20050218Withdraw Application.pdf

D. DOUGLAS LARSON
Vice President
Regulation
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One Utah Center, Suite 2300
Salt Lake City, Utah 84111
[phone]
FAX [phone]
PACIFIC POWER. UTAH POWER tU,:\t;U iUbLi
UTiliTIES COf"if"tISStON
February 15 , 2005
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
Attn: Jean D. Jewell
Commissi on Secretary
RE: Docket No. P AC-O4-8; Request to Withdraw Application
On December 24, 2004, PacifiCorp filed an Application for an Accounting Order relating to
certain interest expenses associated with the Company s hydro-relicensing obligations. For the
reasons set forth below, PacifiCorp has decided to withdraw this Application. As of the date of
this letter, no party has intervened in this matter, nor has the Commission taken any action with
respect to the Application. PacifiCorp therefore requests that the Commission close this docket
without further action.
PacifiCorp is in the process of relic en sing a number of its hydro projects. The settlements
associated with these relicensing efforts generally obligate the Company to make future payment
to mitigate the fish, wildlife and environmental impacts of the projects. These obligations are
significant and long lasting, often spanning the entire life of the license. In the Application in
this case, PacifiCorp sought an accounting order permitting it to reclassify the accretion/interest
expense associated with these obligations as an operating expense. The impetus for the
Application was a shift in Generally Accepted Accounting Principles (GAAP) requiring the
Company to treat the present value of these future settlement obligations as a liability on the
balance sheet, offset by an equal intangible asset consisting of the hydro license and electricity.
Since filing the Application, PacifiCorp has determined that it can comply with GAAP and still
continue historic regulatory accounting for hydro re-licensing obligations. To comply with
GAAP, PacifiCorp' s accounting records will recognize the net present value of future hydro re-
licensing obligations and the related journal entries as described in the Application. For
regulatory accounting purposes, however, PacifiCorp will only recognize an operating expense
for the amount of payment in the period payment occurs. From a regulatory perspective, this will
result in no change relative to prior years.
PacifiCorp believes that this approach accomplishes the objectives sought in its Application
without the need for an accounting order. On this basis, PacifiCorp has decided to withdraw its
Application.
Please contact Bob Lively, [phone], with questions or if PacifiCorp needs to take any
additional steps to accomplish the closure of this docket.
Sincerely,
D. Douglas Larson