20050120comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR APPROVAL OF
REDUCTIONS IN BONNEVILLE POWER
ADMINISTRATION REGIONAL EXCHANGE
CREDITS.
COMMENTS OF THE
COMMISSION STAFF
CASE NO. P AC-O4-
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on
January 4, 2005 , submits the following comments.
BACKGROUND
On December 15 2004, PacifiCorp dba Utah Power & Light Company (PacifiCorp;
Company) filed an Application with the Idaho Public Utilities Commission (Commission)
requesting authority to reduce the Bonneville Power Administration s (BP A) Regional Exchange
Credits in Idaho and revise the Schedule 24 kilowatt-hour credit adjustment for all qualifying
kilowatt-hours of residential and/or farm use. The proposed reduction reduces the Schedule 34
BP A credit by an annual amount of $6.8 million in order to eliminate a $6.8 million deficit
STAFF COMMENTS JANUARY 20, 2005
reflected in the Company s Residential Exchange Program (REP) balancing account. The
Company requests an effective date of January 31 2005.
As a northwest regional utility, PacifiCorp is entitled to participate in the Residential
Exchange Program that extends the benefits of the Columbia River Federal Power Program 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. The Residential Exchange Settlement Agreement between PacifiCorp and
BP A settled the parties' rights and obligations for the Residential Exchange Program for the ten-
year term of the Agreement, July 1 , 2001 through July 30 2011.
As required by the REP Settlement, PacifiCorp established balancing accounts tracking the
differences in the program credits provided to the Company s customers and the monetary
payments received from BP A pursuant to the REP Settlement. As of September 2004 the Idaho
balancing account showed a REP deficit of $6.8 million (i., PacifiCorp paid out $6.8 million
more in benefits to Idaho residential and small farm customers than PacifiCorp had received from
BPA).
Following discussions with the Commission Staff, the Idaho Irrigation Pumpers
Association, and irrigation customers, PacifiCorp seeks Commission authorization to correct the
deficit in the BP A balancing account in a manner that will ease the customer impact of elimination
of the deficit. PacifiCorp proposes to reduce the BPA credit by $6.8 million. To achieve the
targeted zero balance in the BP A balancing account by September 30, 2006, additional
adjustments may be necessary.
As reflected in the Company s Application, while regional exchange benefits are proposed
to be reduced, the allocation of proposed regional exchange benefits among irrigation and non-
irrigation customers retains the ratio of total dollars of regional exchange benefits that had been
provided to these customers. The Schedule 34 kilowatt-hour credit adjustment for irrigation
customers (Schedule No. 10) will decrease from $0.039377 to $0.031546 per kilowatt-hour, or
20.4 7%. The kilowatt-hour credit adjustment for qualifying non-irrigation customers (Residential
Schedules 1 and 36; Commercial and Industrial Schedules 6A, 10 and 23A, 19 with 23A, 19 with
35A; and Public Street Lighting Schedule 7A) will decrease from $0.023327 to $0.019216 per
kilowatt-hour, a decrease for Residential Schedule 1 of6.96% and Schedule 36 of9.55%.
STAFF COMMENTS JANUARY 20, 2005
ST AFF ANALYSIS
The reduction in BP A exchange program credits proposed by PacifiCorp in this case is not
based on any recent reduction in credits received by PacifiCorp from BP A.Rather, the reduction
is proposed to eliminate a balancing account deficit created by paying out more credits to
PacifiCorp customers over the prior three-year period than were actually received from BP
There are two primary reasons why payout exceeded credits received. The first is the method used
to calculate the credit applied to each kilowatt-hour (kWh) used by qualified customers. The
available credits per kWh for 2002 and 2003 were established based on the anticipated amount of
annual BP A credit dollars received by PacifiCorp divided by weather-normalized energy used in
2001. While anticipated credit dollars from BP A were fairly accurate, the energy actually used by
residential and irrigation customers in 2002 and 2003 was significantly higher than the 2001
normalized energy used to calculate the credit. Consequently, the higher usage due to abnormal
weather conditions and load growth caused higher than anticipated credit payments.
