20070831Application.pdf

~~~OUNTAIN
201 South Main, Suite 2300
Salt Lake City, Utah 84111
August 31 , 2007
VIA OVERNIGHT MAIL
. .
\VED
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Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ill 83702
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Re:Application of Rocky Mountain Power for an Order Authorizing a Change in Depreciation
Rates Applicable to Electric Property
Case No. PAC-O7- c4-
Dear Ms. Jewell:
Rocky Mountain Power, a division ofPacifiCorp, hereby submits for filing an original and nine (9) copies
of its Application in the above-referenced matter, along with nine copies of its direct testimony and
exhibits.
Communications relating to this proceeding should be served on the following representatives for Rocky
Mountain Power:
Justin Lee Brown
Senior Counsel
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
J ustin.Brown~Pacifi Corp .com
Brian Dickman
Manager, Idaho Regulatory Affairs
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
B rian.Di ckman~Pac ifi Corp. com
In addition, it is respectfully requested that all formal correspondence and Staff requests regarding this
material be addressed to one or more of the following:
By E-mail (preferred):datarequest~pac ificorp. com
By Fax:[phone]
By Regular mail:Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
Sincerely,
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Vice President, Regulation
Enclosures
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RECE1\lED
1~fi1 M.iG 31 \ A q: 25
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\DJ1J10 PU1?M~~lO~'i
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSIH~LfflES COMi\;
U v .
IN THE MATTER OF THE
APPLICA TION OF ROCKY
MOUNTAIN POWER FOR AN
ORDER AUTHORIZING A CHANGE
IN DEPRECIATION RATES
APPLI CABLE TO ELECTRICPROPERTY
Direct Testimony and Exhibits
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CASE NO. P AC-O7- L.f
ROCKY MOUNTAIN POWER
CASE NO. PAC-07- tL(
August 2007
Justin Lee Brown
201 South Main Street, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
Email: iustin.brown~pacificorp.com
RECEIVED
lfiUl t\UG 3 t A o~ 25
Attorney for Rocky Mountain Power iL,/,);!.) FUBLIC
UTILrnES COi:lHvliSSlON
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNT AIN POWER FOR AN
ORDER AUTHORIZING A CHANGE
IN DEPRECIATION RATES
APPLICABLE TO ELECTRIC
PROPERTY
CASE NO. PAC-07- It.(
APPLICATION OF
ROCKY MOUNTAIN POWER
Rocky Mountain Power, a division of PacifiCorp ("Company ), pursuant to Section
61-525 Idaho Code and Rule 52 of the Idaho Public Utilities Commission ("Commission
Rules of Procedure hereby applies to the Commission for approval of proposed changes to
depreciation rates applicable to the Company s depreciable electric property. The Company
seeks an effective date for authorized depreciation rate changes of January 1 , 2008. In
support of this Application, Rocky Mountain Power states as follows:
Rocky Mountain Power is authorized to do and is doing business in the state
of Idaho. The Company provides retail electric service to approximately 67 000 customers in
the state of Idaho and is subject to the jurisdiction of the Commission. The Company also
provides retail electricity service under the name Rocky Mountain Power in the states of
Utah and Wyoming and under the name Pacific Power in the states of Oregon, Washington
and California.
APPLICA nON OF
ROCKY MOUNTAIN POWER
Page 1
Communications regarding this Application should be addressed to:
Brian Dickman
201 South Main, Suite 2300
Salt Lake City, Utah 84111
Telephone: [phone]
Fax: [phone]
Email: brian.dickman~pacificorp.com
and to:
Justin Lee Brown
201 South Main, Suite 2300
Salt Lake City, Utah 84111
Telephone: (80l) 220-4050
Fax: [phone]
Email: iustin.brown~pacificorp.com
In addition, the Company respectfully requests that all data requests regarding this
matter be addressed to one or more of the following:
Bye-mail (preferred)
By regular mail
datarequest~paci fi corp. com
Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, OR 97232
By facsimile [phone]
The Commission is empowered to ascertain and determine the proper and
adequate rates of depreciation of the Company s property used in the rendering of retail
electric service under the provisions of Section 61-525 Idaho Code. Each utility under the
Commission s jurisdiction is required to conform its depreciation accounts to the rates so
ascertained and determined by the Commission. The Commission may make changes in
such rates of depreciation from time to time as the Commission may find necessary.
