20160909Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF

FROM: CAMILLE CHRISTEN
DEPUTY ATTORNEY GENERAL

DATE: SEPTEMBER 9, 2016

SUBJECT: ROCKY MOUNTAIN POWER’S APPLICATION TO UPDATE BASE
NET POWER COSTS AND IMPLEMENT A RATE STABILITY PLAN,
CASE NO. PAC-E-16-12

On September 1, 2016, PacifiCorp dba Rocky Mountain Power filed an Application
requesting Commission authorization to decrease net power costs (NPC) included in base rates
and set a new level of base NPC to be tracked in the Energy Cost Adjustment Mechanism
(ECAM). Application at 1. The Company also asks the Commission for an Order approving a
new level of base retail load and authorizing the Company to adjust the Load Change
Adjustment Rate (LCAR), Production Tax Credit (PTC) and Renewable Energy Credit (REC)
rates. Id. at 7; Wilding Direct at 4. As an alternative to updating rates, the Company proposes a
Rate Stability Plan, under which rates would remain unchanged. Application at 2. With this
Plan, instead of reducing rates, the Company would track the incremental revenue collection due
to its decreased NPC and “utilize the incremental revenue collection to net against the
Commission approved depreciation deferral.” Id. (citing Order No. 32910). The Company asks
that the Commission issue an Order approving the Application by December 15, 2016, with an
effective date of January 1, 2017. Id. at 7. With its Application, the Company attached the
Direct Testimonies of Ted Weston and Michael Wilding, the proposed updated tariff sheets, and
supporting workpapers for the proposed tariff sheets, including the proposed impacts by rate
schedule.
BACKGROUND
A base level of NPC is recovered through the Company’s base rates for service. This
base NPC is also tracked in the ECAM and is compared against actual NPC each month. Under
DECISION MEMORANDUM 2
the ECAM, the Company defers the difference between actual NPC and base NPC into a
balancing account. At the end of the yearly deferral period, the Company credits or collects the
difference between actual NPC and base NPC through a decrease or increase in customer rates.1
The Commission approved an update to the base NPC included in base rates and the ECAM in
2015. See Order No. 33440. In that case, the Commission approved a stipulation agreed to by
the parties, which required in part that the Company file an Application to update base NPC and
base rates, no later than September 1, 2016, to be effective January 1, 2017. Id.
THE APPLICATION
The Company states that the present Application to update base NPC is a compliance
filing in accordance with Order No. 33440.2 Application at 1. Under the stipulation approved in
that Order, the updated base NPC was to be the amount reported in the 2015 annual results of
operations report, after appropriate pro forma adjustments. Order No. 33440 at 5.
In the Application, the Company seeks Commission authorization to use the NPC
from the 2015 annual results of operations report to update base NPC included in rates and
tracked in the ECAM. Application at 4-5. The Company’s proposed base NPC is $91.6 million,
which is a reduction of $3.2 million from current base NPC set in 2015. Id. at 1, 4. This update
to the NPC would reduce the Company’s revenue requirement by approximately $1.1 million
and, “if implemented as an adjustment to base rates, it represents a reduction of approximately
four tenths of one percent.” Id. at 1. The updated base NPC would also be used for tracking in
the ECAM. Id.
In addition, the Company seeks Commission authorization to update base retail load
based on the 2015 annual results of operations report. Id. at 4. The Company’s proposed update
to retail load would result in a base retail load of 3,407,488 MWh, a reduction of 75,992 MWh
from current base retail load. Id. at 5. The Company requests approval of this updated retail
load and authorization to adjust the LCAR, PTC, and REC rates. Id. at 7; Wilding Direct at 4.
As an alternative to reducing rates, the Company proposes a Rate Stability Plan,
which “would keep rates at the current level and utilize the incremental revenue collected to
offset other regulatory assets mitigating customers’ future rate impact.” Application at 4-5.
Specifically, the Company states the revenues would be applied “against the depreciation

1 The Commission approved the Company’s most recent ECAM filing in Order No. 33492, Case No. PAC-E-16-05.

2 Case No. PAC-E-15-09.
DECISION MEMORANDUM 3
deferral from the 2013 depreciation study.” Id. at 6 (citing Order No. 32910). The Company
indicates that it intends to discuss the Plan with parties, including the potential to treat any rate
reduction associated with the 2017 ECAM filing in the same manner. Id.
The Company requests that this Application be processed under Modified Procedure.
Id. The Company requests that the Commission approve the new base NPC, base retail load, and
the new LCAR, PTC and REC rates. Id. at 7. If the parties cannot reach agreement on the Rate
Stability Plan, the Company requests approval of the tariff revisions included in Attachment A to
the Application. Id. The Company requests the Commission issue an Order approving the
Application no later than December 15, 2016, to be effective January 1, 2017. Id.
STAFF RECOMMENDATION
Staff recommends that the Commission issue an Order providing Notice of
Application and setting an Intervention Deadline of 14 days from the service date of the Order.
COMMISSION DECISION
Does the Commission wish to issue an Order providing Notice of Application and
setting an Intervention Deadline of 14 days from the service date of the Order?

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