The second reason for the deficit is that credit payment levels to customers throughout
2003 remained constant when BP A credits received by PacifiCorp from BP A declined. During
the period February 2003 through September 2003 , payments received from BP A were less than
those anticipated when the per kWh credit payment to customers was originally established.
Rather than receiving $35 million in credits during fiscal 2003 as expected, PacifiCorp received
only $31.7 million. However, energy credits paid to customers based on the $35 million figure
were not reduced.
As the Company has indicated, the over-payment deficit as of September 2004 is $6.
million. The Company proposes to eliminate the deficit by reducing the annual credit payments to
each class while maintaining the payment ratio. Staff supports the credit reduction and the rates
proposed by PacifiCorp.
An analysis of the credits received by PacifiCorp customers over the past three years show
that just over 41 % of the credits received by PacifiCorp from BP A went to residential customers
while 55% went to irrigation customers. The remaining 4% went to customers served under
Schedules 6A, 23A and 7A. Credit levels approved by the Commission in Case Nos. PAC-02-
and P AC-03-5 anticipated payment percentages of 42., 54.4% and 3.3% for residential
irrigation and other non-irrigation schedules, respectively over the three-year period. Staff
Attachment No., page 1 of 2, shows that after fiscal 2002, BP A credit distributions closely
STAFF COMMENTS JANUARY 20, 2005
achieved the overall percentages expected by the Commission. This is true even during the 2003
fiscal year when BP A contributions declined but customer credits did not. Page 2 of Attachment
No.1 shows that under the Company s proposal, payment percentages are anticipated to be 40%
57% and 3% for the three customer groups respectively. While these percentages are slightly
different from historic percentages, Staff notes that actual percentages ultimately received will
vary depending upon actual energy used by each group during the 2005/2006 period.
In fact, Staff analysis shows that the Company is unlikely to recover the entire $6.8 million
deficit in a single year given the likely increase in energy usage subject to the credit. On the other
hand, the Company s proposal anticipates leaving the proposed credit in place through September
of 2006, which is 20 months. Absent a reduction in BP A credits received by PacifiCorp, the
balancing account will likely contain a surplus at the end of the period. This potential for surplus
could be used to offset further reduction in BP A credits in October of 2005 if it occurs or soften
the impact of reduced credits already scheduled for October of 2006.
CONCLUSIONS AND RECOMMENDATIONS
Based on a review of information provided by the Company, Staff has verified that
PacifiCorp has paid $6.8 million more in credits to customers than was received by the Company
from BP A. Staff has further determined that the responsibility for the credit over-payment lies
proportionally with each customer group. Historically, the percentage of credit revenue received
by each customer group closely matched the percentages anticipated when the credit rates were
approved by the Commission.
While the reduced credits proposed by PacifiCorp appear to reduce the percentage of credit
revenue received by some customer classes, the reduction is slight and highly dependent upon
actual energy consumption in each class. Staff believes the percentage of revenue that will
ultimately be received by each customer class under the Company s proposal is reasonable when
compared to historic percentages. Consequently, we support the Company s rate proposal without
change. Staff also recognizes the potential for creating a surplus in the balancing account over the
20-month period. Staff believes any resulting surplus can be applied to mitigate both planned and
unplanned future reductions in BP A regional exchange credits. Therefore, Staff recommends that
the Commission approve the Company s Application as filed.
STAFF COMMENTS JANUARY 20, 2005
Respectfully submitted this
Technical Staff:
i :umisc:comments/paceO4.6swrl
STAFF COMMENTS
'f1t day ofJanuary 2005.
~~.
