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Home My WebLink About20061010Application.pdf2!~J:OUNTAIN October 10, 2006 RECEIVED 2006 OCT lO AN 9: IDAHO ly I'd I"" UTILITIES ddAfrJi~S'ON 201 South Main, Suite 2300 Salt lake City, Utah 84111 VL4 OVERNIGHT DELIVERY Idaho Public Utilities Commission 472 West Washington Boise, ID 83702-5983 PA-c - ~ -0(;- t Attention:Jean D. Jewell Commission Secretary Re:In the Matter of the Application ofPacifiCorp for a Deferred Accounting Order to Defer the Costs Related to the MidArnerican Energy Holdings Company Transition PacifiCorp (d.a. Rocky Mountain Power) hereby submits for filing an original and eight copies of its Application of PacifiCorp for a Deferred Accounting Order to Defer the Costs Related to the MidArnerican Energy Holdings Company Transition. Service of pleadings, exhibits, orders and other documents relating to this proceeding should be served on the following: Brian Dickman Manager, Idaho Regulatory Affairs PacifiCorp One Utah Center, Suite 2300 201 South Main Salt Lake City, UT 84111 brian. di ckman~pacifi corp. com It is respectfully requested that all formal correspondence and Staff requests regarding this material be addressed to: Bye-mail (preferred):datareq uest~pacifi corp. com By regular mail:Data Request Response Center PacifiCorp 825 NE Multnomah, Suite 2000 Portland, Oregon, 97232 By fax:(503) 813-6060 Sincerely, 1) ~QLv(~ ( I';)' II D. Douglas Larson Vice President, Regulation Enclosures cc: Service List I hereby certify that on this 10th day of October, 2006, I caused to be served, via E-mail, if address available or US mail, a true and correct copy of PacifiCorp' s (d. Rocky Mountain Power) Application for a Deferred Accounting Order to Defer the Costs Related to the MidArnerican Energy Holdings Company Transition to the following:. Randall C. Budge Racine, Olson, Nye, Budge & Bailey, Chartered 201 E. Center O. Box 1391 Pocatello, ID 83204-1391 Mail: rcb racinelaw.net .... Brad M. Purdy Attorney at Law 2019 N. 1 ih Street Boise, ID 83702 Mail: bm urdV((1),hotmail.com Eric L. Olsen Racine, Olson, Nye, Budge & Bailey, Chartered 201 E. Center O. Box 1391 Pocatello, ill 83204-1391 Mail: elo((1),racinelaw.net --p~ Peggy Ryan Supervisor Regulatory Administration f': I, '"" 2006 OCT lO AM 9: 17BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IDAHO PUBLIC UTILITIES COMMiSSION IN THE MATTER OF THE APPLICATION) OF P ACIFICORP FOR A DEFERRED ACCOUNTING ORDER TO DEFER THECOSTS RELATED TO THE MIDAMERICAN ENERGY HOLDINGSCOMP ANY TRANSITION CASE NO. P AC-O6- It APPLICATION Pursuant to Idaho Code ~61-524 and Procedural Rule 52, PacifiCorp d/b/a Rocky Mountain Power ("PacifiCorp" or the "Company ) applies to the Idaho Public Utilities Commission ("IPUC" or the "Commission ) for an order authorizing the Company to defer and amortize over a three-year period the costs related to the MidAmerican Energy Holdings Company transition ("MEHC Transition" or "Transition ). In support of this Application PacifiCorp states: PacifiCorp is an electrical corporation and public utility in the state of Idaho and is subject to the jurisdiction of the Commission with regard to its public utility operations. PacifiCorp also provides retail electricity service in the states of California, Utah, Oregon Washington and Wyoming. This Application is filed pursuant to Idaho Code ~61-524, which authorizes the Commission to prescribe the accounting to be used by any public utility subject to its jurisdiction. Communications regarding this Application should be addressed to: Brian Dickman Manager, Idaho Regulatory Affairs PacifiCorp 201 South Main Street, Suite 2300 Salt Lake City, UT 84111 E-mail: brian.dickman~pacificorp.com Page 1 - APPLICATION OF P ACIFICORP Dean S. Brockbank Senior Counsel PacifiCorp 201 South Main Street, Suite 2200 Salt Lake City, UT 84111 E-mail: dean.brockbank~pacificorp.com In addition, PacifiCorp requests that all data requests regarding this application be addressed to: By E-mail (preferred)datareq uest~pac ifi co rp. com By regular mail Data Request Response Center PacifiCorp 825 NE Multnomah, Suite 2000 Portland, OR 97232 By facsimile (503) 813-6060 The Company is incurring costs related to the MEHC Transition for employee severance and conversion of computer software to an accounting calendar