20140327Comments.pdf

ROCKY MOUNTAIN
POITIIER
a otvtstoN oF BctFrconP 201 South Main, Suite 2300
Salt Lake City, Utah 84111
March 26,2014
VA ELECTRONIC FILING
AND OVERNIGHT DELIVERY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472W. Washington
Boise,ID 83702
Re: CASE NO. PAC-E-14-01
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER FOR
AUTHORITY TO DECREASE RATES BY $2.8 MILLION TO RECOVER DEFERRED
NET POWER COSTS THROUGH THE ENERGY COST ADJUSTMENT MECHANISM
Dear Ms. Jewell:
Please find for electronic filing Rocky Mountain Power's reply comments in the above
referenced matter. The Company has also shipped for overnight delivery an original and nine
copies of its reply comments, a CD containing the reply comments, and a Confidential CD
containing the Confidential workpapers. Confidential information will be provided subject to the
protective order in this case.
The Company is also providing revised tariff sheets based on Staff s rate design proposal ready
for Commission approval.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at(801)220-
2963.
t"^.,-/e,;f
Vice President, Regulation & Govemment Affairs
Enclosures
CC: Case No. PAC-E-14-01 Service List
Very truly yours,
effrEy lYlarsen
CERTIFICATE OF SERVICE
I hereby certify that on this 26ft of March, 2Ol4,I caused to be served, via e-mail and
overnight delivery, a true and correct copy of the foregoing document in PAC-E-14-01
the following:
James R. Smith
Monsanto Company
P.O. Box 816
Soda Springs, ldaho 8327 6
i im.r. smithtDmonsanto.com
Steven D. Spinner
Monsanto Company
800 N. Lindbergh Blvd
Saint Louis, Missouri 63141-7843
Steven. d. soinner(2monsanto. com
Brubaker & Associates
16690 Swingley Ridge Rd., #140
Chesterfield, MO 63017
[e-mail]
Yvonne Hogle
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake Ciry, Utah 841I I
Yvonne.ho sle@oac ificom. com
Randall C. Budge
Racine, Olson, Nye, Budge & Bailey, Chartered
201 E. Center
P.O. Box l39l
Pocatello, ID 83204-1391
[e-mail]
Ted Weston
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake city, utah 841I I
Ted. weston@pacifi com.com
Data Request Response Center
PacifiCorp
825 NE Multnomah Street, Suite 20000
Portland, Oregon97232
datarequest@oacifi corp. com
Amy Eissler
Coordinator, Regulatory Operations
Yvonne R. Hogle (ISB # 8930)
Rocky Mountain Power
201 S. Main St., Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
Fax: [phone]
E-mail: [e-mail]
Attomey for Rocky Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE )
APPLICATION OF ROCKY MOUNTAIN ) CASE NO. PAC-E-14-01
POWER FOR AUTHORTTY TO )
DECREASE RATES BY $2.8 MILLTON )
TORECOVERDEFERREDNETPOWER ) REPLYCOMMENTSOF
COSTS THROUGH THE ENERGY COST ) ROCKY MOUNTAIN POWER
ADJUSTMENT MECHANISM )
)
)
COMES NOW PacifiCorp, dba Rocky Mountain Power ("RMP" or the
'oCompany"), pursuant to Rules 56 and 256 of the Rules of Procedure of the Idaho Public
Utility Commission (the ooCommission"), and hereby responds to Monsanto's Comments
and Staff Comments (both defined below) in the above referenced case.
BACKGROUND
On January 3t, 2014, the Company filed an application ("Application") for
authority to reduce Electric Service Schedule No. 94, Energy Cost Adjustment rates by
$2.8 million, establishing the Energy Cost Adjustment Mechanism ("ECAM") rate for all
customer classes including Monsanto Company ("Monsanto") and Agrium, Inc.
("Agrium") based on the deferral period beginning December 1,2012 through November
30, 20 13 ("Deferral Period").
The Application requested Commission approval to add approximately $12.8
million to the ECAM balancing accounts for the Deferral Period, resulting in a total
balance of $24.3 million as of November 30, 2013. The Company proposed to adjust
Electric Service Schedule 94, Energy Cost Adjustment, to collect approximately $13.2
million over the period beginning April l, 2014 through March 31,2015, representing a
decrease of $2.8 million over the current Schedule 94 rate.
