20000113Comment.doc

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE 1998 COMPLIANCE FILING OF IDAHO POWER COMPANY AS REQUIRED BY ORDER NO. 26216 IN CASE NO. IPC-E-95-11. )
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CASE NO. IPC-E-99-2

COMMENTS OF THE COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Weldon B. Stutzman, Deputy Attorney General, in response to Order
No. 28079, the Notice of Filing and Notice of Modified Procedure in Case No. IPC-E-99-2 issued
on June 25, 1999, submits the following comments.
Idaho Power Company (Company) filed the 1998 Earnings Compliance Report on
April 7, 1999 reflecting an actual return on common equity of 12.73% for the Idaho jurisdiction.
The customer share of the earnings amounted to $6,372,411 before previously authorized deductions are removed. The Commission Staff conducted a limited audit to verify the actual earnings and identified one error in the adjusted common equity at year end. The Company has reflected the corrected amounts in the supplement to its 1998 Earnings Compliance Filing filed on June 16, 1999. The corrected 1998 sharing amount is $6,448,092 based on a return of 12.75%.
Included as deductions to the 1997 and 1998 revenue sharing amounts are items specifically approved in prior orders. These item amounts and order numbers are shown on Attachment 2 to the Company’s supplemental filing. Staff has verified the expenditure amounts and interest calculations. The items held in reserve will be verified in subsequent filing(s) the Company will make with the Commission. These reserve items include: the 1998 NEEA payment on line 8, the 1999 NEEA payment estimate on line 12 and the 1999 Ag Choices expenditures on line 13.
The Company’s supplemental filing proposes that the remaining revenue sharing funds for 1997 and 1998 be returned to ratepayers during the month of July 1999. The amount that the Company is proposing to return after removing previously authorized amounts is $3,281,878 ($3,320,173, less intervenor funding in the amount of $38,292 as shown on Attachments 2 and 3 to the Company’s filing).
The Company proposes to spread the revenue sharing refund to customer classes based on each class's actual energy consumption in 1998. Special Contract customers and Schedule 19 customers would receive a lump sum credit on their July bills. Customers in all other customer classes would receive the refund on a cents-per-kWh basis on their July bills. The refund rate for these schedules would be determined by dividing the refund amount by that schedule’s July 1998 normalized usage.
The Commission Staff has three concerns with the Company’s proposal. First, the 14-day comment period allowed by the Commission, which does not end until July 9, 1999, makes it impossible to implement rates on July 1. Moving the refund month to August creates another problem. By then many of the irrigators who grow grain are through irrigating for the season and would not receive any credit intended to be passed back to them based on August energy consumption. Staff’s second concern is that it believes that no single month’s usage pattern is as appropriate as a one-year period for returning revenue sharing amounts accumulated over a one-year or longer period. Staff’s third concern is that the proposed rate design is not consistent with Commission Order No. 26216 from Case No. IPC-E-95-11 which established revenue sharing. The Commissions Order as it relates to rate design reads as follows:

In the event the Company’s actual earnings for a preceding year
exceed an 11.75% return on year end common equity, the Company
shall refund 50% of the excess commencing on May 15th of each year,
in conjunction with its PCA rate adjustment. Any such refund shall
be made on a uniform percentage basis to each customer class.
Furthermore, with the exception of FMC Corporation, refunds shall
be allocated within each rate schedule that has a separate demand and
energy charge, solely on the energy component. The parties have
agreed that FMC may, in its discretion, elect to have the refund
allocated either to demand or energy or both and shall notify the
Company accordingly. (Page 4)

The Company’s proposal does not allocate the revenue sharing amount to customer classes on a uniform percentage of revenue requirement basis but instead allocates the revenue sharing amount to customer classes on an energy basis. It is Staff’s position that class allocation on a uniform percentage basis is the more appropriate way to do this allocation, and is in fact required by Order No. 26216.
For the reasons previously stated, Staff proposes that the revenue sharing amount, less the intervenor funding total, be deferred with interest and passed back to customers over a one-year period to coincide with the Company’s next PCA rate adjustment. Staff believes that this meets the requirements of the Company’s “Alternate Recommendation” found on page 4 of its filing.

STAFF RECOMMENDATION
Staff recommends that the revenue sharing balance, less intervenor funding, $3,281,881.00, be deferred with interest until May 16, 2000, and then be refunded to ratepayers over the one-year period that coincides with the PCA rate adjustment in a manner consistent with Commission Order No. 26216.

Respectfully submitted this day of July 1999.

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Weldon D. Stutzman
Deputy Attorney General

Technical Staff: Terri Carlock
Keith Hessing

WS:TC:KH:gdk:I:word/umisc/comments/ipce992.wst

STAFF COMMENTS 1 JULY 6, 1999