20220516Rate Impact Mitigation Comments.pdf

Peter J. Richardson
Richardson Adams, PLLC
515 N. 27tl' Street
Boise, [daho 83702
Telephone: [phone] I
Fax: [phone]
peter@richardsonadams. com
Attorneys for the Industrial Customers of tdaho Power
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR
AUTHORITY TO IMPLEMENT POWER
cosT ADJUSTMENT ("PCA') RATES FOR
ELECTRTC SERVICE FROM JUNE 1,2022,
THROUCH MAY 31,2023,
CASE NO. IPC-E-22-II
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RATE IMPACT MTTICATION
COMMENTS OF THE TNDUSTzuAL
CUSTOMERS OF IDAHO POWER
COMES NOW, The Industrial Customers of ldaho Power, hereinafter referred to as the
"ICIP" and pursuant to Order No. 35392 issued on May 3,2022, by the Idaho Public Utilities
Commission ("Commission"), and hereby files its Rate [mpact Mitigation Comments regarding
Idaho Power Company's (*lPC" or the "Power Company") Application to [mplement Power
Cost Adjustment ("PCA") Rates from June l, 2022, through May 31,2023.
INTRODUCTION
The ICIP is an unincorporated association of large (Schedule l9) industrial customers all
of whom take electrical service from ldaho Power. As large industrialconsumers, the ICIP's
utembers rely on ldaho Power as the sole monopoly provider of retail electric service in its State of
Idaho sanctioned exclusive service territory. The provision of electric service at reasonable rates is
critical to the continued, and at times precarious. competitive status of its members in the
Rate Mitigation Comments of the
Industrial Customers of Idaho Power
IPC-E-Z?-L t page I
international marketplace. Because large rate increases threaten the [CIP's competitive status, the
Commission is respectfully requested to mitigate the impact of this year's PCA. Thus, for all
customer classes for which double digit rate increases are proposed, the ICIP recommends allocating
the proposed rate increase over a two-year period. Affected classes would include Schedule 19,
Special Contract Customers as well as the Street Lighting Class. Of course, the Commission may, at
is discretion, provide similar rate mitigation treatment for the rest of [daho Power's rate classes that
are slated for a less than double digit rate increase.
T}ilE 2022-2023 PCA IS UNREASONABLY HIGH
Even without the piling-on-effect of the Power Company's proposed increase associated
with its requested accelerated depreciation schedule for coal related assets at the Jim Bridger
plant, the PCA is unreasonable high.
Because the PCA rate is applied on a per kWh basis, customers with good (high) load
factors are disproportionately impacted. Therefore the I t6 high load factor customers taking
service under Schedule 19, Large Power Service, are slated for an I t.85% increase. On the other
hand, customers with poor (low) load factors are corespondingly insulated from PCA impacts.
Therefore, the small commercial class is only slated for a 5% increase. Put another way, the 116
customers taking service under Idaho Power's Schedule l9 only make up about 0.02% of the
Power Company's customers, but would actually pay almost twenty percent of the PCA
proposed revenue increase.
Rate Mitigation Comments of the
lndustrial Customers of ldaho Power
IPC-E-22-l I page2
The following table shows the respective PCA percentage increases by major class of
customer:
Residential
Sm Commercial
Lg Commercial
lnigation
Industrial
Special Contracts
Street Lighting
6.5s
5.24
9.28
8.46
I 1.66
13.24
10.67
The ICIP proposes the Commission mitigate the rate impact of this year's PCA by allowing all
those classes experiencing double digit rate increases (industrial, special contract and street
lighting customers) to opt to spread this year's double digit PCA rate increase over a two-year
period. Obviously, there is no guarantee that next year's PCA will be an improvement over the
double-digit increase proposed this year. Nevertheless, ffiy Econ-l0l student will veriff that it
is in the economic best interest of a rational market participant to delay cash outflow whenever
possible. In addition, tdaho Power's cost of money is obviously and dramatically lower that the
intemal cost of money for industrial concerns. Therefore, even with deferral amounts accruing
---"interest-aLldaho-P-owerjs-internal-r.ateoflreturn ratepayers-on-ldah6-pa,vv6Cssyst€r[drrill-$sne,f1.t-
from such a deferral.
It just makes good, basic, ratemaking sense to alleviate potential rate shock and to smooth
dramatic spikes in rate increases by spreading such large (double digit) rate increases over
several years. Rate shock mitigation is particularly critical this year - given the diffrculties
Rate Mitigation Comments of the
Industrial Customers of ldaho Power
IPC-E-2?-| I page 3
facing ldaho's industrial base caused by global pandemic, supply chain problems, exploding
natural gas prices and the sudden and dramatic increase in inflation and interest rates. The last
thing participations in the global marketplace need at this time is an unnecessarily dramatic
increase in their electric rates.