The Company s last depreciation application, Case No. PAC-02-, was
filed by the Company in October 2002, and in May 2003 the Company entered into a
APPLICA nON OF
ROCKY MOUNTAIN POWER
Page 2
stipulation with the Commission Staff concerning the application. That stipulation included a
commitment from the Company to perform another depreciation study within the next five
years.
Over the last year the Company has worked with its depreciation consultant
and other interested parties from across the Company s multi-state service territory, including
the Commission Staff, to solicit comments and recommendations that were taken into
consideration by the Company and the Company s depreciation consultant in during the
development of the current depreciation study.
In order for the Company to maintain uniform utility accounts, the
depreciation rates for system-allocated plant (i.e. production, transmission, mining and
certain general plant) must be uniform and consistent among all of the Company s six state
regulatory jurisdictions. In the event different depreciation rates were ordered in each state, it
would result in multiple sets of depreciation accounts and records that would need to be
adjusted annually for changes in allocation factors, which would impose a costly
administrative burden on the Company and unnecessary expense for the Company
ratepayers.
The proposed accounting changes are supported by the Company
depreciation study, developed for the Company by Mr. Donald S. Roff of Depreciation
Specialty Resources. The study is attached as an exhibit to Mr. Roffs prefiled testimony
(Exhibit No.5) and will be referred to hereafter as the DSR study. As shown in Table A of
Exhibit No.5 and as summarized in Mr. Roffs testimony, the DSR study proposes a
reduction to the current composite depreciation rate of 2.91 percent for the Company
electric utility plant resulting in a new composite depreciation rate of 2.69 percent. The
effect of applying the recommended depreciation rates to the December 31 , 2006 depreciable
plant balances is a decrease in total Company annual depreciation expense of approximately
$30.6 million, compared with the level of annual depreciation expense developed by
APPLICATION OF
ROCKY MOUNTAIN POWER
Page 3
application of the currently authorized depreciation rates to the same plant balances. The
proposed changes specific to the Idaho jurisdiction would be a decrease in depreciation
expense of approximately $3.5 million based on plant balances as of December 31 , 2006.
Company witness Henry E. Lay, corporate accounting controller, provides testimony
addressing the Company s proposed depreciation rates and gives background information
describing the depreciation study process. Mr. Lay also explains the Company s confidence
in both the depreciation study process and in the integrity of the Company s accounting data
relied on by Mr. Roff in preparing the depreciation study.
Company witness Mark C. Mansfield, Vice President, Thermal Operations, will
explain the process used by the Company s generation engineering staffs to develop
estimated life spans for the Company s thermal and hydroelectric generating plants and will
explain the reasons for including terminal net salvage in the steam generating plant
depreciation
Simultaneous with the filing of this Application, the Company has filed its
direct case including testimony and exhibits of the above witnesses. Pursuant to Commission
Rule of Procedure 201 , the Company requests that this Application be processed under
Modified Procedure.
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission
issue a final Order determining:
The DSR study recommendations regarding depreciation rates are the proper
and adequate current depreciation rates for the Company; and
The Company shall reflect, beginning January 1 , 2008, the depreciation rates
proposed in the DSR study in its accounts and records.
APPLICATION OF
ROCKY MOUNTAIN POWER
Page 4
DATED this 31 th day of August, 2007.
Respectfully submitted
By '3"),,, g,.0J'o 1
(""'"
Justin Lee Brown
Attorney for Rocky Mountain Power
APPLICA nON OF
ROCKY MOUNTAIN POWER
Page 5