20061218final_order_no_30199.pdf

Office of the Secretary
Service Date
December 18 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF P ACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL TO REVISE
ELECTRIC SERVICE SCHEDULE NOS. 10
400 AND 401
ORDER NO. 30199
CASE NO. P AC-06-
Background
Pursuant to Commission approved Stipulation in PacifiCorp s 2005 rate case (PAC-
05-, Order No. 29833) PacifiCorp agreed to file a general rate case no later than April 29
2006 to address cost of service issues not resolved in the 2005 Stipulation and to time the
effective date of new rates to coincide with the expiration of the current Monsanto contract
(December 31 , 2006). The Company s 2006 filing was delayed to permit Company contract
negotiations to proceed with Monsanto. The Company s filings in Case Nos. PAC-06-, 06-
08 and 06-09 were intended to satisfy its 2005 Stipulation filing commitment.
On June 21 , 2006, PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company)
filed an Application with the Idaho Public Utilities Commission (Commission) in Case No.
P AC- E-06-04 requesting authority to implement revised rates in electric tariff Schedules 10
(Irrigation), 400 (Monsanto Company) and 401 (Nu-West Industries). Simultaneous and related
filings were made in Case Nos. P AC-06-08 (Nu- West Stipulation) and P AC-06-
(Monsanto Service Agreement). In Order Nos. 30196 and 30197 issued this date we approve the
Nu-West Stipulation and Monsanto Service Agreement. The filing in Case No. PAC-06-
can be summarized as follows:
Application - Case No. P AC-06-
PacifiCorp is an electric public utility providing retail electric service to
approximately 64 000 customers in the State of Idaho. The Company in this case requests
authority to implement revised tariff schedules that would result in a net increase in base rates of
$8.25 million (5.1%) for retail customers under irrigation Schedule No. 10 ($1.7 million; 5%),
Nu-West special contract Schedule No. 401 ($150 000; 4%) and Monsanto special contract
Schedule No. 400 ($6.8 million; 16.5%).
ORDER NO. 30199
The Company s filing in Case No. P AC-06-04 is accompanied by the testimony
and exhibits of Jeffrey K. Larson, Managing Director of Regulatory Affairs for PacifiCorp. Mr.
Larson is the Company s witness for both cost-of-service and revenue requirement. Also
included with the filing is a May 24, 2006 Stipulation signed by the Idaho Irrigation Pumpers
Association (IIPA). The proposed changes in tariff rates are agreed to by lIP A, Nu-West and
Monsanto. The Company maintains that the increases to tariff Schedules 10, 400 and 401 are
supported by cost-of-service studies and normalized results of operations using a historical test
year ending September 30, 2005 and a Company-calculated Idaho revenue requirement
deficiency ($19.35 million). No change in rates is proposed for other Idaho customer classes.
Regarding irrigation customers, the Company also proposes to defer a total of
$450 000 of the revenue collected under Schedule 10 between May 1 , 2007 and September 30
2007 and refund the total, spread equitably to participants in the Irrigation Load Control Credit
Rider Program. The total refund would be paid no later than December 31 , 2007. The net effect
on all Schedule 10 customers would be an average increase of 3.7% in 2007. The refund to the
program participants is designed to be an incentive encouraging additional participation in the
Load Control Program during the 2007 irrigation season and is in addition to the Load Control
Service Credit provided to program participants under Schedule No. 72.
The Company further agreed to meet with the Idaho Irrigation Pumpers Association
(lIP A) and other interested parties prior to November 1 , 2006 to study alternatives for evaluating
the curtailment product provided by the Irrigators to PacifiCorp.
The Company in Case Nos. PAC-05-1 (2005 Stipulation) and PAC-05-, Order
No. 29998 (MidAmerican Commitment No. I13(b)) agreed to present an analysis in its next rate
case with respect to its funding of low-income weatherization programs managed by Community
Action agencies. The Company represents that it has reached an agreement with the Community
Action Partnership Association of Idaho (CAP AI) that the issue of contributions under electric
tariff Schedule No. 21 (Low Income Weatherization Services) could be addressed in a separate
proceeding before the Commission (reference P AC-06-1 0).
On August 21 , 2006, the Commission issued Notices of Modified Procedure
Scheduling and Hearing in this case. The deadline for filing written comments was November 3
2006; the deadline for filing reply comments was November 17, 2006. Also scheduled was a
hearing date of November 28 2006 to consider the Company s pre filed testimony and to provide
ORDER NO. 30199
an opportunity for Commission inquiry regarding filings in this case, P AC- E-06-08 (Nu- West
Stipulation) and PAC-06-09 (Monsanto Service Agreement).
