20230511Comments_1.pdf

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Peter Richardson, ISB # 3195
RICHARDSON ADAMS, PLLC
5 15 N. 27th Street
Boise, Idaho 83702
(208) e38-7e}r
peter@richardsonadam s. com
Industrial Customers of Idaho Power
BEFORE THE IDAHO
PUBLIC UTILITIE,S COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
IMPLEMENT POWER COST
ADJUSTMENT ("PCA") RATES FOR
E,LECTRIC SERVICE FROM JLINE I,
2023, THROUGH MAY 31,2024.
Case No.: IPC-E-23-12
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
Pursuant to Notice of the Idaho Public ljtilities Commission
("Commission") issued on April 27,2023, the Industrial Customers of Idaho
Power ("ICIP") by and through their attorney of record, Peter J. Richardson, herby
provides the following Comments.
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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RECEIVED
2023 May 11, 2:50PM
IDAHO PUBLIC
UTILITIES COMMISSION
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INTRODUCTION:
A PROPOSED RATB II\CREASE OF
UNPRECEDENTED MAGI\ITUED
Idaho Power Company ("Idaho Power" or the "Company") proposes a 2023-
2024 Power Cost Adjustment ("PCA") rate of 2.7286 cents per kWh, which is
1.3391 cents per kWh higher than the current PCA for the year ending May 3 1,
2023. This represents an increase in billed revenue for the Company in excess of
two hundred million dollars or an overall increase of 14.68 percent! In the thirty-
plus year history of the PCA only two years were higher. Indeed, not counting the
anomalous two years following the West Coast energy crisis of 2001 and 2002,
this yçar's PCA is the hiehest in the Company's history The following graph
shows the annual PCA for each year since its inception in 1992:
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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Again, discounting the 9th and 10th PCA years, this is, from a ratepayer perspecti
the worst PCA by far. Magnifuing and exacerbating the negative impact, from the
ICIP's perspective, is that high load factor customers, (customers who impose
relatively fewer peak demand-related costs on the Company) are
hurt by the PCA. That is because changes in the PCA rate are recovered on a
cents-per-kwh basis. This cents-per-kWh recovery method results in good load
factor customers experiencing relatively higher rate increases. Thus, if approved
as filed, this year's PCA will punish the industrial and special contract customers
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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with a proposed twenty-plus percentage rate increase while poor load factor
customers are rewarded with lower-than-average percentage increases of less than
the overall average of fourteen percent
For the reasons stated below, the ICIP urges the Commission to, for the very
first time, adopt significant PCA-related rate mitigation measures in response to
this unprecedented and extraordinarily high PCA rate increase request by Idaho
Power
THE PCA HAS SACRAFICED RATB STABILITY
IN ORDER TO EXCESSIVELY RBWARD THE COMPANY WITH
EARNINGS STABILITY
Early on, this Commission recognizedthat rate stability and earnings
stability are mutually exclusive concepts when it comes to designing a just and
reasonable power cost adjust mechanism. The inherent conflict between rate
stability and earnings stability was elegantly articulated by this Commission in its
initial order adopting Idaho Power's PCA:
fM]any of the parties expressed concern about the frequent and significant
rate changes that would occur under the Company's proposed PCA, and
these parties proposed various rate stability mechanisms. Concerns about
rate stability are legitimate. The dilemma, though, for the Commission is
that the goals of earnings stabilityþr the Company and rate stabilityþr the
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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customers are in direct conflict with each other. To the extent we promote
one goal, we necessarily impinge on the other.l
In the thirty-year history of the PCA the Commission has never adopted an overall
rate mitigation measure.2 Exclusively and consistently promoling only earnings
stability for Idaho Power "is in direct conflict" with rate stability for its customers.
The pendulum has reached its zenith in favor of Earnings Stability for Idaho
Power's shareholders. It is beyond fair, just and reasonable for this Commission
to respond to the needs of the Company's customers for rate stability.
In consistently rejecting customer requested rate mitigation proposals in the
past, the Commission has taken the approach that it must somehow save the
customers from their requests that recovery deferral mechanisms be implemented.
For example, in 2009 the Commission declared that "it was best for customers and
the company to authorize [PCA] recovery in a single year." 3 Naturally, it is
always better (for the Company) to get all of its money in a single year. But the
I Case No. IPC-E-92-25; Order No. 24806 at pp.22 - 23
2 In the 2002-2003 PCA order the Commission made implemented a small rate deferral for the irrigation
and the small commercial classes, but declined to do so for any other class of customer. See Case IPC-E-02-2; lpC-
E-02-3; Order No. 29026 at pp/ l7 - 18.
3 Case No. IPC-E-O9- I l; Order No. 30828 at p. 10.
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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Commission has never identified why it is "best" for the customers to pay all of
their future obligations in a single year. The Commission does generically express
sympathetic concem for customers that a deferral may result in 'pancaked' rate
increases. However, not quantified nor objectively supported, this concern is
thoroughly rebutted by the fact that it is Idaho Power's customers (who are
entities) who are making the request for deferral. The prior Commission decisions
rejecting deferral requests are not based on an objective (indeed any) record that it
is, in fact, objectively or quantifiably "best" for the Power Company's customers
to pay the full PCA balance in a single year.
Of course, it is always true that the utility is better off if it receives its PCA
balance in a single year. The Commission has also consistently recognizedthat
fact in its decisions rejecting deferral recovery of excessive PCA balances. For
example, in the order quoted above, the Commission was blunt in observing that
"[F]ull recovery in a singe year 'assures the financial community that the
will be allowed to recover its reasonably incurred power supply costs. [internal
citation omitted]"'4 Thus the "inherent conflict" between earnings stability and
4 Id.
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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rate stability has been consistently decided by the Commission in favor of the
"financial community" and earnings stability. The ICIP therefore respectfully
requests that the Commission move the pendulum, for the fîrst time, a bit toward
the rate stability side of the continuum
ICIP'S PROPOSAL
With visions of Lucy pulling the football away from Charlie Brown at the
last minute - once againthe ICIP hereby requests the Commission adopt a two- or
three-year deferral of recovery of this year's unprecedentedly high PCA balance
The ICIP is fully aware that Idaho Power has a general rate case waiting in
the wings. It is also fully aware that the annual PCA often results in a rate
increase. The ICIP makes this recommendation with the full knowledge of
pending potential rate increases (general rate case and next year's PCA) coming on
top of a deferral of this year's PCA. Nevertheless, the ICIP avers that its members
will be better off economically and also from a budget/planning perspective, if this
year's 20%PCA rate increase is mitigated by mandating its balance be recovered
over three years with an equal annual percentage increase or even over two years
with an equal annual percentage increase.
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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WHEREFORE' the Industrial Customers of Idaho Power respectfully
request the Commission issue its order approving recovery of Idaho Power's PCA
balance, as discussed above, over a three or two year period.
Re submitted, this l lth day of May 2023.
J
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 11th day of May 2023,I served a true and
correct copy of the Comments of the Industrial Customers of Idaho Power in
Docket No. IPC-E-23-12 upon the following by electronic mail only.
Idaho Power Company
Megan Goicoechea All
COMMENTS OF THE INDUSTRIAL
CUSTOMERS OF IDAHO POWER
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en msoicoecheaal .com
Lisa Nordstrom com
Matthew Larkin mlarkin(Ð,idahopower. com
Timothy Tatum ttatum@idahopower. com
Jessi Brady j [e-mail]
dockets@idahopower. com
Idaho Public Utilities Commission:
Jan Noriuki, Secretary j [e-mail]
secretarvlEouc.idaho gov
J chardson