20120720reconsideration_order_no_32597.pdf

Office of the Secretary
Service Date
July 20,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF ROCKY MOUNTAIN POWER FOR )CASE NO.PAC-E-12-03
AUTHORITY TO INCREASE RATES )
THROUGH THE ENERGY COST )ORDER NO.32597
ADJUSTMENT MECHANISM (ECAM))
On February 1,2012,PacifiCorp dba Rocky Mountain Power (“Rocky Mountain”or
“Company”)submitted its annual Energy Cost Adjustment Mechanism (“ECAM”)Application
in accordance with Idaho Code §61-502,61-503 and Rule 52.On February 15,2012,the
Commission issued a Notice of Modified Procedure establishing a comment deadline of March
13,2012.
On March 20,2012,the Commission issued Order No.32493 granting Monsanto
Company’s (“Monsanto”)Petition to Intervene and Monsanto’s Motion to Extend the Comment
Deadline until March 20,2012.Comments were submitted by Commission Staff (“Staff”)and
Monsanto,and Rocky Mountain submitted reply comments.
On March 30,2012,the Commission issued final Order No.32507 approving Rocky
Mountain Power’s ECAM Application with certain adjustments.1 On April 20,2012,Monsanto
filed a Petition for Reconsideration of final Order No.32507.Monsanto’s Petition for
Reconsideration consisted of a Brief in Support of its Petition and attached testimony from
witnesses Mark T.Widmer and Kathryn A,Iverson.
On May 18,2012,the Commission issued Reconsideration Order No.32554 granting
in part and denying in part Monsanto’s Petition for Reconsideration.The Commission granted
reconsideration and ordered that representatives of Rocky Mountain Power,Monsanto,and Staff
(collectively referred to as the “Parties”)participate in a workshop to discuss and develop
recommendations regarding the following issues:
1.The appropriate load split percentage (normalized and actual)for
Monsanto,Agrium and the Company’s remaining tariff customers;
2.The proper apportionment and attribution of “line losses”occurring on
Rocky Mountain Power’s Idaho system to specific customer groups;and
An Errata to Final Order No.32507 was issued on April 3,2012.
ORDER NO.32597 1
3.Scheduling of Rocky Mountain Power’s future ECAM filings.
The Commission denied reconsideration on the “forced outage”issue presented in Monsanto’s
Petition.
On June 4,2012,the Parties participated in a workshop to discuss and develop
recommendations for resolution of the three issues referenced above.On June 26,2012,each of
the Parties individually submitted for approval written recommendations to the Commission.
ROCKY MOUNTAIN POWER’S ECAM APPLICATION
Rocky Mountain Power requested the Commission approve the recovery of power
costs deferred for the period of December 1,2010 through November 30,2011.Application at 1.
The Company is requesting approval to recover an additional $18.1 million in the deferral
balancing account (tariff customers $1 0.425 million;Agrium $511,600;and Monsanto $7.196
million).Id.
To recover its ECAM deferral costs,Rocky Mountain proposes to adjust Schedule 94
(Energy Cost Adjustment rates)to collect approximately $13.0 million over the period beginning
April 1,2012 through March 31,2013.This represents a rate increase of $2.6 million over the
current Schedule 94 rates in effect as approved in Order No.32216 (Case No.PAC-E-ll-07).
Id at 2.Rocky Mountain requested an effective date of April 1,2012,for the proposed Schedule
94 rate changes.Id.
Rocky Mountain noted that “effective January 1,2011,Monsanto and Agrium’s loads
are included in the calculation of the ECAM balances in this ECAM filing.”Id.at 5.Pursuant to
a stipulation approved by the Commission in Order No.32432 (Case No.PAC-E-1 1-12),the
Company will amortize and collect Monsanto and Agrium’s share of the Commission-approved
2011 ECAM balances over a three-year period.Order No.32432 at 4,8-1 1.
Rocky Mountain did not request a change in the ECAM surcharge rate to recover the
full $24.1 million projected to accumulate in the ECAM deferral balancing account.Application
at 9.The Company asserted that “approximately $3.0 million of the balance will be recovered
through Schedule 94 rates from December 1,2011 to March 31,2012.”Id.The Company stated
that it intends to address the remaining balance “in future ECAM filings.”Id.Rocky Mountain
projected that “an increase in the collection rate this year would be followed by a decrease in the
rate next year.”Id.
ORDER NO.32597 2
MONSANTO COMMENTS AND RECOMMENDATIONS
In its remarks,Monsanto acknowledged that Staff and Rocky Mountain ‘are in
agreement with a proposal for splitting jurisdictional Base load and apportioning 2011 actual
load in order to determine the Load Differential used in the calculation of the Load Change
Adjustment (LCA”)portion of the ECAM Q’the Proposal”).”Monsanto Comments at 2.