year. The Company seeks an accounting order authorizing capitalization of the transition costs through March 2007; then, amortization of the capitalized balance over a three year period beginning at the implementation of new rates ITom a general rate case filed after December 2006. PacifiCorp s severance plan requires 60 days notice to those employees for whom there are no longer positions as a result of the Transition. Employees whose positions are being eliminated continue to be notified through September 2006. Under the Severance Program currently in effect for non-union employees, employees who are involuntarily terminated or who voluntarily terminate following a material alteration in their positions will be eligible for enhanced severance benefits consisting of severance pay, outplacement assistance and Company-subsidized health benefits. The specific severance benefits provided will vary depending on the compensation level for the impacted employee s position and the employee length of service with the Company. The cost of the Transition severance plan is anticipated to exceed $25 million on a total company basis. Page 2 - APPLICATION OF P ACIFICORP The MEHC Transition also necessitates changing computer software from a fiscal year ending March to a calendar year ending December. PacifiCorp believes this change will streamline financial reporting for regulatory purposes. The cost of adapting software to a calendar year is estimated at between $.5 million and $1 million. In order to match the benefits and costs of the Severance Program, PacifiCorp wishes to capitalize the costs in accordance with paragraph 9 of SF AS No. 71. The cost of the MEHC Transition would then be amortized on a straight-line basis over a three-year period. Such an amortization is appropriate because transition activities are concentrated in the first several months while the Transition benefits are realized over time. Charging all Transition costs in the period they are incurred would unfairly burden existing customers for the benefit of future customers. For this reason, the matching principle supports capitalizing Transition costs and amortizing them over a reasonable period during which the benefits of the Transition will be realized. Per Commission Order No. 30076, the company is also already deferring certain other benefits resulting ITom the Transition, including credits related to the lease for the West Valley generating facility and the cap on administrative and general expenses. PacifiCorp proposes to account for its Transition costs by charging them to Account 182.3 Other Regulatory Assets and amortizing these amounts to Account 930. Miscellaneous General Expenses upon inclusion in rates. PacifiCorp proposes to include the unamortized amounts in its rate base, where they would earn a return at PacifiCorp s authorized rate of return. Prior to inclusion in rates PacifiCorp proposes to accrue a carrying charge using PacifiCorp s most recent return on rate base. In the absence of the authorizations requested in this Application, the Transition costs would be charged to the Company s operations and maintenance accounts. Page 3 - APPLICATION OF P ACIFICORP PacifiCorp does not request a determination of rate making treatment of the MEHC Transition costs at this time and instead proposes to address recovery of these costs in PacifiCorp s next general rate case application. 10.If the costs of programs like the MEHC Transition could not be recovered in either present or future rates, utilities would be unfairly burdened and significantly discouraged ITom investing in needed efficiencies that benefit rate payers. For this reason, and in order to properly match the costs and benefits of the Transition, the capitalization and amortization requested in this Application is in the public interest. WHEREFORE, PacifiCorp respectfully requests that, in accordance with Idaho Code ~61-527, the Commission issue an order authorizing the Company to defer the costs of the Transition in Account 182.3 Other Regulatory Assets and amortize the balance to Account 930. Miscellaneous General Expenses over a three-year period coincident upon inclusion in rates. DATED: October 10, 2006. Respectfully submitted :D .1&~~A . D. Douglas Larson Vice President, Regulation PacifiCorp Page 4 - APPLICATION OF P ACIFICORP