20101007notice_of_application_pac.pdf

Office of the Secretary
Service Date
October 7 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROV AL OF
AMENDMENTS TO REVISED PROTOCOL
ALLOCATION METHODOLOGY
NOTICE OF APPLICATION
CASE NO. PAC-IO-
NOTICE OF
INTERVENTION DEADLINE
YOU ARE HEREBY NOTIFIED that on September 15 , 2010, PacifiCorp dba Rocky
Mountain Power (PacifiCorp; Company) filed an Application with the Idaho Public Utilities
Commission (Commission) requesting approval of amendments to the Revised Protocol
allocation methodology previously approved by the Commission in Order No. 29708, Case No.
PAC-02-
BACKGROUND - REVISED PROTOCOL
PacifiCorp is an electrical corporation and public utility in Idaho and provides retail
electric service to more than 1.7 million customers in Idaho and five other western states.
PacifiCorp owns substantial generation and transmission facilities. Augmented with wholesale
power purchases and long-term transmission contracts, these facilities operate as a single system
on an integrated basis to provide service to all customers in a cost-effective manner. PacifiCorp
recovers costs of owning and operating its generation and transmission system in retail prices
established from time to time in state regulatory proceedings.
Because all of the Company s generation and transmission resources are deemed to
be used to serve the Company s customers in all of its state jurisdictions, the Company contends
it is necessary to determine what portion 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 commissions make different decisions regarding what resources should be
deemed to be in PacifiCorp s rate base or if different state commissions adopt different policies
for allocating the costs of resources among states, the Company may not be afforded the
opportunity to recover its full cost of providing electric service.
Each of PacifiCorp s state regulatory commissions has the ability to pursue policies
that it believes are in the public interest in its state. It is also important, however, the Company
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contends, for PacifiCorp to be able to make business decisions in an environment where differing
state policies do not result in denying the Company a reasonable opportunity to recover its
prudently incurred costs. This, the Company states, would create a disincentive for PacifiCorp to
invest in its system.
On March 5 , 2002, PacifiCorp petitioned the Idaho Public Utilities Commission to
initiate an investigation of inter-jurisdictional issues affecting the Company as a consequence of
its status as a multi-jurisdictional utility subject to the jurisdiction of six state regulatory
Commissions.
As a result of different cost allocation methods adopted for ratemaking purposes in
the Company s various states of operation, PacifiCorp maintained that it was no longer being
provided the opportunity to fully recover its costs. By Order No. 28978 , the Commission
established a docket for investigation, established an intervention deadline and approved a joint
Multi-State Process (MSP) for analyzing PacifiCorp inter-jurisdictional issues (Idaho Code ~ 61-
505) and established initial MSP scheduling (Idaho Code ~ 6l-50l).
On September 30, 2003 , PacifiCorp filed a Motion, direct testimony and exhibits
seeking Commission ratification of an Inter-jurisdictional Cost Allocation Method - Protocol
(Protocol). On July 14, 2004, PacifiCorp filed a Revised Protocol and Supplemental Testimony.
On November 4, 2004, PacifiCorp and Commission Staff filed a Joint Motion requesting
acceptance and Commission approval of a Stipulation and Agreement (Stipulation) negotiated by
PacifiCorp, Staff, Monsanto Company, and AARP as full settlement of the inter-jurisdictional
cost allocation issues affecting PacifiCorp. Reference IDAP A 31.01.01.272-276. The Revised
Protocol was approved by the Idaho Public Utilities Commission on February 28 , 2005. (Order
No. 29708, Case No. P AC-02-3).
Section XIII.B of the Revised Protocol establishes a Standing Committee for
continued dialogue among the states. While not abridging the integrity of Commission decision-
making processes within each respective state, the Standing Committee:
Monitors and discusses inter-jurisdictional allocation issues facing
PacifiCorp and its customers;
Helps to organize and direct work group analysis of inter-
jurisdictional allocation issues;
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Ensures work group analysis is supported by sound technical
analysis;
Shares views on possible amendments to the Revised Protocol, as
they may arise;
Seeks consensual resolution of issues arIsIng under the Revised
Protocol;
Ensures wide dissemination of information regarding Standing
Committee meeting locations and dates and information relating to
its activities;
Ensures and encourages open participation in Standing Committee
meetings by all interested persons; and
Appoints a Standing Neutral to facilitate discussions among the
states, to monitor issues and to assist the Standing Committee.
APPLICATION - 2010 PROTOCOL
Since the approval of the Revised Protocol, interested parties in Utah raised concerns
that the continued use of the Revised Protocol may result in a Utah-allocated revenue
requirement that is higher when compared to a revenue requirement allocated using the Rolled-
methodology that was anticipated by the Public Service Commission of Utah when it originally
adopted the Revised Protocol. The Standing Committee and workgroups, the Company contends
have been collaborating since September 2009, to come up with potential solutions acceptable to
all parties in the context of the Revised Protocol allocation methodology, including the
performance of various studies by the Company at the request of the Standing Committee.
In July 20 1 0, the Standing Committee reached an agreement in principle to amend the
Revised Protocol allocation methodology; such agreement to be known as the "20l0 Protocol"
and provided by the Company as Exhibit No. 1 to the direct testimony of Ms. Andrea L. Kelly.
