20231201Staff Report.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074 S!ON(208)334-0312
IDAHO BAR NO.9917
Street Address for Express Mail:
11331 W.CHINDEN BLVD.,BLDG.8,SUITE 201-A
BOISE,IDAHO 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-23-11
AUTHORITY TO INCREASE RATES )AND CHARGES FOR ELECTRIC SERVICE )STAFF REPORT ON CAPITAL
IN THE STATE OF IDAHO AND FOR )PROJECT PRUDENCE
ASSOCIATED REGULATORY ACCOUNT )TREATMENT )
BACKGROUND
On June 1,2023,Idaho Power Company ("Company")filed an application ("Application")
with the Idaho Public Utilities Commission ("Commission")requesting authorityto increase its
rates and charges for electric service to the Company's customers in the State of Idaho,and for
associated regulatory accounting treatment.
On September 18,October 4,and October 5,2023,Commission Staff ("Staff"),the
Company,and all Intervenors participated in settlement conferences.On October 27,2023,the
Company filed a Stipulation and Settlement ("Proposed Settlement")and a Motion for Approval
of Stipulation and Settlement ("Motion").The Proposed Settlement was signed by Staff,the
Company,and all Intervenors (collectively"the Parties")
As part of the Proposed Settlement,the Parties agreed to allow Staff to complete its review
of plant investments with the understanding that,with exceptions for the prudence concerns
specifically noted in the Proposed Settlement,"all capital projects included in the Company's test
year are presumed to be prudentlyincurred"and "[t]o the extent Staff identifies potential prudence
STAFF REPORT 1 DECEMBER 1,2023
concerns,it will identify specific plant investments to be the subject of further prudence review in
the Company's next general rate case."The Parties agreed to allow Staff until December 1,2023,
to complete its review.This report is the result of Staff's review.
STAFF REPORT
In its Application,the Company requested recovery of approximately $3.3 billion in new
infrastructure investments made since the last general rate case,IPC-E-11-08,in 2011.These
investments are attributed to approximately forty-threehundred (4,300)unique projects or Budget
IDs encompassing over a hundred thousand individual work orders.Staff must determine whether
(1)the Company's decision towards these capital investments is based on needs required to provide
adequate service to its customers,and (2)that the Company has executed each project at a
reasonable cost to customers.
Based on Staff's completed review and analysis,Staff believes the Company's capital
investments within the framework and exceptions noted in the Proposed Settlement are prudent,
and Staff does not believe that further prudence review in the next general rate case is necessary.
Description of Review
The Company provided documentationto support its decisions to make capital investments
and Staff reviewed the information provided by the Company to ensure that the projects were
realized at a reasonable cost.There were several contributing factors that delayed the completion
of this review process for settlement purposes.
To mitigate some ofthese challenges and roadblocks in support ofthe Proposed Settlement,
Staff relied on reviewing a sample or subset of all projects,which were not previouslyreviewed
prior to the settlement conferences.The documentation requested was consistent with Staff's
approach to assess the prudence of a project for the Company to obtain recovery for its capital
investments.Staff relied heavily on an audit of the Company's processes and consistency of its
adherence to those processes.
Results of Review
Based on the review described above,Staff did not find any evidence that would cause it
to withhold a determination of prudence from any of the projects reviewed,and Staff has an
acceptable level of confidence that the Company's capital investments represented for recovery in
the Proposed Settlement are prudent.
STAFF REPORT 2 DECEMBER 1,2023
However,Staff emphasizes the importance of the Company's commitment "to discuss
capital project review options and documentation generally,and specifically for the Company's
partnered plants,to establish a framework for future prudence reviews."Proposed Settlement at
12,13.In addition,Staff did identify one issue regarding the timing and treatment of one of the
Company's investments as discussed below.
Staff determinedthat the Companyperforms necessary pre-scoping in identifyinga project.
Once it is identified,an estimated budget is established,and a unique Budget ID is assigned
through the Company's CLRIS database.After a project is assigned and prioritized,the Company
initiates the design and construction phases of the project.At this stage,the Company can gain a
proper understanding of the detailed budgeted cost for the projects.As the project progresses,
budgets are reviewed,and updates are made on a quarterly basis based on need and time-
sensitivity.
Staff had onsite meetings with the Company to inquire into specific issues identified from
its review of information supplied by the Company.The Company explained and supported its
approach to managing these individual projects.Followingthis review,Staff gained a better
understanding of the legacy software's limitations,and how the Company currentlymonitors,
tracks,and manages its capital projects through its updated and more complex software platforms.
Staff learned that throughout the lifecycle of a project,the Company incorporates tools such as
Microsoft Project,Azure DevOps,Microsoft Excel Spreadsheets,etc.,to track the overall timeline,
progress,and budget.The use of such tools is not universal across the Company,and it is solely
dependent on the practices within the individual departments.In general,the Company also
substantiated how it procures necessary equipment and services,which is consistent with Company
guidelines and policies.
Through the detailed review,Staff discovered a timing issue with the project:Budget ID
T731210001 -T731 Reconstruct the BOMT-HBRD 138kV line.The project is part of the
Boardman to Hemingway project,but the Company is seeking recovery for a part of the project.