On January 28,2014, Monsanto filed a Petition to Intervene, which was approved
by the Commission February 7,2014. On February 20,2014, the Commission issued a
Notice of Application, Notice of Modified Procedure and Notice of Intervention Deadline
and established a procedural schedule with a comment deadline of March 20,2014.
On March 19, 2014, Monsanto filed its Comments of Monsanto Company
(o'Comments") with the Commission, focusing on the following four issues:
1) Reporting of Monsanto's actual energy usage,
2) A July 2013 bill correction to Monsanto's replacement energy,
3) Reporting of Monsanto's ECAM rider revenues, and
4) REC revenues.
On March 20,2014, staff of the Idaho Public Utilities Commission ("Staff') also
filed its Comments of the Commission Staff ("Staff Comments"). Staff proposed (1) a
correction to the wholesale loss adjustment, and (2) a base rate adjustment method, or
back cast, designed to check the deferral amounts. Relying on the back cast, Staff
recommended four adjustments to the $12.8 million ECAM deferral balance in the
following categories:
1) NPC deferral,
2) Load Change Adjustment Deferral,
3) Class 1 DSM costs,
4) REC Revenue Deferral.
Table I begins with the Company's requested amount from the Application, line l, and
summarizes each of the adjustments proposed by the Parties and accepted by the
Company, with two additional corrections to Staffs adjustments proposed by the
Company, and the impact to each customer group's ECAM deferral as explained below.
-TABLEl
Summary of Deferral by Customer Group
TarifrCustome rs l\ilonsanto Aerium Total
I Conpany Defenal by Custonrcr C.roup
2 Adjustnrcnts:
3 Monsanto and AgriumActual load
4 Monsanto Replacenrnt Energy - July 2013
5
6 Deferral Accepting Monsanto's Adj.
7
8 Wholesale loss Adjustnrcnt (Wt A,)
9 NPC Deferal
l0 LCA Deferral
ll Class I DSM C.ost Deferral
12 REC Revenue Deferral
l3
14 Defenal Accepting Staffs Adj.
l5
16 Net Billed Energy forWrite0ffs
17 Add Back ECAM Deferral Write-Off
l8
19 Deferral with C.orrparry Conections
20
2l Net Inpact to Deferral Balances
s 7,234,690 $ 5,156,080 $ 4l9,0ll $ 12,809,781
13,198
124,821 9,901 (606)
(2s0,461) (19,807) (644,4s9)
l 1.830 384,905
- 53,256
s 6,947,698 $5,0a,273 $ 409,069 $ 12,399,M0
1f.sal).-[-(410,749i
ARGUMENT
The Company conditionally accepts some of the proposed adjustments recommended by
Monsanto and by Staff, as explained below.
(l 1,320)(1,878) 0(4ee) (258) (10) (766)
$ 7,247,389 $ 5,144,502 $ 417,124 $ 12,809,014
(13s,327)
(374,192)
(156,292)
(32,218)
223.487
(104,612)
(21,s65)
149.588
(8,273) Q69,177)(1,70s) (55,488)
$ 6,772,84',7 $
$ 121,595 $$ 53,256 $
5,042,273 $
-$-$
409,069 $ 12,224,t89
- 121,595
(286.991) $013.807) $
Monsanto Comments
With respect to Monsanto's actual energy usage, the Company concedes that
November 2012 acttal energy usage was mistakenly reported in December 2012 and that
each of the succeeding months lagged by one month. The correction reduces Monsanto's
actual energy usage during the Deferral Period and reduces Monsanto's ECAM deferral
balance by $11,320. While reviewing actual loads, the Company determined that
Agrium's load also lagged by one month. This correction reduced Agrium's actual
energy used as well as its deferral balance by $1,878. These corrections (1) shift the
usage to the remaining customers, increasing their load by the exact amount and (2)
increase their deferral balance by $13,198, with no net impact to the total ECAM deferral
balance.
