20130327final_order_no_32771.pdf

Office of the Secretary
Service Date
March 27, 20 13
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF PACIFICORP DBA ROCKY MOUNTAIN ) CASE NO. PAC-E-13-03
POWER FOR AUTHORITY TO INCREASE )
RATES THROUGH THE ENERGY COST )
ADJUSTMENT MECHANISM (ECAM) ) ORDERNO. 32771
On February 1, 2013, PacifiCorp dba Rocky Mountain Power ("RMP or
"Company") submitted its annual Energy Cost Adjustment Mechanism ("ECAM") filing in
accordance with Idaho Code $$ 61-502 and 61-503 and Rule of Procedure 52. The Company
requests an effective date of April 1,20 13, for the proposed increase in Idaho rates.
On February 20, 2013, the Commission issued a Notice of Application, Modified
Procedure and Intervention Deadline. See Order No. 32759. On March 8, 2013, Monsanto
Company ("Monsanto") was granted leave to intervene as a party. On March 13, 2013,
Commission Staff ("Staff') and Monsanto submitted written comments regarding RMP's
Application.
THE APPLICATION
RMP requested a Commission Order approving the recovery of power costs deferred
for the period of December 1, 201 1 through November 30, 2012 ("Deferral Period").
Application at 1. RMP requested approval to recover approximately $15.9 million in deferred
net power costs. Id.
RMP's Application seeks to revise Schedule 94, Energy Cost Adjustment, to recover
approximately $15.2 million in total deferred net power costs for the collection period beginning
April 1, 20 13 through March 3 1, 20 14. Id. RMP states that this amount represents an increase
of approximately $2.2 million over current Schedule 94 rates, see Order No. 32597 (Case No.
PAC-E-12-03), and will apply exclusively to Monsanto and Agrium. Id. at 1-2. The Company is
proposing no increase to the standard tariff customers. Id. at 2, 7. RMP estimated Monsanto
($6.3 million) and Agrium's ($.5 million) share in the Deferral Period. Id. at 5. The Company's
filing includes the first amortized payment of those amounts, approximately $2.1 million for
Monsanto and approximately $0.1 million for Agrium. Id
ORDER NO. 3277 1 1
As background, the Company recounts that on September 29, 2009, the Commission
issued Order No. 30904 approving the implementation and submission of an annual ECAM. Id.
at 3. The costs included in the ECAM are net power costs ("NPC"), as defined in the Company's
general rate cases and modeled by the Company's GRID model. Id. Base and actual NPC are
booked into specific FERC accounts. Id. at 3-4. The ECAM process allows the Company to
credit or collect the difference between the actual NPC incurred to serve its Idaho customers and
the NPC collected through rates. Id. at 4. RMP defers the difference into an ECAM balancing
account. Id.
The ECAM includes five additional components: the load growth adjustment rate
("LGAR) or load change adjustment rate ("LCAR), a credit for SO2 allowance sales, an
adjustment for the treatment of coal stripping costs, a renewable resource adder for the
renewable resources that are not yet in rate base and a true-up of renewable energy credit
("REC") revenues, as authorized by the Commission in Order No. 32196. Id. at 4-5. The
ECAM includes a 90 percent (customers)/lO percent (Company) "sharing band" wherein
customers paylreceive the increase/decrease in actual NPC compared to base NPC and RMP
incurslretains the remaining 10 percent. Id. at 4.
Credits for SO2 allowance sales revenues received by the Company were also
included as an offset to the NPC deferral. Id. Additionally, Idaho's allocated differences
between including coal stripping costs incurred by the Company and recorded on the Company's
books pursuant to accounting pronouncement EITF 04-6, and the amortization of the coal
stripping costs when the coal was excavated was added to the NPC differential for deferral. Id.
In addition to the foregoing ECAM calculation components discussed above, the
deferral balance reflects the difference between actual REC revenues during the Deferral Period
and the amount of REC revenues included in base rates. Id. at 7. The 90110 sharing band does
not apply to the REC revenue true-up included in the ECAM. Id.
