20020306Petition to Initiate Investigation.pdf

James F. Fell, ISB 2274
STOEL RIVES LLP
900 SW 5th Ave.
Portland, OR 97204
Telephone: [phone]
Fax: [phone]

Mary S. Hobson, ISB 2142
STOEL RIVES LLP
101 South Capitol Boulevard – Suite 1900
Boise, ID 83702-5958
Telephone: [phone]
Fax: [phone]

Attorneys for PacifiCorp dba Utah
Power & Light Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

In the Matter of the Petition of PacifiCorp, ) Case No.
dba Utah Power & Light Company for an )
Investigation of Inter-Jurisdictional Issues ) PACIFICORP’S PETITION TO
) INITIATE INVESTIGATION OF
) INTER-JURISDICTIONAL
) ISSUES
______________________________________________)

PURPOSE OF PETITION

PacifiCorp, doing business as Utah Power & Light Company (“PacifiCorp” or the
“Company”), pursuant to Idaho Code §61-505 and Idaho Rule of Procedure 053, petitions the
Commission to initiate an Investigation of inter-jurisdictional issues affecting the Company.
Through this Application, PacifiCorp seeks to have the Commission: a) open a new docket for
the purpose of initiating an Investigation of a number of important issues related to
PacifiCorp’s status as a multi-jurisdictional utility, and b) endorse a process through which
these issues can be considered in the first instance by stakeholders from all of the Company’s
jurisdictions in a multi-state process. Following the conclusion of the proposed multi-state
process, the Commission would complete its investigation with the benefit of the record
assembled in the multi-state process. In support of this Petition, PacifiCorp states as follows:
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
ISSUES – Page 1
APPLICANT AND NOTICES

PacifiCorp is an electric utility in the state of Idaho. PacifiCorp provides retail electric
service to more than 1.5 million customers in Idaho and five other western states. PacifiCorp’s
Idaho retail electric service operations are subject to the jurisdiction of the Idaho Public
Utilities Commission (“Commission”).
Communications regarding this Petition should be addressed to:
James F. Fell
Stoel Rives LLP
900 SW 5th Ave.
Portland, OR 97204
Telephone: [phone]
Fax: [phone]

Andrea Kelly
PacifiCorp
825 NE Multnomah Street
Portland, OR 897232-2135
Telephone: [phone]
Fax: [phone]

BACKGROUND

PacifiCorp owns substantial generation and transmission facilities. Augmented with
substantial wholesale power purchases and long-term transmission contracts, these facilities are
operated as a single system on an integrated basis in order to provide service to all customers in
a cost-effective manner. PacifiCorp recovers costs of owning and operating its generation
system in retail prices established from time to time in state regulatory proceedings. In such
state proceedings, it is first customary to determine what assets are deemed to be in the
Company’s rate base in the state conducting the proceeding. Then, because all of the
Company’s generation and transmission resources are deemed to be used to serve the
Company’s customers in all of its state jurisdictions, it is necessary to determine what portion
of the costs associated with each of the rated-based resources ought to be allocated to
customers in the state for which prices are being established. If different state commissions
make different decisions regarding what generation resources should be deemed to be in
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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PacifiCorp’s rate base or if different state commissions adopt different policies for allocating
the costs of resources among states, the Company recovers less than its full cost of providing
electric service.
Each of PacifiCorp’s state regulatory commissions should have the ability to pursue
policies that they think are in the public interest in their state. However, it is also important for
PacifiCorp to be able to make business decisions in an environment where differing state
policies do not result in denying the Company a reasonable opportunity to recover its prudently
incurred costs.
Differences in the manner in which PacifiCorp’s state commissions allocate
PacifiCorp’s pre-1989 generation and transmission investments currently result in a substantial
under-recovery of costs. There is good reason for PacifiCorp to be concerned that divergent
state policies may cause this under-recovery to increase. In particular:
1. There is no consensus among PacifiCorp’s jurisdictions as to how the costs of
the Company’s existing generation and transmission resources should be allocated.
2. There is no consensus among PacifiCorp’s jurisdictions as to who should bear
responsibility or enjoy the benefits of resources in the event of direct access, sale or purchase of
service territory or loss of industrial load.1
3. There is no consensus among PacifiCorp’s jurisdictions as to PacifiCorp’s
responsibility for meeting future load growth through the addition of rate-based resources.2
4. There is no consensus among PacifiCorp’s jurisdictions as to who should bear
the costs of new resource additions.3
1 For example, when the Company sold its interest in the Centralia Generating Station at a
substantial gain, it ultimately incurred a loss on the transaction because more than 100 percent of the
gain on sale was required to be distributed to customers in its various jurisdictions. Under the Oregon
restructuring legislation (SB 1149), direct access commenced on March 1, 2002 with no determination
as to how states should share “stranded costs” or “stranded benefits” associated with generation freed up
by direct access customers.
2 For example, administrative rules adopted by the Oregon Commission implementing SB 1149
contemplate that the Company will construct no additional rate-based resources on behalf of cost-of-
service customers in Oregon.
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5. There is no consensus among PacifiCorp’s jurisdictions as to the appropriate
choice of the Company’s new resource additions.4
6. Even if a consensus did emerge among PacifiCorp’s jurisdictions in regard to
the foregoing issues, there is no means for the Company to be assured that such consensus will
be maintained over the full life of new resource investments, so as to permit full cost recovery.
These are not circumstances conducive to sound planning and business decisions by
PacifiCorp on behalf of its customers and other stakeholders.

