20010412Order No 28702.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF PACIFICORP DBA UTAH POWER & LIGHT COMPANY FOR APPROVAL OF ITS PROPOSED ELECTRIC SERVICE SCHEDULE NO. 72, “IRRIGATION CURTAILMENT PROGRAM RIDER.”
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CASE NO. PAC-E-01-4

ORDER NO. 28702
On February 23, 2001, PacifiCorp dba Utah Power and Light Company (hereinafter referred to as “PacifiCorp”) filed an Application seeking Commission authorization of its Electric Service Schedule No. 72, Irrigation Curtailment Program Rider (“Irrigation Buy-Back Program” or “Program”). Subsequently, the Company filed amendments to its Application on March 22 and April 3, 2001.
On March 14, 2001, the Commission ordered the processing of this case in an expedited manner under Modified Procedure and stated that it would accept written comments regarding PacifiCorp’s proposed Program. Order No. 28663 at 3-4. The Commission Staff, Idaho Irrigation Pumpers Association, Inc., Idaho Farm Bureau Federation and several PacifiCorp irrigation customers filed written comments with the Commission. Finally, the Commission suspended the proposed effective date for this Program until March 30, 2001, which was subsequently extended by the Commission at the hearing on March 28, 2001, until April 4, 2001.
PACIFICORP’S IRRIGATION BUY-BACK PROGRAM
PacifiCorp states that the purpose of its Program is to cost effectively reduce the total cost incurred for power purchased in the wholesale market during the 2001 irrigation season. Application at p.3, ¶ 4. The Company states that because of extreme prices in the wholesale power market, this Program has substantial value. The Company believes that successful implementation of this Program will reduce its excess purchase power costs that can be deferred based on the Commission’s Order No. 28630 in Case No. PAC-E-00-5. Id. The Company states that this reduction in its costs will reduce deferred amounts of purchased power costs the Company will seek to recover in a future case.
PacifiCorp’s Program provides qualifying irrigation customers the option of reducing their consumption of energy in return for payment from the Company. Application at 2. To be eligible to participate in the Program irrigation customers must have total pumping operations of no less than 16 horsepower and receive service under Electric Service Schedule No. 10. Application, Exhibit A at 1. PacifiCorp also asserts that eligible irrigation customers who are obligated for minimum energy usage related to line extension agreements or guarantees will be exempt from such contracts for the 2001 irrigation season so they may participate in the Program. Application, Exhibit A at 1.
PacifiCorp states that eligible irrigation customers who wish to participate in this Program must execute an “Irrigation Curtailment Program Customer Agreement” (“Agreement”) with PacifiCorp prior to May 1, 2001. Exhibit A at 2.
PacifiCorp will pay participating irrigation customers different rates depending on whether they have their irrigation pump service disconnected or not. Second Amendment to Application at 2. PacifiCorp will pay participating irrigation customers 13.5¢ per kWh if they do not wish to disconnect their pumping service. Id. The Company will pay participating irrigation customers 15¢ per kWh if they have their pumping service disconnected. Id.
Based on this fixed price, PacifiCorp proposes to make monthly payments to irrigation customers who provide reductions in their amount of energy consumption through the Program. PacifiCorp asserts that these payments will be adjusted to reflect any outstanding customer balances or arrearages owed to the Company for previous billing obligations. Application, Exhibit A at 1. Finally, the Company will not bill participating irrigation customers for the Schedule 10 Customer Service Charge if they disconnect their pumping service during the 2001 irrigation season.
PacifiCorp proposes to compute the amount of energy saved by those choosing not to completely disconnect their pumping service in the following manner:
The Company will determine the five-year historical average consumption for the service location. The Customer will agree to a curtailment level, which will also establish (by reference to the five-year historical usage) the maximum level of energy consumption at the location for the month of June, and each remaining month of the program if that level is not adjusted[.]

