20220503Comments.pdf

RILEY NEWTON
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. II2O2
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO IMPLEMENT
FIXED COST ADJUSTMENT RATES FOR
ELECTRIC SERVICE FROM JUNE I,2022,
THROUGH MAY 31,2023
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Street Address for Express Mail:
I133I W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. IPC.E.22.O7
COMMENTS OF THE
COMMISSION STAFF
coMES NOW, the Staff the Idaho Public utilities commission ("staff'), by and
through its attorney of record, Riley Newton, Deputy Attorney General, and submits the
following comments.
BACKGROUND
On March l5,2022,Idaho Power Company ("Company") applied to implement new Fixed
Cost Adjustment ("FCA") rates for certain electric service customer classes from June 1,2022,
through May 3I,2023, and a corresponding revised tariff Schedule 54-Fixed Cost Adjustment.
The Company filed the Direct Testimony of Pawel P. Goralski in support of the Application. The
FCA applies to Residential and Small General Service ("R&SGS") customers. If the Application
is approved as filed, a typical Residential customer's average bill would decrease by about $0.81
cents per month.
ISTAFF COMMENTS MAY 3,2022
The Company seeks recovery of the 2021FcAbalance and approval of the corresponding
rates. The proposed FCA is $33,810,563 for the Residential class and 51,392,684 for the Small
General Service class, for a total amount of $35,203,247. The proposed FCA defenal balance is
less than the current FCA defenal balance collected in customer rates. The Company's
Application proposes a $4,890,772 or 0.81 percent rate decrease for Residential and Small
Residential customers over the previous year's FCA.
The Company requests to decrease the FCA to $0.6153 cents per kilowatt-hour ("kWh")
for the Residential class and $0.7788 cents per kWh for the Small General Service class. If
approved, the proposed FCA rates would decrease current billed revenue from affected customer
classes by 0.81 percent per year. The Company requests the proposed rates take effect on June l,
2022,and remain in effect until May 31,2023.1
The FCA is an annual rate adjustment mechanism designed to decouple the Company's
fixed-cost recovery from its volumetric energy sales. Under traditional rate design, a utility
recovers much of its fixed costs through volumetric rates. Fixed costs are a utility's costs to
provide service that do not vary with fluctuations in energy consumption, whereas variable costs,
as their name suggests, vary based on the energy generated and consumed. When a utility's
customers demand less energy, the utility's variable costs decline in proportion to the reduced
demand. However, the utility's fixed costs to meet customer demand stay the same.
The FCA is designed to true-up the difference between the fixed costs the Company
recovered through rates each year and the fixed costs authorized for recovery in the Company's
most recent general rate case. The fixed-cost portion of the Company's revenue requirement is
established for each customer class during the Company's most recent general rate case. The
Commission also establishes a fixed-cost per customer ("FCC") and a fixed-cost per energy
("FCE") as part of the Company's general rate case, which are used in the calculation of the
Company's recoverable fixed costs in subsequent years. The FCA is calculated at the end of each
calendar year after the Company knows how many customers it served during the prior year and
how much energy those customers consumed. The Company then recovers the calculated FCA
balance through rates in effect from June I through May 3l of the following year. The FCA
I The Company requests that the FCA rates become effective on June 1,2022, coincident with the Company's Power
Cost Adjustment, the proposed increase in rates to recover costs associated with the Jim Bridger Power Plant, and
with the commencement of seasonal rates. Application. at 5.
2STAFF COMMENTS MAY 3,2022
provides a customer surcharge when use per customer declines, and a customer credit when use
per customer increases.
STAFF REVIEW
Based on its review, Staffrecommends the Commission approve the Company's proposed
Schedule 54 as filed, allowing it to collect the FCA defenal balance of $35,203 ,247.66 which is
composed of $33,810,563.43 for the Residential class and $1,319,684.23 for the Small General
Service class. Because annual sales for June 2022 through ll{ay 2023 are forecast to be higher
than the same period in the prior year, the higher level of forecasted sales resulted in a decrease in
the FCA rates, with an annual decrease of $4,890,772, or 0.81 percent from the current billed
revenue of the affect customer classes.