ISSUES TO BE INVESTIGATED
By this Petition, PacifiCorp respectfully requests that the Commission initiate an
Investigation (“Investigation”) of the following issues:
1.
2.
3.
4.

What changes, if any, are required in current Idaho law and regulatory practice
in order to ensure that PacifiCorp will have a reasonable opportunity to recover prudently-
incurred costs associated with investments in generation resources notwithstanding any future
change in state policies?
What changes, if any, are required in the manner in which PacifiCorp’s revenue
requirement is calculated in order to accommodate different generation resource investment
policies in different states?
What alternatives exist for allocating the costs of PacifiCorp’s existing resources
among states and which of these alternatives is most equitable?
What alternatives exist for reallocating existing resources in the event of: (a)
direct access, (b) sale or purchase of service territory or (c) closure of a major industrial
facility, and which of these alternatives is most equitable?

(…continued)
3 For example, there is considerable question in some states as to whether jurisdictions with
relatively high rates of load growth should bear a larger share of the costs of new resource additions.
4 These issues include decisions on the appropriateness of making substantial investments to
extend the lives of existing facilities and the appropriateness of demand side resource investments.
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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5.
6.
7.
8.
9.

What alternatives exist for allocating the costs of PacifiCorp’s future generation
and transmission resource additions among states and which of these alternatives is most
equitable?
What alternatives exist for permitting different states to make different decisions
regarding potential new generation additions and which of these alternatives is best adapted to
preserving economic efficiencies?
What are the potential revenue requirement consequences of different methods
of allocating the costs of PacifiCorp’s existing resources among its state jurisdictions?
What are the potential revenue requirement consequences of different methods
of allocating the costs of PacifiCorp’s future resource additions among its state jurisdictions?
What policies should this Commission and other state commissions that regulate
PacifiCorp adopt in order to afford PacifiCorp a reasonable opportunity to recover all of its
prudently-incurred costs of existing and future generation and transmission resource
investments?

PROPOSED MULTI-STATE PROCESS

PacifiCorp further proposes that in advance of further Idaho-specific proceedings in this
Investigation, there be conducted a multi-state process (“MSP”) which will afford interested
parties from all of the Company’s jurisdictions an opportunity to analyze inter-jurisdictional
issues facing PacifiCorp and seek to achieve consensus concerning them. PacifiCorp proposes
that the MSP be conducted as follows:
1. The MSP will be managed by an independent Special Master. PacifiCorp has
solicited recommendations from interested parties as to who might be designated as Special
Master. No later than March 15, 2002, PacifiCorp will nominate an individual to serve as
Special Master. If, prior to March 29, 2002, one or more states accounting for more than 25
percent of PacifiCorp’s retail revenues (“Opposing Percentage”)5 give notice to PacifiCorp that

(continued…)
5 An Opposing Percentage would be represented by either Utah or Oregon or a combination of
Wyoming and Washington together with either Idaho or California. Stakeholders in each state will
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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they object to PacifiCorp’s proposed Special Master, the MSP schedule will be suspended until
either: (a) a Special Master is proposed by PacifiCorp who is not objected to by states
representing an Opposing Percentage or (b) PacifiCorp gives notice that it wishes to terminate
the MSP because it does not believe that a consensus can be achieved on designating a Special
Master.
2. Parties wishing to participate in the MSP should provide notice to that effect to
PacifiCorp as soon as practicable so that they can be included on the distribution list for the
MSP. Additionally, no later than April 5, 2002, interested parties should forward to PacifiCorp
any briefing papers or any other information that they wish to be reviewed by the Special
Master in advance of the MSP.6
3. All meetings of the MSP will be open to all interested parties. Facilities will be
provided by PacifiCorp that permit participation by telephone.
4. The MSP will culminate with the filing of a Report from the Special Master with
the Commission and the other state commissions regulating PacifiCorp. The Report will: (a)
describe the extent of any material consensus that was achieved among commission advocacy
staffs and other interested parties as well as the views of any parties not sharing any such
consensus view and (b) provide the Special Master’s recommendations regarding any issues on
which a material consensus was not achieved. Any such recommendations will be based upon
a record to be developed by the Special Master. The Special Master will have discretion to
determine whether the record, in regard to any contested issue, should consist of testimony and
cross examination or an exchange of written submittals, provided that the process affords

