20151231Application.pdf

December 31,2015
VAOWRNIGHT DELIWRY
Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472West Washington
Boise,ID 83702-5983
Re: Case No. PAC-E-15-16
IN THE MATTER OF TITE APPLICATION OF ROCKY MOI]NTAIN POWER
FOR APPROVAL OF THE 2017 PROTOCOL.
Dear Ms. Jewell:
Please find enclosed for filing an original and nine (9) copies of Rocky Mountain
Power's Application, direct testimony and exhibit in the above-referenced maffer.
Informal questions should be directed to Ted Weston, Idaho RegulatoryAffairs Manager
at80l-220-2963.
Very truly yours,
ROCKY MOUNTAIN
Fo\A'ER
A TXVISION OF BAOFrcOFP
Jefte{ K. LaHen
Vice President, Regulation
Enclosures
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Daniel E. Solander (ISB# 8931)
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail: daniel. solander@Facifi corp.com
Attorneyfor Roclgt Mountain Power
BEFORE THE IDAIIO PI]BLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. PAC-E-15-16
OF PACIFICORP dba ROCKY MOUNTAIN )
POWER FORAPPROVAL OF THE 2017 ) APPLTCATTON OF ROCKY
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PROTOCOLALLOCATION
METHODOLOGY
) MOTTNTATN POWER
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INTRODUCTION
Rocky Mountain Power, (the "Company" or "Rocky Mountain Power"), a division of
PacifiCorp hereby respectfully submits this application ("Application") in accordance with Idaho
Code $61-502, $61-503, and RP052, to the Idaho Public Utilities Commission (ooCommission")
and requests approval of PacifiCorp's 2017 Protocol inter-jurisdictional allocation method (the
*2017 Protocol"). In support of this Application, Rocky Mountain Power states as follows:
1. Rocky Mountain Power is a division of PacifiCorp. PacifiCorp is an Oregon
corporation, which provides electric service to retail customers through its Rocky Mountain
Power division in the states of Idaho, Utah, and Wyoming, and through its Pacific Power division
in the states of Californi4 Oregon, and Washington.
2. Rocky Mountain Power is a public utility authorized to do business in the state of
Idaho. The Company is subject to the Commission's jurisdiction with respect to its prices and
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terms of electric service to retail customers in Idaho. Rocky Mountain Power provides retail
electric service to approximately 73,600 customers in the state.
3. Communications regarding this filing should be addressed to:
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
1407 West North Temple, Suite 330
salt Lake city, Utah 84116
Telephone: [phone]
Email : ted.weston@pacifi corp. com
Daniel E. Solander
Senior Counsel
Rocky Mountain Power
1407 West North Temple, Suite 320
salt Lake city, utah 84116
Telephone: [phone]
Email: daniel.solander@).pacifi corp.com
In addition, Rocky Mountain Power requests that all data requests regarding this
Application be sent in Microsoft Word to the following:
By email (prefened) : datarequest(dpacifi corp.com
By regular mail: Data Request Response Center
PacifiCorp
825 Multnomah, Suite 2000
Portland, Oregon 97232
Informal questions may be directed to Ted Weston, Idaho Regulatory Affairs Manager at
(80r) 220-2e63.
II.BACKGROTJND
4. PacifiCorp provides retail electric service to more than 1.7 million customers in
the western states of California, Idaho, Oregon, Utah, Washington, and Wyoming. PacifiCorp
owns substantial generation and transmission facilities. Augmented with wholesale power
purchases and long-term transmission contracts, these facilities operate as a single system on an
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integrated basis to provide service to customers in a cost-effective manner. PacifiCorp recovers
the costs of owning and operating its generation and transmission system in retail prices
established from time to time in state regulatory proceedings.
5. In such state regulatory proceedings, it is customary to first determine what assets
are used and useful in providing service to customers and the prudence of associated costs to be
included in the Company's revenue requirement in the state conducting the proceeding. Because
all of the Company's generation and transmission resources and other common or general
functions are deemed to be used to serve the Company's customers in all of its state jurisdictions,
it is necessary to determine what portion of these costs should be allocated to customers in the
state for which prices are being established. If different state commissions make different
decisions regarding what resources should be included in PacifiCorp's rate base or if different
state commissions adopt different policies for allocating the costs of resources among states, the
Company may not be afforded a reasonable opportunity to recover its full cost of providing
electric service.
