20180330Application.pdf

)Y ROCKY MOUNTAIN
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RECEIVED
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March 30, 2018 ii},;.i1C ITUELIC
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VA OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise,lD 83702
Re:CASE NO. PAC.E.l8.OE OI
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
REQUESTING APPROVAL OF $7.8 MILLON NET POWER COST DEFERRAL
WITH NO CHAI\IGE TO RATES
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. Enclosed
is a CD containing the Application, direct testimony, and exhibits. A second CD containing
Mr. Wilding's confidential work papers is also provided.
Informal inquiries may be directed to Ted Weston, ldaho Regulatory Manager at [phone].
Very truly yours,
Vice President,
Enclosures
CC: Ron Williams
Eric Olsen
RandallC. Budge
James R. Smith
1407 West North Temple, Suite 330
Salt Lake City, Utah 84116
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Yvonne R. Hogle (ISB# 8930)
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail: y'v'onne.hogle@pacifi cor}. com
Attorneyfor Roclry Mountatn Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
RECE IVED
2fflB HAR 30 [H 9: 26
ii.!,':i-i{j F r"j i3i-IC
t.lT I Li'"i I ES 0{ll.,t M lSSl0N
IN THE MATTER OF THE APPLICATION
OF ROCI(Y MOUNTAIN POWER
RBQUESTTNG APPROVAL OF $7.8
MILLON NET POWER COST DEFERRAL
WITH NO CHANGE TO RATES
) CASE NO. PAC-E-I8-02
)) APPLTCATTON OF
) ROCrff MOUNTATN POWER
)
Rocky Mountain Power, a division of PacifiCorp ("Company" or "Rocky 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 of approximately $7.8 million of deferred costs, plus interest,
from the deferral period beginning January l, 2017 through December 31, 2017 ("Deferral
Period") with no revision to Electric Service Schedule No. 94, Energy CostAdjustment ("Schedule
94").ln support of its Application, Rocky Mountain Power states as follows:
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
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I 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 Generation and Regulation Initiative Decision ("GRID") production
dispatch model. Specifrcally, 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 (fuel, steam generation, excluding fuel handling, start-up fueUgas,
diesel fuel, residual disposal and other costs not modeled in GND),
. Account 503 (steam from other sources),
. Account 547 (fuel, other generation),
. Account 555 (purchased power, excluding BPA residential exchange credit pass-
through if applicable), and
. Account 565 (transmission of elecricity 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
most recently concluded general rate case during the Deferral Period and defers the difference into
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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 six 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, 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)i l0 percent (Company) that shares the differential bet'weenActual NPC and Base NPC,
LCAR, and the coal stripping costs adjustment between the customers and the Company. The
sharing band is described in more detail below.
7 . The Commission's Order 334402 authorized 100 percent recovery of approximately
$1.3 million annual Deer Creek Mine amortization expense through the ECAM until the costs are
fully amortizedby the end of 2018.
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,2015, and is
calculatedby multiplying the actual megawatt-hours of generation fromthe Lake Side 2 generation
rAs 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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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. Through Commission Order No 334403 PTC were authorized to be tracked in the
ECAM without applying the sharing band. Under the Internal Revenue Code ("IRC"), a wind
facility generates a PTC equal to an inflation-adjusted 1.5 cents perkilowatt-hourof electricity
produced and sold to a third-party for a period of 10 years beginning on the date the facility is
placed in-service for income tax purposes.4ln2OlT,the inflation-adjusted PTC rate for electricity
generated from qualifiring wind facilities was 2.4 cents per kilowatt hour.s PTC are reflected as a
reduction to current income tax expense on the flrnancial statements and for rate making purposes.
A forecasted level of PTC are included in base rates benefiting customers; however, the quantity
of PTC received is 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. To the extent
the actual generation from these plants varies from the level in base rates, the value of the energy
is updated in NPC and a corresponding adjustment is made to the amount of the PTC that
customers receive.
PROPOSED ECAM RATE
10. In support of this Application, Rocky Mountain Power has flrled the testimony and
exhibits of Company witness Mr. Michael G. Wilding. Mr. Wilding's testimony describes the
Actual NPC incurred by the Company to serve retail load for the Deferral Period, and explains the
main differences betweenActual NPC and Base NPC.
ll. Exhibit No. 1 to Mr. Wilding's testimony ("Exhibit 1") illustrates the detailed
3 Case No. PAC-E-15-09
4 IRC section 45(a).
5 IRS Notice 2017-33.
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calculation of the ECAM deferral. The deferral is calculated on a monthly basis by comparing
Idaho-allocated Actual NPC to the NPC collected in rates. For the twelve-month period ended
December 31,2017, the NPC differential included in the deferral balance was approximately
$2.1 million before the 90/10 percent sharing band.
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 decreased the deferral balance by approximately $1.5 million before
applying the sharing band due to higher usage during the Deferral Period.
13. 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 decreased the deferral by $93,048 before
applying the sharing band.
14. The total NPC deferral adjusted for LCAR and EITF 04-6 was $477,358 for which
customers are responsible 90 percent, and the Company is responsible for the remaining
10 percent. After accounting for the sharing band, the NPC deferral is a$429,622.
15. 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 $ I .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 $4.1 million on an Idaho-allocated basis.
16. Under Commission OrderNo. 33440, effective January 1,2016, the ECAM began
tracking the difference between the PTC customers receive through base rates and actual PTC,
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without application of the sharing band. During the Deferral Period PTC increased the deferral
approximately $ 1 . 8 million.
17. The ECAM calculation also includes the Deer Creek mine depreciation expense for
the Deferral Period of approximately $1.3 million associated with the unrecovered Deer Creek
mine investment on an Idaho basis, without application of the sharing band.
18. The ECAM also tracks 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 $0.72 million lower than the amount
credited to customers in base rates on an Idaho-allocated basis.
19. Finally, 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 $0.1 million was added to the uncollected balances.
20. The deferred ECAM balance of $10.1 million as of December 31, 2017, is the sum
of $2.3 million of uncollected deferrals from prior ECAM filing, plus the components described
above.
COMMUNICATIONS
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 : (80 I) 220 -29 63
Email : tecl.rveston(dpacifi corp. com
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Yvonne R. Hogle,
Assistant General Counsel
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake city, Utah 841l6
Telephone: [phone]
Email : )rsonne. ho q I er, Ap.a_qj[corp. con:
In addition, Rocky Mountain Power requests that all data requests regarding this
By emai I (preferred) : datarequ [e-mail] sorp. qom
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) 220-2963.
REOUEST FOR RELIEF
The ECAM allows the Company to collect or credit the difference between the actual NPC
incurred to serve customers in Idaho customers and the NPC collected through base rates assuring
customers pay the actual NPC.
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission issue
an order: (1) authorizingthat this matter be processed by Modified Procedure; (2) approving the
$7.8 million ECAM deferral for the Deferral Period; and (3) approving no change to Schedule 94.
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Application be sent in Microsoft Word to the following:
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DATED this 30th day of March,20l8
Respectfully submitted,
ROCKY MOUNTAIN POWER
R. Hogle
West North Temple, Suite 320
Lake City, Utah 84116
No. (801) 220-40s0
Facsimile No. [phone]
E-mail : r"vonne.ho gle (2tpaciircorp.qo_p
Attorneyfor Roclgt Mountain Power
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