20151106Comments.pdf

ROCKY MOUNTAIN
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November 6,2015
VIA OVERNIGHT DELIVERY
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1407 W. North Temple, Suite 330
Salt Lake City, Utah 84116
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472W. Washington
Boise,lD 83702
Re: Case No. PAC-E-15-09
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN
POWER TO MODIFY THE ENERGY COST ADJUSTMENT MECHANISM
AI\ID INCREASE RATES BY $10.2 MILLION, OR APPROXIMATELY 3.9
PERCENT
Dear Ms. Jewell:
Please find enclosed for filing seven (7) copies of Rocky Mountain Power's Comments
supporting the Stipulation filed with the Commission on October 15, 2015, in the above-
referenced matter.
These Comments are provided assuming this case will be processed under Modified
Procedure, if the Commission determines that hearings are necessary the Company stands
ready to offer testimony in support of the Stipulation.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very truly yours,
J"+kykL4/.d^/4,
Jeffrey K. Larsen
Vice President, Regulation
cc: Service List
Enclosures
Yvonne R. Hogle (lSB No. 8930)
1407 W. North Temple, Suite 320
Salt Lake city, utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail: [e-mail]
Attorneyfor Roclcy Mountain Power
IN THE MATTER OF THE
APPLICATION OF ROCKY MOUNTAIN
POWER TO MODIFY THE ENERGY
COST ADJUSTMENT MECHANISM AI\D
INCREASE RATES BY $I0.2 MILLION,
OR APPROXIMATELY 3.9 PERCENT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC.E-15-09
COMMENTS OF
ROCKY MOUNTAIN POWER
PacifiCorp, d.b.a. Rocky Mountain Power ("Rocky Mountain Power" or "Company"),
hereby provides Comments which summarize and support the Stipulation filed October 15,2015,
in the above referenced matter entered into by and among Rocky Mountain Power, Staff for the
Idaho Public Utilities Commission ("Staff'); the Idaho Irrigation Pumper Association, Inc.
("IIPA"); Monsanto Company ("Monsanto"); and PacifiCorp Idaho Industrial Customers
("PIIC") collectively referred to as the "Parties".
BACKGROUND
l. On May 27,2015, the Company filed an Application and the supporting
testimony of Company witnesses Ms. Joelle Steward and Mr. Michael G. Wilding requesting
Commission authorization to: (l) increase rates by $10.2 million effective January 1,2016, and
(2) modiff the Energy Cost Adjustment Mechanism ("ECAM").
2. The testimony of witness Michael G. Wilding supported the proposal to increase
base rates along with the following modifications to the ECAM: (a) eliminate the ECAM sharing
band, load change adjustment rate ("LCAR"), tracking DSM costs, and sulfur dioxide sales from
the ECAM; (b) start tracking production tax credits; (c) calculate based on sales at meter rather
than generator; and (d) align the deferral period to the calendar year.
3. Mr. Wilding testified that net power costs ("NPC") have consistently been under
recovered through base rates causing large NPC deferrals to be recovered through the ECAM,
noting that since the 20ll general rates case, the average NPC deferral in the annual ECAM
filings has been approximately $12.8 million representing almost 5 percent of total retail
revenues.
4. Supporting the proposal to reset base NPC, Mr. Wilding stated that it was more
appropriate for ongoing and permanent NPC to be recovered through base rates rather than
through the ECAM. Regularly resetting base NPC assures that long-teffn recovery of NPC
occurs through base rates, while annual fluctuations in NPC are handled by the ECAM,
consistent with the Commission's recent order from an Idaho Power case:
"[W]hile the Company currently recovers these ongoing perrnanent costs through
the PCA, we never intended the PCA to allow for the long-term recovery of costs
that continue year-to-year. Rather, the PCA was implemented to enable the
Company to recover or return the annual fluctuation in power supply costs and
thus keep its customers from paying too little or too much of those costs." 1
5. Ms. Steward's testimony explained that the proposed rate spread and rate design
for the affected rate schedules was calculated by dividing the $10.2 million increase by the 2014
normalized kWh sales. She testified that since ECAM costs are energy related, the increase
should be allocated across customer classes on equal cents per kWh and customers' energy rates
should increase by an equal cents/kWh for each schedule to collect the corresponding rate
increase.
' Case No. IPC-E-13-20, Order No. 33000, p. 8.
