20070531final_order_no_30329.pdf

Office ofthe Secretary
Service Date
May 31, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR
APPROVAL OF REDUCTIONS IN
BONNEVILLE POWER ADMINISTRATION
RESIDENTIAL EXCHANGE CREDITS ORDER NO. 30329
CASE NO. PAC-07-
On May 25, 2007, Rocky Mountain Power (Company), a division of PacifiCorp,
filed an Application for approval of reductions in the Bonneville Power Administration
Residential Exchange Credits. The Company requests expedited treatment of its Application
with the proposed revised tariff Schedule 34 to become effective on June 1 , 2007.The
Commission finds good cause to act on the Company s Application in an expedited manner, and
approves it as set out below.
THE RESIDENTIAL EXCHANGE PROGRAM
All citizens of the Pacific Northwest are entitled to share in the benefits from the
region s federal hydroelectric power system. See 16 US.C. ~~ 832, 837-839. As a regional
utility, PacifiCorp dba Rocky Mountain Power is entitled to participate in the Residential
Exchange Program (REP), which is the mechanism designed to extend the benefits of low-cost
federal power to residential and small irrigation customers served by investor-owned utilities in
the region. 16 D.C. ~ 839c.The REP is administered by the Bonneville Power
Administration (BP A), the federal agency tasked with marketing the power generated by the
federally owned dams on the Columbia River.
BPA's public power utility customers, such as municipalities, cooperatives, and
public utility districts, typically benefit from the federal hydroelectric system through their
preferential access to low-cost federal power provided by BP A. The residential and irrigation
customers of the regional investor-owned utilities, such as PacifiCorp, Idaho Power, and Avista
share in the benefits of the federal hydroelectric system through the REP, by receiving credits on
their electric bills. The investor-owned utilities provide electricity to approximately 60% of the
Northwest's population. BP A uses formulas based on various factors, including a utility
average system cost for producing power, to distribute benefits through the REP. In application
1 16 US.C. ~~ 839-839h (2000) is titled the Pacific Northwest Electric Power Planning and Conservation Act of
1980, and is commonly referred to as the "Northwest Power Act" (NWP A).
ORDER NO. 30329
the REP acts as a cash rebate to the residential and small farm customers of the investor-owned
utilities, as required by the Northwest Power Act (NWPA).
In 2000, BP A offered the region s investor-owned utilities the option of entering into
a settlement of the REP (2000 REP Settlement) in lieu of the traditional REP calculation. The
entire region s investor-owned utilities, including PacifiCorp, entered into the REP Settlement
with BP A. Payments to Idaho s regional utilities under the REP Settlement totaled
approximately $259 million for the 2002-2006 term, and $35 million for the first four months of
2007. As previously stated, these payments were passed through directly to customers as credits
on their electric bills.
THE
TH CIRCUIT DECISIONS
On May 3, 2007, the 9th Circuit Court of Appeals issued two opinions in 18
consolidated appeals concluding that certain BP A actions in entering the 2000 REP Settlement
with the region s six investor-owned utilities, including PacifiCorp, Idaho Power, and Avista
were "not in accordance with law.Portland General Electric Co. v. Bonneville Power Admin.
F.3d , 2007 WL 1288786 (9thCir); Golden Northwest Aluminum, Inc. v. Bonneville Power
Admin., 2007 WL 1289539 (9 Cir) (Court Decisions). Consequently, on May 21
2007, BPA issued letters to PacifiCorp, Idaho Power, and Avista indicating that because of the
Court Decisions it was suspending the monthly payments or credits that it was making pursuant
to the REP settlements.
THE COMPANY'APPLICATION
On May 25, 2007, Rocky Mountain Power filed an Application for approval of
reductions in the Bonneville Power Administration Residential Exchange Credits. The Company
seeks approval of a revised Electric Service Schedule No. 34, submitted with the Application.