Timely comments were filed by the Commission Staff, the Community Action
Partnership Association of Idaho and a customer residing in Rexburg. In a letter filed with the
Commission on November 14, 2006, PacifiCorp expresses its general support for the comments
filed by all parties in Case Nos. PAC-06-, PAC-06-08 and PAC-06-09. PacifiCorp
expressed its belief that the written record provides a sufficient basis for the Commission to
make its decision on the merits of each Application and requested that the hearing set for
November 28, 2006 be vacated.
On November 20, 2006, the Commission finding that the written record formed a
sufficient basis for decision, issued Order No. 30181 vacating the hearing scheduled for
November 28 , 2006.
Staff Comments
Based on the results of Staffs audit and cost of service analysis, Staff recommends
that the Commission accept the proposed 2006 lIP A Settlement. Staffs audit demonstrated that
reasonable adjustments to the Company s requested revenues did not reduce the Idaho
jurisdictional revenue requirement to a level below that proposed by the Company through
settlement agreements with Monsanto, Nu- West and the Irrigators. Staffs cost of service results
demonstrate that the negotiated increases for the three settlement parties furthest from cost of
service do not raise those rates above full cost of service, nor do other classes with rates left
unchanged remain unreasonably above cost of service. It appears to Staff that the Company
could have potentially justified a larger increase than that proposed but chose to forego a higher
request in the short-term in the interest of settlement. Staffs Audit Report is provided as
Attachment A to its comments. Staffs adjustments and resulting revenue requirement are
regarded by Staff as preliminary for future rate cases when other adjustments may be made. The
Idaho revenue requirement including Staffs adjustments was compared to the revenues the
Company is currently collecting plus the $8.25 million in increases it is asking for in the three
cases.
Cost of Service
The Company s cost of service results are shown on Company Exhibit No., Page 2
of Those calculations are based on an Idaho jurisdictional revenue requirement of
ORDER NO. 30199
$182 112 209. Staff s adjustments in this case reduce the Idaho jurisdictional revenue
requirement to $177 097 281 , which represents a potential Idaho jurisdictional revenue
requirement increase of $14 340 942 or an 8.81% increase overall.Staff s cost of service
analysis shows the allocation of costs among the various customer classes and suggests rate
increases and decreases necessary to bring each class to full cost of service. Study results
indicate that four customer classes require double digit increases to attain full cost of service and
that three customer classes should receive double digit decreases.
The rate adjustments proposed by the Company, Staff notes, address three ofthe four
classes that Staff s cost of service analysis suggests should receive double digit increases. The
Company s proposal recommends that the Commission accept negotiated rate increases with its
two special contract customers in Idaho and the Idaho Irrigation Pumpers Association. The
Irrigators have agreed to a $1.7 million, 5.0% rate increase which constitutes a substantial move
toward the approximate $3.7 million required for full cost of service as suggested by the cost of
service study. In addition, the Company has agreed as part of the settlement to provide a
$450 000 credit to those who participate in the Irrigation Load Control Program during the 2007
irrigation season. Staff supports the proposed credit.
Nu-West, Special Contract 1 in the cost of service study, has agreed to a $150 000
8% increase in rates which moves it toward the $428 000 increase required to attain full cost of
service. Finally, Monsanto, Special Contract 2 in the cost of service study, has agreed to a
843 817 16.5% increase in rates which moves it more than halfway toward the approximate
$13 million rate increase required to achieve full cost of service.
The fourth customer class identified as needing a double-digit increase is the street
and area lighting class. Although the calculated increase necessary is extremely large at almost
80%, the dollar amount is a relatively small $254 096. It is Staffs experience, it notes, that
customer classes with relatively small total revenue requirements may be subject to volatile cost
of service results as allocation factors and accounting data change with each new test year. Rate
changes for such customer classes, it contends, should probably be based on consistent results
involving more than one test year.
Cost of service, Staff contends, is an imprecise science and in Staff s opinion, should
be considered along with other factors such as rate stability when rates are established. In Staff s
view the give and take involved in the proposed 2006 Settlement is unusual in that the three
ORDER NO. 30199
customer classes whose rates are farthest below cost of service have agreed to substantial rate
increases and the Company appears to forego advocating for all that it could while other
customer classes remain unchanged. In terms of cost of service, acceptance of the proposed
2006 lIP A Settlement and Monsanto and Nu- West rate changes, Staff contends, provides for
substantial moves toward full cost of service and sets customer rates that should result in smaller
cost of service differences the next time cost of service is considered.
