20150618notice_of_application_order_no_33325.pdf

Office of the Secretary
Service Date
June 18,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF PACIFICORP DBA )
ROCKY MOUNTAIN POWER’S )CASE NO.PAC-E-15-09
APPLICATION TO MODIFY THE ENERGY )
COST ADJUSTMENT MECHANISM AND )NOTICE OF APPLICATION
INCREASE RATES )
)NOTICE OF
)INTERVENTION DEADLINE
)
______________________________
)ORDER NO.33325
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that PacifiCorp dba Rocky Mountain Power
(“Rocky Mountain”or “Company”)provides retail electric service to approximately 75,435
customers in the State of Idaho.
YOU ARE FURTHER NOTIFIED that on May 27.2015,Rocky Mountain submitted
an Application seeking a Commission Order authorizing the Company to:(1)increase rates by
$10.2 million,or 3.9%on average,effective January 1,2016,as summarized in the electric
service schedules attached to the Company’s Application;and (2)modify the Energy Cost
Adjustment Mechanism (“ECAM”).
YOU ARE FURTI-IER NOTIFIED that Rocky Mountain asserts that its base net
power costs (“NPC”)were established in a general rate case in 2011,based on 2010 loads.
According to the Company,all of the NPC components have changed increasing NPC by $129
million.Because these increased NPC are not reflected in base rates,Rocky Mountain believes
that a significant portion of Idaho’s allocation of NPC is being recovered through the ECAM.
YOU ARE FURTHER NOTIFIED that Rocky Mountain claims that it is more
appropriate for these ongoing and permanent power costs to be recovered through base rates
rather than through the ECAM.
YOU ARE FURTI-JER NOTIFIED that Rocky Mountain proposes to update the level
of base NPC consistent with the level reported in the Annual Results.The Company’s Annual
Results demonstrate that base NPC are $1,514 million,or $93.8 million on an Idaho-allocated
basis,compared to $1,385 million,total Company NPC,or $87.6 million on an Idaho-allocated
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basis,in its 2011 general rate case.By updating base NPC and allowing that level of expense to
be included in base rates beginning January 1,2016,Rocky Mountain argues that the ECAM will
be better aligned to track annual fluctuations in NPC rather than long-term recovery of NPC
currently being collected through the annual ECAM surcharges.
YOU ARE FURTHER NOTIFIED that Rocky Mountain reveals in its Application
that its proposed base rate increase of approximately $10.2 million is derived from:(a)$2.8
million associated with updating base NPC from $1,385 million to $1,514 million,total
Company,or $93.8 million on an Idaho-allocated basis;(b)$6.5 million for renewable energy
credits (“REC5”);(c)$0.2 million for renewable energy production tax credits (“PTCs”);and (d)
$0.7 million for the incremental amortization of the Deer Creek Mine unrecovered investment
(depreciation and depletion expense),as requested in the Company’s application in Case No.
PAC-E-14-lO (“Deer Creek Mine Case”).
YOU ARE FURTHER NOTIFIED that Rocky Mountain proposes to make the
following modifications to the current ECAM:(1)90/10%sharing band should be eliminated,
allowing for 100%recovery of prudently incurred NPC;(2)the calculation method should be
based on retail sales at meter,eliminating the need for Staffs base rate over-collection
adjustment;(3)the LCAR should be eliminated;(4)DSM costs and SO2 sales should no longer
be tracked in the ECAM;(5)renewable energy production tax credits (“PTCs”)should be
included in the ECAM and treated similar to NPC;(6)if the amortization of the Deer Creek
Mine unrecovered investment (depreciation and depletion expense)is not included in base rates a
temporary adder should be included in the ECAM until it is included in base rates;(7)the
deferral period should be changed to correspond with the calendar year and the filing date should
be changed to April 1 with rates effective June 1.
YOU ARE FURTHER NOTIFIED that Rocky Mountain proposes to eliminate the
90/10 sharing band in the ECAM.Rocky Mountain states that it already proactively manages
NPC.The Company believes that the sharing band is not an appropriate incentive because the
Company has little to no control over the volatility and unpredictable nature of these costs.The
Company believes that it has historically been penalized by the sharing band.The Company
claims that sharing bands and dead bands have been eliminated in almost all other states.
YOU ARE FURTHER NOTIFIED that Rocky Mountain proposes to add the
incremental Deer Creek Mine depreciation expense that was collected through the ECAM into
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base rates with no sharing.This proposal is consistent with the Company’s request in the Deer
Creek Mine Case (PAC-E-14-10).Rocky Mountain believes that this proposal would allow
them to continue to collect depreciation expense related to the Deer Creek Mine through its
remaining depreciable life.
