20131001order_no_32901.pdf

Office of the Secretary
Service Date
October 1,2013
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN )
POWER’S TARIFF ADVICE NO.13-01 TO )CASE NO.PAC-E-13-11
ADJUST THE BPA RESIDENTIAL )
EXCHANGE PROGRAM (REP)CREDIT IN )ORDER NO.32901
SCHEDULE 34 )
On August 20,2013,PacifiCorp dba Rocky Mountain Power filed Tariff Advice No.
13-01 to revise its tariff Schedule No.34 (Pacific Northwest Electric Power Planning and
Conservation Act Residential and Farm Kilowatt-Hour Credit (commonly referred to as the
“REP Credit”)).Rocky Mountain proposed that the rate credit be increased from the existing
0.18390 per kilowatt-hour (kWh)to 0.30950 per kWh effective October 1,2013.The
Commission took this matter up at its Decision Meeting on September 30.2013.As set out in
greater detail below,the Commission partially grants the tariff advice and opens this proceeding
to take up one issue.
BACKGROUND
A.The Residential Exchange Program
The Bonneville Power Administration (BPA)markets and distributes electric power
from federal dams located in the Columbia River system.BPA supplies power in the four state
area (Idaho.Montana.Oregon and Washington)to consumer-owned utilities (COUs)(including
municipalities,electric co-ops,and public utility districts,and federal agencies)at a preference
rate.Under the Pacific Northwest Electric Power Planning and Conservation Act (“NW Power
Act”),the Residential Exchange Program (REP)mechanism is designed to pass-through benefits
from the federal Columbia River power system to qualifying residential and small farm
customers of the investor-owned utilities (IOUs)in the Pacific Northwest.16 U.S.C.839c(c).
The amount of REP benefits available to each IOU is the difference between the
IOU’s average system cost and BPA’s priority firm (PF)exchange rate.If an IOU’s average
system cost is higher than the PF exchange rate,then that difference is multiplied by the IOU’s
qualifying load to arrive at a cumulative amount of REP benefits to be passed through to eligible
customers on their monthly power bills.Once PacifiCorp’s total amount of REP benefits is
calculated,then the amount is jurisdictionally allocated among PacifiCorp’s Idaho,Oregon and
Washington customers.The BPA rate credit in tariff Schedule 34 is applied to Rocky
ORDER NO.32901
Mountain’s eligible customers served under Schedules 1,6A,7A,10,23A,35A,36,19 with 6A,
19 with 23A,and 19 with 35A.
In May 2007,the Ninth Circuit overturned six settlement agreements between BPA
and the six regional lOUs’that were entered into in 2000 and 2001.On remand to BPA,
Bonneville calculated an amount (the “Lookback”Amount)that each IOU should pay back so
that BPA could recover REP amounts that it had paid the six lOUs under the overturned
settlement agreements.In the 2007 supplement and subsequent BPA rate cases,Bonneville
began deducting the Lookback Amounts from REP benefits paid to the IOUs in the subsequent
rate cases.
In late 2008,five IOUs,the Citizens’Utility Board of Oregon,and three State
Commissions2 filed consolidated appeals in the Ninth Circuit against BPA.Among other issues,
members of this IOU/PUC group argued that the Lookback mechanism was arbitrary,constituted
retroactive ratemaking,was not in conformance with the Northwest Power Act,and was contrary
to a “savings clause”in the 2000/200 1 settlement agreements.Other parties filed appeals
asserting that BPA has miscalculated the Lookback Amounts as too small and that the COUs
were owed greater amounts.Between the years 2008 through 2010,parties to the BPA rate cases
filed 56 appeals concerning BPA’s REP decisions with the Ninth Circuit.
B.The REP Settlement
In late 2010,the parties in the BPA appeals entered into settlement negotiations
intending to resolve these multiple appeals.With the assistance of a mediator,nearly all the
parties adopted a new REP Settlement Agreement that included the TOU/PUC group,BPA staff,
and nearly all the COUs.Among other issues,the REP Settlement Agreement fixed the total
amount of REP benefits to be paid to all lOUs over the next 17 years (2011-2028).These fixed
REP benefits are allocated to the JOUs based on each utility’s relative average system cost and
its qualifying load.In BPA’s REP-12 case,the BPA Administrator issued a Record of Decision
(ROD)that adopted the REP Settlement Agreement.3 The Idaho Commission approved the REP
Settlement Agreement in April 2011.
‘Avista,Idaho Power,Northwestern,PacifiCorp,PGE,and Puget Sound.
2 The Idaho,Oregon and Washington Commissions.
The Association of Public Agency Customers (APAC)appealed the adoption of the REP Settlement Agreement in
the Ninth Circuit.The appeal was argued in February 2013 and the Court’s decision is pending.