CAPAI Comments
The Community Action Partnership Association of Idaho (CAP AI) in its comments
includes a copy of a Settlement Agreement between PacifiCorp and CAP AI dated June 19 , 2006.
The key elements of the CAPAI/PacifiCorp Agreement include the following:
1. PacifiCorp shall make a one-time cash contribution of shareholder money
of ten-thousand dollars ($10 000) to each of Southeastern Idaho
Community Action Agency (SEICAA) and Eastern Idaho Community
Action Partnership (EICAP) to be used as funding assistance for the
Lend-a-Hand program for the 2006-2007 heating season.
2. PacifiCorp agreed to and did make a formal filing before the Commission
(Case No. PAC-06-10) to address the Company s limitation of funding
only 50% oflow-income weatherization costs.
3. PacifiCorp agreed to provide support for legislation sponsored by CAPAI
during the 2007 general Idaho legislative session that would give the
Commission authority to approve utility-proposed low-income assistance
programs, the costs of which would be included in the utility s cost of
servIce.
4. CAPAI agreed to waive PacifiCorp s commitment to file a general rate
case and makes no objection to the Company s application in the present
case seeking rate increases for Monsanto Corp., Nu- West Industries, Inc.
and PacifiCorp s irrigation customers.
CAPAI submits that its Settlement Agreement with PacifiCorp is in the best interest
of the general body ofPacifiCorp s ratepayers.
CAP AI Petition for Intervenor Funding
Idaho Code ~ 61-617 A and Rules 161-165 of the Commission s Rules of Procedure
provide the framework for awards of intervenor funding. Section 61-617 A(1) declares that it is
the "policy of this state to encourage participation at all stages of all proceedings before the
commission so that all affected customers receive full and fair representation in those
ORDER NO. 30199
proceedings.Accordingly, the Commission may order any regulated utility with intrastate
revenues exceeding $3 500 000 to pay all or a portion of the costs of one or more parties for legal
fees, witness fees, and reproduction costs, not to exceed a total for all intervening parties
combined of $40 000.
Rule 162 of the Commission s Rules of Procedure provides the form and content
requirements of a Petition for Intervenor Funding. The petition must contain: (1) an itemized
list of expenses broken down into categories; (2) a statement of the intervenor s proposed finding
or recommendation; (3) a statement showing that the costs the intervenor wishes to recover are
reasonable; (4) a statement explaining why the costs constitute a significant financial hardship
for the intervenor; (5) a statement showing how the intervenor s proposed finding or
recommendation differed materially from the testimony and exhibits of the Commission Staff;
(6) a statement showing how the intervenor s recommendation or position addressed issues of
concern to the general body of utility users or customers; and (7) a statement showing the class
of customer on whose behalf the intervenor appeared.
On December 1 , 2006, the Community Action Partnership Association of Idaho filed
a Petition for Intervenor Funding in Case No. PAC-06-04. CAP AI's filing is in the form
required by Idaho Code ~ 61-617 A and Commission Rules of Procedure 161-165 , IDAP A
31.01.01.161-165. CAPAI requests funding in the total amount of $927 representing $15 for
photocopy expense and 7.6 hours oflegal expense at $120 per hour. CAPAI notes that because
PacifiCorp filed Case No. PAC-06-10 dealing with the 50% low-income weatherization
funding limitation issue after this case was filed, but before it was concluded, there is some
overlap between costs and fees incurred regarding that single issue between the two cases.
CAP AI has limited the costs included in this Petition to those costs incurred regarding the 50%
issue prior to September 1 , 2006 to avoid any duplication. Because this case was settled, CAP
states that the costs and fees incurred were naturally much less than those typically incurred in a
general rate proceeding. In addition, CAP AI notes that it did not retain an expert witness in this
case, but relied upon the expertise it has acquired in recent cases and, primarily, on its legal
counsel for negotiation and consultation purposes. CAP AI states that it is on an extremely
limited budget and, by necessity, must minimize its costs to the greatest extent possible.
CAP AI represents that it is a non-profit corporation overseeing a number of agencies
who fight the causes and conditions of poverty throughout Idaho. CAP AI states that its funding
ORDER NO. 30199
for any given effort might come from a different variety of sources, including governmental.
Many of those funding sources, however, it states, are unpredictable. CAP AI represents that its
costs of participating in this proceeding constitute a significant financial hardship to the
organization. If it were not for the Commission s awarding CAP AI its reasonable costs in past
rate cases, CAP AI states that it simply would not be able to afford to participate in and advance
the interest of not only low-income ratepayers, but all ratepayers.