The deferred ECAM balance of $25.5 million as of November 30, 2012, is derived
from the following calculation: 90% x (deferred NPC + LCAR + SO2 revenues + coal stripping
costs adjustment) + interest charges + REC revenues. Id. The sum of the three groups' tariff
ORDERNO. 32771
customers, Monsanto and Agrium, ending balances result in an ECAM deferral balance of $25.5
million. Id. .'
RMP stated that it notified customers of this filing by "issuing a press release sent to
local media organizations and messages in customer bills over the course of a billing cycle." Id.
at 8. Copies of RMP's Application are available for review at the Company's local offices in its
Idaho service territory. Id
RMP attached a copy of the direct testimony, including exhibits, of Brian S.
Dickman, Manager of Net Power Costs, and Joelle R. Steward, Director of Pricing, Cost of
Service, and Regulatory Operations in the Regulation Department, in support of its Application.
Mr. Dickman's testimony and exhibit, describes the actual NPC incurred by the Company to
serve retail load for the historical 12-month period and explains the main increases between
actual NPC and Base NPC. Id. at 4-5. Ms. Steward's testimony supports the new ECAM tariff
surcharge rates. Id. at 5.
STAFF' COMMENTS
Staff audited the Company's ECAM filing and proposed two changes. First, Staff
noted that some ECAM revenue had been double counted. According to Staff, a portion of
Monsanto's ECAM revenue was incorrectly credited as standard tariff customer ECAM revenue.
The correction of this error affects only the tariff customer balancing account. The double
counted revenue was $1,252,995 before interest. See Staff Attachment D. Removing the double
count of Monsanto ECAM revenues affects only the standard tariff customer group.
Staff went on to cite language in Order No. 32432, PAC-E-11-12, requiring that the
Company track differences between actual and authorized customer load control costs in the
ECAM. Staff remarked that the Company erred by not including $1,045,423 as Idaho's base
share of the customer load control service credit to be tracked in the ECAM for 2012 and 20 13.
See Order No. 32432 at 5. Staff calculated the effect of including the customer load control
deferral amounts in the ECAM beginning in January 2012 (prorated) in Attachment B of its
comments. The attachment shows a reduction in Customer Load Control costs of $9,757 before
sharing and interest considerations. See Staff Attachments C, D.
1 As stated above, the Company will amortize and collect Monsanto's and Agrium's share of the deferral balance, as
approved by the Commission in this case, over three years pursuant to the 201 1 general rate case Stipulation. As
part of the deferral balance the Company is also collecting the second year of the amortized payment from Monsanto
and Agrium that resulted from the 2012 ECAM case.
ORDER NO. 3277 1 3
Staffs proposed changes to the ECAM deferral balance and balancing account do not
alter the proposed surcharge rates recommended by the Company. Staff noted that the effect of
including customer load control differences in the ECAM is small and would reduce rates for all
three customer groups a negligible amount. The correction of the revenue double count is
substantial but only impacts the standard tariff customer group.
Before Staffs changes, the standard tariff customer balancing account on April 1,
2014, was expected to show a customer credit of $554,734. See Staff Attachment A, 1.36. After
including Staffs proposed changes, the same account shows a surcharge amount of $696,139.
Id. Any amounts not included in rates in this case will be carried forward in the balancing
account for future recovery.
Staff reviewed the Customer Notice and Press Release included in RMP's
Application and believes that they are in compliance with Procedural Rule 125, IDAPA
3 1.0 1.0 1.125. Staff stated that RMP mailed Customer Notices with cyclical billings beginning
March 4,201 3, and ending April 1,201 3. Thus, more than one-half of those customers receiving
notices in their billings would be unable to send in comments before the March 13, 2013
deadline. According to Staff, the Company faulted an external printer for the delay in printing
the inserts.
Ultimately, Staff recommended approval of the following deferral balances for the
period December 1, 20 1 1, through November 30, 20 1 2, for recovery from ratepayers: Tariff
Customers - $9,052,139; Monsanto - $6,345,072; and Agrium - $463,254. The total amount
recommended for recovery from Idaho customers is $15,860,465. See Staff Attachment D, 1.11.