6. On June ll, 2015, the Commission issued Order No. 33321 in this case granting
Petitions to Intervene filed by Monsanto and PIIC. On July l, 2015, the Commission issued
Order No. 33333 in this case granting the Petition to Intervene filed by the IIPA. On July 15,
2015, the Commission issued a Notice of Modified Procedure, Notice of Schedule and
Settlement Conference.2
7. On August 11,2015, a settlement conference with representatives from each of
the Parties was held at the Commission offices. Subsequently, the Parties agreed to a settlement
in principle. The Parties continued their negotiations which ultimately resulted in a Stipulated
Settlement Agreement ("Stipulation") resolving all of the outstanding issues in this case which,
on October 15,2015, was signed by the Parties and filed with the Commission.
TERMS OF THE STIPULATION
8. The Parties agreed that Idaho retail revenues should increase by $10.2 million (3.9
percent) effective January 1,2016. The Parties further agreed that the increase would be applied
on an equal cents/kWh for each schedule as set forth in Exhibits 4 and 6 to the Application. The
Parties agreed that the $10.2 million increase above current base rates using 2014 loads will
consist of: (l) a $3.2 million increase in NPC currently approved in base rates, increasing total
Company base NPC from $1.385 billion (with Deer Creek depreciation) to $1.529 billion
(without Deer Creek depreciation) or $94.8 million Idaho allocated base NPC with ldaho base
energy at meter of 3,483,480 megawaff-hours, or $27.21 per megawaff-hour; (2) a $6.5 million
increase associated with a reduction of the revenue credit from the sale of renewable energy
certificates ("RECs") decreasing the total Company revenue credit from $78 million to $4.4
million establishing Idaho's allocated RECs base at $0.3 million; (3) a $0.2 million change in
'z Order No. 33339
Idaho's share of tax affected production tax credits ("PTCs") establishing an Idaho allocated
base of $6.9 million from a total Company credit $115.7 million; and (4) $0.3 million
incremental increase in exchange for the Company agreeing not to file a general rate case with
rates effective priorto January 1,2018.
9. As part of the Stipulation not to file a general rate case prior to June 1,2018,
Parties agreed to a second base rate change effective January 1,2017. Retail rates will be
updated for base NPC using the incremental change to normalized NPC and loads reported in the
2015 annual results of operations report. The rate spread and rate design will utilize the same
equal cents per kWh approach stipulated to in this filing. The Company will file an application
for review by interested parties and for approval by the Commission no later than September l,
2016, with the proposed change to base rates, the NPC from the 2015 annual results of
operations report, the associated rate change and spread to customer classes, and updated electric
service schedules.
10. The Parties stipulated that with the exception of the application described above,
the Company would not file another application to increase base rates prior to June l, 2017, with
rates effective on or after January 1,2018.
I l. The Stipulation specifies that during the stay-out period the Parties will not
request the establishment of new regulatory assets or liabilities, which have not previously been
approved by the Commission, except under unique or unforeseen circumstances.
12. The Parties agreed that starting January l, 2015, the amortization expense
associated with the unrecovered Deer Creek mine investment will be recovered through the
ECAM as a separate line item, without application of the sharing band until fully amortized.
13. In addition, the Parties agreed to the following modifications to the ECAM for
deferrals on and after January l, 2016: (l) the ECAM will be measured on a dollar per
megawatt-hour basis using load at the meter rather than the load at the generator; (2) PTCs will
be tracked and trued-up in the ECAM, without application of the sharing band; (3) the LCAR
will be updated to $5.68 per megawatt-hour to reflect base loads at meter corresponding to the
2014 period used to set base rates; (4) Sulfur-dioxide ("SOz") revenues and demand side
management costs will no longer be tracked in the ECAM; and (5) the 2016 ECAM Deferral
Period will include 13 months (December 1, 2015 to December 31, 2016), and that all
subsequent ECAM filings will be based on calendar year deferrals. The Company's ECAM
applications will be filed annually on April l, with a rate effective date of June I beginning April
1,2017.
14. Modiffing the ECAM to track variances using load at the meter will simpliff the
ECAM by eliminating the need to perform a back cast calculation to check for over/under-
collection of NPC.
15. Tracking PTC variations in the ECAM is appropriate since they are directly tied
to the megawatt-hours of production from qualiffing wind facilities and only have a ten-year
term of availability. The base level of PTCs will continue to be set in a general rate case but
many of these wind facilities are approaching their ten-year production anniversary, starting in
2017, and will no longer qualifr for PTCs. By tracking PTCs in the ECAM customers will
receive 100 percent of any PTCs generated but won't continue to receive the credit after it is no
longer available to the Company.
16. The base loads in the LCAR and ECAM are updated to the 2014 normalized loads
consistent with the base loads at meter used to establish the proposed retail rates. Prior to this
update the base loads in the ECAM were the historical 2010 loads established in Case No. PAC-
E-tt-12.