With respect to Monsanto's replacement energy, the Company concedes that the
July 2013 replacement energy should be 9,649 megawatt-hours from the revised bill not
the 9,447 megawatt-hours included in Exhibit No. I to Mr. Brian Dickman's direct
testimony. In addition to removing the 202 megawatt-hours of incremental replacement
energy, the Company also adjusted NPC to remove the $10,191 of incremental NPC
associated with Monsanto's buy-through for replacement energy. This correction reduces
(l) Monsanto's share of the ECAM defenal balance by $258, (2) Agrium's share by $10
and (3) the remaining tariff customers' share by $499, for a total reduction of $766 to the
Total ECAM deferral balance.
The argument that the ECAM revenues paid by Monsanto are off by one month is
simply wrong. Monsanto's account should not be credited for the ECAM charges in the
month billed rather than when paid, as set forth in Monsanto's Comments, Affachment A.
In December 2012, Monsanto was billed $218,071 as part of the ECAM rate. The
Company reduced Monsanto's ECAM balance by $218,071 in January 2013, the month
the revenues were received, not the month they were billed. Crediting Monsanto's
ECAM balance in the month billed reduces Monsanto's ECAM balance before they have
actual made any payment.
As to Monsanto's assertion that the Company's filing is void of any detail
supporting REC sales, Mr. Dickman's work papers filed as part of his direct testimony
contain the total Company and Idaho actual monthly REC sales in an excel file titled,
"Exhibit 1 - ID ECAM (Dec 12-Nov13) CONFIDENTIAL Workpaper.xlsx, in the tab
titled "ID Actual REC". This file provides the detail to support the Company's request
with respect to REC sales. The Company notes that Monsanto had and took the
opportunity to request additional information on REC sales in the form of data requests
from the Company. In those responses, the Company explained that it proactively seeks
to sell RECs in the market by issuing requests for proposals and by having bilateral
discussions with market participants as opportunities arise. The Company indicated that
it issues reverse requests for proposals on a minimum rolling quarterly basis. And that the
broker market currently is illiquid and predominantly indicative (meaning there is no firm
interest).
Finally, Monsanto's attempt to discredit the Company by citing an order from the
Public Service Commission of Utah to support its statement that "RMP had to assume
some critical threshold value of RECs in order for the resources to be cost justified" is
flawed. That argument was used by a witness in the Utah case and coincidentally
rejected by the Utah Commission. The Company notes that these renewable generation
resources have already been included in the Company's general rate cases in Idaho for
proper prudency determination. The ECAM is not the appropriate proceeding to address
these types of issues.
RMP Reply Comments - Staff
Preliminarily, Staff s adjustments are based on the premise that the ECAM is an
energy cost tracker that 'oguarantee[s] recovery to a small subset of costs"l by allowing
the Company to track and collect the exact amount of NPC incurred to serve customers.
The Company has worked with Staff to prepare the back cast Staff utilized for its
adjustments and does not oppose Staff s use of the approach conceptually. However if
the intent is to collect the exact amount of expense incurred to serve customers, Staff s
adjustments fall short of being accurate in the following areas:
1) Staff s reliance on all billed kilowatt-hours during the Deferral Period for its back
cast analysis does not properly adjust for kilowatt-hours that are not collected as a
result of bad debt write-offs. Using all billed kilowatt-hours does not allow the
Company the ability to fully recover NPC. The back cast should take into
account bad debt write-offs of NPC to get the most accurate accounting and
provide the opportunity for full cost recovery.
2) AII ECAM deferred balances written-off as part of bad debt expense should be
added back into the balancing account for recovery from remaining customers.
If it is not the intent of the ECAM to "guarantee recovery" of NPC, as noted in Staff
Comments, the Company's position is that the four back cast adjustments proposed by
Staff are not appropriate and should not be made. The Company's Reply Comments not
opposing the use of the back cast approach are based on the assumption that the ECAM
indeed guarantees recovery of all NPC-related expenses.
I Page 9 paragraph I of Staff Comments in Case No. PAC-E-14-01.
6
Incremental Kilowatt-hour Write-offs
Staffs adjustment based on gross kilowatt-hours billed during the Deferral
Period overstates NPC recovery by the incremental megawatt-hours associated with bad
debt and the write-off of ECAM deferrals.
