20210524Reply Comments.pdf

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An IDACORP Company
NATHAN F.GARDINERSeniorCounselngardiner(Sidahopower.com
May 24,2021
VIA ELECTRONIC FILING
Jan Noriyuki,SecretaryIdahoPublicUtilitiesCommission
11331 W.Chinden Blvd.,Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise,Idaho 83720-0074
Re:Case No.IPC-E-21-10
2021-2022 Power Cost Adjustment -Idaho Power Company's ReplyComments
Dear Ms.Noriyuki:
Attached for electronic filing,pursuant to Order No.34781,is Idaho PowerCompany's Reply Comments.
If you have any questions about the attached documents,please do not hesitate tocontactme.
Very truly yours,
Nathan F.GardinerNFG:sh
Attachments
NATHAN F.GARDINER(ISB No.4104)Idaho Power Company
1221 West Idaho Street (83702)
P.O.Box 70
Boise,Idaho 83707Telephone:[phone]Facsimile:[phone]
[e-mail]
Attorneyfor Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-21-10AUTHORITYTOIMPLEMENTPOWER)COST ADJUSTMENT (PCA)RATES FOR )IDAHO POWER COMPANY'SELECTRICSERVICEFROMJUNE1,2021 )REPLY COMMENTSTHROUGHMAY31,2022 )
Idaho Power Company ("Idaho Power"or "Company")respectfully submits the
followingReply Comments in response to comments filed by the Idaho Public Utilities
Commission ("Commission")Staff ("Staff")on May 18,2021.In these Reply Comments,
Idaho Power concurs with Staff's conclusion that the proposed Power Cost Adjustment
("PCA")rates should be approved as filed,and addresses Staff's beliefthat the PCA could
be simplified by modifying the forecast and true-up componentsof the mechanism.
I.BACKGROUND
On April 15,2021,idaho Power applied to the Commission for an order approving
an update to Schedule 55 based on the quantification of the 2021-2022 PCA to become
effective June 1,2021,for the period June 1,2021,through May 31,2022.If approved,
IDAHO POWER COMPANY'S REPLY COMMENTS -1
the 2021-2022 PCA will result in an overall revenue increase of approximately$39.1
million,or a 3.36 percent increase over current billed revenue.
On May 18,2021,Staff filed comments in this case detailing its audit of the
Company's filing.As described in Staff's comments,"Staff reviewed the componentsthat
make up this year's PCA rates and has concluded that they are fair,just,and
reasonable."1 Staff recommended that the Commission approve the Company's
proposed Schedule 55 rates as filed in Attachment 1 to the Company's Application.
Staff also mentioned two proposals to simplify the PCA methodology.Specifically,
Staff believes the Company's PCA could be simplified,while not detracting from its
purpose,by replacing the forecast with a constant value of 0.5446 cents per kilowatt hour
and replacing the true-up and true-up of the true-up with a simple balancing account.2
II.IDAHO POWER'S REPLY
Idaho Power acknowledgesStaffs review and agrees with Staffs conclusion that
the filed PCA componentsappropriately calculate 2021-2022 PCA rates under the
currently approved methodology.With respect to Staffs suggestionsto simplify the PCA
mechanism,Idaho Power discourages adopting any methodologicalchanges at this time
due to concerns that the proposed changes could produce results contrary to the intent
of the PCA and send improper price signals to customers.Despite these reservations,
Idaho Power is open to discussing with Staff simplifications that could be made to the
PCA methodology that would not harm the effectiveness or intent of the mechanism.
1 Staff Comments,p.11.
2 lbid.
IDAHO POWER COMPANY'S REPLY COMMENTS -2
A.The Forecast Component of the PCA Appropriately Sets Rates toMatchExpectedCosts.
