20040323Notice of Public Workshops.pdf

Office of the Secretary
Service Date
March 23, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA UTAH POWER & LIGHT
COMPANY FOR A DEFERRED ACCOUNTING
ORDER AND APPROVAL OF A SURCHARGE.
CASE NO. PAC-O3-
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BACKGROUND
On March 31 , 2003, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission) for an
accounting Order allowing PacifiCorp to defer, for regulatory purposes (a) excess costs incurred
for forward power purchases made for the summer of 2002, and (b) federal and state payments
made in 2002 resulting from Internal Revenue Service Income Tax Audits. Reference Idaho
Code ~ 61-524, System of Accounts.
On December 21 , 2003 , following an informal stay of proceedings, the Company
filed an amended Application with the Commission (a) removing its request for deferred
accounting authority for summer 2002 excess power purchase costs, (b) providing additional and
amended. information regarding 2002-2003 tax audit payments, and (c) requesting approval of a
16-month Schedule 93 surcharge to collect the income tax audit-related payments and to recover
a projected under-collection in the present Schedule 93 surcharge for recovery of authorized
excess power costs. Reference Order No. 29034, June 8, 2002.
PacifiCorp requests approval of deferred regulatory accounting for federal and state
income tax payments made in 2002-2003 resulting from the conclusion of Internal Revenue
Service Income Tax Audits for tax years 1994 through 1998, in which the IRS made its final
determination of the adjustments to the Company s income tax obligations. Such payments
attributable to PacifiCorp s regulated utility operations amounted to approximately $54 million.
The revenue requirement associated with the 2002-2003 federal and state tax audit determination
payments attributable to Idaho is $4 198 000. See Application, Exhibit No.2 (revised). These
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IRS audit-related payments, the Company contends, are a legitimate cost of doing business as
previously recognized by the Commission. The Company cited Utah Power Light Company,
Case No. U-1009-157, Order No. 20523 (May 29, 1986), in which the Commission determined
that if the Company could show it paid a liability arising from an IRS Audit
, "
we will allow it to
submit tariffs to recover this alleged liability from its ratepayers as a legitimate expense
assuming the audit assessment was not payable from a reserve already accumulated. Also citing
In the Matter of the Investigation of the Effects of Revisions of the Federal Income Tax Code
Upon the Cost of Service of Regulated Utilities, Case No. U-1500-164, Order No. 21302 (July 1
1987), wherein following passage of the 1986 Tax Reform Act which reduced corporate income
tax rates, the Commission allowed the Company to recover the Idaho jurisdictional portion of
approximately $25 million paid in 1987 following an IRS audit of 1983 and 1984 taxes. The
Company contends the audit payments, which it seeks authority to defer in this case, were not
paid from a reserve already funded by Idaho ratepayers.
PacifiCorp proposes to account for the federal and state income tax payments, for
regulatory purposes, in the following manner: income tax payments will be credited to Account
409, Income Taxes, thereby decreasing the recorded income tax expense, and debiting Account
182.399, Regulatory Assets.
Deferred accounting treatment for regulatory purposes, PacifiCorp contends, is an
appropriate, just and reasonable means of providing the Company an opportunity to seek
recovery of the federal and state IRS audit-related income tax payments incurred by the
Company.
In its amended Application the Company includes a request for approval of proposed
electric service Schedule 93 (proposed Schedule 93) to collect the income tax audit-related
payments described in its amended Application and to address the over-collection or under-
collection of excess power costs currently being recovered under present electric service
Schedule 93 (present Schedule 93). The Company requests that the proposed Schedule 93 be
effective immediately upon the expiration of the present Schedule 93 (June 8, 2004). Present
Schedule 93 provides that, subject to Commission review and approval, the surcharge may
continue at a revised rate to reflect any under-collection or over-collection of the authorized
surcharge amount.Order No. 29034, June 8, 2002.Current estimates of the power cost
collection under the existing surcharge project an under-collection of approximately $200 000 as
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of June 8 , 2004. PacifiCorp s proposed Schedule 93 includes the projected under-collection of
power costs in addition to the requested collection of income tax audit-related payments.
approved, the power costs under-collection of approximately $200 000 will be revised based on
current actual data prior to implementation of proposed Schedule 93. The deferred amounts
collected through the surcharge will not include a carrying charge.
