19920214Final_Order_No_24172.pdf

Office of the SecretaryServiceDate
FE B 14 1992
BEFORE THE IDAHO FUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF IDAHO POWER COMPANY FOR )CASE NO.IPC-E-90-20
APPROVAL OF AN INTERCONNECTION )TARIFF FOR NON-UTILITY )ORDER NO.24172
GENERATION )
In Order No.24025,the Commission's final Order on Reconsideration
in Case No.IPC-E-90-20,Idaho Power (Idaho Power;IPCo;Company)was
directed to submit a revised Tariff Schedule 72 -Interconnections to Non-utility
Generation,reflecting the use of non level (escalating)vis-à-vis level O &M
charges.In its Order the Commission stated:
We therefore require Idaho Power to submit a revised
Schedule 72 tariff that includes escalating O&M rates
determined by the methodology proposed by Staff in this
case.Idaho Power may use the Consumer Price Index (CPI)
or may use some other indicator of actual inflation that isreasonablyapplicabletothetypeofequipmentbeing
considered.In either case,the Company should use theweightedaverageassetlifeoftheequipmentbeingconsidered,
as determined by its normal accounting practices,and shouldapplytheaverageinflationrateincurredoverthatperiodof
time as the escalation rate for contractual interconnect O&M
rates.
On January 22,1992,Idaho Power submitted a revised Tariff Schedule 72 for
approval and a request for clarification.The Companyrequests an effective date
of March 1,1992.
Based on its review of the Company's compliance filing,the filings of
record and its prior Orders in Case No.IPC-E-90-20,and related avoided cost
Orders in Case Nos.U-1500-170 and IPC-E-89-11,the Commission approves the
mathematical methodology used by Idaho Power to compute the escalating
O &M charge schedules.
The Commission notes that the Companyin its filing proposes to use a
cost of capital or discount rate of 12.09%.The approved cost of capital rate for
determining avoided costs in Case No.IPC-E-89-11,Order No.23357 was
11.45%.We find it reasonable to use consistent discount rates in determining
avoided costs and Schedule 72 rates.We therefore require the Company to use
11.45%as the appropriate discount rate for Schedule 72.
ORDER NO.24172 -1-
The Commission further notes that the Company in its filing proposes
to use an annual capital cost inflation or escalation rate of 5.13%.That rate was
the estimated escalation rate for Colstrip variable costs included in Order
No.23357.The escalation rate included in Staff testimony in this Case
(IPC-E-90-20)was 5.4%.Staffs proposedrate was based on the average rate of
escalation of the historic Consumer Price Index (CPI)over the estimated average
life of the equipment used to determine the level O &M rate.While Staff's
proposed rate is attractive,the Commission finds it more advantageousto use an
escalation rate previously established for determining avoided cost rates.Rather
than use of the 5.13%variable component escalation rate proposed by the
Company however,we find it more reasonable in this Case to require the use of
the 4.50%annual escalation rate for capital components also determined in
Order No.23357.
In consideration of the foregoing we direct the Company to resubmit
compliance tariff schedules using a discount rate of 11.45%and an annual cost
inflation rate of 4.50%.
As part of its Tariff Schedule 72 submittal,the Company includes the
following language for purpose of clarification as to how escalation O &M
charges will be prospectively applied to QF contracts where the contract term is
less than 35 years:
Where a Seller's interconnection will utilize interconnectionfacilitiesprovidedunderaprioragreement(s),the term of
which was shorter than 35 years,the operation and
maintenance charge for the Seller's interconnection will becomputedtoincludetheexpiredtermoftheprioragreement(s).
We agree with this interpretation and approve of the proposed Tariff language.
ORDER
In consideration of the foregoing and as more particularly described
above,IT IS HEREBY ORDERED that the Company resubmit compliance tariff
schedules in Case No.IPC-E-90-20 using a discount rate of 1L45%and an
annual cost inflation rate of 4.50%.With such changes we approve the submitted
complianceTariff Schedule 72 for the requestedeffective date,March 1,1992.
ORDER NO.24172
THIS IS A FINAL ORDER.Any person interested in this Order (or
in issues finally decided by this Order)may petition for reconsideration within
twenty-one (21)days of the service date of this Order with regard to any matter
decided in this Order.Within seven (7)days after any person has petitioned for
reconsideration,any other person may cross-petition for reconsideration.See
Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,
Idaho,this /3 i day of February 1992.
MARSHA H.SMITH,PRESIDEN'f
DEAN J.MILLER,COMMISSIONER
RÁLPH ÑELSON,COMMISSIONER
ATTEST:
MYRNA J.WALTERS,SECRET
SW:jr/O-1668
ORDER NO.24172 -3-