HomeMy WebLinkAbout2000714Decision Memo.docDECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
BILL EASTLAKE
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
DAVE SCHUNKE
RANDY LOBB
TERRI CARLOCK
WORKING FILE
FROM:
DATE:
JULY 14, 2000 RE: CASE NO. PAC-E-00-04; APPLICATION OF PACIFICORP FOR AN ACCOUNTING ORDER REGARDING ENHANCED EARLY RETIRE-MENT PROGRAM
On June 13, 2000, PacifiCorp filed an Application requesting an accounting order from the Commission to capitalize and amortize over a five-year period the cost of a voluntary enhanced early retirement program and employee severance program. The Application was filed pursuant to Idaho Code ( 61-524, which authorizes the Commission to prescribe the accounting to be used by public utilities subject to the Commission’s jurisdiction.
The Application states that beginning in June 2000, PacifiCorp will offer qualifying employees an early retirement option. PacifiCorp has determined that 900 employees will qualify for the retirement option and estimates for purposes of the Application that 750 employees will exercise their election to retire. The retirement program offers additional benefits to qualifying employees which result in increased retirement and other post retirement benefit expense and administration costs. PacifiCorp estimates that total program retirement costs will be $115 million and the annual benefits by year 2005 will be approximately $62 million. In order in match the benefit and costs of the retirement program, PacifiCorp proposes to capitalize the costs and to amortize these costs on a straight line basis over a five-year period, commencing from the date of the Commission’s Order.
The Application also states that PacifiCorp anticipates that additional work force reductions will be needed beyond those that will be achieved through the retirement program to reach an overall target of 1600 reductions. Thus PacifiCorp also plans to implement a severance program and will file additional information regarding these programs, including the projected number of employees, the estimated severance costs and proposed accounting treatment, once the retirement plan reductions have been determined. PacifiCorp also proposes to capitalize the costs of the severance program and amortize the costs on a straight line basis over a five-year period.
The Application states that the proposed accounting treatment is fair because charging all the retirement program or severance program costs in the period in which they are incurred would unfairly burden existing customers to the benefit of future customers. PacifiCorp does not request a determination of ratemaking treatment for the retirement program or severance program, and expects any ratemaking determination would be made in the Company’s next general rate case.
Staff recommends that PacifiCorp’s Application for an accounting order be processed by Modified Procedure.
Commission Decision
Should the Application of PacifiCorp for an accounting order regarding its enhanced early retirement and severance programs be processed by Modified Procedure?
vld/M:PAC-E-00-04_ws
DECISION MEMORANDUM 1