20170331Application.pdf

TY ROCKY MOUNTAIN
Po\A'ER
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1407 West North Temple, Suite 310
Salt Lake City, Utah 84116
March 31,2017
VA OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472W. Washington
Boise,lD 83702
Re:CASE NO. PAC-E-17.02
IN TIIE MATTER OF TIIE APPLICATION OF ROCKY MOUNTAIN POWER
REQUESTING APPROVAL OF THE $7.5 MILLON NET POWER COST
DEFERRAL AIYD AUTHORITY TO DECREASE RATES BY $6.9 MILLION
;Dear Ms. Hanian:
Please find enclosed an original and nine (9) copies of Rocky Mountain Power's Application in
the above referenced matter, along with the direct testimony and exhibits of Mr. Wilding, Mr.
Meredith, and Mr. Weston. Copies of the press release and customer bill insert are also included.
Enclosed is a CD containing the Application, direct testimony, exhibits, and non-confidential
work papers, a second CD with Mr. Wilding's confidential work papers is also provided.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at(801)220-
2963.
Very truly yours,
Jeffrey K. Larsen
Vice President, Regulation
Enclosures
CC: Ron Williams
Eric Olsen
Randall C. Budge
James R. Smitht
f,il,;f;lVEDtYvonne R. Hogle (ISB# 8930)
1407 West North Temple, Suite 320
saltLake city, utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail: [e-mail]
IN THE MATTER OF THE APPLICATION
OF ROCI(Y MOUNTAIN POWER
REQUESTTNG APPROVAL OF TrrE $7.5
MILLON NET POWER COST DEFERRAL
AIID AUTHORITY TO DECREASE RATES
BY $6.9 MILLION
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Attorneyfor Roclqt Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
) CASE NO. PAC-E-[7-02
)) APPLTCATTON OF
) ROCKY MOUNTATN POWER
)
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t Rocky Mountain Power, a division of PacifiCorp ("Company" or "Roclqr Mountain Power"),
in accordance with Idaho Code $61-502, $61-503, and RP 052 hereby respectfully submits
this application ("Application") to the Idaho Public Utilities Commission ("Commission")
pursuant to the Company's approved energy cost adjustment mechanism ("ECAM"). The
Company is requesting approval for recovery of approximately $7.5 million deferred costs,
plus interest, beginning June 1 , 20 I 7 through May 3 I , 201 8, from the deferral period beginning
December 1,2015 through December 3I,2016 ("Deferral Period") and proposed revisions to
Electric Service Schedule No. 94, Energy Cost Adjustment ("Schedule 94"). The Deferral
Period for this Application is thirteen months under Order No. 33440 in Case No. PAC-E-15-
09. In that case, the Commission approved a change to the ECAM deferral to a calendar year
period from the December through November deferral period previously used. In support of
its Application, Rocky Mountain Power states as follows:
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l. Rocky Mountain Power is a division of PacifiCo.p, an Oregon corporation,
which provides electric service to retail customers through its Rocky Mountain Power division
in the states of Idaho, Wyoming, and Utah. Rocky Mountain Power is a public utility in the
state of Idaho and is subject to the Commission's jurisdiction with respect to its prices and
terms of electric service to retail customers in Idaho pursuant to Idaho Code 61-129. Rocky
Mountain Power is authorized to do business in the state of Idaho providing retail electric
service to approximately 75,400 customers in the state.
BACKGROUND
2. The ECAM became effective July 1, 2009, pursuant to an agreement among
parties in Case No. PAC-E-08-08, as approved by the Commission September 29,2009, in
Order No. 30904. The ECAM allows the Company to collect or credit the difference between
the actual net power costs ("NPC") incurred to serve customers in Idaho and the NPC collected
from Idaho customers through rates set in general rate cases.
3. Included in the ECAM are NPC as defined in the Company's general rate cases
and modeled by the Company's production dispatch model GRID. Specifically, NPC include
amounts booked to the following FERC accounts:
. Account 447 (sales for resale, excluding on-system wholesale sales and other
revenues not modeled in GRID),
. Account 501 (fueI, steam generation, excluding fuel handling, start-up fuel/gas,
diesel fuel, residual disposal and other costs not modeled in GRID),
. Account 503 (steam from other sources),
. Account 547 (fwl, other generation),
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. Account 555 (purchased poweq excluding BPA residential exchange credit
pass-through if applicable), and
. Account 565 (transmission of electricity by others).
4. On a monthly basis, the Company compares the actual system net power costs
("Actual NPC") to the net power costs embedded in then effective rates ("Base NPC") from
the general rate case during the Deferral Period and defers the difference into the ECAM
balancing account. This comparison is on a system-wide, dollar per megawatt-hour basis.
