20220315Final_Order_No_35345.pdf

ORDER NO. 35345 1
Office of the Secretary
Service Date
March 15, 2022
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER'S
APPLICATION TO UPDATE THE
SUBSTATION ALLOWANCE UNDER
SCHEDULE 19, LARGE POWER SERVICE
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CASE NO. IPC-E-22-01

ORDER NO. 35345

On December 28, 2021, Idaho Power Company (“Company”) filed Tariff Advice No.
21-03 (“Tariff Advice”) proposing an update to the substation allowance outlined in Schedule 19,
Large Power Service, as required by Commission Order Nos. 32893 and 32914. The Company
requested the update to the allowance become effective February 1, 2022.
Due to the significant proposed increase to the allowance amount and changes to
overhead rates, Staff recommended that the Commission treat the Tariff Advice as an Application
and process the case by modified procedure to allow additional time to review the Company’s
proposal and for public input.
At its February 1, 2022, Decision Meeting, the Commission found it reasonable to treat
the Company’s filing as an Application rather than a tariff advice. See Commission Rule of
Procedure 134.02. Subsequently, on February 1, 2022, the Commission issued a Notice of
Application, established comment deadlines and suspended the Company’s proposed effective
date until March 15, 2022. Order No. 35309. Staff filed the only comments. The Company did not
respond.
Having reviewed the record in this case, the Commission now issues this final Order
approving the Company’s Application as filed, effective March 15, 2022.
THE APPLICATION
The changes to Schedule 19’s substation allowance reflects updated material costs,
labor rates, and the stations’ overhead rate. The Substation Allowance amount increased from
$49,016 to $57,640—an increase of 17.6 percent.
The primary driver for the increase of the Substation Allowance is attributed to the
increased costs of the 138kV/13.09kV, 44.8 MVA transformer, and the 4-unit metalclad
switchgear—approximately 17 percent and 25 percent respectively. Other material costs generally
increased but were partially offset by a decrease in the general overhead rate from 8.97 percent to
8.63 percent.

ORDER NO. 35345 2
The Company’s Application includes the proposed tariff sheet in clean and legislative
form.
STAFF COMMENTS
Staff reviewed the Application and relevant documents and workpapers;
recommending Commission approval of the Company’s proposed update to Schedule 19. Staff
believes the substation allowance costs were reasonable, the overhead rate was accurate, and that
the calculation method complied with prior Commission orders. Staffs review focused on three
areas to determine the reasonableness of the Company’s substation allowance update: (1) the
calculation method; (2) changes to direct allowance costs; and (3) an audit of the overhead rate.
Staff confirmed the Company’s substation allowance calculations followed the method
approved in past Commission orders.1 Under the current method, the Company determines the per
Megawatt (“MW”) substation allowance by dividing the estimated fully loaded costs for
constructing a transformer substation by 44.8 MVA, which Staff explained is the rating of the
transformer commonly used by the Company for this type of service.
Staff believed the costs included in the Company’s proposed substation allowance were
reasonable. Staff reviewed the direct costs that make up the substation allowance including labor,
material, and vehicle costs. Staff also reviewed the overhead rate used to determine indirect costs
in the substation allowance. The primary driver for the increase of the allowance was attributed to
the increased costs of the 138kV/13.09kV, 44.8 MVA transformer and the 4-unit metalclad
switchgear, which increased approximately 17 percent and 25 percent respectively. Staff reviewed
actual invoices to verify the increases in material costs for the transformer and the metalclad
switchgear. All material costs generally increased but were partially offset by a decrease in the
general overhead rate.
Staff described general overheads as capital costs that cannot be directly assigned to a
specific asset or individual project. The Schedule 19 general overhead rate is applied to all vehicle,
labor, and direct material costs. The proposed general overhead rate for the 12 months ending
October 31, 2021, was 8.63 percent—a decrease from the currently authorized rate of 8.97 percent.
Staff verified the Company’s inputs and calculation of general overheads for substations were
correct.

1 Order Nos. 32893, 32914, from Case No. IPC-E-13-09 (Glanbia Foods Petition for Allowance to Rule H), Order No.
32982 from Case No. IPC-E-14-01 (Schedule 19 Update), and Order No. 34576 from Case No. IPC-E-19-40 (Update
to Substation Allowance Under Schedule 19).

ORDER NO. 35345 3
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction over this matter under Idaho Code §§ 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. The Commission has reviewed the record and based on our review we find
it reasonable to approve the Company’s proposed update to substation allowance in Schedule 19—
Large Power Service.
O R D E R
IT IS HEREBY ORDERED that the Company’s proposed updates to Schedule 19—
Large Power Service, substation allowance is approved, effective March 15, 2022.
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 regarding 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 15th day
of March 2022.

__________________________________________
ERIC ANDERSON, PRESIDENT

__________________________________________
JOHN CHATBURN, COMMISSIONER

__________________________________________
JOHN R. HAMMOND JR., COMMISSIONER
ATTEST:

_________________________________
Jan Noriyuki
Commission Secretary
I:\Legal\ELECTRIC\IPC-E-22-01 Schd 19\orders\IPCE2201_final_dh.docx