20041118Comments in Support of Settlement.pdf

JAMES F. FELL (ISB NO. 2274)
STOEL RIVES LLP
SUITE 2600
900 SW FIFTH AVENUE
PORTLAND, OR 97204
TEL: [phone]
FAX: [phone]
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U 11 L III Es e 0 r'if f'J I S S JON
Of Attorneys for PacifiCorp d/b/a
Utah Power & Light Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Investigation of
Inter-Jurisdictional Issues Affecting
PacifiCorp d/b/a Utah Power & LightCompany CASE NO. P AC-O2-
ACIFICORP COMMENTS IN
SUPPORT OF JOINT MOTION FOR
ACCEPTANCE OF SETTLEMENT
PacifiCorp (or the "Company ), the Staff of the Idaho Public Utilities Commission
(the "Commission ), Monsanto Company, and AARP have entered into a stipulation and
agreement (the "Stipulation ) pursuant to which they agreed, subject to the terms of the
Stipulation, to support Commission ratification of the Revised PacifiCorp Inter-Jurisdictional
Allocation Protocol (the "Revised Protocol") in this docket. The Stipulation and the Joint
Motion ofPacifiCorp and Staff for Acceptance of Settlement were filed with the Commission on
November 4 2004. A copy of the Revised Protocol was included as Exhibit A to the Stipulation.
Through these Comments, PacifiCorp urges the Commission to accept the Stipulation and
ratify the Revised Protocol.
BACKGROUND OF MSP
The Stipulation represents the culmination ofPacifiCorp s four-year quest to resolve a
number of longstanding issues arising from its status as a multi-state utility subject to the
jurisdiction of six regulatory commissions.
ACIFICORP COMMENTS IN SUPPORT OF JOINT MOTION FOR ACCEPTANCE OF
SETTLEMENT -
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In December 2000, through a series of "SRP" filings, the Company proposed to
reorganize itself into six state distribution companies, a generation company and service
company. The SRP filings proved controversial-in large measure because of a concern that the
proposed restructuring would result in a loss of jurisdiction from state regulatory commissions to
the Federal Energy Regulatory Commission and the Securities and Exchange Commission.
Ultimately, a number of parties and some state commissioners suggested that the Company seek
other means of resolving inter-jurisdictional issues that did not require a legal restructuring of the
Company. The Company was strongly encouraged to initiate an informal process aimed at
achieving consensus among interested parties regarding these issues. To that end, in March
2002, the Company made an additional set of filings requesting that the Company s state
commissions initiate investigations and endorse a collaborative process to address inter-
jurisdictional issues facing PacifiCorp. These filings were broadly supported by the Company
state commissions, including the Idaho Commission in opening this docket, and gave rise to what
became known as the Multi-State Process or "MSP.
The Company had three fundamental objectives with respect to the MSP:
To establish inter-jurisdictional cost allocation mechanisms that would permit it to
continue to plan and operate its generation and transmission system on an integrated basis
To establish uniform inter-jurisdictional cost allocation methods among its six
jurisdictions that would provide it with a reasonable opportunity to earn a return on future
investments in generation and transmission facilities and
To preserve the ability of each of its jurisdictions to implement individual state
energy policies in a manner that does not unreasonably burden customers in other jurisdictions.
A number ofMSP meetings were held commencing in April 2002. All of the major
meetings were attended in person by in excess of 50 individuals representing some 18 entities
from the states of Oregon, Utah, Wyoming, Washington, and Idaho. Participants included
representatives of state policy staffs, advocacy staffs, industrial customers and consumer groups.
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A number of other people participated by telephone. Additionally, the Company participated in
a number of separate meetings with representatives from individual states or groups of states and
conducted various technical workshops. More formal hearings were conducted in some states to
review MSP progress. There were weekly telephone conferences and e-mail exchanges. There
was a dedicated website for information sharing. Throughout the process, the Company
responded to a large number of formal and informal data requests from the parties.
The last large-group MSP meeting occurred in July 2003. At that time, the Company was
encouraged to take the analytical results of the MSP and all of the parties ' views into
consideration and develop a proposal that was most responsive. Accordingly, in September
2003, the Company filed a proposed PacifiCorp Inter-Jurisdictional Cost Allocation Protocol
(the "Protocol") with the Oregon, Wyoming, and Idaho Commissions. These filings were
supported by substantial testimony and analyses.
Following those filings, additional discussions ensued with parties in Oregon and Utah
resulting in the Revised Protocol, which was filed with the Commission on July 15 , 2004.
Since the filing of the Revised Protocol, in addition to the Idaho Stipulation
, "
all party
stipulations have been entered into in Utah and Wyoming and a stipulation has been entered into
with all parties to the Oregon proceedings other than the Industrial Customers of Northwest
Utilities. The Company is awaiting decisions from the Oregon and Utah Commissions. The
Wyoming Commission issued an order on October 19, 2004 accepting the Wyoming stipulation
and ratifying the Revised Protocol.
