19900912Response.pdf

SNAKE RIVER ../¿ 7.L3
IDAHgCE~f?iWER COMPANY
lLED 0 BOX 70 . BOISE, IDAHO 83707
HYDRO POWER
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lES COMMISS¡Orl September 12, 19904:~
Mrs. Myrna J. Walters
Secretary
Idaho Public Utilties Commission
Statehouse
Boise, Idaho 83720
RE: Case No. IPC.E.90.8
Response of Idaho Power Company
Dear Mrs. Walters:
Please find enclosed for filing an original and seven (7) copies of Idaho
Power Company's Response to Staff and Parties in the above entitled matter.
If you have any questions, please feel free to call me.
Sincerely,~
Larry D. Ripley
Attorney
LDR:mka
Enclosures
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LARRY D. RI PLEY
c/o Idaho Power Company
1220 West Idaho Street
P.O. Box 70
Boi se, Idaho 83707
[phone]
STEVEN L. HERNDON
IDAHO POWER COMPANY
1220 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
[phone]
RECEIVED 00
LED n
~W SEP 12 Pí~ 3 10
PU8UC
¡linES COMMISSiON
Attorneys for Idaho Power Company
FAX [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE RATE BASING )
OF THE MILNER HYDROELECTRIC )
PROJECT OR IN THE ALTERNATIVE )
A DETERMINATION OF EXEMPT STATUS )
FOR THE MILNER HYDROELECTRIC )PROJECT )
)
CASE NO. IPC-E-90-8
RESPONSE OF IDAHO POWER
COMPANY TO COMMENTS OF
STAFF AND PARTIES IN THE
MILNER PROCEEDING
At the prehearing conference held on August 22, 1990, it was agreed
that the Commission Staff (Staff) and interested Parties (Parties) would be
permitted to file statements of position concerning Idaho Power's Application in
this proceeding. The Commission Staff (Staff), Industrial Customers of Idaho
Power (ICIP), Afton Energy, Inc. (Afton), and Idaho Consumer Affairs, Inc. (ICA),
have fi 1 ed such statements.
The statements of Staff, ICIP, and Afton all raise legal issues which
must be addressed by the Commi ss ion if the Commi ss ion determi nes that it wi 11 not
permit the ratebasing of the Milner Hydroelectric Project upon completion of that
project.It is the pos it i on of Idaho Power Company (Idaho Power) that the
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issuance of a cert i fi cate of pub 1 i c conveni ence and necess i ty for a generat ion
fac i 1 i ty is a determi nat i on by the Commi ss i on that the fac i 1 i ty, upon
construction, will be included in the ratebase of the utility when determining
the revenue requi rement of that utili ty. Under Idaho 1 aw if a utility has
reasonably and prudently invested funds in a facility which is dedicated to the
public use, that investment must be included in the utility's ratebase for
purposes of determi ni ng the uti 1 i ty' s revenue requi rement. The issuance of a
cert ifi cate of pub 1 i c conveni ence and necess i ty is a determi nat i on that the
facil ity should be constructed and is dedicated to the public use. If a
Cert i fi cate of Exemption is issued, the investment in Mil ner will not be
recognized for revenue requirement purposes by the Commission. Since the
faci 1 i ty wi 11 not be recogni zed for rate maki ng purposes in the State of Idaho
it should be exempt from the jurisdiction of the Commission insofar as the sale
of power from that facil ity is concerned. As counsel for Idaho Power pointed out
at the prehearing conference, the difficulty with hydro projects is that there
are two jurisdictions which claim authority. The Federal Energy Regulatory
Commission (FERC) determines if a hydro facil ity can be constructed on the
navigable waters of the United States and determines many of the construction
requirements of the project. The State Regulatory Commission, in this instance,
the Idaho Commission, also has jurisdiction over the facility as far as the
issuance of a state certificate of publ ic convenience and necessity is concerned.
If the Idaho Commission determines that it will not issue a certificate of public
convenience and necessity, Idaho Power has proposed that the facility be declared
exempt from state regulation for a period of time in order to meet the
requirements of the FERC as well as the Commission. This period of exemption
must be for a reasonable period of time (20 years) to permit Idaho Power to enter
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into along term sale of the power from the Mi 1 ner fac i 1 i ty .
