20200721Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9917
r?[e rlvE D
t*?fi JUL 2l Plt 2: l5
Street Address for Express Mail:
I I33I W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, ID 837I4
Attomey for the Commission Staff
BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR
AUTHORIZATION TO CHANGE
DEPRECIATION RATES APPLICABLE TO
ELECTRIC PROPERTY
CASE NO. PAC.E.18.O8
COMMENTS OF COMMISSION
STAFF IN SUPPORT OF
SETTLEMENT AGREEMENT
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On September 11,2018, Rocky Mountain Power, a division of PacifiCorp ("Rocky
Mountain Power" or "Company") filed an Application seeking approval of its proposed changes
to depreciation rates applicable to the Company's electric plant effective January 1,2021. The
Company's last depreciation case, PAC-E-13-02, was approved by the Commission in 2013.
On October 5,2018, the Commission issued a Notice of Application and Notice of
Intervention Deadline directing Staff and parties to discuss the appropriate scheduling for the
case. Monsanto, PacifiCorp Idaho Industrial Customers ("PIIC"), Idaho Irrigation Pumpers
Association, Inc., ("IIPA") and Idaho Conservation League ("ICL") intervened in this case. On
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT AGREEMENT
ruLY 21,2020
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April 18, 2019, a technical conference was held in Boise, followed by several meetings and
conference calls where settlement discussions were held with parties.
On June 15,2020, the Company filed a proposed Settlement Stipulation ("Stipulation")
signed by the Company, Staff, Monsanto, PIIC, and IIPA (collectively the "Stipulating
Parties")l. The Company, on behalf of the Stipulating Parties, requested the case be processed
by Modified Procedure.
In summary, the Stipulating Parties entered the Stipulation for depreciation rates in
resolution of all issues other than decommissioning costs for coal units which will be addressed
in a proposed Phase II of this case. The Stipulating Parties agreed to depreciation rates that
would increase annual depreciation expenses allocated to Idaho by about $8.7 million. Any
reference to other States in the Stipulation is for illustrative purposes only and does not purport
to bind other State Commissions.
The Stipulating Parties were not able to agree that each specific component of this
Stipulation is just and reasonable in isolation, but all of the Stipulating Parties agree that this
Stipulation as a whole is just and reasonable and is in the public interest.
The Stipulating Parties agree that if any person challenges the approval of this Stipulation
or requests rehearing or reconsideration of any order of the Commission approving this
Stipulation, each Stipulating Party will use its best efforts to support the terms and conditions of
this Stipulation. In the event any person seeks judicial review of a Commission order approving
this Stipulation, no Stipulating Party shall take a position in that judicial review proceeding in
opposition to the Stipulation.
STAFF REVIEW
Staff reviewed the Company's Application and accompanying depreciation study
prepared by Gannett Fleming Valuation and Rate Consultants, LLC. During the review, Staff
analyzedthe depreciation rates, service lives, remaining lives, Iowa curves and net salvage
values for all plant asset accounts. Based on Staff s review and negotiations with the Stipulating
parties, Staff believes that the Stipulation represents a fair, just, and reasonable compromise for
all issues raised by the parties and is in the public interest.
I Idaho Conservation League is not a Stipulating Party but does not oppose the Settlement Stipulation.
STAFF COMMENTS IN SUPPORT 2
OF SETTLEMENT AGREEMENT
ruLY 21,2020
The depreciation rates proposed in the Company's Application would have resulted in an
estimated increase to annual depreciation expense of $228.1 million, across PacifiCorp's six
jurisdictions, and $14.1 million on an Idaho jurisdictional basis. The Stipulation decreases the
Company's proposed total system depreciation expense by $86.7 million, to $141.4 million. The
impact on Idaho's jurisdictional depreciation expense is a decrease of $5.4 million, to $8.7
million. The Stipulation, if accepted, will become effective as of January 1,2021.
The Company's Application would have resulted in an overall increase of $19.3 million
to ldaho's jurisdictional depreciation expense currently included in base rates. However, the
$5.4 million adjustment to the total Idaho jurisdictional depreciation expense would decrease the
overall impact to $13.9 million. Table No. 1 summarizes the increase to the Idaho jurisdictional
annual depreciation expense.
