20100915Application.pdf

~~~OUNTÀIN
°ECCi \ .!Î~
September 15, 2010
201 Sou Main, Suite 2300
iom SEP 15 AM 9: 34 Salt Lake City, Utah 84111
VI OVERNIGHT DELIVERY
Jean D. Jewell
Commssion Secreta
Idaho Public Utiities Commssion
472 W. Washington
Boise,ID 83702
RE: Case No. PAC-E-IO-09
In the Matter of the Application of PacifCorp dba Rocky Mountain Power
Requestig Approval of Amendments to the Revised Protocol Alocation
Methodology
Please find enclosed for filing an origina and nie copies of Rocky Mountain Power's
Application, Dirct Testimony and Exhbits in the above-referenced matter. Enclosed is.a CD
contanig electronic copies of the application, testimony and exhbits in the file formats in
which they were created. Also enclosed ar two CDs contaning the confdential and non-
confdential work papers supporting the testiony and exhbits.
The Company has also enclosed a Protective Agreement that it will ask the paries to sign before
being provided with confdential inormation for ths proceeding.
All formal correspondence regarding ths Application should be addressed to:
Ted Weston
Idaho Reguatory Affairs Manger
Rocky Mounta Power
201 South Mai Street, Suite 2300
Salt Lake City, Uta 84111
E-mail: ted.westonêpacificorp.com
Mark C. Moench
Danel E. Solander
Rocky Mounta Power
201 South Main Street, Suite 2300
Salt Lae City, Uta 84111
E-mail: mark.moenchêpacificorp.com
daneLsolanderêpacificorp.com
Communcations regarding discovery matters, including data requests issued to Rocky Mounta
Power, should be addressed to the following:
Idaho Public Utilties Commssion
September 15,2010
Page 2
By E-mail (peferred):datarequest!ßacificorp.com
ted. weston(ßpacificorp.com
By reguar mail:Data Request Response Center
PacifiCorp
825 NE Multnomah Stret, Suite 2000
Portland, ~egon 97232
Informal inquies may be directed to Ted Weston, Idao Reguatory Affais Manager at (801)
220-2963.
Sincerely,
~~/~
Vice President, Reguation
Enclosures
cc: Rady Budge, Monsanto (excluding confdential work papers)
Enc Olsen, IIPA (excludig confdential work papers)
Tim Buller, Agrum (excluding confdential work papers)
Mark C. Moench
Danel E. Solander
201 South Mai Street, Suite 2300
Salt Lake City, Uta 84111
[phone]
mark.moench(ipacificorp.com
daniel.solander(ipacificorp.com
iow Sf? l 5 AM 9: 34
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
In the Matter of the Application ofPacifiCorp
dba Rocky Mounta Power for Approval of
Amendments to Revised Protocol Allocation
Methodology
Case No. PAC-E-I0-09
APPLICATION FOR APPROVAL
OF AMNDMENTS TO
REVISED PROTOCOL
ALLOCATION METHODOLOGY
Rocky Mountan Power (Rocky Mounta Power or Company) hereby submits its
application (Application) to the Idaho Public Utilties Commission (Commission) requesting
approval of amendments to the Revised Protocol allocation methodology previously approved by
the Commssion in Order No. 29708, Case No. PAC-E-02-3. In support of the Application,
Rocky Mountan Power states as follows:
1. Rocky Mounta Power is a division of PacifiCorp. PacifiCorp is an ~egon
corpration that provides electrc service to retal customers though its Rocky Mounta Power
division in the states ofIdao, Uta and Wyoming, and though its Pacific Power division in the
states of Californa, Oregon, and Washington.
2. Rocky Mounta Power is authorized to do and is doing business in the state of
Idaho. The Company provides retal electrc serice to approximately 72,700 customers the state
of Idao and is subject to the jursdiction of the Commssion.
1
3. The Company respectfly requests tht the Commssion complete its review and
issue an order with respect to ths Application no later th March 31, 2011, for the reasons
discussed herein.