If the Commission determines that Idaho Power should be issued a
cert i fi cate of pub 1 i c conven i ence and necess i ty and therefore, Idaho Power's
reasonable investment in the Milner facility should be ratebased; it is the
position of Idaho Power that the amount to be included in ratebase, upon
comp 1 et i on of the construction of Mi 1 ner, shoul d be the plant costs reasonably
incurred in constructing Milner 1 imited only by the cap on ratebase that Idaho
Power is willing to voluntarily impose.
The amount of investment included in a utility's ratebase are the
costs reasonably incurred by the utility. It is not appropriate to utilize some
type of avoi ded cost cal cul at i on to determi ne ratebase investment.
The Company does agree that the actual amount of investment to be
included in ratebase can only be determined after construction of Milner is
comp 1 eted. I f the amount, however, is below the cap proposed by Idaho Power and
has been reasonably incurred, it is the pos i t i on of Idaho Power that th is amount
must be recogni zed in Idaho Power's ratebase for revenue requi rement purposes.
The ICIP is perhaps confused as to the effect of Idaho Power's
Application on the rates to be charged Idaho Power's customers. The "ratebasing"
of a generat ion fac i 1 i ty does not change the rates charged by Idaho Power.
Admittedly, the inclusion of a generation facility will increase a utility's
ratebase but it may not change the revenue requ i rement of that ut i 1 i ty . The
revenue requirement of the util ity can only be determined in a proceeding where
the utility's rates are subject to revision.
CONCLUSION & RECOMMENDATION
Idaho Power, in responding to the statements of Staff and the
Parties, recognizes that all parties will be given additional time to fully brief
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the issues that have been raised before the Commission makes a final decision.
Concurrently with the evidentiary proceeding that is to be held in
regard to the Company's Application for the Milner Hydroelectric Project, the
Commi ss i on shoul d set a bri efi ng schedul e on the 1 ega 1 issues that have been
ra i sed by the Staff and Parties.
If Staff and Parties desire to contend that the Commission's Avoided
Cost Determinations for Idaho Power can be utilized to calculate Idaho Power's
investment for ratebase purposes, they should be required to file specific
proposa 1 s as to how that cal cul at ion woul d be made by a date to be set by the
Commi ss ion. Idaho Power woul d then be able to respond to such a content ion.
Dated t Boise, Idaho
s arr . Ri 1 e 'IAtow~
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CERTIFICATE OF SeRVICE
I HEREBY CERTIFY that I have this 12th day of September, 1990,
served the foregoi ng RESPONSE OF IDAHO POWER COMPANY TO COMMENTS OF STAFF AND
PARTIES, to all parties of record by hand delivering a copy thereof, to the
following:
Afton Energy, Inc.
c/o Owen H. Orndorff
Orndorff & Peterson
1087 West River Street - Ste. 230
Boi se, Idaho 83707-0027
R. Scott Pasl ey
Ass i stant General Counsel
J. R. Simplot Company
P.O. Box 27
Boise, Idaho 83707-0027
David H. Hawk, Director
Energy Natural Resources
J. R. Simplot Company
P.O. Box 27
Boise, Idaho 83707-0027
R. Michael Southcombe, Esq.
CLEMONS, COSHO & HUMPHREY
815 West Washington
Boi se, Idaho 83702-5590
Peter Ri chardson
DAVIS, WRIGHT, TREMAINE
350 North Ni nth Street
Suite 400
Boi se, Idaho 83702
Michael S. Gilmore (2)
Brad M. Purdy
Idaho Publ ic Util ities Comission
472 West Washi ngton
Boi se, Idaho 83720
and by causing a copy thereof to be del ivered by Federal Express to:
James N. Roethe, Esq.
PILLSBURY, MADISON, SUTRO
225 Bush Street
San Francisco, CA 94140
Grant E. Tanner
DAVIS, WRIGHT, TREMAINE
2300 First Interstate Bank Tower
1300 SW Fi fth Avenue - Ste. 2300
Portl and, Oregon 97201
and due to the fact Mr. Mi 1 es had another commi tment I have caused the copy to
be mailed to Mr. Miles at the following address:
Harold C. Miles, Chairman
Idaho Consumer Affairs, Inc.
316 15th Avenue South
Nampa, Idaho 83651
By~M¿
Attorney for Idaho Power Cómpany