pace004.wstc.doc

WELDON 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 APPLICATION OF PACIFICORP FOR AN ACCOUNTING ORDER REGARDING ENHANCED EARLY RETIREMENT PROGRAM.
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CASE NO. PAC-E-00-4

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. 28451 the Notice of Application and Notice of Modified Procedure in Case No. PAC-E-00-4, issued on
July 21, 2000, submits the following comments.

SYNOPSIS OF PACIFICORP’S APPLICATION
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.
PacifiCorp will offer qualifying employees an early retirement option beginning in June 2000. 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. PacifiCorp will set the retirement date, with that date being no later than December 31, 2002. The retirement program offers additional benefits to qualifying employees that 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 to 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.
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. PacifiCorp will demonstrate the benefits of the programs when it seeks rate recovery of the costs. PacifiCorp proposes to capitalize the costs of the retirement program and severance program in Account 182.3 Other Regulatory Assets and amortize these costs to Account 930.2 Miscellaneous General Expenses over the five-year period commencing from the date of the order. PacifiCorp also proposes to include the unamortized amounts in rate base, where it would earn a return at PacifiCorp’s authorized rate of return.

STAFF ANALYSIS AND RECOMMENDATIONS
Staff supports PacifiCorp’s request for an accounting order authorizing it to capitalize the costs of the retirement program and severance program in Account 182.3 Other Regulatory Assets and amortize these costs to Account 930.2 Miscellaneous General Expenses over the five-year period commencing from the date of the order. Staff recommends that the subaccount detail be such that the costs for each program can be easily identified and audited.
Staff also supports conducting the review of benefits and the ratemaking treatment during the next rate case. Since the review will be made in the next rate case, the unamortized deferral should not accrue interest prior to the rate case review. The ratemaking determination to rate base the Idaho unamortized amounts should be made when the other ratemaking determinations are made.
There were 739 PacifiCorp employees, 82% of the 903 eligible that exercised their election to retire early. PacifiCorp has provided an updated cost estimate of $95.6 million to implement this early retirement program and $74.2 million for the severance program.

DATED at Boise, Idaho, this day of August 2000.

____________________________
Weldon Stutzman
Deputy Attorney General
Technical Staff: Terri Carlock

WH:TC:gdk:i:umisc/comments/pace004.wstc
STAFF COMMENTS 2 AUGUST 11, 2000