ORDER NO.32901 2
C.Reallocating REP Benefits Among the JOUs
Section 6 of the REP Settlement Agreement contains a mechanism for reallocating
REP benefits among the six JOUs.This “reallocation”became necessary so the benefits of
settling are roughly equal among the JOUs.From the period of 2007 through 2011,five of the
lOUs paid various amounts of their respective Lookbacks before the Lookback mechanism was
extinguished in the settlement.For example,PSE paid approximately 55%of its Lookback
Amounts to BPA.Idaho Power received no REP benefits;therefore,it did not pay any of its
Lookback Amounts to BPA.The lOUs and the State Commissions in particular agreed to
benchmark the Lookback Amounts for each IOU to PSE’s 55%repayment level.Consequently,
Avista,Idaho Power,PacifiCorp and PGE will reallocate some of their REP benefits to the other
TOUs:Avista —$22.98 million;Idaho Power —$54.14 million;PacifiCorp —$66.72 million;and
PGE —$4.66 million.See Table 6.2.3 of the REP Settlement.This redistribution of REP
benefits will make all the lOUs roughly the same with the exception of Idaho Power.The
Settlement Agreement also sets a cap on the amount of reallocation annually so that each eligible
IOU will be able to distribute some amount of REP credits to its customers.
THE TARIFF ADVICE
In its Tariff Advice No.13-01,PacifiCorp (i.e.,Rocky Mountain)proposes to
increase its residential exchange credit for Idaho customers in both FY14 and FY15.The
Company reports that its FY14-15 REP benefits for all three states are $69.482 million,or
$34.741 million per fiscal year.Rocky Mountain proposes to allocate Idaho customers $6.37
million or $3.188 million per fiscal year.The current REP account for Idaho customers contains
a balance of approximately $168,000.Adding the REP allocation for Idaho and the existing
Idaho REP balance results in total of $6.55 million to be distributed to Idaho customers over the
next two fiscal years (from October 1,2013 through September 30,2015).The projected usage
during that time period is 2,114,100 MWh which results in a projected rate credit of 0.30950 per
kWh for eligible customers.The Company proposes to make this increased rate credit available
to customers on October 1,2013.
STAFF REPORT
Pursuant to procedural Rule 133,Staff reviewed the tariff advice.Staff reports that
Rocky Mountain treats the reallocation payments made by PacifiCorp to the other utilities
differently than the reallocation payments it receives from the lOUs.More specifically,Idaho’s
ORDER NO.32901 3
jurisdictional share of the reallocation adjustments paid to other lOUs is 28.5%,while Rocky
Mountain calculated the Idaho jurisdictional share of reallocation adjustments paid to PacifiCorp
is 12.95%.
Staff questions whether all Section 6 reallocation adjustments should receive
consistent and equal jurisdictional treatment.In other words,if Idaho customers are responsible
for 28.5%of reallocation adjustments paid by PacifiCorp,then Idaho customers should receive
28.5%of reallocation adjustments paid to PacifiCorp.Conversely,if Idaho customers only
received 12.95%of reallocation adjustments paid to PacifiCorp,then Idaho customers should
only be responsible for 12.95%of reallocation adjustments paid by PacifiCorp.4
Given the proposed effective date of October 1,2013,Staff recommended the
proposed credit of 0.30950 per kWh be approved on an interim basis effective October 1,2013.
Staff further recommended the Commission initiate a proceeding to further investigate the proper
allocation of the Section 6 reallocation adjustments.The Commission should specifically
reserve the disputed reallocation issue and the direct the parties to see if they can reach
settlement on this issue.If the parties are unable to reach settlement on the disputed issue,Staff
will advise the Commission accordingly and the Commission may then decide upon further
proceedings at that time.
COMMISSION DECISION
After reviewing the tariff advice and Staff recommendations,we adopt Staff’s
recommendation.We find that the proposed BPA credit proposed by Rocky Mountain shall
become effective on an interim basis on October 1,2013.The Commission conditionally
approves the rate of 0.30950 per kWh and specifically reserves resolution of the disputed issue
pending further discussions between Staff and the Company.We also approve the language
changes proposed in tariff Schedule 34 and agreed to by the Company and Staff.If the parties
are not able to reach settlement on the jurisdictional issue,Staff will advise the Commission at
which time we will determine the manner in which this investigation will proceed.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain’s Tariff Advice No.13-01
recommending an increase in the REP rate credit from the existing 0.18390 per kWh to 0.30950
‘Staff and the Company also discussed deleting some outdated language in the proposed tariff Schedule 34.The
parties reached agreement on these language changes and Rocky Mountain filed these changes on September 3,
2013.
ORDER NO.32901 4
per kWh shall be approved on an interim basis effective October 1.2013.The Commission
specifically reserves resolution of the disputed allocation issue identified by the Commission
Staff We direct the parties to engage in settlement discussions to see if they can reach
settlement.If settlement is not possible,Staff will advise the Commission accordingly at which
time we will decide how to proceed.
IT IS FURTHER ORDERED that the proposed language changes to tariff Schedule
34 are approved.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 3O’
day of September 2013.
PAUL K LLA i3,PRESIDENT
ATTEST:
nD.JeJ1H
commission Secretary
bls/O:PAC-E-13-1 ldh
MACK A.REDFORD,COMMISSIONER
ii L
MARSHA H.SMITH,COMMISSIONER
ORDER NO.32901 5