Also with its Application the Company filed a copy of a letter from BP regarding the
elimination of REP payments, a balancing account study, and an affidavit of Jeffrey K. Larsen
regarding the request for expedited treatment. The Company states that as a result of the
proposed revisions eliminating the REP credit pass-through, the net monthly bill for the average
Idaho residential customer using 1 000 kWh will increase 28 percent. Irrigation customers' net
monthly bill, on average, will increase 51 percent for service rendered on and after July 13 2007.
The Company states that the effect of the proposed revisions to Schedule 34 is to
eliminate the REP credit for residential customers and continue the credit to eligible irrigation
ORDER NO. 30329
customers into the first part of the current irrigation season, until the surplus in the balancing
account is reduced to zero. Because the irrigation season is just beginning, eligible irrigation
customers have not yet received a material level of the REP credits for the year, and continuing
their credit until the balancing account is exhausted will provide some level of benefits during at
least part of the current irrigation season. The Company anticipates that with the proposed
changes, the REP credit will continue for irrigation customers for service through July 12 2007.
The Company requests expedited treatment stating that it is warranted in order to
ensure that customers are not paid credits that exceed the benefits received from BP
IDAHO IRRIGATION PUMPERS ASSOCIATION COMMENTS
On May 25 , 2007, the Commission received a letter from the executive director of
the Idaho Irrigation Pumpers Association (lIP A). lIP A stated that it supports distributing the
remaining credits in the balancing account to the irrigation class at the "pre-termination levels
until such time as they are exhausted, as proposed by the Company. lIP A stated that this is a
necessary step in trying to mitigate the loss of the credits to the irrigation class under the
circumstances. lIP A stated that it polled its members and they support this approach. This was
communicated to Rocky Mountain Power prior to the filing of its Application. lIP A expressed
its support for the Company s Application, and asked the Commission to act quickly on it.
STAFF RECOMMENDATION
Staff recommended that the Commission find that good cause exists under these facts
to consider and rule upon the Company s Application on an expedited basis. Additionally, Staff
reviewed the proposed revisions to Schedule 34, and recommended that the Commission approve
the Company s Application. Staff discussed the possibility of several different scenarios for the
distribution of the remaining credit balance in the Company s REP balancing account. However
given the expressed preference of the irrigation customers, as stated by the lIP A, Staff supported
the requested disbursement.
DISCUSSION/FINDINGS
We find that good cause exists to issue this Order on an expedited basis, based upon
the suspension of the REP payments/credits by BP A to Rocky Mountain Power that are passed
directly through to customers. Continuation of the credit after the suspension of payments by
BP A would result in a rapid accumulation of a negative balance. Failure to take immediate
action will result in significant overpayment of credits to customers with rapid growth in the
ORDER NO. 30329
credit deferral balance subject to later recovery through customer surcharge. We recognize that
this suspension of the REP benefits to customers will result in an immediate and substantial
increase in residential and small farm/irrigation customers' electric bills. However , we also
acknowledge that this credit is a direct pass-through of a federal benefit, and the actions of the
federal court and federal agency with authority over such benefits are what require our actions in
eliminating the billing credit.
Based upon the representations of the Idaho Irrigation Pumpers Association, we find
that continuation of the full benefit for irrigation customers until the balancing account is
exhausted is a reasonable method of passing at least some benefit through to the irrigators for
2007. We find this reasonable based upon the fact that the residential customers have seen the
credit on their bills for five months, and the irrigation season has just begun. We find this to be a
just and reasonable allocation. The proposed revisions to the Company s Schedule 34 are
approved.
ORDER
IT IS HEREBY ORDERED that the Application of Rocky Mountain Power to
reduce the BP A credit is approved. The proposed revisions to Schedule 34 are approved as filed
with an effective date of June 1 , 2007.
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 with regard to any
matter decided in this Order. 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. 30329
DONE by Order ofthe Idaho Public Utilities Commission at Boise, Idaho this 3/ sr
day of May 2007.
SHA H. SMITH, COMMISSIONER
ATTEST:
D. Jewe
Commission Secretary
O:PAC-07-1O dw
ORDER NO. 30329