CAP AI states that no other intervenor in this proceeding represented, exclusively, the
interests of the residential class, particularly the low-income sector of that class. CAP AI
contends it raised issues and represented the interests of the general body of PacifiCorp
ratepayers. For example, it states that the Low-Income Weatherization Program for which
CAP AI seeks increased funding reduces the consumption of electricity during PacifiCorp
summer peak season helping to defer the acquisition of marginally-priced resources and provides
other system-wide benefits including the reduction of bad debt and arrearages. The problems
facing PacifiCorp s low-income customers, CAP AI contends, are societal problems that affect us
all. CAP AI contends that those problems, if not addressed, adversely affect all utility ratepayers
in the form of increased collection and associated costs as well as the write-off of uncollectible
accounts.
Furthermore, because the Low-Income Weatherization Program is a DSM program
CAP AI contends it represents a resource to the Company. It is in the best interest of
PacifiCorp s ratepayers for the Company, it states, to have a healthy diversity of resources. By
promoting the conservation of electricity consumption, CAP AI contends that the Company is
able to defer the acquisition of new, marginally higher cost resources.
Though a hearing was never conducted, CAP AI contends that its participation in this
case contributed materially towards shaping the scope and focus of the issues and evidence
presented to the Commission and thus the ultimate outcome of this proceeding by offering a
perspective not offered by any other party.
To the extent that CAP AI represented a specific PacifiCorp class, it contends that it is
the residential class.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. PAC-
06-04 including the comments and recommendations of Commission Staff and the Community
ORDER NO. 30199
Action Partnership Association of Idaho. As part of our reVIew we considered the filed
testimony and exhibits of the Company, the IIPAIPacifiCorp Stipulation and Commission Staffs
revenue requirement and cost of service analysis.The Commission continues to find
reasonable to process this case pursuant to Modified Procedure, i., by written submission rather
than by hearing. Reference Commission Rules of Procedure, IDAP A 31.01.01.204.
PacifiCorp in this case requests authority to implement revised rates in electric tariff
Schedules 10 (Irrigation), 400 (Monsanto Company) and 401 (Nu- West Industries).
considering the proposed changes to tariff Schedules 400 and 401 we have reviewed the related
filings made in Case Nos. PAC-06-08 (Nu-West Stipulation) and PAC-06-09 (Monsanto
Service Agreement). The proposed changes in tariff rates are agreed to by IIPA, Nu-West and
Monsanto. The proposed revisions to the tariff schedules result in a net increase in base rates of
$8.25 million (5.1%) for retail customers under Irrigation Schedule No. 10 ($1.7 million; 5%),
Nu-West special contract Schedule No. 401 ($150 000; 4%), and Monsanto special contract
Schedule 400 ($6.8 million; 16.5%). No change in rates is proposed for other Idaho customer
classes.
We note that the Community Action Partnership Association of Idaho was a party to
the Stipulation approved in Case No. PAC-05-01 and was expecting a general rate case to be
filed by April 29, 2006 with testimony that would satisfy Commitment No. I13(b) in that case.
We acknowledge that that issue is being addressed in a separate proceeding before the
Commission. We thank CAP AI for its participation and representation of low and fixed income
customers.
Pursuant to Stipulation with lIP (Paragraph 6), PacifiCorp will defer a total
$450 000 of the revenue collected under Schedule No.1 0 between May 1 , 2007 and September
2007, and refund the total, spread ratably to participants in the Irrigation Load Control Credit
Rider Program. The total one-time refund is to be paid no later than December 31 , 2007. The
net effect on all Schedule 10 irrigation customers will be an average increase of 3.7% in 2007.
The net increase occurs in a year when the Bonneville Power Administration (BP A) rate credits
passed on to PacifiCorp irrigation customers will be significantly reduced. We acknowledge that
the refund is in addition to the Load Control Service Credit provided to program participants
under Schedule No. 72. We find the refund proposal to be a reasonable incentive to encourage
continued and additional participation in the Company s Load Control Program.
ORDER NO. 30199
We acknowledge that the Stipulation between PacifiCorp and IIPA represents a
compromise of party positions. We find the settlement terms to be in the public interest and its
terms and conditions to be fair, just and reasonable. IDAP A 31.01.01.272-276.