Second Amendment to Application at 2.
If a non-disconnecting, participating irrigation customer consumes 5% more power than the maximum agreed upon with the Company they will be charged 27¢ per kWh for the excess kWh consumed. Second Amendment to Application at 2-3. However, this penalty will not apply for the month of June. During this month PacifiCorp will charge a participating customer for this excess usage at the rates contained in Schedule 10 up to the dollar amount that the Company would owe for the actual curtailment. Id. at 3. Further, the maximum consumption for that location will be reset at a level that will remain in effect for the reminder of the Program. Id. at 3.
For those participating customers who choose to disconnect their pumping service, the Company will calculate their payment based on each customer’s average monthly energy usage as recorded on the applicable meter(s) for qualifying load, during the previous five years from June 1 through September 15. Application, Exhibit A at 1. Any energy used in violation of the agreements which these irrigators enter into will also be assessed a penalty of 27¢ per kWh. Application at 4; Second Amendment to Application.
Under either scenario the Company asserts that for customers with less than five years of historical usage, the average for the available years of historical usage, and a comparison to the average usage for a similar pumping operation, will be used. Id. at 1.
PacifiCorp states that participation in this Program won’t preclude an irrigation customer from using other energy sources for pumping such as diesel generators, propane or diesel engines to directly drive their pumping systems. Id.
PacifiCorp estimates that it has at least 2000 Schedule 10 customers and that it hopes that 20%-25% of them will participate in the Program.
PacifiCorp proposes that its Program only will be operational during the 2001 irrigation season and will expire on September 15, 2001. Id.
COMMENTS
Commission Staff
Staff recommended approval of the Company’s Tariff Schedule 72 so that it may implement its Irrigation Buy-Back Program for 2001 only. Staff also made the following additional recommendations.
1. Fixed Price Purchase Price
Staff noted that the proposed Irrigation Buy-Back Program is one of several options PacifiCorp has to obtain supply or reduced load. The actual cost, timing, and quantity of energy that can be obtained from all the options available to PacifiCorp is not fully known at this time. Absent more specific information regarding the characteristics and mix of resource options planned and implemented by the Company, Staff was unable to determine the most appropriate price to pay irrigators for energy purchased under this Program. However, Staff believes the Company’s analysis appears to reasonably address the relevant factors for determining an offering price. The price proposed by the Company is less than the forward market prices and appears to be within a reasonable range when compared to other resource options.
Schedule 10 (A-Firm)
The Company’s proposal does not include a different fixed price for the few irrigation customers taking service under this Schedule. Even though a higher price may be justified to firm (Schedule 10A) customers, for administrative ease Staff was not opposed to the Company’s proposal to pay all Schedule 10 customers the same rate.
2. Controls to Guarantee Energy Savings and Calculation of Energy Saved
Originally, Staff had concerns about completely removing ancillary systems should the irrigator provide an alternative source for the pump (i.e., direct drive). However, because the Company’s Program as amended would offer irrigators the choice whether to disconnect or not Staff’s concerns have been mitigated.
In order to assure the load reductions necessary the Company will monitor participating customers farming operations to check for compliance with Program requirements. Furthermore, Schedule No. 72 will provide penalties in the amount of 27¢ per kWh used if the irrigator is found in violation of the agreement. Staff believes that these controls will help to promote the success of this Program.
As stated previously, PacifiCorp proposes to compute the amount of energy saved by comparing an irrigation customer’s average monthly energy usage during this season to usage during the previous five years from June 1 through September 15. If a customer does not have five years of prior billing history, the Company will use the billing history that is available to compute savings. Staff believes through this process that the Company can verify accurately energy savings each irrigation customer participating in this Program provides.
3. Payments to Participating Irrigation Customers
PacifiCorp will make monthly payments to irrigation customers who participate in this Program. Staff believes this method of payment to participants is reasonable.
4. Accounting Treatment and Cost and Recovery
Staff recommended that the Company be allowed to allocate costs and benefits of the program to its power supply expense in Account 555. Staff also recommended that subaccounts be established to specifically track Program costs that are subject to deferral and subsequent rate recovery. Staff further recommended that the Company provide a summary program performance report following the completion of the Program in order to track actual program performance in a timely manner.
Irrigation Pumpers Association, Inc.
The Irrigators state that it supports this Program but that the original offered price of 8.5¢ per kWh was to low for a variety of reasons. See Irrigator’s Comments. The Irrigators recommended that the Commission approve the Program with a price of 15¢ per kWh as it did in Idaho Power’s Irrigation Buy-Back Program. See Case No. IPC-E-01-3. The Irrigators also raised concerns regarding the requirement that irrigation customers would have to disconnect their pumping service to participate in the Program. After its discussions with the Company that produced the Second Amendment to the Application the Irrigators believe that its concerns have been resolved. Idaho Farm Bureau Federation
Like the Irrigators this organization also recommended that the Commission require PacifiCorp to pay 15¢ per kWh. The Farm Bureau also believes that Program payments to irrigation customers will keep dollars in the state rather than going to out of state power generators and marketers.

