20080201Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL
DATE:JANUARY 30, 2008
SUBJECT:CASE NO. PAC-07-
PACIFICORP DBA ROCKY MOUNTAIN POWER'S APPLICATION
FOR AN ORDER TO CHANGE DEPRECIATION RATES
On August 31 , 2007, PacifiCorp dba Rocky Mountain Power filed an Application
requesting an Order authorizing a change in depreciation rates for electric property. The
Company requested the depreciation rate change be effective as of January 1 , 2008. The
Application states that the Company s last depreciation rate application was filed in October
2002, and in May 2003 the Company entered into a stipulation with the Staff regarding the
depreciation rates. The stipulation included a commitment that Rocky Mountain perform
another depreciation study within five years. The Company retained a depreciation consultant
and prepared a depreciation study, which resulted in the current Application. The study
proposed a reduction to the current composite depreciation rate of 2.91 % for the Company
electric utility plant, resulting in a new composite depreciation rate of 2.69%. The depreciation
rates proposed in the Application would result in a decrease in depreciation expense of
approximately $3.5 million to plant balances allocated to the Company s Idaho operations.
On October 3, 2007, the Commission issued a Notice of Application and Notice of
Intervention Deadline. The Notice stated that the Company requested its Application be
processed by Modified Procedure, but the Commission stated it would determine after the
Company and Staff review the proposed depreciation rates in workshops whether Modified
Procedure would be appropriate.
DECISION MEMORANDUM
On January 30, 2008, the Company and Staff filed a Stipulation on Rocky Mountain
Power s Application to change depreciation rates. The Stipulation sets forth new depreciation
rates for Rocky Mountain s depreciable electric plant. The proposed depreciation rates applied
to plant balances as of December 31 , 2006, result in a decrease of approximately $4 million in
Rocky Mountain Power s annual depreciation expense for its Idaho jurisdiction operations. The
Stipulation provides that if approved by the Commission the depreciation rates set forth in the
Stipulation should become effective as of January 1 2008.
Commission Rule of Procedure 274 states that "the Commission may summarily
accept settlement of an essentially private dispute that has no significant implications for
regulatory law or policy or for other utilities or customers upon the written request of the
affected parties.The depreciation rates for Rocky Mountain Power s electric plant are
essentially a private matter and have no significant implications for other utilities or regulatory
law or customers. Accordingly, the Stipulation asks that the Commission simply issue an Order
approving the Stipulation and adopt the terms and conditions of the Stipulation without further
procedure.
Staff recommends that the Commission issue an Order approving the Stipulation on
Rocky Mountain Power s Application to change depreciation rates, and direct that the new
depreciation rates in the Stipulation are effective as of January 1 , 2008.
COMMISSION DECISION
Should the Commission issue an Order approving the Stipulation on Rocky Mountain
Power s Application to change depreciation rates, making the new depreciation rates effective as
of January 1 , 2008?
j ,' ~::-. ......~=.
Weldon Stutzman
Deputy Attorney General
bls/M:PAC-O7-14 ws2
DECISION MEMORANDUM