20060630final_order_no_30076.pdf

Office of the Secretary
Service Date
June 30, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF P ACIFICORP (DBA ROCKY MOUNTAIN
POWER) FOR AN ACCOUNTING ORDER
TO DEFER THE RATE CREDITS IN THE
MIDAMERICAN-ACIFICORP
ACQUISITION COMMITMENTS 127 AND 131
CASE NO. P AC-06-
ORDER NO. 30076
On April 28, 2006, PacifiCorp (dba Rocky Mountain Power) filed an Application
requesting that the Commission issue an accounting order. Rocky Mountain requested authority
to book and defer the rate credits arising as a result of Commitments 127 and 131 approved by the
Commission in the MidAmerican-PacifiCorp acquisition proceeding, Case No. P AC-05-
See Order No. 29998. On May 17 2006, the Commission issued a Notice of Modified Procedure
requesting that interested parties submit comments in this matter no later than June 14, 2006.
The only comments received were submitted by the Commission Staff and it recommended
approval of the Application.Based upon our review of the Application and the Staff
comments, we grant Rocky Mountain s request for an accounting order as outlined in greater
detail below.
THE APPLICATION
A. Background
In the MidAmerican-PacifiCorp acquisition proceeding, the Commission adopted
numerous state-specific commitments including 127 and 131. In Commitment 127, MidAmerican
and PacifiCorp committed to reduce the annual non-fuel costs of the West Valley lease by an
expected $3.7 million in 2006, $5 million in 2007, and $2.1 million in 2008 on a total Company
basis. This adjustment would reduce costs by $417 000 per month (total company).
Commitment 127 also provided that: "Beginning with the first month after the close of the
transaction. . . , Idaho s share of the monthly rate credit will be deferred for the benefit of
(Idaho) customers and accrue interest at PacifiCorp s authorized rate of return.Order No.
29998, Idaho Commitments at p. 17.
In Commitment 132, MidAmerican and PacifiCorp agreed to reduce the total
Company administrative and general (A&G) costs by $500 000 per month and to provide
ORDER NO. 30076
(subject to offset provisions) a total Company rate credit in that amount. Id. at pp. 18-19. On an
annual basis, A&G costs would be reduced in FERC Accounts 920 through 935 by $6 million.
This commitment also provided that Idaho s share of the monthly rate credit will be deferred for
the benefit of Idaho customers and accrue interest at PacifiCorp s authorized rate of return.
B. The Accounting Treatment
In its Application, Rocky Mountain proposed to book and defer the rate credits
beginning on April 1 , 2006. The Company proposed to allocate the deferrals relating to the West
Valley lease (I27) among the six states based upon the "seasonal system generation combustion
turbine" (SSGCT) allocation factor for the 12 months ending March 31 , 2006. The amount of
the deferral accounting related to the A&G cost savings in Commitment 131 will be allocated
among the six states based upon the system overhead (SO) allocation factor for the 12 months
ending March 31 , 2006. Application at ~
Rocky Mountain proposed to account for these rate credits by charging the general
cost savings to Account 400 (Operating Revenues) with the credits being recorded in Account
254 (Other Regulatory Liabilities). The Company proposed that the amortization of the balances
would be accomplished by debiting Account 254 and crediting Account 400.Id. at ~ 6.
Rocky Mountain did not request a determination of ratemaking treatment for these
rate credits at this time. Instead, the Company proposed to address these issues associated with
the rate credits in the Company s next general rate case.
STAFF COMMENTS
After reviewing the Company s proposed accounting treatment, the Staff agreed that
the rate credit created by the Commitments should be deferred as set forth in the Company
Application. The Staff also agreed that the appropriate date for beginning the deferral accounts
is April 1 , 2006. Staff Comments at 3. While the specific amounts of the deferral credits cannot
be determined at this time, the Staff agreed with the Company that the credits should be allocated
to Idaho based upon the SSGCT and the SO allocation factors.
In addition to the deferral credits, Rocky Mountain agreed that the deferral accounts
will accrue interest at its authorized rate of return and will continue to accrue interest until the
Commission determines the ratemaking treatments of the rate credits in the next general rate
case. Staff proposed that the appropriate interest rate should be 8.827% based upon the Staffs
ORDER NO. 30076
1999 audit.Staff indicated in its comments that Rocky Mountain agrees that this is the
appropriate interest rate. Id. at 4.
DISCUSSION
After reviewing the Application and the Staff s comments, we grant Rocky
Mountain s Application for an accounting order.Consistent with the two Commitments
approved in our acquisition Order No. 29998, Rocky Mountain should begin to record the
deferral rate credits beginning April 1 , 2006. We further find that the deferral credits should
accrue interest at a rate of 8.827%. The rate credits shall be deferred with interest until the
Commission determines the appropriate ratemaking treatment in Rocky Mountain s next general
rate case.
ORDER
IT IS HEREBY ORDERED that the Application for an accounting order submitted
by PacifiCorp (dba Rocky Mountain Power) is granted.
IT IS FURTHER ORDERED that Rocky Mountain book the deferred rate credits
caused by the two Idaho Commitments as set out in its Application. The Company shall begin
its deferral accounting effective April 1 , 2006.
IT IS FURTHER ORDERED that the deferral accounts shall accrue interest at a rate
of 8.827%. The rate credits shall continue to be deferred with interest until the Commission
determines the appropriate ratemaking treatment in Rocky Mountain s next general rate case.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. P AC-06-
may petition for reconsideration within twenty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this case. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30076
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 36 -rk.
day of June 2006.
PAUL KJELL NDER, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~&\
Je D. Jewell
Co mISSIon Secretary
bls/O:PAC-O6-05 dh2
ORDER NO. 30076