17. Revenues from SOz sales have declined from approximately $0.2 million in 2010
to $71 in 2014. Because the level has declined to a level of immateriality the Parties agreed that
SO2 sales should no longer be tracked in the ECAM.
18. Class I demand-side management costs were included in the ECAM beginning in
2012 due to the uncertainty of the programs allocation treatment. Subsequently, Staff discussed
treatment of costs with the Multi-State Protocol Standing Committee. Since the uncertainty is no
longer an issue, the Parties agreed that there is no longer a need to separately track demand-side
management costs in the ECAM.
19. When the Company first filed to implement the ECAM in Idaho it requested that
the deferral period be December through November to be consistent with the period used in
Wyoming. Since then Wyoming has changed its deferral period to a calendar year. The Parties
agree that aligning the deferral period with the calendar year which matches the Company's
accounting period will simplify the audit of the ECAM. To provide time to prepare the ECAM
the Stipulation proposes that the filing date be moved from February I to April 1 with June I as
the new rate effective date.
20. The Company filed this Application in an effort to mitigate customer rate impact
by proposing to reset base NPC and modi$ the ECAM effective January l, 2016, followed by a
general rate case with rates effective April l, 2017. This would have aligned the 2017 ECAM
update with the rate effective date of the rate case, and was projected to offset the rate case with
a reduction to the customer's ECAM rate. In an effort to reach this Stipulation the Company has
agreed to extend its expected rate case filing an additional nine months for rates effective no
sooner than January l, 2018.
21. This Stipulation represents a compromise of the Parties positions, provides
significant customer benefits and will result in fair, just, and reasonable rates for tdaho
customers. Idaho's average residential customer on Schedule I uses approximately 800 kWh per
month. If this Stipulation is approved, the average residential customer would see their bill
increase by $2.35 per month in 2016, followed by a decrease in their ECAM surcharge in 2017
due to a higher level of NPC recovery in base rates during 2016.
22. The Company and Monsanto agreed to extend the current terms of the existing
Electric Service Agreement governing curtailment products and payments through December 31,
2017. An executed copy of the contract is provided separate from the Company's Comments for
the Commission's approval.
REQUEST FOR RELIEF
For the reasons set forth above and in the supporting testimony, Rocky Mountain Power
respectfully requests that the Commission approve the Stipulation as filed.
DATED this November 6,2015.
RESPECTFULLY SUBMITTED,
ROCKY MOUNTAIN POWER
ed/*q
CERTIFICATE OF SERVICE
I hereby certiff that on this 6th of November,2015,l caused to be served, via e-mail, a
true and correct copy of the foregoing document in PAC-E-15-09 to the following:
Randall C. Budge
Racine, Olson, Nye, Budge & Bailey, Chartered
201 E. Center
P.O. Box l39l
Pocatello, ID 83204-1391
[e-mail]
Eric Olsen
Racine, Olson, Nye, Budge & Bailey
201 East Center
PO Box 1391
Pocatello, lD 83204
[e-mail]
Val Steiner
Agrium Us IncA.,lu-West Industries
3010 Conda Rd.
Soda Springs, lD 8327 6-5301
[e-mail]
James R. Smith (E-mail only)
Monsanto Company
P.O. Box 816
Soda Springs, ldaho 83276
i [e-mail]
Yvonne Hogle
Rocky Mountain Power
1407 W. North Temple, Suite 320
Salt Lake city, utah 841l6
Yvonne.hoele@pacifi corp.com
Bradley G. Mullins (E-mail only)
333 S.W. Taylor, Ste. 400
Portland OF.,97204
bmull [e-mail]
Brubaker & Associates
16690 Swingly Ridge Road, #140
Chesterfreld, MO 63017
[e-mail]
Ronald L. Williams
Williams Bradbury PC
l0l5 W. Hays St.
Boise,ID 83702
ron@wiliamsbradburv. com
Christina Zamora
Community Action Partnership Assoc. of Idaho
3350 W. Americana Terrace, Suite 360
Boise ID. 83706
[e-mail]
Jim Duke
Idahoan Foods
357 Constitution Way
Idaho Falls, lD 83742
iduke @idahoan.com
Ted Weston
Rocky Mountain Power
1407 W. North Temple, Suite 330
Salt Lake City, Utah 84116
Ted.weston@pacifi com.com
Data Request Response Center
PacifiCorp
825 NE Multnomah Street, Suite 2000
Portland, Oregon97232
datareq uest@pacifi corp.com
Anthony Yankel
29814 Lake Road
Bay Village, OH 44140
tony@.yankel.net
Coordinator, Regulatory Operations