Monsanto accepts this Proposal to be applied to the Company’s 2012 ECAM,as well the
Company’s next ECAM filing in February 2013.Id.Nevertheless,Monsanto suggests that the
issue of how “interrupted energy”or “buy-through energy”should be treated in the ECAM
should be preserved for debate and resolution in the Company’s next general rate case filing.Id.
Until such time,Monsanto states that it “is willing to accept Staff and the Company’s
approach to not remove ‘replacement’energy from Monsanto’s Base loads for purposes of
determining the Load Differential.”Id.at 5.
Monsanto recommended the split of base jurisdictional energy loads be developed by
starting with monthly energy at input for Monsanto,Agrium and the remaining tariff customers.
Id.at 6.Each group’s monthly energy input should then be compared to the values found in
Exhibit No.2 (PAC-E-10-07)monthly base jurisdictional loads.Id.After determining monthly
adjustment factors for wholesales energy sales losses,monthly wholesales energy sales losses
should then be applied to the monthly energy at input for each group “so that all customers share
equitably in those wholesales energy sales losses.”Id.Monsanto believes “that all parties are in
agreement with this split of Base load.”Id.
Monsanto understands that the proposal accepted by the Parties “includes
‘replacement’energy for purposes of the Load Differential.”Id.Monsanto believes that adding
“back all economic curtailment —whether bought through or not —to the actual loads for
purposes of the Load Differential ...is necessary in order to keep the Load Differential
reflective of load changes that are outside the control of the Company.”Id.“The LCA portion
of the ECAM should not penalize Monsanto for any ‘declining load’based upon economic
curtailments,whether bought-through or not.”Jd.
Monsanto does not recommend an adjustment to actual loads for interruptions
associated with system integrity and operating reserves.Id.However,Monsanto believes that
the issue “warrants additional review in the future.”Id.Monsanto states that all Parties agree
that for the actual loads used for the load differential,Agrium and Monsanto’s actual loads are
ORDER NO.32597 3
increased by the transmission losses of 3.605%and increased by the monthly wholesale energy
sales losses adjustment factors.Id.at 8.
Monsanto states that Rocky Mountain has agreed to provide quarterly ECAM reports
and designate a contact person to provide supporting information,answer questions and address
problems concerning the ECAM calculations in advance of the February 1 annual filing.Id.at 8-
9.
STAFF COMMENTS AND RECOMMENDATIONS
Staff addressed the issue of the “proper apportionment and attribution of line losses”
by asserting that “the ECAM used an improper transmission line loss adjustment factor that
understated Monsanto and Agrium’s base load allocation and recommends using the class cost of
service loads as a surrogate for allocation purposes.”Staff Comments on Reconsideration at 3.
Staff believes that Monsanto’s “replacement energy”should not be removed from the base load
value included in Monsanto’s original ECAM filing.Id.at 4.Staff included a calculation for
these recommendations as Attachment B to its reconsideration comments.Id.The resulting
difference to the base load value over the ECAM test year from the base load used in
Commission Order No.32507 is -12,642 for Monsanto,Agrium and remaining tariff customers.
Id.
Staffs proposed method of allocation utilizes a “class”allocation of loads typically
used for cost-of-service purposes as a surrogate to the “system”line loss adjustment factor
utilized by the Company in its initial filing.Id.at 4-5.According to Staff,this approach is more
in line with the Commission’s directive in Order No.32507 “that base load established in a
general rate case and embedded in base rates should not be changed in the ECAM.”Id.at 5.
Staff agrees that the Company’s stated position “that the amount included in base
load is assumed to be served without curtailment,”is supported by Appendix D of the 2010
Jurisdictional Protocol.Id.Staff explained that because the cost to serve the Monsanto loads
was included in revenue requirement in the Company’s last general rate case,any adjustment to
base load for replacement energy in the ECAM would be improper.Id.
Although Staff believes that total load used to develop base rates should not be
adjusted in this ECAM,Staff agrees that actual loads for Monsanto and Agrium “at generation
need to be adjusted for losses associated with moving wholesale energy sales so they are
comparable to Staffs method of customer allocated base loads at generation.”Id.at 6.
ORDER NO.32597 4
Monsanto and total retail actual loads need to be adjusted for economic’curtailment related
energy so that the Company doesn’t double recover energy-related fixed costs in the Load
Change Adjustment (LCAR)mechanism.”M Staff’s approach yields a resulting yearly change
to actual load for net power cost (-4,472)and LCAR purposes (11,495)from the base load found
in Order No.32507.M
Staff noted that per the Company’s filing and in accordance with Order No.32507,
“RMP is currently able to recover energy-related fixed cost of load economically curtailed
through the Load Change Adjustment (LCAR)portion of the ECAM.”Id.at 7 Staff believes
that this must be corrected to avoid allowing the Company a “double recovery of energy-related
fixed costs associated with load that is economically curtailed.”Id.