6. Each of PacifiCorp's state regulatory commissions has the ability to pursue
policies that it believes are in the public interest in its state. It is also important, however, for
PacifiCorp to be able to make business decisions in an environment where differing state policies
do not result in preemptively denying the Company a reasonable opportunity to recover its
prudently incurred costs. This would create a disincentive for PacifiCorp to invest in its system.
7. The Multi-State Process ("MSP") began in 2002, with PacifiCorp filing
applications in each of its six jurisdictions to create a process to consider issues related to its
status as a multi-jurisdictional utility. After years of discussions, PacifiCorp sought ratification
of an inter-jurisdictional allocation protocol in Idaho, Oregon, Utah and Wyoming. Following
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negotiations, the participants agreed to certain revisions to the protocol filed with the
commissions (the "Revised Protocol"), which was approved by the commissions in Idaho,
Oregon, Utah and Wyoming. The Revised Protocol allocated costs among PacifiCorp's
jurisdictional states and ensured that the Company operated its generation and transmission
system on an integrated basis to achieve a least costleast risk resource portfolio, while allowing
each state to independently establish its ratemaking policies. Section XIII.B of the Revised
Protocol established a "Standing Committee" for facilitating continued dialogue among the states
related to inter-jurisdictional allocation issues.
8. Thereafter, subsequent and substantial discussions occurred to address various
concerns raised by stakeholders in different states that resulted in the amendments to the Revised
Protocol (the "2010 Protocol"). The 2010 Protocol was agreed to by the parties on September
15, 2010, and was designed to allocate PacifiCorp's costs among its jurisdictional states in an
equitable manner, ensure PacifiCorp plans and operates its generation and transmission system
on a six-state integrated basis that achieved a least cost-least risk resource portfolio for
customers, allow each state to independently establish its ratemaking policies, and provide
PacifiCorp with the opportunity to recover 100 percent of its prudently-incurred costs. The 2010
Protocol was approved by the commissions in Idaho, Oregon, Utah and Wyoming.
9. One of the terms of 2010 Protocol was a specified terrnination date. Parties to the
stipulation agreed that it would only be utilized for regulatory filings made prior to January 1,
2017. Knowing that it would take some time to develop a new allocation methodology, the
Standing Committee and Broad Review Work Group ("BRWG"), a workgroup of interested
stakeholders, started collaborating in November 2012 to develop potential solutions acceptable to
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all parties in the context of an allocation methodology, including the performance of various
studies by the Company at the request of the Standing Committee.
10. The 2017 Protocol is the result of general agreement that has been reached
between representatives of PacifiCorp and certain Commission staff members, consumer
advocates and other interested parties from Idaho, Oregon, Utah, and Wyoming, who are
signatories to the 2017 Protocol,l (collectively referred to as the "Parties" or individually as a
"Party") regarding issues arising with regards to the 2010 Protocol, PacifiCorp's status as a
multi-jurisdictional utility and future inter-jurisdictional allocation procedures.
11. After approximately three years of discussions and negotiations, in November
2015 the Parties reached an agreement-in-principle that led to the final 2017 Protocol that is
being presented in this docket.
III. REQUEST FORAPPROVAL OF 2017 PROTOCOL
12. The 201,7 Protocol was developed and the Parties support its adoption to provide
PacifiCorp, state commissions, and other interested stakeholders an allocation methodology on a
shorter-term basis while the impacts of the Environmental Protection Agency ("EPA") Rule
11 1(d) and other multi-jurisdictional issues are better understood and can be more fully analyzed
for their allocation impacts on PacifiCorp and its states.