In a teleconference meeting with the Company,it explained that this portion of the project is
associated with an easement purchase that has been arguably in service since January 2023.Staff
understands that this easement purchase is needed for the double circuit conversion (230/138 kV)
of the existing transmission line.AlthoughStaff believes this portion of the investment is prudent,
Staff needs to ensure that such easements are similarly treated from an accounting perspective.As
a result,Staff will continue to evaluate the proper accounting treatment of easements in Plant in
STAFF REPORT 3 DECEMBER 1,2023
Service prior to projects being completed and whether such easements should be deemed used and
useful.
CONCLUSION
Staff believes the Company's capital investments within the framework and exceptions
noted in the Proposed Settlement are prudent,and Staff does not believe that further prudence
review in the next general rate case is necessary.
Respectfully submitted this lst day of December 2023.
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
STAFF REPORT 4 DECEMBER 1,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 1"'DAY OF DECEMBER 2023,
SERVED THE FOREGOING REPORT REQUESTOF THE COMMISSION STAFF
TO IDAHO POWER COMPANY,IN CASE NO.IPC-E-23-11,BY E-MAILING A
COPY THEREOF,TO THE FOLLOWING:
LISA D NORDSTROM TIMOTHY TATUM
DONOVAN E WALKER CONNIE ASCHENBRENNER
MEGAN GOICOECHEA ALLEN MATT LARKIN
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:E-MAIL:[e-mail]
[e-mail] [e-mail]
[e-mail] [e-mail]
[e-mail]
[e-mail]
KELSEY JAE MICHAEL HECKLER
LAW FOR CONSCIOUS LEADERSHIP COURTNEY WHITE
920 N CLOVER DR CLEAN ENERGY OPPORTUNITIES
BOISE ID 83703 3778 PLANTATION RIVER DR
E-MAIL:kelsey kelseyjae.com STE 102
BOISE ID 83703
E-MAIL:
[e-mail]
[e-mail]
ERIC L OLSEN LANCE KAUFMAN PhD
ECHO HAWK &OLSEN PLLC 2623 NW BLUEBELL PLACE
PO BOX 6119 CORVALLIS OR 97330
POCATELLO ID 83205 E-MAIL:lance aegisinsight.com
E-MAIL:[e-mail]
PETER J RICHARDSON DR DON READING
RICHARDSON ADAMS PLLC 280 SILVERWOOD WAY
515 N 27TH ST EAGLE ID 83616
BOISE ID 83702 E-MAIL:[e-mail]
E-MAIL:[e-mail]
CERTIFICATE OF SERVICE
JIM SWIER AUSTIN RUESCHHOFF
MICRON TECHNOLOGY INC THORVALD A NELSON
8000 S FEDERAL WAY AUSTIN W JENSEN
BOISE ID 83707 HOLLAND &HART LLP
E-MAIL:[e-mail] 555 17TH ST STE 3200
DENVER CO 80202
E-MAIL:[e-mail]
[e-mail]
[e-mail]
[e-mail]
clmoser hollandhart.com
TOM ARKOOSH
ARKOOSH LAW OFFICES
PO BOX 2900
BOISE ID 83701
[e-mail]
erin.cecil arkoosh.com
ED JEWELL WIL GEHL
DARRELL EARLY ENERGY PROGRAM MANAGER
DEPUTY CITY ATTORNEY BOISE CITY DEPT OF PUBLIC WORKS
BOISE CITY ATTORNEY'S OFFICE PO BOX 500
PO BOX 500 BOISE ID 82701-0500
BOISE ID 83701-0500 E-MAIL:[e-mail]
E-MAIL:[e-mail]
ejewell citvofboise.org
dearlv citvofboise.org
MATTHEW NYKIEL BRAD HEUSINKVELD
ID CONSERVATION LEAGUE ID CONSERVATION LEAGUE
710 N 6TH ST 710 N 6TH ST
BOISE ID 83702 BOISE ID 83702
E-MAIL:mathew.nykiel amail.com E-MAIL:
bheusinkveld idahoconservation.org
PETER MEIER DWIGHT ETHERIDGE
US DEPT OF ENERGY EXETER ASSOCIATES
1000 INDEPENDENCE AVE SW 5565 STERRETT PLACE
WASHINGTON DC 20585 STE 310
E-MAIL:[e-mail] COLUMBIA MD 21044
E-MAIL:detheridge exeterassociates.com
CERTIFICATE OF SERVICE
F.DIEGO RIVAS BENJAMIN J OTTONWENERGYCOALITION1407WCOTTONWOODCT
1101 8TH AVE BOISE ID 83702HELENAMT59601E-MAIL:[e-mail]-MAIL:[e-mail]
NORMAN M SEMANKO JUSTINA A CAVIGLIAPARSONSBEHLE&LATIMER PARSONS BEHLE &LATIMER800WMAINSTSTE130050WLIBERTYSTSTE750BOISEID83702RENONV89502E-MAIL:[e-mail] E-MAIL:[e-mail]
STEVE W CHRISS
DIR ENERGY SERVICES
WALMART INC
2608 SOUTHEAST J ST
BENTONVILLE AR 72716
E-MAIL:[e-mail]
Ida Elmasian
CERTIFICATE OF SERVICE