20070619Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEG AL
FROM:SCOTT WOODBURY
DATE:JUNE 13, 2007
SUBJECT:CASE NO. P AC-07-05 (Rocky Mountain Power)
GENERAL RATE CASE
On June 8, 2007, PacifiCorp dba Rocky Mountain Power (Company) filed an
Application with the Idaho Public Utilities Commission (Commission) for authority to increase the
Company s base rates for electric service by $18.5 million annually, or 10.3%. The increase in base
rates would vary by class of customer and actual usage. As reflected in the Company s Application
this request is $3.6 million less than the increase otherwise supported by the Company s revenue
requirement analysis, but was limited due to the Revised Protocol rate mitigation cap. The Revised
Protocol is the allocation method utilized to allocate and assign generation, transmission and
distribution costs to PacifiCorp s six retail state jurisdictions. Reference Case No. P AC-02-
(Inter-Jurisdictional Cost Allocation), Order No. 29708.
Rocky Mountain Power provides electric service to over 67 000 customers in eastern
Idaho. As reflected in accompanying testimony, Rocky Mountain Power s need for the revenue
increase requested is primarily caused by cost increases in the following areas:
1. Fuel, wholesale market and transmission wheeling price increases, which
contribute to significant increases in net power costs.
2. New generation, transmission and distribution plant investments.
3. Labor-related cost increases.
The Company contends that all elements of its rate increase are necessary to maintain and provide
adequate, efficient, safe and reliable electric service to its customers and to provide a reasonable
DECISION MEMORANDUM
opportunity for the Company to earn a fair return on its investments. The Company claims it is
currently earning a return on equity (ROE) of 5.3% in its Idaho jurisdiction. The requested increase
in rates will allow the Company to earn an ROE of 10.75%. The Company contends that the higher
ROE is necessary to attract capital necessary to maintain its utility infrastructure.
The proposed average increase in base rates by kilowatt-hour will result in the following
allocation of the net price increase for major customer classes:
Residential: 6.
Irrigation: 6.
Industrial contract Schedule 400 (Monsanto Corporation): 24.
Industrial contract Schedule 401 (Nu-West Industries): 14.
General service: no increase
The Company s rate spread and rate design proposals are based on a submitted class cost of service
study and include a proposal that, in time of rising costs, no individual customer class would receive
a rate reduction.
In addition to the revenue increase requested , the Company also proposes operational
changes to its electric service regulations. The Company proposes changes to Regulation No.1 0
proposing payment of collection agency cost be the responsibility of the customer causing such a
charge to be incurred. The Company is also proposing increasing Schedule 300 fees associated
with the connection and reconnection of service and changing the hours during which connection
and reconnection of service is offered after normal office hours. In addition, the Company is
proposing changes to Regulation No. 12 including housekeeping, clarification, and changing the
methodology of refunding customer advances for line extension.
The revised tariff schedules proposed by the Company reflect a proposed effective date
of January 1 , 2008.
COMMISSION DECISION
Based on its review of the Company s Application and Idaho law, Staff at this time
recommends that the Commission issue a Notice of Application and Notice of Intervention
Deadline. Does the Commission agree with Staff s recommended procedure?
Scott Woodbury
bls/M:PAC-O7-05 sw
DECISION MEMORANDUM