The proposed Schedule 93 is designed to recover from tariff customers, on a uniform
percentage basis of revenue from each rate schedule, the deferred amounts over a period of
approximately 16 months. Proposed Schedule 93 would be applied to customers' bills for
electric usage commencing June 08, 2004. Utilizing a test period for the 12-months ending
March 31 , 2003 , Application Exhibit No.6 shows the effects of proposed Schedule 93 by rate
schedule and a worksheet containing derivation of the cents per kilowatt hour surcharges for
each rate schedule. For residential customers, the implementation of proposed Schedule 93
would result in a price reduction from current prices averaging 3.3%. Excluding special
contracts, commercial and industrial customers would see a price reduction averaging 3.5%.
Irrigation customers would see a price reduction averaging 3.6%. The overall effect on Idaho
tariff customers would be a price reduction from current levels averaging 3.5%. If the current
surcharge is allowed to expire as scheduled on June 08, 2004, a rate decrease of approximately
5% from current levels will result. The price changes set out in the Company s Application, the
Company notes, do not reflect any impact of reductions to the levels of BP A credits that are
expected to occur in 2004.
On February 4, 2004, the Commission issued Notices of Original and Amended
Application, Modified Procedure and Intervention Deadline in Case No. PAC-03-5. Parties
requesting and granted intervention were the Idaho Irrigation Pumpers Association, Inc. (ON
29438) and the City of Firth (ON 29439). Included in the Commission s February 4th Notice was
a public notice that Commission Staff had apprised the Commission of its intent to hold public
workshops in this matter and to engage in subsequent settlement discussions with the Company
and other parties of record. Reference IDAPA 31.01.01.271-279.
YOU ARE HEREBY NOTIFIED that Commission Staff will hold a public
workshop for Utah Power & Light customers on Monday. April 21. 2004 at 7:00 p.m. at the
Robinson Buildin2. 186 West Second North. Preston. Idaho (208 852-1050)At this meeting
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customers will have an opportunity to hear from Commission Staff regarding the Company
Application in Case No. P AC-03-5 and to ask questions of Staff and Company representatives.
YOU ARE FURTHER NOTIFIED that the Commission Staff will hold a second
public workshop for Utah Power & Light customers on Tuesday. April 22. 2004. at 7:00 p.
at the Best Western CottonTree Inn. 450 West Fourth South. Rexbur2. Idaho (208 356-
4646)At this meeting customers will have an opportunity to hear from Commission Staff
regarding the Company s Application in Case No. PAC-03-5 and to ask questions of Staff and
representatives of the Company.
The Commission having previously found that the public interest in this matter may
not require a hearing to consider the issues presented, and that the issues raised by the
Company s filing may be processed under Modified Procedure , by written submission
rather than by hearing (Reference IDAPA 31.01.01.201-204), YOU ARE FURTHER NOTIFIED
that the deadline for filing written comments or protests with respect to PacifiCorp
Application and the use of Modified Procedure in Case No. PAC-03-5 is Friday, April 30,
2004.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline, the Commission may consider the matter on its merits and may
enter its Order without a formal hearing. If comments or protests are filed within the deadline
the Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order based on the written positions before it. Reference IDAP A
31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case
No. P AC-03-5 should be mailed to the Commission and the Company at the addresses
reflected below.
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
BOB LIVELY
PACIFICORP
201 S MAIN ST. SUITE 2300
SALT LAKE CITY, UT 84140
e-mail: bob.lively~PacifiCorp. Company
Street Address for Express Mail:
472 WWASHINGTON ST
BOISE, ID 83702-5983
JOHN M. ERIKSSON
STOEL RIVES LLP
ONE UTAH CENTER 201 S MAIN ST., STE 1100
SALT LAKE CITY, UT 84111-4904
e-mail: imEriksson~stoel.com
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All comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the Applicant at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application in Case No. P AC-03-5 may
be viewed www.puc.state.id.by clicking on "File Room" and "Electric Cases " or can be
viewed during regular business hours at the Idaho Public Utilities Commission, 472 West
Washington Street, Boise, Idaho and at the Idaho offices of PacifiCorp dba Utah Power & Light
Company.
DATED at Boise, Idaho this ;1..3 rJ. day of March 2004.
qjrEg. Co ISSlOn Secretary
Vld/N:PACEO305 sw2
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