5. In addition to the difference between Actual NPC and Base NPC, the ECAM
includes eight additional components: the Load Change Adjustment Revenues ("LCAR"), an
adjustment for the treatment of coal stripping costs under Emerging Issues Task Force ("EITF")
04-6, the sales of sulfur dioxide ("SOz") emission allowances, load control or demand side
management ("DSM") costs, a true-up of 100 percent of the incremental Renewable Energy
Credit ("REC") revenues, Production Tax Credits ("PTC"), Deer Creek amortization expensel,
and the Lake Side 2 generation resource adder. These components are described in more detail
below.
6. The ECAM includes a symmetrical sharing band of 90 percent (customers) / l0
percent (Company) that shares the differential between Actual NPC and Base NPC, LCAR,
and the coal stripping costs adjustment between the customers and the Company. The sharing
band is also described in more detail below.
7. Under Order 33440 and consistent with the Commission's approval of full
amortization of unrecovered Deer Creek Mine capital costs in Case No. PAC-E-14-10,2 100
tAs approved in Order No. 33440, page 5, paragraph 6.
2 See ln the Matter of the Application of Rocky Mountain Power for Approval of the Transaction to Close the
Deer Creek Mine and for a DeferredAccounting Order, Case No. PAC-E-14-10, OrderNo. 33304 (May 27,2015).
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percent of approximately $1.3 million annual Deer Creek Mine amortizationexpense is tracked
and recovered through the ECAM until the costs are fully amortized, through2020.
8. Under the stipulation in Case No. PAC-E-13-04 and approved by the
Commission in Order 32910, the ECAM deferral also includes a resource adder for the Lake
Side 2 generation facility that is not subject to the sharing band. This resource adder is to be
recovered through the ECAM for the period that the investment in the facility is not reflected
in rates as a component of rate base. Inclusion of the Lake Side 2 resource adder in the ECAM
began January I, 2075, and is calculated by multiplying the actual megawatt-hours of
generation from the Lake Side 2 generation facility by $1.99 per megawatt-hour and is capped
at $5.4 million dollars or 2,729,500 megawatt-hours for the calendar year.
9. Under Order No 33440, Case No. PAC-E-15-09, PTC are also tracked in the
ECAM and are not subject to the sharing band. The generation of energy at certain Company-
owned facilities is eligible for the renewable electricity production tax credit under Internal
Revenue Code section 45, and the credit is included as an offset to the Company's federal
income taxes. For each kilowatt hour of energy generated at eligible wind-powered generating
facilities the Company receives a $0.023 credit on its tax return, for a duration of 10 years
beginning on the date which the facility became commercially operable. The value of these
credits is reflected as a reduction to current income tax expense on the financial statements and
for rate making pu{poses. These PTC are included in base rates benefiting customers. The
amount of renewable electricity production tax credits received is entirely dependent on the
amount of generation at eligible facilities. The generation is highly dependent on weather,
varying from year to year as weather patterns fluctuate. The forecast of generation from these
facilities used to set base NPC is the same output currently used to calculate the value of the
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plants varies from the forecast, the impact on NPC gets updated via the ECAM filings but the
value of the PTC was not trued-up. Therefore, the Commission determined that including a
true-up of the PTCs in the ECAM would be appropriate.
PROPOSED ECAM RATE
10. In support of this Application, Rocky Mountain Power has filed the testimony
and exhibits of Company witnesses Mr. Michael Wilding, Mr. Robert M. Meredith, and Mr.
Ted Weston. Mr. Wilding's testimony and exhibit describe the Actual NPC incuned by the
Company to serve retail load for the historical thirteen-month period ended December 31,
20l6,and explains the main differences between Actual NPC and Base NPC. Mr. Meredith's
testimony supports the rate change to Schedule 94 with proposed rates effective June 1,2017
through May 31,2018. Mr. Weston's testimony describes a rate stability alternative in the event
the Commission wishes to address the growing depreciation regulatory asset rather than
reducing rates by the full $7 million. Under this alternative, customers' ECAM rates would be
reduced by $3 million from the current level and the remaining balance of approximately $4
million, used to offset the deferred regulatory asset owed from customers to reduce the 2013
depreciation regulatory asset.
11. Exhibit No. I to Mr. Wilding's testimony ("Exhibit 1") illustrates the detailed
calculation of the ECAM deferral. The NPC deferral is calculated on a monthly basis by
comparing Idaho-allocated Actual NPC to the NPC collected in rates. For the thirteen-month
period ended December 31, 2016, the NPC differential for deferral was a credit of
approximately $1.1 million before the 90/10 percent sharing band.
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12. The LCAR is a symmetrical adjustment to offset over- or under-collection of
the Company's energy-related production revenue requirement, excluding NPC, due to
variances in Idaho load. The LCAR increased the deferral balance by $231,490 before sharing
due to lower usage during the Deferral Period.