The 2010 Protocol describes how the costs and wholesale revenues associated with PacifiCorp
generation, transmission and distribution system will be assigned or allocated among its six-state
jurisdictions for purposes of establishing its retail rates. If adopted, the 2010 Protocol will
remain in effect for Company filings made through 2016. The amendments are intended to allow
for greater movement to a Rolled-In allocation methodology, while retaining a Hydro
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Endowment for the former Pacific Power & Light states of Oregon, California, Washington and
part of Wyoming.
The 2010 Protocol continues to identify state resources based on cost responsibility
and regional resources for the Hydro Endowment calculation. Besides using a Rolled-
allocation methodology as the starting point, a significant change relates to the Embedded Cost
Differential (ECD). The scope of the ECD has been reduced and limited, using a comparison of
embedded costs based on resources in place on the Company s system prior to 2005. The ECD
calculation has been based on projected pre-2005 resource costs and the value allocated to each
state is fixed and levelized over the term of the 2010 Protocol. For the duration of the 2010
Protocol a fixed dollar amount per year deviation would be applied to each state s revenue
requirement under the Rolled-In allocation methodology. The deviation is composed of two
parts: a situs adjustment associated with the surcharge imposed under the Klamath Hydroelectric
Settlement Agreement to Oregon and California with a corresponding credit to the other states
and the fixed levelized ECD.
As reflected in the 2010 Protocol, the assignment of a particular expense or
investment, or allocation of a share of an expense or investment, to a state pursuant to the 2010
Protocol is not intended, and should not, prejudge the prudence of those costs. Nothing in the
2010 Protocol shall abridge any state s right and/or obligation to establish fair, just and
reasonable rates based upon the law of that state and record established in rate proceedings
conducted by that state. Parties who have supported the ratification of the 2010 Protocol do so in
the belief that it will continue to achieve a solution to multi-state issues that is in the public
interest. However, a party s support of the 2010 Protocol is not intended in any manner to
negate the necessary flexibility of the regulatory process to deal with changed or unforeseen
circumstances. Any party s support of the 2010 Protocol will not bind or be used against that
party in the event that unforeseen or changed circumstances cause that party to conclude, in good
faith, that the 2010 Protocol no longer produces results that are just, reasonable and in the public
interest.
The requested amendments in the Revised Protocol allocation methodology, the
Company contends, result in a consistent and fair cost allocation method that assures the
Company a reasonable opportunity to recover all of its prudently incurred costs and supports
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further system investment. Adoption of the changes, the Company contends, are just, reasonable
and in the public interest.
Rocky Mountain Power requests that the Commission complete its review and issue
an Order with respect to its Application no later than March 3l , 2011.
Communications regarding this filing should be sent to the Commission at PO Box
83720, Boise, ID 83720-0074.
YOU ARE FURTHER NOTIFIED that the following persons are designated as
PacifiCorp s representatives in this matter:
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
20l S. Main Street, Suite 2300
Salt Lake City, UT 84111
E-mail: ted.weston~pacificorp.com
Mark C. Moench
Daniel E. Solander
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84lll
E-mail: mark.moench~pacificorp.com
daniel. so lander~paci fi corp. com
INTERVENTION DEADLINE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in Case No.
P AC-l 0-09 for the purpose of becoming a party, i., to present evidence, to acquire rights of
cross-examination, to participate in settlement or negotiation conferences, and to make and argue
motions must file a Petition to Intervene with the Commission pursuant to Rules 72 and 73 ofthe
Commission s Rules of Procedure, IDAPA 31.01.01.072-073.Persons desiring to acquire
intervenor rights of participation must file a Petition to Intervene on or before Friday,
October 29, 2010.Persons desiring intervenor status shall also provide the Commission
Secretary with their electronic mail addresses to facilitate future communications in this matter.
YOU ARE FURTHER NOTIFIED that the Commission Secretary shall issue a
Notice of Parties after the deadline for intervention has passed. The Notice of Parties shall
assign exhibit numbers to each party in this proceeding. IDAP A 31.01.01.230.
YOU ARE FURTHER NOTIFIED that persons desiring to present their VIews
without parties' rights of participation and cross-examination are not required to intervene and
may present their comments without prior notification to the Commission or to other parties.
YOU ARE FURTHER NOTIFIED that discovery is available pursuant to the
Commission s Rules of Procedure, IDAPA 31.01.01.221-234.
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NOTICE OF INTERVENTION DEADLINE
YOU ARE FURTHER NOTIFIED that the Company Application and the
accompanying testimony in Case No. P AC- E-l 0-09 can be reviewed during regular business
hours at the Commission s office in Boise, Idaho and at the following Idaho offices of Rocky
Mountain Power:
25 E. Main, Rexburg, Idaho
519 S. 200 E., Preston, Idaho
825 E. 1400 N., Shelley, Idaho
24852 U.S. Highway 89, Montpelier, Idaho
The Application is also available for public inspection on the Commission s web site at
www.puc.idaho.gov by clicking on "File Room" and then "Electric Cases.
YOU ARE FURTHER NOTIFIED that the Commission will monitor the related
2010 Protocol filings and scheduling in the Company s other jurisdictional states and will
establish further scheduling in this case at a later date.
DATED at Boise, Idaho this 7-t1- day of October 2010.
MARSHA H. SMITH, COMMISSIONER
~BJ.
MACK A. REDF , COMMISSIONER
ATTEST:~I~
D. Jewell
Commission Secretary
bls/PAC-1O-09 sw
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