THE STIPULATION IS IN THE PUBLIC INTEREST
Idaho parties were active and highly constructive participants in the MSP. Idaho parties
recognized from the beginning of the MSP that reaching a resolution to the inter-jurisdictional
cost allocation issues confronting PacifiCorp was important for both the Company and its
customers. Absent a resolution of those issues, there was a significant risk that the Company
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concerns about its ability to recover its prudently-incurred costs associated with new generation
resources would cause it to refrain from making long-term resource investments that would
minimize costs to customers. Also, absent a resolution of those issues, there was a risk that
policy initiatives undertaken in one state (for example, direct access legislation in Oregon) could
unreasonably burden PacifiCorp s customers in other states.
The Revised Protocol, if ratified by all ofPacifiCorp s state commissions, will establish
uniform policies in respect to a number of critical issues. These include:
How the costs of new resources will be allocated among states.
How the costs of resources built to serve seasonal load will be allocated.
How the costs of Qualifying Facilities will be assigned.
How the consequences of direct access will be isolated to the state adopting the
program.
How the costs and benefits of special contracts with large industrial customers
will be allocated among states.
How the Northwest states' claim to a special entitlement to hydroelectric
resources will be recognized.
In addition, the Revised Protocol provides for the establishment of an "MSP Standing
Committee" consisting of state commissioners or their delegates. The MSP Standing Committee
will oversee continuing analytical efforts associated with inter-jurisdictional issues (such as the
consequences of disproportionate load growth among states) and serve as a forum for the parties
to discuss and hopefully resolve emerging inter-jurisdictional issues. Meetings of the MSP
Standing Committee are to be open to all interested parties. Those meetings are expected to
assist in maintaining an ongoing consensus among PacifiCorp s states regarding inter-
jurisdictional issues, thereby preserving the accomplishments of the MSP.
Idaho parties concluded that the provisions of the Revised Protocol represented a
reasonable balance of the concerns raised by MSP participants and were generally supportive of
it. However, they observed that an unintended consequence of the Revised Protocol was that it
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appeared to result in a higher Idaho revenue requirement in the early years of its operation
compared to the use of other allocation methods. Although the Revised Protocol is expected to
result in a lower Idaho revenue requirement in later years, Idaho parties nonetheless concluded
that it was critical that the expected near-term Idaho customer impacts be mitigated. To that end
the Stipulation provides that until March 31 2009, the Company s use of the Revised Protocol
will not result in rates in Idaho that exceed 101.67 percent of the amount that would result from
use of the "Rolled-" method.
Therefore, as a result of the Stipulation, Idaho customers obtain the benefits arising from
the resolution ofMSP issues, while being insulated from any major near-term rate impacts
associated with it.
Idaho parties also recognized that circumstances might change such that it might not be
sensible for them to continue to support the Revised Protocol. Accordingly, the Stipulation
provides that if the results of using the Revised Protocol materially depart from PacifiCorp
current projections, or otherwise produce results that are not just, reasonable and in the public
interest, any party may propose amendments to the Revised Protocol or propose that the
Commission depart from its terms.
For the foregoing reasons, the Commission should find that the Stipulation is in the
public interest, accept the settlement of the parties and ratify the Revised Protocol.
Respectfully submitted this 17th day of November 2004.
STOEL RIVES LLP
Of Attorneys for PacifiCorp
PACIFICORP COMMENTS IN SUPPORT OF JOINT MOTION FOR ACCEPTANCE OF
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CERTIFICATE OF SERVICE
I hereby certify that I served the foregoing PacifiCorp Comments in Support of Joint
Motion for Acceptance of Settlement on the following named person(s) on the date indicated
below by
00 mailing with postage prepaid
hand delivery
facsimile transmission
overnight delivery
to said person( s) a true copy thereof, contained in a sealed envelope, addressed to said person( s)
at his or her last-known addressees) indicated below.
Randall C. Budge
Racine Olson Nye Budge & Bailey
PO Box 1391
Pocatello, ill 83204-1391
Eric L. Olsen
Racine Olson Nye Budge & Bailey
PO Box 1391
Pocatello, ill 83204-1391
Sue Rolfe
Andrea Kelly
PacifiCorp
825 NE Multnomah
Portland, OR 97232
DATED: November 17 , 2004.
CERTIFICATE OF SERVICE -
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James R. Smith
Monsanto Company
PO Box 816
Soda Springs, ill 83276
Anthony J. Yankel
29814 Lake Road
Bay Village, OH 44140
Of Attorneys for PacifiCorp d/b/a Utah Power &
Light Company