20180906order_no_34139.pdf

Office of the Secretary
Service Date
September 6,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF ROCKY MOUNTAIN POWER FOR A )CASE NO.PAC-E-17-07
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY AND BINDING )
RATEMAKING TREATMENT FOR NEW )ORDER NO.34139
WIND AND TRANSMISSION FACILITIES )
On July 3,2017,Rocky Mountain Power,a division of PacifiCorp (the Company)
applied for a Commission order granting certificates of public convenience and necessity (CPCNs)
to construct or acquire four new Wyoming wind projects with a total combined capacity of 860
megawatts.The Company also requested CPCNs for associated transmission facilities (together,
the "Combined Projects").The Company claimed the projects,subsidized by federal production
tax credits (PTCs),would provide significant economic benefits for its customers.
On May 9,2018,the Company filed a settlement stipulation (Stipulation)it had entered
into with Staff.The Stipulation resolved all but one disputed issue:the imposition of an overall
cost cap,or "hard cap."By way of summary,the Stipulation provided that the Commission grant
a CPCN,track investment,energy production,and PTCs through a Resource Tracking Mechanism
(RTM),set annual caps related to RTM costs and benefits,and the Company would guarantee
mechanical availability of the wind facilities.The Stipulation also agreed that the Commission
would determine if an overall capital cost cap would be appropriate.Finally,the parties waived
"any right they may have to appeal any portion of this Stipulation or the Order approving the
same."Stipulation at 9.
On July 20,2018,the Commission issued final Order No.34104 approving the
Stipulation,with an express condition of an overall cost cap set at the Company's overall project
estimate.On August 10,2018,the Company requested clarification on the overall cost cap,and in
the alternative,reconsideration of the overall cost cap.Staff and Intervenors filed answers agreeing
with the request for clarification,but arguing against reconsideration.Additionally,the Intervenors
included cross petitions for reconsideration,requesting that the Commission reconsider the
issuance of the CPCN.
The Company claims that the Commission should clarify that the cost cap does not
preclude the Company from recovering more than its estimated costs in a future proceeding.
ORDER NO.34139 1
Petition at 2.The Company submits that the Commission intended the Company to come back to
the Commission for a later prudency determination on any cost beyond its estimates.Alternatively,
the Company argues that if the Commission clarifies that the cap precludes future recovery of costs
above the Company's estimates,the Commission should reconsider the imposition of such a cap.
The Company argues that an overall cap on future recovery is unreasonable,unnecessary,and
punitive.Id.
DISCUSSION AND FINDINGS
Reconsideration provides an opportunityfor a party to bring to the Commission's
attention any issue previously determined and provides the Commission with an opportunity to
rectify any mistake or omission.Washington Water Power Co.v.Kootenai Envtl.Alliance 591
P.2d 122,l 26 (1979).The Company generally maintains that this Commission's reference to an
overall capital cost cap in Order No.34104 is unclear.The Company's alternative argument is that
the Commission should reconsider the overall capital cost cap if the cap would prevent the
Company from later recovering its above-estimate costs from customers through rates.By this
Order,we grant clarification,deny reconsideration,and reiterate our previously stated findings
and conclusions.
In Order No.34104,this Commission conditionally approved the Stipulation and
CPCN for the Combined Projects upon setting an overall capital cost cap at the Company's project
estimate.The Commission found such a cap reasonable because the primary justification for the
Combined Projects was economic benefit,and not an immediate need for more generation or
transmission to provide reliable and safe service.We found that the overall cost cap reduces
ratepayer risk and compels the Company to rely on its modeling.To be clear,the overall cost cap
is a hard cap that precludes the Company from recovering any additional costs or expenses beyond
its cost estimates,whether in a general rate case,a later prudency proceeding,through the approved
RTM mechanism,or through some other proceeding.Considering the economic nature of the
Combined Projects,this cap fairly balances the risk between the Company and its customers.
Having clarified that the overall,hard cost cap precludes the Company from recovering
anything more than its cost estimates,we deny the Company's alternative request for
reconsideration.The Company has failed to present a cogent argument related to how the
imposition of an overall project cost cap is unreasonable,unlawful,or erroneous.The
Commission's decision to impose a "hard cap"on the Company's rate basing of the costs to build
ORDER NO.34139 2
the Combined Projects is supported by substantial evidence.See Boise Water Corp.v.Idaho Pub.
Utilities Comm'n.,555 P.2d 163,170 (1976)("Substantial evidence is that which affords 'a
substantial basis in fact from which the fact in issue can be reasonably inferred.").
The record unequivocallyestablishes that the Company's main rationale for building
the Combined Projects is economic rather than an immediate need for reliability and safety.
Conversely,Staff and Intervenors presented convincing evidence that the motives and justification
for the Combined Projects require that the costs incurred be treated differently than a standard
capital project.
Whether the Company decides to build the Combined Projects in light of the imposition
of a hard,overall cost cap,is entirely within its control.The Company controlled the cost estimates
and contingencies that the Commission relied on to impose the cap.A hard cap demands that the
Company rely on it modeling and estimates.The Company's economic incentive for the
Combined Projects supports the Commission's decision to cap the Company's ability to recover
its overall capital costs through rates.Further,it minimizes customers'risk for a project not driven
by an immediate need to maintain safe and reliable service.
The record of this case fully supports these conclusions.Because the Company's
request to reconsider the imposition of such a cap is without legal or factual merit,the request is
denied.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain Power's Request for Clarification is
granted.The Commission's prior Order is clarified,as referenced above.Any construction costs
of the Combined Projects that exceed the Company's cost estimates will not and cannot be rate-
based in Idaho.
IT IS FURTHER ORDERED that Rocky Mountain Power's Petition for
Reconsideration is denied.
IT IS FURTHER ORDERED that given the Commission decision to deny
reconsideration,the Intervenors'Cross Petitions for Reconsideration are also denied pursuant to
Idaho Code §61-626(l).
ORDER NO.34139 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idahothis
of September 2018.
PkÛL KJ L DER,PRESIDENT
KRI I INI PER MI IONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
PACEI707 Final re Recon bk
ORDER NO.34139 4