20030319Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:MARCH 19, 2003
RE:CASE NO. PAC-02-5 (PacifiCorp)
CHANGE IN DEPRECIATION RATES-ELECTRIC PROPERTY
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
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 9 61-525, the Commission is empowered to determine the
proper depreciation rates of property used to provide retail electric service.
THE APPLICATION
The accounting changes proposed in the Application are supported by a Depreciation
Study ("D&T Study ) prepared by Deloitte & Touche LLP. 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.
On November 8, 2002, the Commission issued a Notice of Application in Case
No. PAC-02-5. The Notice contained the following language:
DECISION MEMORANDUM
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.
Since November multi-state discussions with parties have continued. Staff has reviewed the
depreciation study and identified issues. Staff informs the Commission that the Company and
parties in Utah have agreed in principal to the terms of a proposed settlement. Staff has sat in on
some of the discussions and believes that it is now appropriate to provide further notice of
procedure in the Company s Idaho jurisdiction. Staff recommends that the Commission
establish a deadline for intervention and further apprises the Commission of Staffs intent
schedule a public workshop and once interested parties are identified to engage in active
settlement discussions. Reference IDAPA 31.01.01.272.
Commission Decision
Staff recommends that the Commission establish a Notice of Intervention Deadline
and apprises the Commission of potential intervening parties of its intent to enter into settlement
negotiations. Does the Commission find the proposed procedure acceptable?
Scott Woodbury
VldlM:PAC-O2-sw2
DECISION MEMORANDUM