20180531final_order_no_34076.pdf

Office of the Secretary
Service Date
May 31,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF ROCKY MOUNTAIN POWER )CASE NO.PAC-E-18-01REQUESTINGAPPROVALOF$7.8 )MILLION NET POWER COST DEFERRAL )WITH NO CHANGE TO RATES )ORDER NO.34076
On March 30,2018,Rocky Mountain Power applied for approval of $7.8 million in
deferred costs,plus interest,from the deferral period beginning January 1,2017,through
December 31,2017.The Application is made pursuant to the Company's approved energy cost
adjustment mechanism (ECAM).The ECAM allows the Company to adjust its rates each year to
capture the difference between the Company's actual power supply expenses and the power
expenses embedded in base rates.The adjustment is a separate line item on customer bills that
increases if power supply costs are higher than the amount already included in base rates,or
decreases if power supply costs are lower.The ECAM does not affect the Company's earnings.
On April 19,2018,the Commission issued a Notice of Modified Procedure and
invited interested persons to comment on the case.Order No.34038.Monsanto and
Commission Staff submitted the only comments in this matter in support of the Application.
OVERVIEW OF THE ECAM
The ECAM allows the Company to increase or decrease rates each year to reflect
changes in the Company's power supply costs over the year.Due to its diverse generation
portfolio and other factors,the Company's actual cost of providing electricity varies from year to
year.Neither the Company nor its shareholders receive any financial return as a result of this
filing.
To determine the ECAM,the Company tracks the monthly difference between the
actual Net Power Costs (NPC)it incurred to serve customers,and the embedded (or base)NPC it
collected from customers through base rates.The Company defers the difference between actual
NPC and base NPC into a balancing account for later disposition at the end of the yearlydeferral
period.At that time,the ECAM allows the Company to credit or collect the difference between
actual NPC and base NPC through a decrease or increase in customer rates.In addition,it
includes an adjustment related to the accounting treatment of coal-stripping costs.Id.at 3.
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Pursuant to the ECAM's sharing band,90%of the above costs are allocated to customers and
10%are allocated to the Company.Id The ECAM also includes Deer Creek Mine amortization
expense;a resource adder for Lake Side 2;a true-up between actual Production Tax Credits
(PTC)and Renewable Energy Credits (REC)and the PTCs and RECs included in base rates;and
interest.Id at 3-4,6.
The Commission first approved an annual ECAM for the Company in 2009,and the
mechanism has been modified several times since then.See Order Nos.30904,32432,32910,
33008,and 33440.ECAM rates are reflected in Electric Service Schedule No.94.
THE APPLICATION
In this application,the Company explains that its requested deferral amount includes
the following:
-approximately $2.1 million for the difference between actual NPC and that
included in base rates,90%of which is allocated to customers and 10%to the
Company;
-a credit of approximately $1.5 million for LCAR,90%of which is allocated to
customers and 10%to the Company;
-a credit of $93,048 related to the accounting treatment of coal-stripping costs,
90%of which is allocated to customers and 10%to the Company;
-approximately $1.3 million for the Deer Creek Mine amortization;
-approximately $4.1 million for the Lake Side 2 resource adder;
-approximately $1.8 million for the PTC true-up;and
-approximately $0.72 million for the REC true-up.
Id at 5-6.The Company requests approval of a deferral balance of $7.8 million for the period
January 1,2017,through December 31,2017.This would be added to the existing approved
deferral balance of $2.3 million,for a total of $10.1 million.Id at 6.The Company requests no
changes in rates,and requests a June 1,2018,effective date.
THE COMMENTS
Commission Staff
Staff reviewed the Company's Application focusing on four areas:(1)costs and
revenues in the Company's NPC;(2)an audit of contracts,invoices,and other documents to
authenticate the actual cost and revenue;(3)a review of "the appropriateness of the Company's
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proposal;"and (4)Staff incorporated a rate reduction proposed in the Company's Tax Reform
Settlement Stipulation in Case No.GNR-U-18-01.Staff Comments at 2-3.Staff concluded that
the costs and revenues were accurate,and provided support for the Company's tax stipulation.
Id.
