HomeMy WebLinkAbout28630.docBEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
PACIFICORP dba UTAH POWER & LIGHT
COMPANY FOR A DEFERRED ACCOUNTING
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CASE NO. PAC-E-00-5
ORDER NO. 28630
On November 1, 2000, PacifiCorp filed an Application for a deferred accounting order. On December 7, 2000, Monsanto Company and the Idaho Irrigation Pumpers Association, Inc., (“Irrigators”) filed petitions to intervene that the Commission granted. Order Nos. 28597 and 28598. The Commission issued Notice of Application and Notice of Modified Procedure on December 20, 2000, Order No. 28593, and an Amended Notice of Comment/Protest Deadline was filed requiring interested parties to file comments/protests no later than January 11, 2001, and reply comments no later than seven (7) days after that. On January 11, 2001, the Irrigators filed a Motion to Dismiss and Comments, and the Commission Staff and Monsanto also filed comments. PacifiCorp filed its response to Intervenors’ and Staff’s comments on January 18 and 19, 2001, respectively. Finally, the Irrigators filed a Reply to PacifiCorp’s Reply Comments on January 29, 2001.
SUMMARY OF DECISION
PacifiCorp’s Application
PacifiCorp’s Application seeks Commission authorization to defer excess net power costs starting on November 1, 2000 and continuing until the earlier of October 31, 2001 or until such date as new rates are implemented providing for their recovery. PacifiCorp seeks this authority because it has incurred extremely high wholesale purchased power costs since May 2000 that are substantially above the wholesale market prices upon which its net power costs in rates are based. The Company projects that between January 1, 2001 through December 31, 2001 its actual costs will exceed Idaho’s allocated share of costs by $8,000,000. Therefore, the Company feels that deferred accounting treatment is the appropriate, just and reasonable means of providing it an opportunity to seek recovery of extraordinary excess purchased power costs it may incur.
PacifiCorp proposes to calculate its deferred excess net power costs by using data from an Oregon rate case because there has not been a post-merger Utah Power/PacifiCorp rate case where its net power costs could be addressed. See In the Matter of the Revised Tariff Schedules Applicable to Electric Service Filed by PacifiCorp, Docket UE-111, (Oregon P.U.C.; filed November 5, 1999).
PacifiCorp also requests that it be allowed to accrue a carrying charge on the unamortized balance at a rate equal to the weighted average cost of capital most recently recommended by Commission Staff in its audit of PacifiCorp’s results of operations.
The Company states that it will initiate discussions with Staff to develop a mechanism by the end of March 2001 for the recovery of deferred amounts and when it will be employed. Accordingly, PacifiCorp is not requesting a determination of ratemaking treatment at this time and will seek such determination in a later case.
Finally, the Company requests that this Application be processed by Modified Procedure pursuant to the Commission’s Rules. IDAPA 31.01.01.201-.204.
Motion to Dismiss
The Intervenors argue that PacifiCorp’s Application should be dismissed because its approval would violate a condition set as part of the ScottishPower/PacifiCorp merger that was approved by the Commission. Case No. PAC-E-99-1, Order No. 28213. Specifically, that the Company would not seek a general rate increase effective prior to January 1, 2002. Order No. 28213 at 31.
Staff does not believe that Commission approval of the instant Application would violate the condition that the Company not seek a rate increase until January 1, 2002. Accordingly, Staff opposes the Intervenors’ motions to dismiss.
PacifiCorp’s reply argues that it only seeks deferral of excess power costs at this time and not a determination of ratemaking treatment. Therefore, no rate increase will result now if its Application is approved. Furthermore, the Company states it must seek approval of this Application as failure to obtain deferred accounting treatment may preclude it from recovering excess net power costs in the future. Citing In re Washington Water Power Co., Case. No. WWP-E-98-11, Order No. 28097, 1999 WL 667502 (I.P.U.C. 1999). Accordingly, PacifiCorp contends the general rate condition is not violated and asks that the Intervenors’ requests for dismissal be denied.
