20060502Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:CECELIA A. GASSNER
DATE:APRIL 28, 2006
SUBJECT:CASE NOS. IPC-06-, A VU-06-2, AND P AC-06-
PETITIONS TO RESCIND ORDER NO. 28804, FILING OF BIENNIAL
COST INFORMATION BUNDLING REPORTS
On February 28, 2006, Idaho Power Company ("Idaho Power ) filed a Petition to
rescind Order No. 28804, as it applies to Idaho Power, which requires Idaho Power to file
biennial cost information-unbundling reports with the Commission. On March 10 2006, Avista
Corporation dba Avista Utilities ("Avista ) filed a similar Petition, asking for the rescission of
Order No. 28804 as it applies to A vista. On March 10 , 2006, PacifiCorp dba Utah Power &
Light Company ("PacifiCorp ) also filed a similar Petition, asking for the rescission of Order
No. 28804 as it applies to PacifiCorp.
On March 30, 2006, the Commission issued a Notice of Petitions, a Notice of
Consolidation of these matters, and a request for comments from the public. Order No. 30009.
The only comments received were from the Staff.
THE PETITIONS
Order No. 28804 was issued by the Commission on August 15 , 2001. Under this
Order, Idaho Power, Avista and PacifiCorp are obligated to file biennial cost reports that include
inter alia unbundled cost information at the actual earned rate of return and not adjusted to
authorized return levels, as well as the actual earned rate of return for each customer class.
In its Petition, Idaho Power states that it intends to regularly file general rate actions
with the Commission that would enable the Commission to routinely examine its costs. Idaho
Power believes that these more frequent rate case filings will allow the Commission and its Staff
DECISION MEMORANDUM
the opportunity to review Idaho Power s costs in greater detail than afforded in the biennial cost
reports.
PacifiCorp similarly states in its Petition that it anticipates that regular rate case
actions will be needed in the future, and that such rate case filings will afford the Commission
and its Staff to review PacifiCorp s costs. It further states that in addition to the review allowed
by rate case filings, the Commission and its Staff receive PacifiCorp s annual results of
operations. PacifiCorp will file these results for the 10 years following the Commission
ratification of the Revised Protocol, PacifiCorp inter-jurisdictional cost allocation
methodology.
A vista states that given the anticipated frequency with which it intends to file general
rate cases, it believes the Commission and its Staff will continue to have access to Avista s costs
through the cost of service studies that are part of the rate cases.
ST AFF COMMENTS
Staff noted that unbundled cost studies breakout the costs of providing service by rate
schedule or by delivery voltage level. Costs are identified as generation related, transmission
related, distribution related or other. Some of the four major categories are further divided into
subcategories. Staff acknowledged that by Commission Order, the three electric utilities
participating in these matters have filed unbundled cost studies with the Commission for 1996
1998, 199, 2001 and 2003. The Staff uses or references this unbundled cost information from
time to time.
The Staff believes that with the larger staffs that the three electric utility companies
employ, and the fact that the companies' staffs are more acquainted with their own models and
data, it is easier for the companies to do these studies than it would be for the Staff to complete
them. However, Staff observes that this information is only occasionally needed and that, in
general, unbundled cost results change slowly and, therefore, this type of analysis can be done on
an infrequent basis.
The Staff observes that there is every indication that all three utilities will have more
frequent rate cases in the near term. General rate cases require the companies to file cost of
service information, which contains the elements of the companies ' costs used to derive
unbundled costs. The Staff believes, however, that there is a substantial effort involved in
putting the data in the unbundled cost format. Staff further believes it will have an opportunity
DECISION MEMORANDUM
during the course of a rate case to request this information from the relevant company if it is
deemed necessary.
Due to the infrequent requirements for unbundled cost information, Staff supports the
three companies' Applications to discontinue the biennial filings required by Order No. 28804.
However, Staff requests that the Commission order the companies to provide unbundled cost
information upon Staff request in a general rate case. As time allows, Staff commits to work to
develop the models necessary to extract and organize the information.
COMMISSION DECISION
Does the Commission desire to rescind the requirement under Order No. 28804 that
Idaho Power, Avista and PacifiCorp file biennial cost reports containing unbundled cost
information?
Does the Commission desire to order Idaho Power, A vista and PacifiCorp to provide
such unbundled cost information during the consideration of future rate cases upon Staff's
request for such information?
cec
M:lPCEO604 _A VUEO602 _P ACEO602 _cg2
DECISION MEMORANDUM