20211209Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITTES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO.9917
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Sheet Address for Express Mail:
I I33I W CHINDEN BLVD, BLDC 8, SUITE 2OI-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TIIE MATTER OF IDAHO POWER
COMPAI\TY'S APPLICATION FOR
AUTHORITY TO INCREASE ITS RATES
DT]E TO REVISED DEPRECIATION RATES
FOR ELECTRIC PLAIYT.IN.SERVICE
CASE NO. IPC.E-2T.T8
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attomey
of recor4 Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROT]ND
On June 3,zVl,Idaho Power Company ("Company") applied to the Commission for
authorization to implement revised depreciation rates for electric plant-in-service. The Company
requested that the revised rates be effective as of December l, 2021.
On June 24,2021, the Commission issued a Notice of Application and set a deadline for
interested parties to intervene. Order No. 35089. The Industrial Customers of Idatro Power
(*ICIP") intervened. Order No. 351 14.
On August 24,2021, Staffnotified the Commission Secretary that it was entering into
settlernent negotiations with the parties in this case and parties in the related Oregon docket
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ISTAFF COMMENTS DECEMBER9,2O2I
intending to reach an agreement on revised depreciation rates and ensure those rates remain
consistent among jurisdictions.
On November 10,2021, a Settlement Stipulation ("Settlement") and Joint Motion to
Approve Settlement Stipulation were filed in this case. The Company, Staff, and ICIP
(collectively the "Parties," or individually "Party") signed the Settlement which included an
agreement on revised depreciation rates. The parties agreed the revised rates should become
effective January l, 2022.
On November 24,2021, the Commission issued a Notice of Proposed Settlement, Notice
of Modified Procedure, and Notice of Suspension of Proposed Effective Date suspending the
proposed effective date until January 1,2022.
STAT'F ANALYSIS
Stafffully supports the Settlement as filed because it believes the Settlement is in the
public interest and that the terms and conditions are fair, just, and reasonable. Stafffully
reviewed the Company's Application containing the depreciation study. Stafffocused on the
Company's largest production, transmission, and distribution plant-in-service asset accounts. As
a result of Staffs analysis and negotiations with the parties, adjusnnents were made to net
salvage percentages and survivor curves to better reflect the salvage values and asset lives of the
Company's largest asset accounts. Attachment I to the Settlement provides the agreed upon
depreciation data to be included in ratemaking filings including revenue requirement filings.
Attachment I reflects the survivor curve, net salvage percentage, original cost, book depreciation
reserve, accnral amounts, depreciation accrual rate, and composite remaining life. Table No. I
below reflects the changes in the resulting net salvage percentages and survivor curves included
in the Settlement. The table also provides the resulting annual accrual amount differences based
on these adjusfinents.
2STAFF COMMENTS DECEMBER9,2O2I
Table No. l: Settlement Adiustments
The signing parties also agreed to accept the changes included within the Company's
depreciation settlement agreement with Oregon for asset accounts 341.00, 3M.00, and 370.10 to
maintain continuity in depreciation rates and asset lives between the two jurisdictions. The total
calculated annual accrual is reduced by $3.3 million compared to the Company's original filing.
This difference is directly atfributed to the adjustnent in the Iowa Curves and net salvage
percentages reached in settlement.
The parties also agreed that given the reduction to the annual accrual amount for
depreciation reached through settlemen! that no adjusfinent to Idaho jurisdictional base rates is
required.
t (t) Net salvage percentage values vary within the account by production plan! but there is no change in the values
between'AS FILED" and "SETTLED".