13. No revenues from SOz emission allowance sales were received by the Company
during the month of December 2015. Under Order No. 33440 SOz emission allowance sales
won't be tracked in the ECAM beginning January I,2016.
14. Under OrderNo. 33440 DSM load control costs won't be tracked inthe ECAM
beginning January 1,2016. For December 2015 Idaho load control costs decreased the balance
by $71,884 before sharing.
15. The difference between including coal stripping costs recorded on the
Company's books under the guidance of the accounting pronouncement EITF 04-6, and the
amortization of the coal stripping costs when the coal was excavated increased the deferral by
$49,006 before sharing.
16. The total NPC defenal adjusted for LCAR, DSM load control costs, and EITF
04-6 was a credit of $842,454 of which customers receive 90 percent, and the Company retains
the remaining 10 percent. After accounting for the sharing band the NPC defenal is a $758,208
credit.
17. In addition to the ECAM calculation components discussed above, the ECAM
includes a Lake Side 2 resource adder which is calculated by multiplying the actual megawatt-
hours of generation from the Lake Side 2 generation facility by $1.99 per megawatt-hour
without application of the sharing band. During the Deferral Period the Lake Side 2 resource
adder increased the ECAM deferral approximately $5.9 million on an Idaho-allocated basis.o
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I 18. Under Order No. 33440, effective January l, 2016 the ECAM began tracking
the difference between the PTC credited to customers through base rates and actual PTC
without application of the sharing band. During the deferral period PTC increased the deferral
approximately $0.5 million.
19. The ECAM calculation also includes the Deer Creek mine depreciation expense
for the Deferral Period of approximately $1.4 million associated with the umecovered Deer
Creek mine investment on an Idaho basis, without application of the sharing band.
20. Finally, the deferral balance reflects the difference between actual REC
revenues during the Deferral Period and the amount of REC revenues credited to customers in
base rates. The REC revenue true-up included in the ECAM is symmetrical but no sharing
band is applied. During the Deferral Period actual REC revenue was approximately $0.35
million lower than the amount credited to customers in base rates on an Idaho-allocated basis.
21. The deferred ECAM balance of $12.7 million as of December 31,2016 is the
sum of $5.2 million of uncollected deferrals from prior ECAM filing plus the components
described above. Interest is accrued on the uncollected balance at the Commission-approved
interest rate on customer deposits, currently one percent annually. During the Deferral Period
interest of $0.2 million was added to the uncollected balances.
RETAIL RATE DESIGN
22. Mr. Robert M. Meredith's testimony describes the calculation of the proposed
Schedule 94 rates. Exhibit 3 of Mr. Meredith's testimony illustrates this calculation based on
metered loads, the line loss adjusted loads, the allocation of the ECAM price change, and the
percentage change by rate schedule based on the present revenues ordered in Case No.
PAC-E-16-12. Exhibit 4 includes clean and legislative copies of Schedule No. 94 containing
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t the proposed rates by electric service schedule based on the customer's delivery voltage of
electric service.
23. Rocky Mountain Power is notiffing its customers of thisApplication by means
of a press release sent to local media organizations and messages in customers' bills over the
course of a billing cycle. The customer bill inserts will begin in April and continue through
the twenty-one day billing cycle. Copies of the press release and bill insert are provided with
the Application. [n addition, copies of the Application will be made available for review at the
Company's local offices in its Idaho service territory.
COMMUNICATIONS
Communications regarding this filing should be addressed to:
Ted Weston
Idaho Regulatory Affairs Manager
Rocky Mountain Power
1407 WestNorth Temple, Suite 330
Salt Lake City, Utah 84116
Te lephone : (80 l) 220 -29 63
Emai I : ted.weston@oacifi corp.com
Yvonne R. Hogle,
Assistant General Counsel
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake ciry, Utah 84116
Telephone: (80 I ) 220-4050
Email : wonne.hoele@oacifi 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 (preferred) : datarequest@f acifi com.com
By regular mail: Data Request Response Center
PacifiCorp
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t 825 Multnomah, Suite 2000
Portland, Oregon 97232
lnformal questions may be directed to Ted Weston, Idaho Regulatory Affairs Manager
at [phone].
REOTIEST FOR RELIEF
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission
issue an order: (1) authorizing that this matter be processed by Modified Procedure; (2)
approving the $7.5 million ECAM deferral for the Deferral Period; and (3) approving Electric
Service Schedule No. 94, Energy CostAdjustment, as filed in Exhibit 4 or if the Commission
desires, implement the alternative plan proposed in Mr. Weston's direct testimony, with a
June l, 2017 rate effective date.
I DATED this 3l't day of Marchz}l7.
Respectfu lly submitted,
ROCKY MOI.'NTAIN POWER
R. Hogle
WestNorth Temple, Suite 320
SaltLake City, Utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail : yvonne.hogle@Facifi corp.com
Attorneyfor Roclqt Mountain Power
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