YOU ARE FURTHER NOTIFIED that Rocky Mountain argues that its resource mix
has changed since the initial approval of the ECAM.The Company states that it has become
increasingly reliant on short-term market purchases due to more intermittent energy from the
addition of QFs on the Company’s system and other owned and contracted generation that serve
its load.Due to requirements under the Public Utility Regulatory Policies Act of 1978,the
Company has added additional intermittent energy from the purchase of energy from qualifying
facilities,exposing the Company to the market and increased NPC volatility.Intermittent energy
is highly dependent on the weather,which is entirely out of the Company’s control,making NPC
more unpredictable.
YOU ARE FURTHER NOTIFIED that Rocky Mountain believes that its new
hedging policy also supports modifications to the ECAM.The Company updated its hedging
policy by incorporating guidelines that allow a reasonable percentage of natural gas and power
requirements to remain open to short-term market price exposure and for operational flexibility.
YOU ARE FURTHER NOTIFIED that Rocky Mountain proposes to change the
ECAM’s differential calculation method so that it is based on retail sales at the meter,
eliminating the need for the method developed by Staff,known as the base rate over-collection
adjustment.The Company also proposes to eliminate tracking the LCAR,SO2 sales,irrigation
load control and DSM costs and from the ECAM.The LCAR should be eliminated because it is
asymmetrical in that it only considers changes in loads (or sales going forward)but ignores
changes in the actual underlying costs.Irrigation load control and DSM costs were included in
the ECAM as stipulated in the 2011 GRC due to the uncertainty of the jurisdictional treatment of
the irrigation load control program by the Multi-State Protocol (“MSP”)committee.The MSP
now dictates that DSM costs are situs assigned,thus eliminating the need to track these cost in
the ECAM.The Company says that it has modified the DSM program to make it more cost
effective and aligned with the benefits received.The DSM program cost should not be part of
the ECAN.
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YOU ARE FURTHER 1\OTJFIED that Rocky’Mountain declares that revenues from
S02 sales have become immaterial and irrelevant,citing that the 2015 ECAM Idaho S02 sales
amounted to a $71 credit to customers.The Company proposes tracking renewable energy
production tax credits in the ECAM because the credits are directly’tied to the energy production
of the qualifying renewable generation facilities,which can vary significantly from year to year.
YOU ARE FURTHER NOTIFIED that Rocky Mountain proposes a change to the
ECAM deferral period to coincide with the calendar year (January to December)as opposed to
the current December through November deferral period.The Company believes this change
will make the ECAM easier to audit and align the deferral period with that used in all the other
PacifiCorp jurisdictions.The Company wishes to move the filing date from February 1 to April
1,with rates effective June 1 rather than April 1.
YOU ARE FURTHER NOTIFIED that Rocky Mountain provided additional notice
of its Application to its customers through the issuance of a press release sent to local media
organizations and bill inserts included in customer bills beginning in June.Copies of the
Application were provided to many of the Company’s major customer representatives.Copies of
the Application will also be made available for review at the Company’s local offices in its Idaho
service territory.In accordance with Rule 1 21(e),(f),and (g),Rocky Mountain represents that
the Application,testimony,exhibits and workpapers support the costs the Company seeks to
recover.
YOU ARE FURTHER NOTIFIED that Rocky Mountain requests that the
Commission process its Application through Modified Procedure.
YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers,
testimonies and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices.The Application and
testimonies are also available on the Commission’s web site at www.puc.idaho.gov.Click on the
“File Room”tab at the top of the page,scroll down to ‘Open Electric Cases,”and then click on
the case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code.The Commission
may enter any final Order consistent with its authority under Title 61.
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YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01 .01.000 et seq.
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YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
must file a Petition to Intervene with the Commission pursuant to this Commission’s Rules of
Procedure 72 and 73,IAPA 3 1.01.01.072 and -.073.All Petitions to Intervene must be filed
within fourteen (14)days from the service date of this Order.Persons desiring to present
their views without parties’rights of participation and cross-examination are not required to
intervene and may present their comments without prior notification to the Commission or the
parties.
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in Case No.PAC-E
15-09 should do so no later than 14 days from the date of this Order.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of June 2015.
PAUL KJELLA ER,PRESIDENT
KRSTINE RAPER,COMMISSIONER
ATTEST:
/lAPJJ
J(en D.Jewjl
Commission Secretary
O:PAC-E-1 5-O9np
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