The ICIP is appreciative of, and, frankly encouraged by the Company's willingness to
entertain the concept of rate mitigation for this year's PCA rate increase. ldaho Power stated in
its Application that; "[w]hile the Company is not proposing any rate mitigation measures in this
filing, it is open to discussing these measures if the Commission determines they may be
appropriate."l Company witness Ms. Brady explained that she was advised by "management"
not to propose any rate mitigation measures in this year's PCA because the Power Company
perceived the Idaho Commission's prior reluctance to approve mitigation measures based on its
concerns regarding possibte rate pancaking.2 In addition, according to Ms. Brady's Direct
Testimony, the Company is concerned that rate mitigation measures may thwart the generic
regulatory goal of matching costs to the time period in which they occur.3 While avoiding an
expense/rate recovery mismatch is a laudable (yet often-times not fully attainable goal), it is not
a particularly apposite argument given the composition of this year's rate recovery request. The
Balancing Account in this year's PCA totals S57 million or 55oh of the total PCA recovery
amount requested by the Power Company. The Balancing Account is made up of two distinct
pails. One part is the true up.amount to recover the difference between.last years' forecastof
Net Power Supply Costs ("NPSC") and the actual NPSC that werc in fact incurred last year. The
I Application, Idaho PowerCo.. p. 30.
2 Jessica Brady, DI,IPC-E-22-ll, p.30-31.I tbia., p. : r.
Rate Mitigation Comments of the
Industrial Customers of ldaho Power
IPC-E-22-l t page 4
other component is the difference between the forecast of Net Power Supply Costs from the
Company's March operating plan and base level NPSE that are built into the Company's base
rates. The impact of the past year's mistaken forecast adds $18.5 million to the coming year's
PCA. In other words, one third of the total PCA Balancing Account request occurred last year.
Those costs which were incurred in the past, are being shifted into this coming year's PCA.
Therefore, a portion of the rates and costs are already mismatched and are not occurring in the
same time period. Since a large ($ 18.5 million) expense/rate recovery mismatch has already
occurred, the ratelmismatch objection loses much of its credibility when used to thwart the more
compelling and overriding need to avoid rate shock and dramatic (and unnecessary) rate spikes.
Therefore, it makes sense to spread the impact of the already partially mismatched costs and
expenses over a minimum period of two years. For industrial customers a two-year recovery of
this year's PCA would still impose an increase of over 6.5Yo each year, which, while still high,
would arguably result in fair, just and reasonable rates.
The Commission established some minimal guidelines for implementing rate mitigation
measures when it adopted the PCA back in 1993. According to the Commission:
Idaho Power represented during the hearing that it was willing to accommodate the
Commission's desire !o ameliorate the "rate shock" that could result during periods of
very low water. We accept this offer but note that the goal of rate stability is of such
importance that we would have imposed a similar requirement even in the absence of the
Company's acquiescence. For the purpose of giving a degree of specificity to this rate
stability goal, we require the following: if forecasted increases above normalized power
--suppl.1.eosts-in-any.givenaeara.re-predieted-to.exeeed7-7o-oflth+Cenapanyis-ngr+nalized-
base revenues for the ldaho jurisdiction, then ldaho power is instructed to make a filing
with the Commission for the purpose of determining whether a means to defer a
percentage of that year's power supply cost recovery should be investigated.
Although the Power Company did not specifically make a filing "fbr the purpose of determining whether
a means to defer a percentage of [this year's PCA] should be investigated", it did assert that it was
Rate Mitigation Comments of the
Industrial Customers of Idaho Power
IPC-E-22-l I page 5
amenable to the implementation of such a measure. See Brudy at pp. 30 - 3 I . Given that this year's PCA
percentage increase for the high load factor classes is between ten and thirteen percent, the ICIP's modest
two-year recovery recommendation would be a reasonable ratemaking response for the Commission to
implement.
BRIDGER OVERREACH
Also included In ldaho Power's application for its PCA adjustment is Idaho Power's controversial
request to impose an annual $27.1 million surcharge for accelerated depreciation of coal related
investments at its Jim Bridger facility. The Bridger case, IPC-E-21-17, is currently pending before the
Commission for consideration. However, the Company has prematurely bundled its proposed Bridger
surcharge along with this year's PCA, The combined impact of the PCA and the inclusion of Bridger
accelerated depreciation would result in a 14.33 percent increase for the Schedule 19 class with Bridger
depreciation costs representing approximately 260/o of the total requested increase. However,
consideration of the proposed Bridger increase in this docket is inappropriate. The Commission has not
yet ruled on the company's request for Bridger accelerated depreciation. The impact, if any, of that rate
request is currently unknown and unknowable. Because the proposed Bridger accelerate depreciation is
not a known and measurable cost for ratemaking purposes, the ICIP recommends it be excluded from this
year's PCA.
DATED this l6th day 2022
Peter J. Richardson
RICHARDSON ADAMS, PLLC
Rate Mitigation Comments of the
Industrial Customers of ldaho Power
IPC-E-22-l I page 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the l6th day of May 2022, a true and corect copy of the within
and foregoing FINAL COMMENTS OF THE INDUSTRIAL CUSTOMERS OF IDAHO
in N I I was served electonically to:
RTCHARDSON ADAMS, PLLC
Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission
secretarv@ouc. idaho. sov
i an. nori)ruki@ouc. idaho, gov
Lisa Nordstrom
Idaho Power Company
I [e-mail]
dockets(didahooower.com
Dayn Hardie
Idaho Public Utilities Commission
dayn.hardie@Fuc. idatro. gov
Matthew T. Larkin
Timothy E. Tatum
Jessi Brady
Idaho Power Company
m lark i nt0 idahoDower.com
natumt@ idahooower.com
i brady@ idahooower.com
Rate Mitigation Comments of the
lndustrial Customers of ldaho Power
IPC-E-22-l I page 7