HomeMy WebLinkAbout2000915Decision Memo.docDECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
LOU ANN WESTERFIELD
BILL EASTLAKE
RANDY LOBB
TONYA CLARK
DON HOWELL
DAVE SCHUNKE
TERRI CARLOCK
WORKING FILE
FROM: WELDON STUTZMAN
DATE: SEPTEMBER 15, 2000
RE: CASE NO. PAC-E-00-4
APPLICATION OF PACIFICORP FOR AN ACCOUNTING ORDER REGARDING ENHANCED EARLY RETIREMENT 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 states that beginning in June 2000, the Company will offer qualifying employees an early retirement option, and estimates that 750 employees will exercise their election to retire. PacifiCorp estimates the total program retirement costs will be $115 million and the annual benefits by year 2005 will be approximately $62 million. PacifiCorp proposed to capitalize the costs and to amortize the costs on a straight-line basis over a five-year period, commencing from the date of a Commission Order. PacifiCorp also plans to implement a severance program, and proposed to file additional information regarding the severance program, including the projected number of employees, the estimated severance costs and proposed accounting treatment, once the retirement plan reductions were determined by the Company. PacifiCorp also proposed to capitalize the costs of the severance program and amortize those costs on a straight-line basis over a five-year period.
On July 21, 2000, the Commission issued a Notice of Application and a Notice of Modified Procedure. Written comments were filed only by the Commission Staff. Staff’s written comments support PacifiCorp’s request for an accounting order authorizing it to capitalize the costs of the retirement program and a severance program and to amortize those costs over a five-year period. Staff also supports PacifiCorp’s proposal to review the benefits of the ratemaking treatment for these accounts during the next rate case. Staff also recommended that, since the review will be made in the next rate case, the unamortized deferral should not accrue interest prior to the rate case review.
Staff recommends that the Application of PacifiCorp for an accounting order be approved. However, Staff also recommends that the order specifically state that the unamortized deferral should not accrue interest prior to the next rate case review for the affected accounts.
Commission Decision
Should the Application of PacifiCorp for an accounting order regarding enhanced early retirement and severance programs be approved, including stating that any unamortized deferral should not accrue interest prior to a rate case review?
Weldon B. Stutzman
Bls/M:pace004_ws
DECISION MEMORANDUM 1