20020131Order No 28946.pdf

Office of the Secretary
Service Date
January 31. 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR APPROVAL OF
CHANGES TO ITS ELECTRIC SERVICE
SCHEDULES.
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CASE NO. PAC-E-02-1

INTERLOCUTORY
ORDER NO. 28946

On January 7, 2002, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission)
requesting approval of the Company’s proposed electric service schedules. Included in the
Company’s filing is a proposed Schedule 34-BPA Exchange Credit distribution. The BPA
Credit is being processed under Modified Procedure, i.e., by written submission rather than by
hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. The remainder
of the Company’s filing—Cost of Service (COS) study, proposed Power Cost Surcharge ($38
million) and a proposed Rate Mitigation Adjustment (RMA)—is being processed and handled
separately.
Schedule 34—BPA Exchange Credit
PacifiCorp reports that in May 2001 it entered into a Settlement Agreement with the
Bonneville Power Administration (BPA Settlement) regarding the exchange benefits to be
provided by BPA through September 30, 2006 to qualifying residential and small farm
customers. The BPA Settlement, the Company contends, will provide approximately $34
million in benefits to Idaho customers in 2002.
The Company in this case proposes an increase in the Bonneville Power
Administration credit to the recently settled amount. The Bonneville Power Administration
(BPA) residential and small farm exchange credit is a mechanism to provide benefits to
qualifying customers of investor-owned utilities (like Utah Power) from the Federal Columbia
River Hydroelectric system and to satisfy BPA’s obligations under the Northwest Power Act of
1980. The credit is available only to residential and small farm customers and is provided to the
Company’s customers in Idaho through electric service Schedule No. 34. In recent years the
benefits have been allocated 43% to residential customers and 57% to irrigation customers. The

INTERLOCUTORY
ORDER NO. 28946 1
Company’s previous exchange agreement with BPA expired in 2001, and a new agreement (the
2001 Settlement) was entered into to provide a continuation of exchange benefits. In its 2001
negotiations, the Company reports that BPA proposed an alternative to the traditional exchange.
The alternative was to provide investor-owned utilities (IOUs) the option to purchase actual
power or rights to power through a subscription process. IOUs that chose subscription did so as
a settlement of their exchange rights for this period. The subscription was further split between
actual power and a monetary portion that was calculated as a difference between BPA’s price
and BPA’s forecasted market price. BPA expects that it will be required to purchase additional
resources in order to serve that portion of the subscription that is to be delivered as actual power.
Faced with the potential of very high costs for these additional resources, PacifiCorp agreed to
forego its right to actual power for an overall financial settlement of its exchange benefits. The
resulting financial 2001 Settlement provides $34 million in benefits to qualifying Idaho
customers for the first year and $35.2 million in the second year. This level, the Company
reports, is substantially higher than historical levels. The Company proposes to allocate the
Settlement amounts between qualifying residential and small farm customers in the same manner
as the prior exchange agreement (i.e., 43% to residential customers and 57% to small farm).
BPA increased its credit to PacifiCorp effective October 1, 2001. PacifiCorp
contends that it has a contractual obligation to pass the credit through to its customers in a timely
manner. Consequently, the Company is proposing that the Schedule 34 BPA credit be approved
for a February 1, 2002 effective date.
PacifiCorp proposes to have the anticipated four months’ worth of accrued credit (for
the period from October 1, 2001 until the new credit level is implemented in rates) for residential
customers included in the first year’s credit rate. In other words, the rate for the first year will be
set to distribute 16 months of a normal year’s amount for residential customers. The total
amount of BPA credit the Company proposes to distribute to qualifying customers in year one is
$40.6 million. At the end of the first year, the rate will be reset to match a normal 12 months
credit. The Company proposes no adjustment for the four-month lag for small farm customers.
Irrigation usage, the Company contends, is largely completed by October 1. Those payments,
the Company also contends, fluctuate significantly year-to-year due to differences in irrigation
usage during the irrigation season.

