20230503Staff Comments.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER'S
APPLICATION FOR AUTHORITY TO
IMPLEMENT FIXED COST ADJUSTMENT
RA TES FOR ELECTRIC SERVICE FROM
JUNE 1, 2023, THROUGH MAY 31, 2024
)
) CASE NO. IPC-E-23-09
)
)
) COMMENTS OF THE
) COMMISSION STAFF __________________ )
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Michael Duval, Deputy Attorney General, submits the following comments.
BACKGROUND
On March 15, 2023, Idaho Power Company ("Company" or "Idaho Power") applied to
implement new Fixed Cost Adjustment ("FCA") rates for electric service from June 1, 2023,
through May 31, 2024, and a corresponding revised tariff Schedule 54 ("Application"). The
Company proposed a $9,976,903, or 1.56 percent, decrease for Residential and Small General
Service customers.
On April 20, 2023, the Company filed an Errata to Application stating it discovered a
minor variance between forecasted loads used in the FCA and the forecasted loads used in the
annual Power Cost Adjustment ("PCA"), which was filed on April 14, 2023. Errata to
Application at 1-2. After correcting the discrepancy, the Company's proposed revenue decrease
STAFF COMMENTS 1 MAY 3, 2023
in this case is now $$9,976,707, or $196 less than originally filed. The Company maintains that
revised amount did not result in a change to the FCA rate or the overall percentage revenue
change. Id at 2.
If the Company's proposal is approved, a typical residential customer using 950
kilowatt-hours ("kWh") per month will see an approximate $1.66 decrease to their monthly bill.
Application at 1-2. The Company requested its Application be processed through modified
procedure with an effective date of June 1, 2023.
The FCA is a rate adjustment mechanism designed to break the link between the energy a
utility sells and the revenue it collects to recover fixed costs 1 of providing service, thus
decoupling the utility's revenues from its customers' energy usage. This decoupling removes a
utility 's incentive to increase sales to increase revenue and profits and encourages energy
conservation. It applies to Residential and Small General Service customers. The FCA provides
a customer surcharge when use per customer declines, and a customer credit when use per
customer increases.
The Company seeks recovery of the 2022 FCA balance and approval of proposed rates.
The proposed FCA is $24,076,901.44 for the Residential class and $988,173.87 for the Small
General Service class, for a total amount of $25 ,065,075.31. Id. at 6. The Company stated, "the
proposed FCA deferral balance is less than the current FCA deferral balance collected in
customers' rates." Id.
The Company requested to decrease the FCA rate for Residential customers to 0.4402
cents per kWh and decrease the FCA rate for Small General Service customers to 0.5541 cents
per kWh. If approv.ed, the proposed FCA rates would decrease current billed revenue from
affected customer classes by 1.56 percent.
The Company requested the proposed rates take effect on June 1, 2023 , and remain in
effect until May 31 , 2024.
The Company notified customers about its Application through a press release to relevant
media outlets in the Company's service area and a customer notice distributed in customers'
bills. Id. at 7.
1 "Fixed costs" are a utility's costs to provide service, such as infrastructure and customer service, which do not
vary with energy use, output, or production, and remain relatively stable between rate cases.
STAFF COMMENTS 2 MAY 3, 2023
STAFF ANALYSIS
Staff reviewed the Company's Application and calculations of its Residential and Small
General Service ("R&SGS") FCA rates, along with the Company's workpapers and supporting
testimony provided by Company witness Paul Goralski. Based on its review, Staff recommends
the Commission approve the Company's proposed Schedule 54 as filed and accept the FCA
deferral balance of $25,065,075.31. This balance is composed of $24,076,901.44 for the
Residential class and $988,173.87 for the Small General Service class.
Staff audited the components used to calculate the FCA balance and confirmed that it
complies with Commission orders and was calculated correctly by the Company. Staff verified
the Fixed Cost per Customer ("FCC") and the Fix Cost per Energy ("FCE"), the annual kilowatt­
hour (kWh) sales for the two affected classes, new and existing customer counts, and all the
inputs used to calculate the FCA balance.
Calculation of the 2023-2024 FCA Rate
Staff verified the Company's FCA calculation for the R&SGS classes. The Company
proposed to change the Residential Service rate from the present rate of 0.6153 cents per kWh to
a rate of0.4402 cents per kWh, a decrease of 0.1751 cents for residential customers. This is a
decrease of $9.7 million to customers, or 1.56%. For the Small General Service class, the
Company proposed to change the present surcharge rate of 0.7788 cents per kWh to a rate of
0.5541 cents per kWh, a decrease of0.2247 cents. This is a decrease of $312,938, or 1.63%.
Using forecasted sales for June 1, 2023, through May 31, 2024, Staff agrees that surcharges of
0.4402 cents per kWh for the Residential class and 0.5541 cents per kWh for the Small General
Service class will provide a sufficient opportunity for the Company to recover the 2022 FCA
deferral balance.
Modifications to the FCA
In Case No. IPC-E-21 -39, Order No. 35273, the Commission authorized the Company to
modify the FCA mechanism and institute separate and reduced fixed cost tracking for residential
and small general service customers added to the Company's system after January 1, 2022. This
is the first FCA filing that incorporates the modification.
STAFF COMMENTS 3 MAY 3, 2023
The FCA modifications work identically for both the R&SGS classes. Under this
modification, the number of customers connected to the system before January 1, 2022, would be
calculated using the current FCC and FCE. However, the authorized level of fixed cost recovery
for new customers would exclude generation and transmission-related fixed costs but continue to
include distribution and other customer-related fixed costs. This change would reduce the
amount of FCC for new customers since the Company does not invest in new generation and
new transmission when individual R&SGS customers are added to the system.
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 of the 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. The Company continues to effectively achieve these benefits. In
2022, Idaho Power asserts that it achieved 169,889 megawatt-hours ("MWh") of savings system­
wide. The energy savings claimed are enough energy to power approximately 14,900 average
homes a year in Idaho Power's service area. The energy savings are described in the 2022 DSM
Annual Report filed in Case No. IPC-E-23-10.
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 28 and ending April 25, 2023. The Commission set a
comment deadline of May 3, 2023. Some customers in the last billing cycle may not have
STAFF COMMENTS 4 MAY 3, 2023
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 Commission. Staff recommends that the Commission accept late filed comments by
customers. As of May 2, 2023, no customer comments had been filed.
STAFF RECOMMENDATION
Staff recommends the Commission:
1. Approve the Company's FCA filing with a net deferral balance of $25,065,075.31
for June 1, 2023-May 31, 2024;
2. Approve the Company's proposed Schedule 54 as filed ; and
3. Accept late filed customer comments.
Respectfully submitted this
Technical Staff: Laura Conilogue
Curtis Thaden
Jason Talford
i:umisc/comments/ipce23.9mdlcctjjt comments
STAFF COMMENTS
J rJ u day of May 2023.
Michael Duval
Deputy Attorney General
5 MAY 3, 2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 3rd DAY OF MAY 2023 ,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-23-09, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
MEGAN GOICOECHEA ALLEN
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL:
[e-mail]
lnordstrom(a),idahopower.com
[e-mail]
CONNIE ASCHENBRENNER
PA WEL P GORALSKI
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83 707-0070
E-MAIL: caschenbrenner(a),idahopower.com
[e-mail]
CERTIFICATE OF SERVICE