In contrast,Staff maintains that reliability-related curtailment is not something the
Company is able to control.Id.“It is a system requirement and a normal cost of doing business
which is part of the Company’s mandate as a public utility to serve.”Jd.“Therefore,Staff
believes that the Company should receive recovery of energy-related fixed cost for curtailed
loads associated with system reliability.”Id.
However,Staff believes that the choice to economically curtail is within the
Company’s control and should be viewed as a “sunk cost embedded in rates.”Id.Staff asserted
that if Monsanto is curtailed Rocky Mountain will almost certainly recover its fixed costs
because it will either sell the generation at a higher price or it will avoid a more expensive energy
purchase.Id.at 8.“The ability of RMP to fully recover the fixed energy costs associated with
economic curtailment without LCAR recovery forms the basis of Staff’s proposed adjustment.”
Id.;Atch.D (Staff’s calculation for LCAR adjusted actual load is equal to actual retail sales load
plus load that was economically curtailed.)Id.
Addressing the ECAM scheduling issue,Staff noted that the Company agreed to
provide prospective intervenors the same quarterly ECAM deferral reports currently distributed
to the Commission.Id.at 8.The Company agreed to develop a comprehensive confidentiality
agreement that would cover the distribution of the quarterly’ECAM deferral reports and other
ECAM relevant information from the Company that would help intervening parties expedite the
discovery process.Id.
Staff believes that the Commission should direct the Company to develop a
comprehensive confidentiality agreement that could cover the distribution of quarterly ECAM
ORDER NO.32597 5
deferral reports and any other ECAM relevant information that would allow intervening parties
to expedite the discovery process.Id.at 9.The Commission should order the Company to
provide the same quarterly ECAM deferral reports currently distributed to the Commission to
any potential intervening party that signs the confidentiality agreement.Id.
Staff stated that Monsanto and the Company have accepted its proposal for
calculating deferred ECAM costs.Id.at 9.Based on the Parties’agreement and general
acceptance of Staffs proposed methodology.Staff made the ft)llowing recommendations
regarding the three issues outlined by the Commission in Order No.32554:
1.Adopt Staffs method for calculating and allocating normalized and actual
load for Monsanto,Agrium,and the Company’s remaining tariff
customers for future ECAMs.
2.Accept and approve for recovery Staffs adjusted Idaho ECAM deferred
cost of $6,783,223 for Monsanto,$469,272 for Agrium,and $10,457,450
for remaining tariff customers for a total balance of $17,709,945 for the
December 1,2010 through November 30,2011 deferral period (does not
include previously approved 2nd year amortization from last year’s Load
Change Adjustment).
3.Continue all customer rates,including Schedule 400 and 401,as recently
approved in Commission Order No.32507.
4.Direct the Company to develop a comprehensive confidentiality
agreement that would cover the distribution of quarterly ECAM deferral
reports and any other ECAM relevant information that would allow
intervening parties to expedite the discovery process.
5.Direct the Company to provide the same quarterly ECAM deferral reports
currently distributed to the Commission to any potential intervening party
that signs the confidentiality agreement.
Ia
ROCKY MOUNTAIN COMMENTS AND RECOMMENDATIONS
As mentioned above,Rocky Mountain Power recommended the Commission accept
Staffs proposal and order the agreed upon revisions to base load for line losses and Monsanto
replacement energy and line losses for actual load.Further,the Company respectfully requests
that the Commission reconsider inclusion of the LCAR as a component of the ECAM.
ORDER NO.32597 6
LEGAL STANDARDS FOR RECONSIDERATION
“Within twenty-one (21)days after the service date of...any final order,any person
interested in a final order or any issue decided in a final order of the Commission may petition
for reconsideration Commission Rule of Procedure 331,IDAPA 31.01.01.331.01.
Answers to petitions for reconsideration “must be filed according to the procedures for cross-
petitions for reconsideration.”Id.,JDAPA 31.01.01.331.05.
Reconsideration provides an opportunity for a party to bring to the Commission’s
attention any question previously determined and thereby affords the Commission with an
opportunity to rectify any mistake or omission.Washington Water Power Co.v.Kootenai
Environmental Alliance,99 Idaho 875,879,591 P.2d 122,126 (1979).The Commission may
grant reconsideration by reviewing the existing record by written briefs,or by evidentiary
hearing.See Commission Rule of Procedure 311,IDAPA 31.01.01.311.03.