INTERLOCUTORY
ORDER NO. 28946 2
On January 16, 2002, the Commission issued Notices of Application and Modified
Procedure in Case No. PAC-E-02-1 with respect to the proposed Schedule 34-BPA Exchange
Credit. The deadline for filing written comments was Thursday, January 24, 2002. The
Commission Staff was the only party to file comments. Staff recommends that the BPA Credit
be approved for the requested effective date of February 1, 2002. Staff sees the BPA Credit as a
great benefit to residential and small farm customers. The Credit will reduce residential
customers’ rates by an average of 44% and small farm irrigation rates by 63%. Staff submits the
following schedule showing the estimated effect of the proposed BPA Credit on revenues from
electric sales to ultimate consumers by rate schedules in Idaho for year one.

UTAH POWER
ESTIMATED EFFECT OF PROPOSED BPA CREDIT
ON REVENUES FROM ELECTRIC SALES TO ULTIMATE CONSUMERS
BY RATE SCHEDULES IN IDAHO - Year 1

Line
No.

Acct
No.

Description

Sch.
No.

Average
No. of
Customers

MWh
Current Revenues
($000)
Base Sch. 34 Net
Rev Credit Rev
Proposed
Sch. 34
Credit Percent
($000) %
(1) (2) (3) (4) (5) (6) (7) (8) (19) (20)

(6)+(7) (19)/(6)

440
Residential
Sales

1
Residential
Service

1

28,524

257,880

$ 22,056

($951)

$21,105

($8,619)

-39.08%

2

Residential
Optional TOD

36

15,933

303,528

$ 20,383

($1,039)

$19,344

($10,132)

-49.71%

3
Total
Residential

44,457

561,408

$ 42,439

($1,990)

$40,449

($18,751)

-44.18%
442 Commercial
& Industrial

4
General Svc -
Lrg Power
(R&F)

6A

222

28,149

$ 1,761

($93)

$ 1,668

($929)

-52.75%

5

Irrigation Rate

10

1,876

615,632

$ 32,327

($5,578)

$26,749

($20,344)

-62.93%

6
General Svc
(R&F)

23A

1,310

16,388

$ 1,468

($53)

$ 1,415

($540)

-36.78%

7
Security Area
Lighting
(R&F)

7A

181

141

$38

($1)

$37

($5)

-13.16%

8
Total Sales to
Ultimate
Consumers

54,387

3,152,295

$151,751

($7,715)

$144,036

($40,569)

-26.73%

INTERLOCUTORY
ORDER NO. 28946 3
COMMISSION FINDINGS
The Commission has reviewed the filings of record and comments in Case No. PAC-
E-02-1 regarding PacifiCorp’s proposed Schedule 34-BPA Exchange Credit. We continue to
find that the public interest does not require a hearing on this issue and that it is appropriate to
process the matter pursuant to Modified Procedure, i.e., by written submission rather than by
hearing. Reference IDAPA 31.01.01.204.
The Company in this case proposes to distribute the exchange benefits negotiated in a
May 2001 Settlement Agreement with the Bonneville Power Administration (BPA). The
proposed credit will benefit qualifying residential and small farm customers in eastern Idaho and
will provide appropriate benefits from regional power as contemplated by the 1980 Pacific
Northwest Electric Power Planning and Conservation Act. The Idaho Public Utilities
Commissioners wish to express their appreciation to the Bonneville Power Administration for its
acknowledgment that the benefits of the Federal Columbia River Power System (FCRPS) should
be spread to all the residents of the Pacific Northwest. This is a significant step to more
equitably share the benefits provided by the FCRPS to the residential and small farm customers
of PacifiCorp.
The Commission finds it reasonable to approve the proposed electric Tariff Schedule
34-BPA Exchange Credit distribution for an effective date of February 1, 2002.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission by interlocutory Order does hereby approve the
proposed electric Tariff Schedule 34-BPA Exchange Credit for qualifying residential and small
farm customers of PacifiCorp for an effective date of February 1, 2002.

INTERLOCUTORY
ORDER NO. 28946 4

INTERLOCUTORY
ORDER NO. 28946 5
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of January 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

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