4. Communcations regarding ths fiing should be addressed to:
Ted Weston
Idaho Reguatory Affairs Manager
Rocky Mountan Power
201 South Main Street, Suite 2300
Salt Lake City, Uta 84111
E-mail: ted.weston(ipacificorp.com
Mark C. Moench
Danel E. Solander
Rocky Mountan Power
201 South Mai Stret, Suite 2300
Salt Lae City, Uta 84111
E-mail: markmoenchêpacificorp.com
danel.solander(ipacificorp.com
In addition, Rocky Mounta Power requests tht all data requests regarding the
Application be sent in Microsoft Word or plai text format to the followig:
By emal (preferred):dataequest!ßacificorp.com
By reguar mail:Data Request Response Center
PacifiCorp
825 NE Multnomah Street, Suite 2000
Portland, Oregon 97232
Inormal questions may be diected to Ted Weston, Idaho Reguatory Afairs Manager at
[phone].
Background
5. PacifiCorp is an electrcal corpration and public utilty in Idaho and provides
retal electrc service to more than 1.7 millon customers in Idaho and five other western states.
PacifiCorp owns substtial generation and trmission facilties. Augmented with wholesale
2
power purchases and long-term transmission contrcts, these facilties operate asa single system
on an integrated basis to provide service to all customers in a cost-effective maner. PacifiCorp
recovers costs of owng and operatig its generation and tranmission system in retal prices
established from time to tie in state regulatory procengs.
6. In such state proceedings, it is customar to first determne what assets are
deemed to be in the Company's rate base in the state conducting the proceeding. Then, because
all of the Company's generation and tranmission resources are deemed to be use to serve the
Company's customers in all of its state jursdictions, it is necessar to determe what porton of
the costs associated with each of the rate-based resources ought to be allocated to customers in
the state for which prices are being established. If different state commssions make different
decisions regardig what resources should be deemed to be in PacifiCorp's rate base or if
different state commssions adopt different policies for allocating the costs of resources among
states, the Company may not be aforded the opportty to recover its ful cost of providing
electrc service.
7. Each ofPacifiCorp's state reguatory commssions ha the abilty to pursue
policies that it believes are in the public interest in its state. However, it is also importt for
PacifiCorp to be able to make business decisions in an environment where differig state policies
do not result in denying the Company a reasonable opportty to recover its prudently incured
costs. Ths would create a disincentive for PacifiCorp to invest in its system.
8. Accordingly, in 2002, PacifiCorp filed applications in each of its six jursdictions
requesting the state commissions to investigate a number of importt issues related to its status
as a multi-jursdictional utilty and to endorse a process though which these issues can be
considered by staeholders, the Multi-State Process (MSP). In its application, the Company
3
identified issues to be investigated, related priarly to the inter-jursdictional allocation of
prudently-incured costs associated with investments in existig and new generation and
transmission resoures and how futu policy scenaros includig, but not limted to, dict
access, sale or purchae of service terrtory or closure of a major industral facilty should be
considered and implemented among the Compay's state jursdictions to allow PacifiCorp a
reasonable opportity to recover all of its prudently-incurred costs, among other thigs.
9. Afer approximately two year of discussions and negotiations, on September 29
and 30, 2003, PacifiCorp initiated proceedigs in Uta, Oregon, Wyomig and Idao seekig
ratification of an Inter-jursdictional Cost Allocation Protocol (protocol) by the Public Service
Commssion of Uta, the Public Utilty Commission of~egon, the Public Service Commssion
of Wyomig, and the Idaho Public Utilties Commssion (collectively, the Commssions).
10. Thereafer, subsequent and substtial discussions occured tht resulted in the
development of a Revised Protocol. The Revised Protocol was agreed to by the paries on June
28,2004, and seeks to allocate PacifiCorp's costs among its jursdictional states in an equitable
maner, ensures PacifiCorp plans and operates its generation and tranmission system on a six-
state integrted basis tht achieves a leas cost-least risk resource portolio for customers, allows
each state to independently establish its ratemakg policies and provides PacifiCorp with the
opportty to recover 100 percent of its prudently-incur costs. The Revised Protocol was
approved by the Idao Public Utilty Commission on Febru 28,2005.