Staff noted a $2.1 million difference between Actual NPC and NPC recovered
through base rates as a result of actual load being about five percent greater than the load
included in base rates.Staff further analyzed EITF 04-06 adjustments approved in PAC-E-09-08,
the load change adjustment rate,production tax credits,renewable energy credit adjustments,and
a Lake Side 2 Resource Adder created in Case No.PAC-E-13-04.
Additionally,Staff examined a May 10,2018,all-party stipulation that provides for
$3.5 million in tax benefits stemming from federal tax law changes to be used to offset an
existing regulatory asset created in Case No.PAC-E-13-02.In the settlement,the annual amount
left to be offset related to the depreciation regulatory asset is approximately $1.8 million.This
results in a $2.2 million ECAM rate reduction.In the tax case,and here,Staff reviewed the
proposed rate plan and confirmed that the Company's calculations were accurate,reasonable,and
comply with prior Commission orders.The Stipulation rate proposal decreases Schedule 94 rates
by $2.2 million,a 0.8%decrease,effective on June 1,2018.
In sum,Staff recommended that the Commission authorize the ECAM deferral
amount of $7,798,495 for the period of January 1,2017,through December 31,2017,and that
the Commission adopt the Company's Tax Act Stipulation,which will reduce Schedule 94 rates
and reduce the depreciation regulatory asset.Staff further requests that the Commission direct
the Company include the depreciation regulatory asset offset in its future Idaho ECAM Deferral
exhibits,and submit tariffs that reflect Commission approved rates.In consideration of the rapid
nature of the ECAM docket,Staff also requested that the Commission accept late-filed customer
comments.
Monsanto Company
Monsanto filed comments in this matter expressing concern that the Company is
using the ECAM tariff to collect revenues to pay non-power-related costs.However,Monsanto's
concerns with this request were "mitigated in part with the results of a Stipulation reached by the
parties in the Tax Reform case."Monsanto Comments at 4.Considering the impact of the tax
reform stipulation,"Monsanto supports approval of an ECAM rate which includes $1.8 million
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for the incremental depreciation deferral,rather than the Company's proposed continuation of
collecting $4 million."Id.
FINDINGS AND DISCUSSION
We find that the Company is an electrical corporation and public utility,and that we
have jurisdiction over the Company and the issues in this case under Idaho Code §§61-119,61-
129,61-501,and 61-502.Based on our review of the record,we find that the Company's current
ECAM rates are unreasonable and would enable the Company to over-collect its deferred power
costs.
After reviewing the record,including the Company's Application and the comments
filed in this case,we find it fair,just,and reasonable to grant the Company's Application to
approve the $7.8 million ECAM deferral for the Deferral Period,for a total deferral balance of
approximately of $10.1 million as of December 31,2017.In Case No.GNR-U-18-01,this
Commission has contemporaneously considered and approved (Order No.34072)a Settlement
Stipulation related to the federal Tax Cuts and Jobs Act of 2017 that will reduce the Company's
Schedule 94 rates by an additional $2.2 million.We direct the Company to include the
depreciation regulatory asset offset in its future Idaho ECAM filings.We further direct the
Company to notify customers of these changes by direct notice in subsequent bills.The new rates
will take effect on June 1,2018.
We acknowledge Monsanto's comments and appreciate its perspective and
participation in this matter.We encourage continued cooperative efforts between all intervenors.
While no customer filed a comment in this matter,we are mindful of the economic
conditions affecting ratepayers throughout Idaho.We find that the outcome of this case,and the
treatment in the Company's tax case,resulting in a rate reduction for ratepayers,is in the public
mterest.
On May 25,2018,the Company proactively filed conforming tariffs that incorporate
both our findings here and the approved stipulation in GNR-U-18-01.
ORDER
IT IS HEREBY ORDERED that Rocky Mountain Power's Application is approved.
The new rates that result based on this Order and Order No.34072 (issued contemporaneously)
are approved effective June 1,2018.
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THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one days of the service date of this Order.Within seven days after
any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this &
day of May 2018.
PAUL MELLANDER,¾ESIDENT
KRI INE RAPER,COÑíMISSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
PACE1801 Final bk
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