Staff reviewed the Company's filing and supporting testimony provided by Company
witness Paul Goralski. Staff audited the components used to calculate the FCA balance and
confirmed that it complies with Commission orders. Staff verified the FCC and the FCE, the
annual sales for the two affected classes, the customer counts, and all the inputs used to calculate
the FCA balance.
Calculation of the 2022-2023 FCA Rate
Staff verified the Company's FCA calculation for the R&SGS classes. Consistent with
prior practice, the Company proposes spreading the FCA surcharge uniformly to both the R&SGS
classes on an equal percentage basis. Using forecasted sales for June l, 2022, through May 31,
2023, Staff agrees that surcharges of 0.6153 cents per kWh for the Residential class and 0.7788
cents per kWh for the Small General Service class will provide a sufficient opportunity for the
Company to recover the 2021 FCA defenal balance. Staff verified that the FCA forecasted sales
are appropriate and align with the forecast used in the Company's 2022-2023 Power Cost
Adjustment filing.
Modifications to the FCA
In Case No. IPC-E-21-39, Order No. 35273, the Commission authorized the Company to
modiff the FCA mechanism and institute separate, and reduced, fixed cost tracking for R&SGS
aJSTAFF COMMENTS MAY 3,2022
customers added to the Company's system after January 1,2022. This modification will be
reflected in the Company's 2023 filing to recover the 2022 FCA deferral balance.
Impact of Company-Sponsored Energy Efficiency
The Commission adopted the FCA in part to remove the Company's disincentive to invest
in energy efficiency that reduces energy sales. However, the Company's energy sales can decrease
for many reasons, including, but not limited to, weather, economic cycles, better building codes
and standards, improved appliance standards, fuel switching (e.g., increased electric to gas
conversions), energy efficiency programs, or various consumer responses to higher electric bills
(i.e., elasticity measures). The FCA rate adjustment mechanism provides for fixed cost recovery
regardless ofthe cause for decreased energy sales and revenues.
Since the implementation of the FCA, the Company has stated that the mechanism reduces
its financial disincentive to promote energy efficiency programs such as Demand Side
Management ("DSM"). Cost effective DSM can defer or eliminate some capital costs needed by
the Company to serve load. Staff agrees with the Company that these benefits have effectively
been achieved. Staff believes the modifications approved in Order No. 35273 will not adversely
affect recovery of actual fixed costs or become a disincentive to cost effective DSM measures and
programs.
ln 2021, the Company asserts that it achieved 143,971 megawatt-hours ("MWh") of
savings system-wide. The energy savings claimed are enough energy to power approximately
12,600 average homes for one year in the Company's service area. The energy savings are
described in the 2021 DSM Annual Report filed in Case No. IPC-E-22-08.
Customer Notice and Press Release
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and determined that both meet the requirements of Rule 125 of the
Commission's Rules of Procedure (IDAPA 31.01.01 .125). The notice was included with bills
mailed to customers beginning March 26 and ending Apil23, 2022. The Commission set a
comment deadline of May 3,2022. Some customers in the last billing cycle may not have received
their notices or had adequate time to submit comments before the comment deadline. Customers
must have the opportunity to file comments and have those comments considered by the
4STAFF COMMENTS MAY 3,2022
Commission. Staffrecommends that the Commission accept late filed comments by customers.
As of May 2,2022,no customer comments had been filed.
STAFF RECOMMENDATIONS
Staff recommends the Commission:
l. Approve the Company's FCA filing with a net deferral balance of $35,203,247 for
June 1,2022- May 31,2023.
2. Approve the Company's proposed Schedule 54 as submitted.
rJ
Respectfully submitted this 3 day of May 2022.
Riley Newton,
Deputy Attorney General
Technical Staff: Kathy Stockton
Laura Conilogue
KevinKeyt
Curtis Thaden
i :umisc/comments/ipce22. Tmklsttlcdectkk comments
5STAFF COMMENTS MAY 3,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3M DAY OF MAY 2022, SERVED
THE FOREGOING COMMENTS OF TIrE COMI\flSSION STAX'F, IN CASE NO.
IPC-E-22-07, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
LISA NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOrSE ID 83707-0070
E-MAIL : [e-mail]
dockets@idahopower. com
PAWEL P GORALSKI
CONNIE ASCHENBRENNER
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL : [e-mail]
caschenbrenner@ idahopower. com
SECRETARY
CERTIFICATE OF SERVICE