Scott Woodbury
Deputy Attorney General
JANUARY 20, 2005
Staff Comments
Attachment No., Page 1 of 2
Case No. PAC-04-
Total Total Residential Irrigation Other
BPA BPA Accumulated BPA BPA Non-Irrigation
Credits Credits Balance Credits Credits Credits
Period Paid Received Paid Paid Paid
($)($)($)($)($)($)
2002
Totals 485,113 016 575 392 028 919 120 153 387 573,738
Percentage 41.03%60.83%82%
2003
October 966 837 931 563 360 203 331,474 529 378 105 984
November 124,484 931 563 171 222 675 970 264 625 183 889
December 390,437 931 563 716 587 066 714 107 537 216 186
January 509 380 931 563 143,199 329 468 607 176 305
February 862 803 503 180 788 199 1,448 284 751)416 269
March.543,825 503 180 753,492 1,439 961 633 102 231
April 292 864 503 180 970,451 194 278 16,437 150
May 787 582 503,180 693 635 105 835 602 076 671
June 669 240 503 180 531 695 970 768 631 876 596
July 010 387 503,180 508 963 949 964 630 808
August 271 864 503 180 (3,744 176)079,486 132 583 794
September 779 377 503 180 020 373)973 905 750 665 806
Total 209 079 751 691 580 093 003 297 625 689
Percentage 41.23%54.72%04%
2004
October 796 920 939 595 877 698)907 581 1 ,801 ,568 771
November 691 380 939 595 629,483)198 866 370 144 122 370
December 898 879 939,595 588,767)715 561 715 161 603
January 090,477 939 595 739 649)934,478 955 144 044
February 796 037 939 595 596,091)681 756 166 109 115
March 551 702 939 595 (208 197)1,459 463 399 839
April 361 330 939 595 371 171 153 701 132 200 75,428
May 898 170 939 595 413,787 059 216 762 359 76,595
June 965 059 939 595 (611 676)935,680 678,843 350,536
July 971 375 939 595 (3,643,456)900 024 975 523 828
August 393 152 939 595 097 012)960 243 372 407 502
September 658 370 939 595 815 787)905 441 706 324 605
Total 072 851 275 144 812 012 841 602 1,419 237
41.06%55.00%93%
Grand Total 107 767 043 101 043 410 815 787)311 224 998 286 .618 664
Percentages 41.12%56.60%36%
Com. Order 109,161 000 46,094 000 59,426,000 641 000
Percentages 42.23%54.44%34%
Attachment
Case No. PAC-E-04-
R. Lobb, Staff1/20/05 Page 1 of
Staff Comments
Attachment No.1, Page 2 of 2
Case No. PAC-04-
Residential Irrigation Total Total
Residential BPA Irrigators BPA BPA BPA Accumulated
Energy Credits Energy Credits Credits Credits Balance
Paid Paid Paid Received
605 874)
February 917,471 112 942 (41 284)302)199 156 939 595 (865,435)
March 584 634 106 546 503 215 186 741 939 595 887 420
April 759 644 917 749 387 647 229 993 529 939 595 833,486
May 222 800 849 785 199 237 447 929 358 548 939 595 4,414 533
June 821 388 745 992 109 237 210 3,445 997 243 595 939 595 110 533
July 548 715 740 752 140 668 592 437 531 240 825 939 595 809 304
August 169 088 829 537 121 045 781 818,510 694 255 939 595 (945,356)
September 946 842 748,403 88,454 918 790 399 580 928 939 595 586 689)
October 294 548 697,436 42,487 796 340 320 106 143 939 595 (753,236)
November 943 145 921 275 729,405 275 378 294 000 939 595 892 358
December 605,981 318 333 512 124 16,155 1,457 722 939 595 374 232
January 360,556 486 560 281 943 894 598 264 939 595 715 562
Total 597 174 812 11,475 311 526 001 872 593,255 953 707 275 144
Percentages 39.63%57.31 %06%
Attachment
Case No. PAC-E~04-R. Lobb, Staff1/20/05 Page 2 of
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 20TH DAY OF JANUARY 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-04-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO THE
FOLLOWING:
BOB LIVELY
ACIFICORP
201 S MAIN ST., SUITE 2300
SALT LAKE CITY, UT 84140
JAMES F FELL
STOEL RIVES LLP
900 SW FIFTH AVE SUITE 2600
PORTLAND OR 97204
DATA REQUEST RESPONSE CENTER
ACIFICORP
825 NE MUL TNOMAH SUITE 800
PORTLAND OR 97232
CERTIFICATE OF SERVICE