In further support of Idaho Power's position,the Company references its reply
comments filed in last year's PCA filing,IPC-E-20-21,in which Idaho Power provided a
historical look at the developmentof the current PCA mechanism and described the
benefits of the current methodology,including a description of how the current forecast-
based PCA more closely matches revenue collections to actual power supply expenses,
and why removing the PCA forecast is unlikely to result in more rate stability.
Idaho Power is concerned that Staff's suggestion to use a fixed forecast rate would
result in inaccurate price signals to customers by disconnecting the PCA rate from
expected conditions.Because the PCA forecast componentallows the Company to
adjustrates to match forecast NPSE expected to be incurred by the Company,customers
receive a proper price signal that better reflects the expected costs of energy at the time
the customer is consuming and paying for the energy.Alternatively,Staff's simplified
approach would mute any pricing signals related to expected operating conditions,as any
variance from the proposed flat rate would be recovered from future customers through
the true-up.Additionally,this approach could result in the accumulation of expenses and
an associated rate increase just before an abundant water year,or vice-versa,an
accumulation of revenues and an associated rate decrease coincident with a low water
year.Ultimately,Idaho Power's customers could receive inappropriateprice signals while
rate volatilitywould not be improved.
Idaho Power acknowledgesthat no forecast will be perfectly accurate,and notes
that the treatment of certain costs within the PCA will necessitate deviations between the
forecast and actual operations.Upon Idaho Power's entrance into the Energy Imbalance
IDAHO POWER COMPANY'S REPLY COMMENTS -3
Market ("EIM"),the Company and Staff agreed3 that rather than attemptingto forecast
EIM costs and benefits,these amounts would flow through the backward-looking
componentsof the PCA to ensure rates appropriately reflect the net benefits of EIM
participation.For this reason alone,Idaho Power's forecast will not perfectly match actual
operations over time.However,Idaho Power does not believe deviations between
forecast and actuals at the levels currently experienced warrant a modification of the
forecast,for reasons cited above.
B.The True-Up and True-Up of the True-Up Effectively Ensure the PCAMeetsItsIntendedGoal.
Idaho Power is not certain what replacementof the true-up and true-up of the true-
up with a simple balancing mechanism would entail.However,the Company believes the
current structure of the PCA appropriatelytracks and recovers from customers'deviations
between forecast and actuals.Notwithstandingthis belief,Idaho Power is open to
discussing potential modifications with Staff.
III.CONCLUSION
Idaho Power acknowledgesStaff's review and conclusion that the Company's
proposed PCA rates in this case are fair,just,and reasonable and comply with the existing
PCA methodology.Based on currently known information,Idaho Power disagrees with
Staff's suggestion that replacing the forecast with a constant value of 0.5446 cents per
kilowatt hour and replacing the true-up and true-up of the true-up with a simple balancing
account would result in improvementsto the PCA mechanism.Staff's proposed changes
could result in improper price signals to customers without reducing rate volatility.Idaho
3 Order No.34100,p.2.
IDAHO POWER COMPANY'S REPLY COMMENTS -4
Power is open to meeting with Staff to discuss opportunities to simplify the PCA
mechanism that would not harm the effectiveness of the mechanism.
Idaho Power respectfully requests that the Commission approve the 2021-2022
PCA rates as filed in this proceeding.
DATED at Boise,Idaho,this 24th day of May 2021.
NATHAN F.GARDINER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS -5
CERTIFICATE OF SERVICE
l HEREBY CERTIFY that on the 24th day of May 2021 I served a true and correctcopyofIDAHOPOWERCOMPANY'SREPLY COMMENTS upon the following namedpartiesbythemethodindicatedbelow,and addressed to the following:
Commission Staff Hand DeliveredJohnR.Hammond,Jr.U.S.MailDeputyAttorneyGeneralOvernightMailIdahoPublicUtilitiesCommissionFAX11331WChindenBlvd,Bldg.8,Suite 201-A X Email john.hammond puc.idaho.qovP.O.Box 83720
Boise,Idaho 83720-0074
Sandra Holmes,Legal Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS -6