20011129Notice of Application - Order No 28904.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

in the matter of THE APPLICATION OF PacifiCorp FOR THE DETERMINATION OF GUIDELINES FOR INTEGRATED RESOURCE PLANNING, POWER COST RISK MANAGEMENT AND WHOLESALE TRANSACTIONS, AND FOR APPROVAL OF A PERMANENT AND TEMPORARY POWER COST ADJUSTMENT MECHANISM. )
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CASE NO. PAC-E-01-15

NOTICE OF APPLICATION

ORDER NO. 28904

YOU ARE HEREBY NOTIFIED that on November 5, 2001, PacifiCorp dba Utah Power & Light Company (PacifiCorp; Company) filed an Application with the Idaho Public Utilities Commission (Commission) for (1) the determination of guidelines for integrated resource planning, power cost risk management and wholesale power purchases and sales in the context of a Power Cost Adjustment (PCA) mechanism and the western retail and wholesale power markets, (2) approval of a Power Cost Adjustment mechanism and (3) approval of a temporary Power Cost Adjustment mechanism.
Background
In support of its electric utility operations, PacifiCorp reports that the Company owns approximately 8,000 MW of thermal, hydro and wind generation capacity. That generation, combined with firm wholesale power purchase rights, provides the Company with over 10,000 MW of system capability. The Company has a system-wide peak load (exclusive of off-system wholesale sales and interruptible loads) of over 7,500 MW.
Under today’s structure, PacifiCorp states that it plans and operates its system on a multi-state integrated basis. PacifiCorp’s planning and operation involves considerations of Company-owned generation, forecast generation and demand-side resource costs, wholesale sales and purchase opportunities, especially including recently emerging price and quantity volatilities in these opportunities, transmission capabilities and opportunities, existing load, forecast load, and a variety of other issues. PacifiCorp’s resource planning has developed in an integrated resource planning (IRP) process and reported in the Company’s Resource and Market Planning Program (RAMPP) Reports. The Commission established guidelines for the filing of the Company’s RAMPP Reports in Order No. 22299, Case No. U-1500-165.
PacifiCorp notes that it has filed with this Commission a proposal to restructure the Company into a generation company, a service company and six state electric companies. Reference Case No. PAC-E-00-06. The Company believes that the determinations which the Company seeks in this docket will have applicability to the state electric companies once its Structural Realignment Proposal (SRP) is implemented.
PacifiCorp contends that the Company continues to be impacted by the consequences of the volatility and high prices in the wholesale power market prior to June 19, 2001, when FERC intervened establishing a price gap mechanism and rule changes. Reference 95 FERC ¶ 61, 418.
IRP Guidelines
PacifiCorp believes it would be appropriate for the Commission to establish guidelines for integrated resource planning (IRP), power cost risk management and wholesale power purchases and sales in the context of a PCA mechanism and the western wholesale and retail power markets.
PacifiCorp represents that power cost risk management activities are commercial activities intended to mitigate the impacts of unanticipated changes in commodity price, transmission, loads or resource availability. Such activities, the Company states, could include, but are not limited to weather hedges, financially or physically settled derivatives, demand side management and forward purchases.
PCA Mechanism
Upon the Commission’s establishment of such guidelines, the Company requests approval of a proposed Power Cost Adjustment mechanism. Reference Application Exhibit A. Such mechanism, the Company contends, will provide a reasonable means of allowing PacifiCorp to recover expenses reasonably incurred in providing service to its retail customers in Idaho and is in the public interest.
Temporary PCA
Pending the Commission’s determination of guidelines, PacifiCorp requests implementation of a temporary Power Cost Adjustment mechanism. Reference Application Exhibit B. Such a mechanism will allow PacifiCorp the ability to recover, through the Power Cost Adjustment mechanism, 80% of the actual net power costs in excess of the base line and, when actual net power costs are below the base line, return to customers 80% of the difference. The base line will be set at the level of such costs included in the Company’s semi-annual report for the year 1998, the audit of which was completed by the Commission Staff in 1999. Such a sharing mechanism, the Company contends, is intended as an interim measure to ensure that the Company has an incentive to minimize expenses and pursue the most cost-effective resources. The PCA, the Company contends, will also send appropriate price signals to customers, and is just, reasonable and in the public interest.
COMMISSION FINDINGS
The Commission after reviewing the Application in Case No. PAC-E-01-15 finds that the Company’s filing is incomplete. We accordingly find it reasonable to require the Company to supplement its filing with pre-filed testimony as a condition of any further procedural scheduling in this case or consideration of the issues presented.
O R D E R
In consideration of the foregoing, IT IS HEREBY ORDERED and the Company is put on notice that it must file supporting testimony in this case as a condition of any further procedural scheduling or consideration of the issues presented.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of February 2003.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:PACE0115_sw

NOTICE OF APPLICATION
ORDER NO. 28904 1

Office of the Secretary
Service Date
November 29, 2001