus on enhanced vegetation management. We acknowledge that, to mitigate the risk
of the devastating consequences that have occurred in other states, some additional costs and
expenses may be necessary. Idaho has unique forest management practices and, as such, the risks
and benefits to Idaho customers will be independently evaluated. We encourage the Company to
focus on fuel reduction and removal—to reduce the risk of combustible debris near its assets.
We appreciate the Company’s proactive, “all of the above” approach to wildfire
mitigation. We have reviewed the Company’s Application and believe the proposed actions
described will provide benefits to the Company’s customers and Idaho. Limiting the potential
impact that wildfire has on the Company’s system and its customers provides benefits that are hard
to quantify, but we find are important given the trajectory of wildfires and the associated potential
liability.
We have reviewed the Company’s forecast of incremental O&M expenses for wildfire
mitigation during 2021-2025. The largest portion of this is attributed to incremental vegetation
management expenses. We agree that the Company should operate its proposed three-year cycle
of enhanced vegetation management activities for four to five years to verify the cycle can be
ORDER NO. 35077 8

beneficially maintained. As the Company increases its vegetation management activities, we find
it reasonable for it to defer its Idaho jurisdictional share above its 2019 actual costs. We do however
expect the Company to report to the Commission the results of its enhanced vegetation
management activities explaining the actual costs and benefits of those activities as it begins its
enhanced vegetation management program under the Wildfire Plan.
We agree with the Company that customers should benefit from adequate insurance
coverage. Insurance protects the Company and its customers from unforeseen wildfire-related
costs which have caused utility bankruptcy in recent years. While the increased insurance
premiums, including the “wildfire load,” represent additional costs; the alternative is not prudent
or wise. We believe the Company’s proactive investment will provide benefits to customers should
the Company ever face significant wildfire liability. We find it reasonable to allow the Company
to defer its Idaho jurisdictional share of incremental wildfire insurance costs above 2019 levels.
The Company requested authority to defer depreciation expenses for incremental
capital investments related to wildfire mitigation. These capital investments will be used primarily
for system hardening for the Company’s transmission and distribution systems. We agree these
capital investments are an integral part of the Company’s Wildfire Plan. Without these capital
investments the other components of the Wildfire Plan standing alone are less likely to provide the
intended benefits to customers. We find it reasonable to allow the Company to defer its actual
depreciation expense associated with incremental capital expenditures. The Company should
record the capital investments in appropriate plant accounts as assets are placed in service.
The Company may defer actual incremental O&M expenses, incremental insurance
expenses, and depreciation expenses for its capital expenditures related to the Wildfire Plan as
discussed above. The Company shall record these deferrals in accordance with Code of Federal
Regulation to FERC Account 182.3—Other Regulatory Assets. We agree with Staff that the
deferral period for the Wildfire Plan expenses should have limits. We find that the deferral period
should end after five years or when rates from the Company’s next general rate case go into effect,
whichever is first. This will protect customers from a regulatory liability that could otherwise grow
perpetually and will give the Commission a chance to review deferred expenses for prudency and
examine the actual costs and benefits of the Wildfire Plan.

ORDER NO. 35077 9

ORDER
IT IS HEREBY ORDERED that the Company’s Application is approved. The
Company may defer its Idaho jurisdictional incremental O&M expenses, incremental insurance
expenses, and depreciation expenses for its capital expenditures related to the Wildfire Plan for
recovery in a future rate proceeding.
IT IS FURTHER ORDERED that the Company shall defer these expenses into FERC
Account 182.3—Other Regulatory Assets.
IT IS FURTHER ORDERED that the deferral period authorized by this Order shall
last for five years, or until rates go into effect after its next general rate case, whichever is first.
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 about 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 17th day
of June 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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