The Commission finds the proposed changes in rates for Schedules 10, 400 and 401
customers to be supported by the developed record in Case No. P AC-06-04 regarding cost of
service and revenue requirement. We find the resultant rates to be fair, just and reasonable and
in the public interest. Idaho Code ~ 61-301. We find it reasonable to approve an effective date
for changes to tariff Schedules 10 and 400 of January 1 2007. We note that in Order No. 30117
issued August 21 2006 we approved a September 1 2006 effective date for proposed changes to
Nu- West Schedule 401 , subject to refund. In this Order we find that no refund is required and
acknowledge the September 1 , 2006 effective date. The Commission further finds reasonable
the Company s proposal with Irrigators to provide a $450 000 credit to encourage additional
participation in the Irrigation Load Control Program during the 2007 irrigation season.
In approving the rate changes we note that the Company represents that its proposed
increase in Schedules 10, 400 and 401 rate enhances its ability to continue to safely and reliably
meet the electrical service needs of its customers in Idaho while leaving the rates of the majority
of the Company s Idaho customers unchanged. We find the Company s efforts in this regard to
be commendable. Approval of the rate changes, we find, also constructively addresses the cost
of service disparity issues between customer classes identified in Case No. P AC-05-01.
Submitted for Commission consideration in this case is a Petition for Intervenor
Funding filed by the Community Action Partnership Association of Idaho. Pursuant to Idaho
Code ~ 61-617 A(2) the Commission may order PacifiCorp to pay all or a portion of the costs of
one or more parties for legal fees, witness fees and reproduction costs not to exceed a total for all
intervening parties combined of $40 000 in any proceeding before the Commission. The total
requested by CAP AI is $927. We find that the Petition of CAP AI was filed timely and satisfied
all of the procedural requirements set forth in Rules 161-165 of the Commission s Rules of
Procedure.
Idaho Code ~ 61-617 A includes a statement of policy to encourage participation by
intervenors in Commission proceedings. The Commission determines an award for intervenor
funding based on the following considerations:
ORDER NO. 30199
(a) A finding that the participation of the intervenor has materially
contributed to the decision rendered by the Commission;
(b) A finding that the costs of intervention are reasonable in amount and
would be a significant financial hardship for the intervenor;
(c) The recommendation made by the intervenor differed materially from the
testimony and exhibits of the Commission Staff; and
(d) The testimony and participation of the intervenor addressed issues of
concern to the general body of users or consumers.
We find that CAP AI's Petition satisfies the findings that we are required to make to justify an
award. We find it fair, just and reasonable to award the total request of CAP AI in the amount of
$927 and find that the public interest is well served by such an award. We find that the
intervenor funding award to CAP AI will further the purpose of encouraging "participation at all
stages of all proceedings before the Commission so that all affected customers receive full and
fair representation in those proceedings.Idaho Code ~ 61-617A(I).
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power, an electric utility, and the issues presented in this case, pursuant to the powers
granted it under Title 61 of the Idaho Code, and pursuant to the Commission s Rules of
Procedure, IDAPA 31.01.01.000 et seq.including specifically Rules 272 through 280 as they
pertain to Settlements.
The Commission has jurisdiction and authority pursuant to the above identified
statute and rules to authorize and require PacifiCorp to re-allocate its revenues among the
customer classes, to change its rate components within customer classes, to award intervenor
funding and to address the other issues in the manner set forth in the text of this Order.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission hereby approves the proposed revisions to rates in
electric tariff Schedules 10 (Irrigation), and 400 (Monsanto Company) for an effective date of
January 1 2007. The Company is directed to file amended tariffs comporting with this Order.
ORDER NO. 30199
IT IS FURTHER ORDERED that the Schedule 401 (Nu-West Industries) change in
rates authorized in prior Commission Order No. 30117 for effective date September 1 , 2006 is
reaffirmed and that no refund is required.
IT IS FURTHER ORDERED and the Commission does hereby approve the terms
and conditions of lIP AlPacifiCorp May 24, 2006 Stipulation submitted in Case No. P AC-06-
04.
IT IS FURTHER ORDERED that the Community Action Partnership Association of
Idaho s Petition for Intervenor Funding is granted in the amount of $927. Reference Idaho Code
9 61-617 A. Pacifi Corp is directed to pay said amount to CAP AI within 28 days from the date of
this Order. PacifiCorp shall include the cost of this award of intervenor funding to CAP AI as an
expense to be recovered in the Company s next general rate case proceeding from the residential
customer class.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
ORDER NO. 30199
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
t1-
day of December 2006.
PAU
tJ~MARSHA H. SMITH, COMMISSIONER
ATTEST:
/~~
Co mission Secretary
bls/O:PAC-O6-04 sw3
ORDER NO. 30199