Authorization of a deferred accounting order in this case will only allow PacifiCorp to preserve for subsequent review the ratemaking treatment to be afforded any deferred costs and thus the opportunity to recover these costs. Accordingly, approval of PacifiCorp’s Application will not result in a rate increase at this time and thus does not violate the condition that it will not seek a general rate increase effective prior to January 1, 2002. See Case No. PAC-E-99-1, Order No. 28213 at 31. For this reason the Intervenors’ motions to dismiss are denied.
Modified Procedure
In the event this Application is not dismissed the Intervenors protest the use of Modified Procedure to process PacifiCorp’s Application. They contend that public interests require that the issues presented by this Application be resolved through a more formal process.
In addition, the Intervenors have raised numerous issues that they believe PacifiCorp should address prior to the Commission rendering a decision on its Application.
Staff believes that the use of Modified Procedure is still appropriate to process this case as the Application adequately states the legal and factual basis necessary for the issuance of a deferred accounting order.
In its reply comments, PacifiCorp contends that its Application adequately states the legal and factual basis for a deferred accounting order. PacifiCorp also reiterates that if its Application is granted the only affect will be to reserve for subsequent review the ratemaking treatment to be afforded deferred costs. For these reasons, PacifiCorp contends that the use of Modified Procedure to process this case is still appropriate.
PacifiCorp’s Application presents both the legal and factual basis necessary for a request for a deferred accounting order. Therefore, despite the concerns raised by the Intervenors the Commission finds that Modified Procedure is still the appropriate method by which to process this Application.
COMMISSION FINDING
After reviewing all comments in this matter the Commission finds that PacifiCorp’s Application should be granted, pursuant to Idaho Code § 61-524, to allow it to defer excess net power costs in Account 182.3 Other Regulatory Assets, commencing on November 1, 2000 and continuing until the earlier of October 31, 2001 or until a proceeding is filed by the Company to recover these costs. The Commission finds that the costs that will be tracked in the account authorized by this Order are for the most part outside the control of the Company. This accounting authorization will allow PacifiCorp the opportunity to request and litigate the recovery of these costs in the future. Without this authorization, there is a risk of negative actions on the part of the financial community. The subaccount detail of this account shall be such that the costs of each deferral program can be easily identified and audited.
PacifiCorp may use data from the Oregon rate case it cites to assist in calculating deferred costs. However, Commission authorization of the use of this data for deferral purposes is not approval of it as the best and only process by which to accomplish this task. The Company will have to demonstrate, in a subsequent proceeding for recovery of these costs, that this methodology provided the most reasonable tool by which to calculate the costs.
The Commission finds that interest should not accrue on the deferral balance. The reasonableness of accruing interest may be presented to the Commission for decision when the determination of ratemaking treatment for these amounts in a future case is made.
Because PacifiCorp does not have a Power Cost Adjustment (“PCA”) or an existing deferral to adjust for excess net power costs like Idaho Power or Avista Utilities, additional areas and potential regulatory impacts should be discussed when evaluating possible recovery mechanisms. These include but are not limited to consideration of cost sharing, prudence, potential offsets and review of impacts, if any, from existing differences in regulation between Idaho and Oregon, such as treatment of the Irrigation Interruptibility Credit and allocation methods. The Commission directs PacifiCorp, Staff and any other interested parties engage in preliminary discussions to develop a recovery mechanism to be used in a future case. To facilitate these discussions, the Company shall provide an initial packet of information that includes the following:
1) Schedules showing what the monthly deferral would have been historically for the year 2000.
2) Schedules showing the monthly deferral to date for 2001.
3) Schedules showing the 1998 Net Power Cost and Net System Load for Idaho normalized by month to determine the actual base rate per MWh for each month in 1998.
4) Schedules showing all long-term (i.e., one year or longer), wholesale sale or purchase contracts that have been entered into or have expired since 1998.
5) Schedules showing power purchases made and costs incurred to replace Centralia generation.
6) Schedules showing the total MWh sales for Idaho customer classes by month for the deferral period.
7) Schedules showing that the portion of the deferral allocated to Idaho for Monsanto or Nu West will not be collected from other Idaho Customers.
