20021108Notice of Application.pdf

Office of the Secretary
Service Date
November 8, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ACIFICORP FOR AN ORDER AUTHORIZING
A CHANGE IN DEPRECIATION RATES
APPLICABLE TO ELECTRIC PROPERTY
) CASE NO. P AC-O2-
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that on October 1 , 2002, PacifiCorp dba Utah
Power & Light Company (PacifiCorp; Company) filed an Application with the Idaho Public
Utilities Commission (Commission) seeking an Order authorizing a change in the depreciation
rates applicable to PacifiCorp s depreciable electric property. This change, the Company states
is for accounting purposes only. PacifiCorp intends to seek approval of the requested changes
for ratemaking purposes in a future rate case. Pursuant to Idaho Code ~ 61-525 , the Commission
is empowered to determine the proper depreciation rates of property used to provide retail
electric service. The Company requests that the depreciation rate changes become effective as of
April 1 , 2002.
THE APPLICATION
The accounting changes proposed in the Application are supported by the prefiled
testimony of three PacifiCorp witnesses. The Company s first witness is Mr. Donald S. Roff of
Deloitte & Touche LLP, who prepared PacifiCorp s Depreciation Study ("D&T Study ). The
purpose of the D&T Study was to identify the changes that have occurred since the last
PacifiCorp depreciation study, to measure the effect of the changes on the recovery of presently
surviving capital, and to properly revise the capital recovery rate. If approved, the proposed
depreciation rate changes will decrease the annual depreciation expense by $732 000 on a total
Company basis. The composite depreciation rate of 3.11 % for the Company s electric plant will
not change. Based on depreciable plant balances as of March 31 , 2002, the proposed changes
specific to the Idaho jurisdiction would increase the depreciation expense by approximately
$612 0000.
PacifiCorp s Application is also supported by the prefiled testimony of Ms. Kathryn
C. Hymas, PacifiCorp s Managing Director and Corporate Business Services Controller. She
NOTICE OF APPLICATION
provides testimony addressing the depreciation rates the Company proposes for both financial
reporting and ratemaking purposes. Ms. Hymas also provides background information that
describes the depreciation process, identifies a number of significant issues considered during
preparation of the D&T Study, and addresses the Company s confidence in the integrity of the
accounting data relied on by Mr. Roff.
Mr. Barry G. Cunningham, PacifiCorp s Senior Vice-President of Generation
explains the process used to develop estimated life spans for the Company s thermal and
hydroelectric generating plants. Mr. Cunningham also explains the reasons for including
terminal net salvage in the steam generating plant depreciation rates and addresses the inclusion
of decommissioning and removal costs for PacifiCorp Condit and American Fork
Hydroelectric plants. Lastly, Mr. Cunningham explains why depreciation of water rights
acquired for the operation of steam generating plants is appropriate for ratemaking purposes.
YOU ARE FURTHER NOTIFIED that Commission Staff contends that the
depreciation rate change proposed in this Application could substantially impact the multi-state
cost recovery issues under consideration in Case No. PAC-02-3. In order to efficiently review
the Application, Staff recommends that the Commission wait to establish further procedure for
processing this case until the depreciation rate issue is more fully developed at the multi-state
level. The Commission has been apprised that this proposed procedure is acceptable to the
Company.
YOU ARE FURTHER NOTIFIED that the Application in Case No. PAC-02-5 can
be reviewed at the Commission s office and at the Idaho offices of PacifiCorp in Rexburg,
Preston, Shelley and Montpelier during regular business hours.
DATED at Boise, Idaho this 7f1'day of November 2002.
if Je b. Jewell
Commission Secretary
blslN:PACE0205 sw
NOTICE OF APPLICATION