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ACCT Description
Iowa Curve / Net Salvage
Percentage
Annual Accrual
Amount Difference
(As Filed)(Settled)($)
341.00 Production Plant - Structures
and lmprovements 55-R3 *l 60-R3 *- 42,762
344.OO Production Plant - Generators 45-S2 *50-Rr *23.83r
354.00 Transmission - Towers and
Fixtures 80-R4 -20 85-R5 -20 -204,251
355.00 Transmission - Poles and
Fixtures 6l-so.s -75 6l-s0.s -60 699,457
356.00 Transmission - Overhead
Conductors and Devices 70-R1.5 40 75-Rl -30 - 896,581
364.00 Distribution - Poles, Towers
and Fixtures 62-Rl -50 64-R0.5 -50 - 430,510
36s.00 Distribution - Overhead
Conductors and Devices 50-R0.5 -30 50-R0.5 -25 -214,594
368.00 Distribution - Line
Transformers 48-Ot -15 5l-ol -15 - 9t3,062
370.10 Distribution - Meters - AMI l8-Rl 0 20-L3 0 45.528
Adjusted Annual Accrual Amount - $3,330,858
STAFF COMMENTS DECEMBER9,2O2I
Salvaee Percentases and Values
The Settlement reduces future recovery through depreciation by $64 million over the life
ofthe assets due to adjustnents in net salvage percentages for asset accounts 355.00, 356.00, and
365.00 as summarized in Table No. 2, below. Overall, Staffbelieves the settlement represents an
opportunity to recover the total costs of removing assets offset by the salvage value the Company
will likely see. The table reflects the change in net salvage percentages and the resulting
adjustments to future accruals reached through settlement.
Table No. 2: Future Accru?l Adiustment
ACCT Description Net Salvage Percentage Future Accrual
Difference
(As Filed)(Settled)($)
355.00 Transmission - Poles and
Fixtures -75 -60 - 32,151,712
356.00 Transmission - Overhead
Conductors and Devices 40 -30 -24,476"063
365.00 Distribution - Overhead
Conductors and Devices -30 -25 - 7,366,038
Total Adjusted Future Accrual - $63,993,813
Staffanalyzed both components of the net salvage value for each account which
included the salvage value and the cost of removal. In its analysis, Staffgave more weight to
more recent data. Staffthen reviewed the overall average, the annual amoun! and the three- and
five-year composite averages, including a trend analysis of the accounts examined. After
identiffing and receiving explanations for any potential outliers through discovery and
identifuing trends in the data the parties were able to agree on reduced amounts for costs of
removal, thereby reducing future accrual amounts.
Finally, Staffreviewed the process for posting salvage and costs of removal and found
the process to be acceptable.
Survivor Curves and Asset Lives
Standardized lowa-type survivor curves were used to determine realistic forecasts of the
remaining useful life of groups of assets examined by Statr Staffcompared Iowa survivor
4STAFF COMMENTS DECEMBER9,2O2I
curves submitted in the Company's Application to actual vintage survivor data for the highest
value asset accounts. Using a least squares method, which calculates the residual difference
between the survival data and the proposed Iowa Curve, Staffdetermined altemative Iowa curves
that best matched the data- Staffbelieves that the Survivor curves ultimately agreed upon in the
Settlement provide a realistic representation of the remaining useful lives of the Company's
assets using the best available data for the accounts shown in Table No. I above.
STAFT' RECOMMENDATIONS
Staffrecommends the Commission approve the Settlement as jusL fair, reasonable, and in
the public interest. Specifically, Staffrecommends the Commission:
1. Approve the depreciation rates on an account-by-accotrnt basis as reflected in
Attachment I ofthe Settlement;
2. Set an effective date of January 1,2022, for the approved depreciation rates
reflected in Attachment I of the Settlement; and
3. Acknowledge there be no associated change in retail rates for depreciation.
Respectfully submitted this day of December 2021
Deputy Attomey General
Technical Staff: Rick Keller
Joseph Terry
i: umisc/oomnertyipoe2l. lSdh(it comnrn6
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5STAFF COMMENTS DECEMBER 9,202I
CERTIHCAIE OF SERVICE
I TIEREBY CERTIFY THAT I HAVE THIS 96 DAY OF DecembeT 2A21,
SERVED THE FOREGOING COMMENTS OF Trm COIIIVIISSION 51a['f, IN
CASE NO. IPC.E-21.18, BY E.MAILING A COPY TTIEREOF, TO THE FOLLOWING:
LISANORDSTROM
IDAHO POWERCOMPAI{Y
PO BOX 70
BOrSE rD 83707-0070
E-MAIL: [e-mail]
[e-mail]
PETER J RICHARDSON
RICTIARDSON ADAMS PLLC
515 N 27ffi ST
BOISE D 83702
E-MAIL: [e-mail]
MATT LARKIN
IDAHO POWERCOMPANY
PO BOX 70
BOrSE rD 83707-0070
E-MAIL: [e-mail]
DRDON READING
6070 HILL ROAD
BOISE ID 83703
E-MAIL: [e-mail]
tlrlaarrCzulrr,-
SECRETARY
CERTIFICATE OF SERVICE