8) Schedule showing the location of records for audit. The Company must keep records that will allow Staff to audit all aspects of the cost incurred and methods used to allocate costs to Idaho. These records will allow Staff to audit affiliates that supply, sell, purchase or negotiate terms for any part of the power cost.
9) Documentation showing at least the following:
a) Actions taken by PacifiCorp to mitigate the impact of the “circumstances contributing to these high costs – the combination of high gas prices and significant growth in electricity demand, coupled with little new generation” (Application, page 4),
b) The prudence of the purchases compared to other options available,
c) Optimization of Company-owned resources for the benefit of retail customers, and
Any other supply/purchase information PacifiCorp believes is relevant.
In addition, the deferral period proposed is for a 12-month period. Any proposed recovery mechanism should reflect 12-month increments (i.e., 1 year, 2 years, 5 years) to limit the impacts of seasonal usage and supply that can occur over the course of a full year.
If a recovery mechanism is not approved, the Commission finds that a straight-line five-year amortization of the deferred amounts shall begin on January 1, 2003. This will limit the time period this deferral will remain on the Company’s books. The Commission also finds that PacifiCorp shall be required to file monthly deferral reports showing all calculations for the monthly deferral, the corresponding accounting entry, and the balances for the associated deferred accounts.
Although Commission approval of PacifiCorp’s Application for a deferred accounting order will allow the Company the opportunity to seek recovery of these costs, it does not guarantee future recovery of any deferred amounts. The Company must ask for recovery in a separate, future proceeding where the Commission will review the prudency of any deferred amounts to determine whether the Company is entitled to recover them from its customers.
O R D E R
IT IS HEREBY ORDERED that the Intervenors’ motions to dismiss are denied.
IT IS FURTHER ORDERED that this case shall still be processed by the use of Modified Procedure as prescribed by the Commission’s Rules. IDAPA 31.01.01.201-.204.
IT IS FURTHER ORDERED that PacifiCorp’s Application for a deferred accounting order is granted. Accordingly, the Company may defer excess net power costs resulting from price increases in the electric marketplace, commencing on November 1, 2000 and continuing until the earlier of October 31, 2001, or until a subsequent proceeding is filed which seeks recovery of these costs.
IT IS FURTHER ORDERED that no interest will accrue on the deferral balance. This issue may be presented to the Commission in a future case.
IT IS FURTHER ORDERED that PacifiCorp, Staff and all other interested parties shall engage in preliminary discussions to develop a recovery mechanism to be used in a future case. In these discussions the parties shall address the areas and regulatory impacts noted in the Staff’s recommendations above. Supra at 4-5.
IT IS FURTHER ORDERED that if a recovery mechanism has not yet been approved a straight-line five-year amortization of the deferred amounts will begin on January 1, 2003.
IT IS FURTHER ORDERED that PacifiCorp shall file monthly deferral reports showing all calculations for the monthly deferral, the corresponding accounting entries and the balances for the associated deferred accounts.
IT IS FURTHER ORDERED that this deferred accounting order allowing the Company to defer these costs does not constitute Commission approval to collect the costs from Idaho ratepayers. PacifiCorp will make this request in a subsequent filing. In conjunction with the discussions on proposed recovery mechanisms to be used in that subsequent filing, Staff will audit the Company records and perform a prudence review. In these discussions the parties shall address the matters set out in the Staff’s recommendations above.
THIS IS A FINAL ORDER. Any person interested in this Order or in interlocutory Orders previously issued in this case 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 or in interlocutory Orders previously issued in this case. 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
day of February 2001.
DENNIS S. HANSEN, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
PAUL KJELLANDER, COMMISSIONER
ATTEST:
Jean D. Jewell
Commission Secretary
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For example, the Intervenors allege that they have not had enough time to review PacifiCorp’s Application and that the Application itself does not adequately state the legal and factual basis necessary for the Commission to authorize a deferred accounting order.
Monsanto raises four additional issues. See Comments of Monsanto Company at 3-5. Irrigators raise 21 additional issues. See Protest and Comments of Irrigators at 3-5.
ORDER NO. 28630 1
Office of the Secretary
Service Date
February 12, 2001