20040504Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:APRIL 29, 2004
RE:CASE NO. PAC-04-2 (PacifiCorp)
BP A REGIONAL EXCHANGE CREDITS
MOTION TO CONSOLIDATE CASE NOS. PAC-03-5 AND PAC-04-
On Apri121 , 2004, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission) for
approval of reductions in the Bonneville Power Administration (BP A) regional exchange credits.
The proposed revisions to the Company s electric Schedule 34 will revise the kilowatt hour
credit adjustment for all qualifying kilowatt hours of residential and/or farm use.
As a regional utility, PacifiCorp is entitled to participate in the Residential Exchange
Program (REP), which extends the benefits of low-cost federal power to residential and small
farm consumers served by investor-owned utilities in the region. Section 5c of the Northwest
Power Act, 16 U.C. 9839(c).The REP is administered by the Bonneville Power
Administration.In 2000, BP offered the region s investor-owned utilities the option of
entering into a settlement of the REP (REP Settlement) in lieu of the traditional REP. All the
regions' investor-owned utilities , including PacifiCorp, entered into the REP Settlement.
Upon initiation of the REP program, and as required by the REP Settlement, the
Company established balancing accounts, tracking the differences in the program credits
provided to the Company s customers and the monetary payments received from BPA pursuant
to the REP Settlement. As of September 2003 , the Idaho balancing accounting showed a deficit
of $5.7 million (i., PacifiCorp paid out $5.7 million more in benefits to Idaho residential and
small farm customers than PacifiCorp had received from BP A).
DECISION MEMORANDUM
Following discussions with the Commission Staff, the Idaho Irrigation Pumpers
Association, and irrigation customers, the Company decided to seek Commission authorization
to correct the deficit in the BP A balancing account in a manner that would ease the customer
impact of elimination of the deficit. PacifiCorp proposes to reduce the BP A credit by one-third
of the $5.7 million, thereby recovering the negative balance over a three-year period.
Additionally, the credit is being reduced to match the level of the annual credit received from
BP A with the annual credit passed on to Idaho residential and small farm customers. This
reduces the credit by an additional $597 000 per year. The proposed annual reduction for a
three-year period would therefore total $2 496 000 ($1 899 000 plus $597 000). Additional
adjustments to the BP A credit may be necessary in order to achieve the targeted zero balance in
the BP A balancing account by September 30, 2006.
PacifiCorp in its filing submits the following exhibits providing additional support for
the relief requested:
a. Application Table A: Table A shows the net impact by rate schedule of the
proposed revision to Schedule 34 including the expiration of the power cost surcharge (Schedule
93) and the implementation of the year 3 rate mitigation adjustment (Schedule 94);
b. Application Table B: Table B reflects the calculation of proposed Schedule 34
based on normalized 12 months ended March 31 , 2003;
c. Application Table C: Table C is a balancing account study reflecting the
Company s BPA balancing account history for fiscal year 2002-2003. The Table shows the $5.
million deficit as of September 2003; and
d. Application Table D: Table D reflects the Company s Schedule 34 and shows the
proposed tariff changes.
PacifiCorp proposes that the proposed reduction to the Schedule 34 BP A credit be
effective on June 8, 2004. The Company requests that the Commission enter an Order
authorizing the reduction of the Schedule 34 BP A credit by an annual amount of $2 496 000 for
a three-year period, in order to eliminate the $5.7 million deficit currently reflected in the
Company s balancing account and to further reflect the net effect of the annual credit received
from BP A with the annual credit passed on to Idaho residential and small farm customers.
PCP Motion to Consolidate Case Nos. P AC-03-5 and P AC-04-
PacifiCorp in its Application moves to consolidate its filing in Case No. PAC-04-
with the currently pending PacifiCorp Case No. PAC-03-5. The Company s PAC-03-
DECISION MEMORANDUM
filing is a Company request to recover additional federal and state tax payments made pursuant
to IRS audit. A consolidation of the two cases would allow implementation of the net effect of
the two referenced dockets at the same time.
COMMISSION DECISION
Staff recommends that the Company s Application be in Case No. PAC-04-2 be
noticed and that the filing be consolidated with Case No. PAC-03-5. Staff apprises the
Commission of its intent to continue working with the Company and the parties of record in Case
No. P AC-03-5 to develop a comprehensive settlement addressing all of the rate and cost
recovery issues incorporated in Case Nos. P AC-03-5 and P AC-04-2. Staff expects that a
settlement agreement will be submitted to the Commission no later than May 14, 2004. If the
settlement is acceptable to the Commission, rate changes reflected in both dockets would be
effective June 8, 2004. Does the Commission approve of Staffs recommended procedure?
Scott Woodbury
Vld/M:P ACEO402 _
DECISION MEMORANDUM