Individual Irrigation Customers
All irrigation customers who commented recommended that the Commission require PacifiCorp to pay them a greater price per kWh than was originally proposed by the Company.
COMMISSION FINDINGS
After reviewing the record in this case the Commission finds that PacifiCorp’s Application as amended by the Second Amendment to the Application should be approved. We compliment the Company on listening to its customers and designing a program that is more responsible to their needs and concerns. The Commission also finds that the prices to be paid to participating irrigation customers, 13.5¢ per kWh for those who chose not to disconnect and 15¢ per kWh for those who do, are reasonable when compared to the projected forward market prices for power during the 2001 irrigation season. If these price projections prove to be accurate the Commission believes this Program will provide benefits to all of the Company’s ratepayers. Furthermore, by raising the price it will pay irrigation customers for each kWh the Commission believes the Company has resolved many of the concerns which commenting persons and parties raised regarding the low price to be paid for energy.
The Commission also finds that its concerns regarding the disconnection of pumping service have been resolved by the Company’s offering to allow irrigation customers to participate regardless of whether they chose to disconnect or not.
The Commission also finds that the Company shall allocate costs and benefits of the Program to its power supply expense in Account 555. The Commission also finds that the Company shall establish subaccounts to specifically track Program costs that are subject to deferral and subsequent rate recovery. The Commission shall also require the Company to provide a summary program performance report following the completion of the Program in order to track actual program performance in a timely manner.
O R D E R
IT IS HEREBY ORDERED that PacifiCorp’s Application as amended by the Second Amendment to the Application of PacifiCorp is approved. Accordingly, the Company may implement its Irrigation Buy-Back Program for the 2001 irrigation season only.
IT IS FURTHER ORDERED that the Company shall allocate costs and benefits of the Program to its power supply expense in Account 555.
IT IS FURTHER ORDERED that the Company shall establish subaccounts to specifically track Program costs that are subject to deferral and subsequent rate recovery.
IT IS FURTHER ORDERED that the Company shall provide a summary program performance report following the completion of the Program in order to track actual program performance in a timely manner.
THIS IS A FINAL ORDER. Any person interested in this Order or in interlocutory Orders previously issued in this Case No. PAC-E-01-4 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 No. PAC-E-01-4. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of April 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:PACE014_jh2
The Idaho Irrigation Pumpers Association was allowed to intervene into this case. See Order No. 28674.

PacifiCorp defines the 2001 irrigation season as June 1 through September 15, 2001.
Because of this exemption for 2001 PacifiCorp states that an additional year will be added to any existing contract for minimum usage a participating irrigation customer has previously entered into. Exhibit A at 1.

Originally, the Company’s Program would have required all participating irrigation customers to have their pumping service disconnected. See Application and Amendment to Application.

In its Application the Company proposed to pay participating irrigation customers 8.5¢ per kWh and then raised it to 12¢ per kWh through the first Amendment to its Application.

ORDER NO. 28702 -1-

Office of the Secretary
Service Date
April 12, 2001