20061103Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
RECEIVED
200& NOV - 3 PM 3: 36
IDAHO F;UG~..iC
UTILITIES COMMISSIO,-
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF A STIPULATION)
WITH NU-WEST INDUSTRIES.
CASE NO. P AC-O6-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Modified Procedure, Notice of Scheduling and Notice of Hearing issued on August 21 2006
submits the following comments.
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-06-4 (Rate increase - Schedules 10 400
STAFF COMMENTS NOVEMBER 3, 2006
401),06-8 (Nu-West Stipulation) and 06-9 (Monsanto Service Agreement) are intended to satisfy
its 2005 Stipulation filing commitment.
Application
PacifiCorp in this Case No. P AC-06-8 requests Commission approval of a June 9, 2006
Stipulation (2006 Stipulation) between PacifiCorp and Nu- West Industries, Inc. proposing an
adjustment to electric tariff Schedule No. 401 (reference PAC-06-4).
Nu- West is a special contract customer producing phosphate fertilizer at facilities in Soda
Springs, Idaho. The Electric Service Agreement currently governing electric service to Nu- West
under Schedule 401 (Agreement) was approved in Order No. 29940; it terminates December 31
2010 and it was not renegotiated in the Stipulation. The existing Agreement states that the
Commission authorized tariff rate changes, effective semi-annually each July 1 and January 1 , apply
to service under Schedule No. 401. On June 21 2006 in a separate Application in Case No. PAC-
06-, the Company submitted a Revised Tariff Schedule No. 401 reflecting new rates for Nu-
West pursuant to the 2006 Stipulation. The Commission in Interlocutory Order No. 30117 (Case
No. P AC-06-4) approved an effective date of September 1 2006 for the revision to Schedule No.
401 subject to refund at the time of the Commission s Final Order. In a departure from the terms of
the existing Agreement, Nu- West has agreed by 2006 Stipulation to allow for the proposed rate
adjustment to be effective September 1 , 2006. Future Commission authorized adjustments are
anticipated to be made according to the terms of the existing Agreement.
STAFF ANALYSIS
Revenue Requirement Analysis
Staff audited the Company Results of Operations (Larsen Testimony, Exhibit 1) for a test
year ending September 30 2005. During the course of its audit, Staff determined that there should
be adjustments to the Results of Operations for reductions in the return on equity, reductions in
capital projects that should not be included in rate base and reductions in annual expenses. Staff
believed it necessary to make these adjustments to the Results of Operations in order to evaluate the
reasonableness of the Company s combined revenue requirement increase proposal made in the
three filings. These adjustments and resulting revenue requirement will be considered preliminary
for future rate cases when other adjustments may be made. Staffs adjustments reduce the revenue
requirement for Idaho by approximately $5.0 million. The Staff Audit Report is provided as
Attachment A, Staff Audit Report, StaffComments/Case No. PAC-06-
STAFF COMMENTS NOVEMBER 3, 2006
The Idaho revenue requirement including Staff s 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. The total revenue that the Company has requested as a result of increases in these three cases
is less than the adjusted revenue requirement Staff determined through its audit. Therefore, from a
revenue requirement increase perspective, the requested increases in the Applications are
reasonable.
Contract Terms
Nu- West is engaged in the production of phosphate fertilizer at facilities located in Soda
Springs, Idaho. The existing Electric Service Agreement governing service to Nu- West became
effective January 1 , 2006 , and will terminate on December 31 2010. The Nu-West service
Agreement was not renegotiated in this Application.
The Company on June 21 2006 in Case No. PAC-06-, submitted Revised Tariff Sheet
No. 401 , reflecting new rates for Nu-West pursuant to the 2006 Stipulation. The Company
requested and the Commission approved an effective date of September 1 , 2006. Order No. 30117.
Those rates, subject to refund, represent a 3.8% increase over the prior rates. Nu-West has agreed
to the $150 000 8% increase which moves it towards the $428 000 increase specified in the cost
of service study provided in Case No. P AC-06-4. Staff believes the increases represent a
reasonable move toward full cost of service. Staff s analysis of Revenue Requirement and cost of
service is detailed in the P AC- E-06-4 case.
The following is a summary of the monthly charges that will apply to Nu-West:
MONTHLY CHARGES
Prior Current Prior Current
Mav-October Proposal November-April Proposal
Customer
Charge $ Per Month $282.$293.$282.$293.
Demand Charge $ Per kW-
Month $ 11.19 $ 11.61
Energy Charge $ Per MWh
(HLH)Mon - Fri $ 23.$ 23.$ 19.$ 19.
HEO800-
HE2300 MPT
(LLH)All other hours
and holidays $ 17.$ 17.$ 17.$ 17.
STAFF COMMENTS NOVEMBER 3, 2006
The Nu- West service Agreement provides that the Commission has the authority to modify
the rates for service under the Agreement under the same standard that applies to tariff customers
generally. Commission authorized tariff rate changes, including surcharges or credits that apply to
tariff customers generally, will also apply to service under the Agreement.
Staff has evaluated the proposed rates for service to Nu- West Schedule 401 and finds that
the rates comply with the 2006 Stipulation and represent a 3.8% increase over the present
Agreement rates.
RECOMMENDATION
Staff notes that the proposed rates, which became effective September 1 2006 subject to
refund, represent a 3.8% increase over prior Schedule 401 rates and that the rates proposed are
acceptable to both parties and appear to be reasonable. Staff s evaluation of the increase amount is
addressed in the cost of service analysis in the pending Case No. PAC-06-4. Staff recommends
that the Commission approve the proposed rates and charges for Nu- West.
Respectfully submitted this vd)day of November 2006.
Scott Woodbury
Deputy Attorney General
Technical Staff: Joe Leckie
Dave Schunke
i: umisc :commen ts/paceO6 Aswtcjldes .doc
STAFF COMMENTS NOVEMBER 3, 2006
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 3RD DAY OF NOVEMBER 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. PAC-06-BY MAILING A COpy THEREOF, POSTAGE PREPAID , TO THE
FOLLOWING:
BRIAN DICKMAN
DEAN BROCKBANK
ACIFICORP
DBA ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2200
SALT LAKE CITY UT 84111
CONLEY E WARD
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701
DATA REQUEST RESPONSE CENTER
ACIFICORP
825 NE MULTNOMAH STE 800
PORTLAND OR 97232
TIM BULLER
ELECTRICAL ENGINEER
AGRIUM US INC
3010 CONDA RD
SODA SPRINGS ID 83276
'-
~oA-
SECRET AR .
CERTIFICATE OF SERVICE