(…continued)
independently determine whether an objection should be made on behalf of their state. If a suspension
occurs because a Special Master is not designated by March 29, 2002, PacifiCorp expects that there
would be a corresponding slippage in each of the MSP procedural milestones proposed in the balance of
this Petition.
6 Any requests to be added to the MSP distribution list or materials for review by the Special
Master should be e-mailed to Sue Rolfe ([e-mail]) or mailed to Sue Rolfe at
PacifiCorp (825 NE Multnomah, Suite 300, Portland, OR 97232). PacifiCorp intends to maintain a
public web site on which all MSP documents will be posted to avoid a requirement that parties serve
materials on each other.
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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parties with a reasonable opportunity to make their views known and to contest the views of
other parties.
5. The MSP will be conducted generally in accordance with the following
schedule:
April 10, 2002 – Special Master holds individual meetings with representatives from
each state (Boise)

April 11 and 12, 2002 – Organizing Meeting (Boise)

May 7, 8 and 9, 2002 – Workshop/settlement Meeting 1

May 28 and 29, 2002 – Settlement Meeting 2

June 10 and 11, 2002 - Final Settlement Meeting

June 25, 2002 – Report from Special Master on resolved and unresolved issues and how
a record will be assembled in respect to unresolved issues (this report will not be part of
the MSP record)

July 15, 2002 - All party filings on unresolved issues

August 2, 2002 – All party responsive filings on unresolved issues

Week of August 12, 2002 – Further proceedings (and settlement conferences on
unresolved issues)

September 6, 2002 – Special Master distributes draft report

September 13, 2002 – Parties submit comments on draft report
September 20, 2002 – Special Master files Report with the Commission and other
PacifiCorp state commissions

October 2, 2002 – Parties Submit Comments on the Special Master’s Report with the
Commission and other state commissions

6. At the Organizing Meeting, the Special Master, after soliciting the views of the
parties, will: (a) describe how the settlement meetings will be organized around particular
issues, (b) establish locations for further meetings, (c) make any required adjustments in the
schedule, (d) establish analytical requirements of the process and (e) determine whether it
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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would be helpful to establish a “Stakeholders Committee” to work with the Special Master on
procedural matters.
7. The MSP may be terminated at any time in advance of the submittal of the
Report at the election of either states representing an Opposing Percentage, or PacifiCorp, if
either concludes that the MSP is being conducted in an unreasonable manner or is not
reasonably productive.

FURTHER COMMISSION PROCEEDINGS IN THE INVESTIGATION
1. PacifiCorp proposes that the Commission conduct public workshops during the
weeks of June 18 and August 12, 2002, to afford interested parties an opportunity to provide
comments to the Commission concerning the MSP and to afford the Commission the
opportunity to provide guidance to the parties regarding the MSP.
2. PacifiCorp further proposes that within 30 days of receipt of the Special
Master’s Report, that the Commission convene a prehearing conference to establish a schedule
for further proceedings in the Investigation. At such prehearing conference, parties from other
jurisdictions could petition to intervene in the Investigation.
3. The Commission should find that the Special Master’s Report, parties’
comments with respect to the Special Master’s Report and the supporting record from the
Special Master’s Report should be made part of the record in the Investigation, subject to any
party’s right to provide rebuttal testimony in respect to the Report, comments or record.

RELIEF REQUESTED
WHEREFORE, Pacificorp respectfully requests that the Commission:
A. Issue a notice inviting written or oral comments on the Company’s Petition no
later than March 22, 2002.
PACIFICORP’S PETITION TO INITIATE INVESTIGATION OF INTER-JURISDICTIONAL
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B. Enter its order adopting the procedure proposed by Company’s Petition no later
than April 3, 2002 so that the MSP can move forward on an expeditious basis. A form of
proposed Order on the Petition is attached hereto.
DATED: March 5, 2002.
Respectively submitted,

STOEL RIVES LLP

By: _________________________
Mary S. Hobson
STOEL RIVES LLP
101 South Capitol Boulevard – Suite 1900
Boise, ID 83702-5958

James F. Fell
STOEL RIVES LLP
900 SW 5th Ave.
Portland, OR 97204

Attorneys for PacifiCorp,
dba Utah Power & Light Company

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