20041108Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:NOVEMBER 4, 2004
RE:CASE NO. PAC-02-3 (PacifiCorp)
INVESTIGATION OF INTER-JURISDICTIONAL ALLOCATION ISSUES
JOINT MOTION FOR ACCEPTANCE OF SETTLEMENT
On November 4, 2004, PacifiCorp and Commission Staff filed a Joint Motion in Case
No. P AC-02-requesting acceptance and Commission approval of a Stipulation and
Agreement (Stipulation) negotiated by PacifiCorp, Staff, Monsanto Company, and AARP as full
settlement of the inter-jurisdictional cost allocation issues affecting PacifiCorp as a consequence
of its status as a multi-jurisdictional utility subject to the jurisdiction of six state regulatory
Commissions. The stipulating parties request Commission approval of the inter-jurisdictional
cost allocation methods embodied in the Revised Protocol filed with the Commission on July 14
2004, as a means of achieving consistent allocation methods in the jurisdictional states served by
PacifiCorp.
As reflected in the Stipulation, the Revised Protocol is the culmination of an
extended series of joint multi-state process (MSP) meetings, technical workshops and telephone
conferences for analyzing PacifiCorp s inter-jurisdictional cost allocation issues. MSP meetings
were attended by representatives of some 18 entities from the states of Utah, Oregon, Wyoming,
Washington and Idaho. Participants included representatives of state commission policy staffs
advocacy staffs, individual customers and consumer groups. The Company s filing in Idaho is
identical to contemporaneous filings made with the regulatory commissions in Utah, Oregon and
Wyoming. In Washington, PacifiCorp filed the Revised Protocol as part of the Company s rate
case in that state.
DECISION MEMORANDUM
Public workshops for PacifiCorp customers in eastern Idaho were held in Preston on
October 4, 2004 and in Rexburg on October 5 , 2004. At the workshops Commission Staff
presented a summary of the Company s Petition, MSP Revised Protocol and discussed its
participation in settlement negotiations.
Key elements of the Revised Protocol are: a hydro endowment reflecting the cost
difference of hydro-electric resources and certain contracts attributed to the former Pacific Power
and Light states; an assignment recognizing the cost difference of state-specific qualifying
facilities; and an allocation for seasonally specific resources. All other resources will continue to
be allocated based on the peak and energy requirements of each state on the integrated system.
In addition, the Revised Protocol addresses treatment of a number of items and
potential situations including: (i) refunctionalization and allocation of transmission costs and
revenues, (ii) treatment of the costs of special contracts, (iii) means of accounting for and
accommodating state specific policies, such as direct access, and (iv) the process and
infrastructure for resolving issues in order to further secure the sustainability of the allocation
methodology in the future.
Included in the Stipulation are rate mitigation measures intended to apply to
calculations of the Company s Idaho revenue requirement for any PacifiCorp rate filing made
through March 31 , 2009. In the near term through 2008, the Revised Protocol methodology
results in a 2% higher revenue requirement to Idaho than under Rolled-, an alternate allocation
methodology that Idaho Staff would favor in the absence of agreement to the Revised Protocol.
The results to Idaho beyond 2008 are more favorable because future hydro relicensing costs will
be assigned directly to the Pacific Power & Light states, primarily Washington and Oregon. In
addition, Idaho customers will continue to benefit from the efficiencies of PacifiCorp
integrated six state system while PacifiCorp will be provided greater certainty for a recovery of
its prudently incurred costs.
The stipulating parties agree that the Stipulation and rate mitigation mechanism is in
the public interest and that all of the terms of the Stipulation are fair, just and reasonable. The
parties recommend that the Commission approve use in Idaho by PacifiCorp of the Revised
Protocol methodology and rate mitigation mechanism for purposes of inter-jurisdictional
allocation of the Company costs and Idaho results of operations in future regulatory
proceedings.
DECISION MEMORANDUM
allocation of the Company costs and Idaho results of operations in future regulatory
proceedings.
COMMISSION DECISION
PacifiCorp and Staff request that the Commission process the Joint Motion for
Acceptance of Settlement pursuant to Modified Procedure, i., by written submission rather than
by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. If the
Commission desires testimony in support of this Motion and the Settlement between the parties
the parties are willing to provide such testimony on very short notice. Commission Orders
approving the Revised Protocol are expected by November 15 in both Utah and Oregon. The
State of Wyoming has approved by bench ruling the Revised Protocol and an Order is pending.
Staff recommends by way of scheduling for Modified Procedure that the stipulating
parties and parties of record, including PacifiCorp, file comments on or prior to Tuesday,
November 23. A public comment deadline of Monday, December 6 is also proposed. It is
Staffs intention following comments to place this matter on the Commission s decision agenda
for December 20 2004. Does the Commission agree with the proposed procedure?
Scott Woodbury
Vld/M:PACEO302 sw2
DECISION MEMORANDUM