HomeMy WebLinkAbout20010402Decision Memo.docDECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
TONYA CLARK
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
TERRI CARLOCK
KATHY STOCKTON
BEV BARKER
GENE FADNESS
WORKING FILE
FROM: JOHN R. HAMMOND
DATE: APRIL 2, 2001
RE: IN THE MATTER OF THE APPLICATION OF PACIFICORP FOR A DEFERRED ACCOUNTING ORDER, CASE NO. PAC-E-01-2.
On February 8, 2001, PacifiCorp dba Utah Power & Light Company (“PacifiCorp”) filed its Application, pursuant to Idaho Code § 61-524, for a deferred accounting order. PacifiCorp requests Commission authorization for an accounting order so that it may defer the costs associated with its Trail Mountain Mine. Specifically, PacifiCorp seeks authorization to defer approximately $27.1 million, which reflects the Company's unrecovered investment in the Trail Mountain Mine. PacifiCorp expects production at this mine will cease by mid-March 2001.
The Commission issued Order No. 28657, the Notice of Application and Notice of Modified Procedure in Case No. PAC-E-01-2 on March 5, 2001. The Commission Staff was the only party to submit comments.
STAFF RECOMMENDATION
Consistent with the analysis contained in Staff’s Comments it recommends that the Company be allowed to defer the mine closure costs and unrecovered investment in the Trail Mountain Mine in separate subaccounts. However, in a future proceeding where the Company seeks to recover any deferred amounts the Commission Staff recommends conducting a prudency review to assess PacifiCorp’s decision to purchase the mine. Staff will investigate other possibilities and other options available to the Company at the time of the mine purchase to assess whether this was the least-cost option and the most beneficial for the Company and customers. PacifiCorp is asking to defer the remaining investment for recovery in a future rate proceeding. If the purchase of the mine is not found to be prudent or it is found that additional depreciation should have been reflected, Staff could argue that including the deferral balance in rate base or the amortization in rates would not be appropriate. The amortization would then be below the line. Staff also accepts the 5-year amortization as requested. Additionally, Staff recommends that the amortization begin immediately when the deferral is established.
COMMISSION DECISION:
Does the Commission wish to approve PacifiCorp’s Application for a Deferred Accounting Order, subject to a prudency review when recovery of any amount is sought by the Company in a future proceeding?
Does the Commission wish to approve a 5-year amortization period for this asset as PacifiCorp requests and if so should the amortization period begin immediately?
John R. Hammond
Staff: Terri Carlock
Kathy Stockton
M:pace012_jh2
DECISION MEMORANDUM 2