If reconsideration is granted,“the matter must be reheard,or written briefs,comments
or interrogatories must be filed,within thirteen (13)weeks after the date for filing petitions for
reconsideration.”Idaho Code §61-626(2).“The commission must issue its order upon
reconsideration within twenty-eight (28)days after the matter is finally submitted for
reconsideration.”Id.Commission Rule 311 “determines when a matter that is reconsidered is
finally submitted for purposes of Section 6 1-626....“Commission Rule of Procedure 332,
IDAPA 3 1.01.01.332.A matter is deemed “submitted for decision...no later than twenty-eight
(28)days after hearing is closed when a hearing is held....“Commission Rule of Procedure
311,IDAPA 31.01.01.311.
COMMISSION FINDINGS AND DECISION
In response to Monsanto’s Petition for Reconsideration,the Commission ordered the
Parties to participate in a workshop discussion in order to develop a methodology,to be used in
the Company’s future ECAM filings,for the proper attribution of “line losses”to specific
customer groups and the appropriate split of Rocky Mountain’s Idaho jurisdictional base load
between Monsanto,Agrium and its remaining tariff customers.Order No.32554 at 5.The
Parties were also ordered to present recommendations addressing scheduling and disclosure
issues for the Company’s subsequent ECAM filings.Id.at 8-9.
The Commission has carefully reviewed the various filings containing the Parties’
recommendations and finds that the proposed adjustments to Rocky Mountain’s ECAM
ORDER NO.32597 7
Application presented by Staff,and agreed to by Monsanto and Rocky Mountain.are fair,just
and reasonable.The Commission finds that the recommendations put forth by the Parties
represent a consensus resolution of the issues outlined by the Commission in Order No.32554.
The Parties’proposed adjustments,incorporating a more accurate line loss factor,
3.605%,and methodology for the assignment of an appropriate load percentage to Monsanto,
Agrium and remaining tariff customers,constitute reasonable approaches addressing complex
and novel issues arising out of the Cornpany s first attempt to recover ECAM costs from
Monsanto and Agrium.In light of this unique circumstance,the Commission acknowledges the
Parties’considerable efforts in working through these issues and presenting consensus
recommendations.
As we noted in our prior Orders,“Monsanto’s request to extend the length of review
for Rocky Mountain Power’s future ECAM Applications is reasonable.”Order No.32507 at 2;
(see also Order No.32554 at 8).The Commission finds that the Company’s acquiescence to
provide relevant information on a quarterly basis will enable “a full and insightful analysis of the
Company’s ECAM Application....“Order No.32554 at 8.The Commission orders Rocky
Mountain to prepare a confidentiality agreement conforming to the Commission’s rules.
Inasmuch as a party has dutifully complied with the terms of said confidentiality agreement,the
Commission directs the Company to transmit copies of its quarterly ECAM reports,and other
relevant information relating to the ECAM filing,to all interested parties,including Monsanto.
Therefore,after a careful review of the record,the Commission adopts the Parties’
recommendations more fully discussed herein.The Commission finds that our decision to accept
the Parties’proposed adjustments to the Company’s ECAM filing are based upon substantial
evidence.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Rocky
Mountain Power,an electric utility,and the issues presented in Case No.PAC-E-12-03 pursuant
to ldaho Code,Title 61,and the Commission’s Rules of Procedure,IDAPA 31.01.01.000 c/seq.
ORDER
IT IS HEREBY ORDERED that,in accordance with the Commission’s findings and
decision in Order No.32554,the Commission adopts the Parties’recommendations regarding (I)
the appropriate load split percentage (normalized and actual)for Monsanto,Agrium and the
ORDER NO.32597 8
Company’s remaining tariff customers;(2)the proper apportionment and attribution of “line
losses”occurring on Rocky Mountain’s Idaho system to specific customer groups;and (3)
scheduling of Rocky Mountain’s future ECAM filings,outlined and more fully described above.
Therefore,Rocky Mountain’s Idaho ECAM deferral balance shall be adjusted to
assign costs of $6,783,223 for Monsanto,$469,272 for Agrium,and $10,457,450 for remaining
tariff customers for a total balance of $17,709,945 for the December 1,2010 through November
30,2011 ECAM deferral period.
IT IS FURTHER ORDERED that the Company shall develop a comprehensive
confidentiality agreement,conforming to the Commission rules,in order to facilitate the
distribution of its quarterly ECAM reports to interested parties,including Monsanto.
THIS IS A FINAL ORDER ON RECONSIDERATION.Any party aggrieved by this
Order or other final or interlocutory Orders previously issued in this Case No.PAC-E-12-03 may
appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules.See Idaho Code §61..627.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this d20
day of July 2012.
PAUL KJE LA ER,PRESIDENT
MACK A.REDFORD,COMMISSIONER
ta4L //&L&
MARSHA H.SMITH,COMMiSSIONER
ATTEST:
/1 (./
ALF4 j f
Jean D Jewell
Commission Secretary
O:PAC-E-I 2-O3_np6Reconsideration
ORDER NO.32597 9