Incremental bad debt is the net difference between the bad debt expense included
in base rates and the actual bad debt expense from the Deferral Period. The base loads
and bad debt expense for the Deferral Period are from Case No. PAC-E-10-07.' That
case included$471,222 of Idaho bad debt expense, which is equivalent to approximately
5,868 megawatt-hours of energy. During the Deferral Period, the Company wrote-off
9796,632 or 10,369 megawatt-hours. The incremental write-offof $325,410 is equivalent
to 4,501 incremental megawatt-hours. All of Staff s back cast adjustments overstate the
Company's actual collection of NPC by the 4,501 incremental megawatt-hours. Reducing
the megawatt-hours in the four categories by the 4,501 incremental megawatt-hours
written-off reduces the back cast adjustment by $121,595.
The $121,595 are NPC-related expenses tracked in the ECAM that the Company
incurred during the Deferral Period to serve Idaho retail customers that were not
recovered.
Bad Debt Write-Offs
Given the ECAM was designed to be symmetrical, and assuming the ECAM
guarantees collection of actual NPC incurred to serve customers, it is reasonable that any
ECAM deferral balance not recovered due to bad debt write-offs be added back into the
balancing account to be collected from the remaining customers, rather than be written-
off.
2 Paragraph 5, Stipulation CASE No. PAC-E-l l-12.
The bad debt expense included in customers' rates is from calendar year 2009.3
Collection of the ECAM deferral balance began April l, 2010 and, therefore, no deferred
ECAM revenues are included in the bad debt expense in customer rates. During the 2013
ECAM deferral period, $53,256 of the tariff customers' Commission-approvedo 2Ol2
ECAM balance was written off as bad debt expense. If the Company is guaranteed
recovery of its NPC, the $53,256 and any future ECAM balance amounts that are written
off should be transferred back into the balancing account for recovery.
The Company agrees with Staff that the guarantee applies to a small subset of
costs, such as NPC-related items. The Company's suggested corrections to the Staff
Comments only relate to the ECAM calculation and deferred balances. The Company
proposes that the $53,256 of tariffcustomers' ECAM deferred balance, written-off as bad
debt expense during the Deferral Period, be added back into the tariff customers ECAM
balancing account.
To assure no double counting of megawatt-hours or dollars, the Company
excluded the dollar amount of ECAM write-offs when it prepared the incremental
megawatt-hours calculation and verified that no ECAM deferral write-offs were included
in customers' rates during the base period. If the Commission were to approve this
adjustment, the Company would transfer the ECAM-related revenues wriffen-off to the
ECAM deferred balance rather than expense them when the Company prepares its
monthly write-off.
3 Case No. PAC-E-10-07.o 2ol2 ECAM Deferral, Case No. PAC-E-I3-03.
Proposed Rates
If the Commission agrees that the intent of the ECAM is to "guarantee" recovery
of NPC, and accepts Staff s adjustments or some combination of Staff s, Monsanto's and
the Company's adjustments, the Company would support Staff s proposed rate design for
Electric Service Schedule No. 94 - Energy Cost Adjustment rates. Since the rates only
impact the timing of the recovery of the balancing account dollars, the Company is not
opposed to implementing Staff s proposed rates. The Company is providing revised tariff
sheets consistent with Staffs proposed rates along with its Reply Comments for
Commission approval.
CONCLUSION
The Company expresses appreciation to the Parties and their cooperative
approach to reviewing the Application. The Company intends to continue to provide
quarterly ECAM reports to assist Parties' timely review of its annual ECAM filings. The
Company is not opposed to Staffs back cast approach, as long as it is completely
symmetrical and with the following corrections: (1) the Idaho actual energy should be net
of incremental write-offs, and (2) all ECAM deferred balances included in bad debt
write-offs should be transferred back into the balancing account for future recovery rather
than expensed.
The Company respectfully requests Commission approval of the revised ECAM
deferral balance of $12,399,041, representing a $410,740 reduction to the requested
amount in the Application, effective April 1, 2014.
DATED this 26th day of March,2ul4.
