20050121Decision Memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JANUARY 20, 2005
RE:CASE NO. P AC-04-6 (PacifiCorp)
BP A REGIONAL EXCHANGE CREDIT-REDUCTION
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
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 (REP) 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. ~ 839(c). The REP is administered by
the Bonneville Power Administration (BP A). The Residential Exchange Settlement Agreement
between PacifiCorp and BP 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 an REP deficit of $6.8 million (i., PacifiCorp paid out $6.
DECISION MEMORANDUM
million more in benefits to Idaho residential and small farm customers than PacifiCorp had
received from BP A).
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 BP A 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 20.47%. 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 7 A) will decrease from $0.023327 to
$0.019216 per kilowatt-hour, a decrease for Residential Schedule 1 of 6.96% and Schedule 36 of
55%.
On January 4, 2005, the Commission issued Notices of Application and Modified
Procedure in Case No. PAC-04-6. The deadline for filing written comments was January 20
2005. The Commission Staff was the only party to file comments. Staff recommends that the
Commission approve the Company s Application as filed.
The reduction in BP A exchange program credits proposed by PacifiCorp in this case
Staff notes, is not based on any recent reduction in credits received by PacifiCorp from BP
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 A. Based on its 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
proportionately with each customer group. Historically, the percentage of credit revenue
DECISION MEMORANDUM
received by each customer group closely match 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, Staff contends that the reduction is slight and
highly dependent upon actual energy consumption in each class. Staff believes that 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. Staff 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.
COMMISSION DECISION
PacifiCorp proposes to reduce the Schedule 34 BP A regional exchange credit by an
annual amount of $6.8 million to eliminate a balancing account deficit by September 30, 2006.
Additional adjustments may be necessary. Staff recommends that the Commission approve the
Company s Application for an effective date of January 31 , 2005. Does the Commission find the
proposed change in the Schedule 34 BP A credit to be reasonable?
Scott Woodbury
Vld/M:P ACEO406 sw
DECISION MEMORANDUM