13. The Parties to the 2Ol7 Protocol agreed to support Commission adoption and use
of the 2017 Protocol in all PacifiCorp rate proceedings filed after December 31, 2016, up to and
I Signatories to the 2Ol7 Protocol include: PacifiCorp, Public Utility Commission of Oregon Stafi the Citizens'
Utility Board of Oregon, the Idaho Public Utilities Commission Staff, Utah Division of Public Utilities, Utah Offrce
of Consumer Services, Wyoming Office of Consumer Advocate, Wyoming Industrial Energy Consumers, and the
Wyoming Public Service Commission Staff. Representatives from Washington participated in early discussions, but
they are not signatories to the 2017 Protocol since the Washington Utilities and Transportation Commission has
adopted a different allocation methodology as part of general rate case proceedings. Califomia representatives did
not participate in negotiations, but it implements the multi-jurisdictional allocation methodology as part of general
rate case proceedings. The Utah Association of Energy Users was party to the negotiations and, although not
available at the time of filing, the Company anticipates receiving a signature page and filing it with the Commission
in the near future.
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including December 31, 2018. The 2017 Protocol will expire on December 31, 2018, unless all
state commissions that approve the 2017 Protocol determine, by no later than March 31,2017,
that the term of the 2017 Protocol should be extended by an optional one-year through December
31,2019.
14. During the term of the 2017 Protocol, PacifiCorp will continue to analyze
alternative allocation methods including but not limited to: corporate structure alternatives,
divisional allocation methodologies, alternative system allocation methodologies, potential
implications of the EPA Rule 111(d), and possible formation of a regional independent system
operator. PacifiCorp will present the results of its analyses of these issues to the MSP BRWG
and discuss them at commissioner forums.
15. PacifiCorp commits that its generation and transmission system will continue to
be planned and operated prudently on an integrated basis designed to achieve a least cost-least
risk resource portfolio for PacifiCorp's customers.
16. The 2017 Protocol describes how the costs and revenues, including wholesale
transactions, associated with PacihCorp's generation, fransmission and distribution system will
be assigned or allocated among its six state jurisdictions for purposes of establishing retail rates.
It describes inter-jurisdictional allocation policies and procedures, which, if utilized by the states
for rate proceedings filed after December 31, 2016, is intended to better afford, than would
otherwise be the case, PacifiCorp a reasonable opportunity to recover all of its prudently incurred
cost of service.
17. The assignment of a particular expense or investment, or allocation of a share of
an expense or investment, to a jurisdiction pursuant to the 201.7 Protocol is not intended to, and
should not prejudge the prudence of those costs. Nothing in the 2017 Protocol abridges any state
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commission's right and/or obligation to establish fair, just and reasonable rates based upon the
law of that state and the record established in rate proceedings conducted by that state.
18. The Parties who support the ratification of the 2017 Protocol do so with the belief
that it will continue to achieve a solution to multi-jurisdictional issues that is in the public
interest. A Party's support of the 2017 Protocol, however, is not intended in any manner to
negate the necessary flexibility of the regulatory process to deal with changed or unforeseen
circumstances, and a Party's support of the 2017 Protocol will not bind or be used against that
Party in the event that unforeseen or changed circumstances cause that Party to conclude, in good
faith, that the 2017 Protocol no longer produces results that are just, reasonable and in the public
interest.
19. In support of this Application the Company provides the testimony of witnesses:
Jeftey K. Larsen, Vice President of Regulation, and Steven R. McDougal, Director of Revenue
Requirement.
IV. PROPOSED COMMISSION PROCEEDING PROCESS
20. Given the lengthy discussions held with interested parties and the significant
analytical review that was undertaken with them, as described in the direct testimonies of Mr.
Larsen and Mr. McDougal, PacifiCorp respectfully requests that the Commission complete its
review and issue an order with respect to this Application no later than July L,2016. The
Company also proposes that within 30 days of receipt of the Application, the Commission
establish a schedule for further proceedings.
V. CONCLUSION
WHEREFORE, by this Application, PacifiCorp respectfully requests that the Commission issue
an order approving the2017 Protocol inter-jurisdictional allocation methodology as described in
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the direct testimony of Company witnesses Mr. Larsen and Mr. McDougal no later than July 1,
2016.
DATED this 31st day of Decenrber 2015.
Respectfully submitted,
PACIFICORP
Daniel E. Solander (11467)
1407 West North Temple, Suite 320
SaltLake City, Utah 84116
Tel: [phone]t4
Fa:r: [phone]
daniel.solander@pacifi corp.com
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