Approval of the Schedule 94 ECAM, effective April 1, 2013, rates constitutes a 2.6% increase to
Monsanto, a 2.4% increase to Agrium and no increase to standard tariff customers. Staff
recommended the Commission re-emphasize the Company's obligation to send customer notices
in a timely manner so that customers will have an opportunity to comment.
MONSANTO COMMENTS
Monsanto agreed with the RMP's calculations and proposed no adjustment to the
Company's proposed ECAM deferral account balances or ECAM rates. In its comments,
Monsanto expressed three general concerns regarding the Company's Application.
First, Monsanto asserted that the treatment of interrupted energy in the ECAM should
be preserved for debate and resolution in the Company's next general rate proceeding. Second,
ORDER NO. 32771 4
Monsanto believes that the Company should continue to transmit copies of its quarterly ECAM
reports and other relevant information relating to the ECAM filing to all interested parties,
including Monsanto, subject to confidentiality.
Third, Monsanto argued that the "monthly adjustment factors for moving wholesale
energy sales" warrant additional review in the Company's next general rate case. Monsanto's
concerns pertain to what it views to be a wide divergence in the monthly adjustment factors,
from a high of 23% down to a low of negative 13.6%. Monsanto stated that the Company
maintains the adjustment factors are primarily attributable to moving wholesale energy and also
attributable to the different methods used to develop jurisdictional loads and cost of service
loads. Monsanto recommended that the huge swings in these factors warrant special review in
the next general rate case as to the nature and source of such discrepancies and whether it makes
sense to adjust Monsanto's actual loads by these factors for the NPC deferral balance.
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-13-03 pursuant
to Idaho Code, Title 61, and the Commission's Rules of Procedure, IDAPA 3 1.0 1 .01.000 et seq.
COMMISSION FINDINGS AND DECISION
The Commission has thoroughly reviewed RMP's Application, including attached
testimony and exhibits, in Case No. PAC-E-13-03 and written comments filed by Monsanto and
Staff. The Commission finds that the Company's Application is fair, just and reasonable. The
Application complies with the Commission's prior Orders and directives concerning the
recovery of deferred net power costs incurred by the Company during the Deferral Period. The
Commission approves a total amount of $1 5,860,465, Tariff Customers - $9,052,139; Monsanto
- $6,345,072; and Agrium - $463,254, for recovery through Schedule 94 rates from Idaho
customers during the Deferral Period.
The aforementioned amount approved for recovery incorporates the differential
between actual and authorized customer load control costs that should have been included in the
ECAM and removes the portion of Monsanto ECAM revenue incorrectly credited to the standard
tariff customer balancing account. The Company has not offered any objections to these
relatively minor revisions to its Application.
ORDERNO. 32771
The Commission finds that approval of the Schedule 94 ECAM rates. effective April
1, 2013, will not result in an increase in the ECAM surcharge rate for standard tariff customers.
The approved rates constitute a 2.6% increase for Monsanto and an increase of 2.4% for Agrium.
Monsanto and Agrium did not file an objection to this increase.
The Commission also acknowledges Monsanto and Staff's complaints regarding
RMP's continuing failure to send timely notice to customers regarding the Company's yearly
ECAM filing. The Commission reiterates the importance of allowing an adequate time period
for customers to review and file comments regarding the Company's Application. We expect
that this will not be an issue in subsequent ECAM filings.
Finally, Monsanto's concerns regarding treatment of interrupted energy in the ECAM
and the development of "monthly adjustment factors" for wholesale energy sales warrant further
review. The Commission will entertain relevant arguments put forth by interested parties in the
context of the Company's ongoing general rate case, PAC-E- 13-04.
O R D E R
IT IS HEREBY ORDERED that the Commission hereby approves, effective April 1,
2013, RMP7s Energy Cost Adjustment Mechanism (ECAM) Application subject to the
adjustments described above. The Company is directed to file a Schedule 94 tariff in compliance
with the Commission's decision.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
recoilsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code $ 6 1-626.
ORDER NO. 32771
DONE by Order of the Idaho Public IJtilities Commission at Boise, Idaho this ;l?*
day of March 20 13.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
ORDER NO. 3277 1