Request for Approval of Amendments to the Revised Protocol
11. Since the approval of the Revised Protocol, interested paries in Uta raised
concerns that the continued use of the Revised Protocol may result in Uta-allocated revenue
requirement that is higher when compaed to revenue requirement allocated using the Rolled-In
4
methodology than was anticipated by the Public Service Commission of Uta when it originlly
adopted the Revised Protocol. The Stading Committee and workgroups have been
collaborating since September 2009 to come up with potential solutions acceptable to all pares
in the context of the Revised Protocol allocation methodology, includig the pedormance of
varous studies by the Company at the request of the Stading Commttee.
12. In July 2010 the Stading Commttee reached an agreement in priciple to amend
the Revised Protocol allocation methodology; such agreement will be known as the 2010
Protocol and is provided as Exhbit NO.1 to the direct testimony of Ms. Andra L. Kelly. If
adopted, the 2010 Protocol will remai in effect for Company filings made thóugh 2016. The
amendments are intended to allow for greater movement to a Rolled~In allocation methodology,
while retag a Hydro Endowment for the former Pacific Power & Light states of ~egon,
Californa, Washigton and par of Wyomig.
13. As fuer described in the attched direct testimony of Company witnesses Ms.
Andrea L. Kelly, Vice President of Regulation, Mr. Steven R. McDougal, Director of Revenue
Requirement, and Mr. Gregory N. Duvall, Director, Long-Rage Planng and Net Power Costs,
the 2010 Protocol contiues to identifY state resources based on cost responsibilty and regiona
resources for the Hydro Endowment calculation. Besides using a Rolled-In allocation
methodology as the staing point, a signficant change relates to the Embedded Cost Differential
(ECD). The scope of the ECD ha been reduced and limted, using a comparson of embedded
costs based on resources in place on the Compay's system prior to 2005. The ECD calculation
ha been based on projected pre-2005 resource costs and the value allocated to each state is fied
and levelized over the term of the 2010 Protocol. For the duration of the 2010 Protocol a fixed
dollar amount pe year deviation would be applied to each state's revenue requiment under the
5
Rolled-In allocation methodology. The deviation is composed of two pars; a situs adjustent
associated with the surcharge imposed under the Klamath Hydroelectc Settlement Agrement
to Oregon and Californa with a correspondig credit to the other states, and the fixed levelized
ECD.
14. The requested amendments in the Revised Protocol allocation methodology result
in a consistent and fair cost allocation method tht assures the Company a reasonable opportty
to recover all of its prudently-incured costs and supports fuer system investment. Adoption
of the chages are just, reasonable and in the public interest.
Proposed Commission Proceeding Process
15. Given the signficant discussions and anysis since November 2008 by interested
paries, as described in Ms. Kelly's direct testimony, Rocky Mounta Power respectfly
requests tht the Commission complete its review and issue an order with respect to ths
Application no later th Marh 31, 2011. In ths context, the Company proposes the following
ilustrative schedule of milestones that would allow for discovery, rounds of testimony and
hearngs that would allow suffcient time for a comprehensive review:
Event Date
PacifiCorp Aoolication, Testimony and Exhbits Seotember 15,2010
Intervenor Testimony due Ealy-December 2010
PacifiCoro Rebutt Testimony due Early-Janua 2011
Public Hearji Late-Janua 2011
Briefs due Mid-Febru 2011
Target Date for Commission Decision Marh 31, 2011
WHREFORE, by ths Application, Rocky Mounta Power respectfuly requests tht
the Commssion issue an order approving the 2010 Protocol allocation methodology as described
in the dirct testimony of Company witnesses Ms. Kelly, Mr. McDougal and Mr. Duvall no later
th March 31, 2011.
6
DATED ths 15th day of September 2010.
Respectfully submitted,
ROCKY MOUNTAI POWER
MOil( MfWNlak(w
Mark C. Moench
Danel E. Solander .
201 South Mai Street, Suite 2300
Salt Lake City, Uta 84111
Tel: [phone]
Fax: [phone]
mark.moench(ßpacificorp.com
daniel.solander(ipacificorp.com
7