Attorney for
Rocky Mountain Power
l0
YFEtrHruouNrArN
I.P.U.C. No. I
Fourth Revision of Sheet No. 94.1
Cancelling Third Revision of Sheet No. 94.1
ROCKY MOUNTAIN POWER
ELECTRIC SERVICE SCHEDULE NO.94
STATE OF'IDAHO
Energy Cost Adjustment
AVAILABILITY: At any point on the Company's interconnected system.
APPLICATION: This Schedule shall be applicable to all retail tariff Customers taking service
under the Company's electric service schedules.
EI\IERGY COST ADJUSTMENT: The Energy Cost Adjustment is calculated to collect the
accumulated difference between total Company Base Net Power Cost and total Company Actual Net Power
Cost calculated on a cents per kWh basis.
MONTHLY BILL: ln addition to the Monthly Charges contained in the Customer's applicable
schedule, all monthly bills shall have applied the following cents per kilowatt-hour rate by delivery voltage.
Delivery Voltage
Schedule I
Schedule 6
Schedule 6,4,
Schedule 7
Schedule 7A
Schedule 9
Schedule l0
Schedule I I
Schedule 12
Schedule 19
Schedule 23
Schedule 23A
Schedule 24
Schedule 35
Schedule 35A
Schedule 36
Schedule 400
Schedule 401
Secondary
0324A per kWh
0.324(, per kWh
0.324(, per kWh
0.3240 per kWh
0.324(, per kWh
0.324i, per kWh
0.324i, per kWh
0.324(, per kWh
0.324fi per kWh
0.324i, per kWh
0.324i, per kWh
0.3240 per kWh
0.3240 per kWh
0.324(, per kWh
0.324(, per kWh
Primary
0.3130 per kWh
0.3130 per kWh
Transmission
0.304(, per kWh
0.42W, per kWh
0.4190 per kWh
0.313(, per kWh
0.313f, per kWh
0313A per kWh
0.3130 per kWh
0.313(, per kWh
Submitted Under Case No. PAC-E-14-01
ISSUED: March 26,2014 EFFECTIYE: April l, 2014
YHffi^H.^/IOUNTAIN
I.P.U.C. No. I
+hir+fourtlL Rwision of Sheet No.94.l
Cancelling Seeen+I'nin!_nevision of Sheet No. 94.1
ROCKY MOI]NTAIN POWER
ELECTRIC SERVICE SCHEDULE NO.94
STATE OF IDAHO
Energy Cost Adjustment
AVAILABILITY: At any point on the Company's interconnected system.
APPLICATION: This Schedule shall be applicable to all retail tariff Customers taking service
under the Company's electric service schedules.
ENERGY COST ADJUSTMENT: The Energy Cost Adjustment is calculated to collect the
accumulated difference between total Company Base Net Power Cost and total Company Actual Net Power
Cost calculated on a cents per kWh basis.
MONTHLY BILL: In addition to the Monthly Charges contained in the Customer's applicable
schedule, all monthly bills shall have applied the following cents per kilowatt-hour rate by delivery voltage.
Delivery VoltageSecondary Primary Transmission
Schedule I 03AWd perkWh
Schedule 6 0.32458p per kWh 0.313559( per kWh
Schedule 6A 0.324569i per kWh 0.3_1355ep per kWh
Schedule 7 0.32458d per kWh
Schedule 7A 0324569( per kWh
Schedule 9
Schedule l0 0.3245690 per kWh
Schedule I I 03245690 per kWh
Schedule 12 0.324569( per kWh
Schedule 19 0.32!58i, per kWh
Schedule 23 0.324569( per kWh 0.31355ef per kWh
Schedule 23A 0.Y45+9A perkWh 0.3_1355eP perkWh
Schedule 24 0324569( per kWh 0.313559P per kWh
Schedule 35 0.3245690 per kWh 0.31355ry per kWh
Schedule 35A 0.324569( perkWh 0.31355& perkWh
Schedule 36 0.32+#i, per kWh
Schedule 400
Schedule 401
0.3W545:O per kWh
0421+240 per kWh
0.41%e+O per kWh
Submitted Under Case No. PAC-E-+#3l4-01
ISSIIED: March 26&, 20Wl EFFECTM: April l,20143