Table No. L: Increase to ldaho Jurisdictional Depreciation Expense
Application Stipulation
Total Conpany - Depreciable Plant $14,130,754 $ 8,725,756
Excess Reserve Amortiztion 3,214,547 3,214,547
20 1 3 Increnrental Depreciation - Not in Rates ( 1 )2,000,000 2,000,000
Total $ 19,345,301 $13,940,303
(l) PAC-R13-02
Table No. 2 summarizes the overall adjustments to the annual depreciation expense and
further summarizes the Idaho jurisdictional annual depreciation expense before and after the
Stipulation.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT AGREEMENT
J JULY 2I,2O2O
Description
Total Company
Current
Depreciation
Total Company
Proposed
Deprcciation
Total Company
Stipulated
Depreciation
Idaho
Stipulated
Depreciation
Idaho
Stipulated
Ad.iustments
Idaho
Incrrase in
Deoreciation
Productbn Plant
Steam $ 245,923,367 $ 419,112,432 $ 348.028,372 $ 10.773,430 $ (4.42r.868)$ 6,351,562
Hydro 29,943,66r 30,467,681 30,434,82s 32,597 Q.044)30,553
Other Prodrptbn 163,fi2,102 203.786.985 203,715,719 2,530,229 (4,433)2.525,796
SubTotal 438,979,130 6s3367.098 582.178.916 r3.336.2s6 (4,428,3451 8,907,911
GeneralPhnt t9,414,887 24,084,509 23,994,765 502,445 0,271')501,r74
Transmissbn Plant 130"435.713 r39.796.277 127,733,460 s82,285 (750.382)fl68,097)
Distibutbn Plant - ID 10,453,988 10,163,756 9,938,75s (290,232)(225,001)(5 I 5,233)
Distrbtfibn Phnt - WY 23,248,95r 2l,88 r,003 21.015.097
Dbtrbttbn Phnt - UI 82,950,370 83,098,r 50 80,8 19,8 l6
Distrbuion Phnt - PP Sates 78,49t,062 79,683,914 79,683,914
Grand Total Plant
Increases s 783.974.101 $ 1.012.074.707 $ 925,364,723 $ 14,130,754 $ (s.404.999)$ 8.725.7s5
Table No. 2: Summary of Stipulated Depreciation Expense
Prior to signing the Stipulation, Staff met with the Company and intervening parties to
discuss various depreciation accounts. Staff expressed concerns with several accounts where the
data included in the depreciation study supported extending the depreciable lives for certain
assets. Staff proposed changes to net salvage values of certain plant accounts based on historical
amounts of actual removal costs. Staff also evaluated the fit of the Iowa curves to actual
historical data and proposed new Iowa curyes to extend the depreciable lives of certain assets.
Staff believes the adjustments to net salvage values and Iowa curves are reflected reasonably in
the Stipulation.
Adjustments
Production Plont - Steam
Cholla Unit 4 depreciation expense has been removed and the remaining book value will
be removed from plant in-service as of December 2020. The overall impact to the annual
depreciation expense is a system decrease of $71.8 million. The total impact of all other
adjustments to Idaho jurisdictional annual depreciation expense is a reduction of $4.4 million.
Production Plant - Httdro
The net salvage values used to calculate the annual depreciation expense for FERC
Account No. 331 - Hydro Structures has been adjusted to reflect the actual historical data
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT AGREEMENT
4 JULY 2I,2O2O
provided in the depreciation study with the Application. The adjustment decreases the Idaho
jurisdictional annual depreciation expense by $2,044.
Transmission Plant
The Company's depreciation study recommends shortening the depreciable lives of
certain assets which would result in an increase to PacifiCorp's total system annual depreciation
expense by $9.4 million. The Stipulation changes the Iowa curves to following FERC Accounts:
350 - Land Rights,352 - Structures, 353 - Station Equipment ,354 - Towers and Fixtures, 355
- Poles and Fixtures, 356 - Overhead Conductors,35g - Roads and Trails. The Stipulation also
changes the net salvage values to FERC Account 354 - Towers and Fixtures. The adjustments
extend the remaining depreciable life of the assets, which decreases PacifiCorp's total system
annual depreciation expense by $12.1 million. The total impact to the Idaho jurisdictional annual
depreciation expense is a reduction of $750,382
Distribution ant - Idaho
The Stipulation adjusts four accounts specific to Idaho Distribution plant which reduces
the Idaho jurisdictional annual depreciation expense by $225,001. The first two adjustments
change the net salvage values to FERC Account No. 365 - Overhead Conductors and Devices
from -35oh to -30Yo, and to FERC Account No. 371 - Installation on Customer Premises from -
45o/oto -35%. Staff believes the agreed upon net salvage values are more reflective of historical
trends experienced by the Company for these two accounts. The overall impact of increasing the
net salvage values is a reduction to Idaho jurisdictional annual depreciation expense of $35,166.
The other two adjustments to Idaho Distribution plant changes Iowa curves to increase
the remaining life of assets in FERC Account No. 362 - Station Equipment and FERC Account
No. 364 - Poles and Fixtures. Extending the depreciable lives of these assets reduces the
proposed Idaho jurisdictional annual depreciation expense by $230,262.
The remaining adjustments to Idaho Distribution accounts are additions and retirements
expected to occur by the end of December 2020. They amount to an increase to the Idaho
jurisdictional annual depreciation expense by 540,427.
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT AGREEMENT
5 JULY 2T,2O2O
Other
The Stipulation includes other aspects that are summarized below:
1. The Company will defer the increase in the Idaho jurisdictional annual depreciation
expense of $13.9 million for one year through December 31,20212. The Company
will record $1,161,692 per month in a regulatory asset account for recovery to be
determined in the Company's next general rate case. No carrying charge would be
applied to the regulatory asset during the deferral period. The amortization and
treatment of the regulatory asset will be determined in the Company's next general
rate case. The Company will stop recovering the incremental depreciation expense
from PAC-E-13-02 in the Energy Cost Adjustment Mechanism effective December
31,2020.
2. The Company will request Cholla Unit 4 ratemaking treatment for unrecovered
plant balances, decommissioning, and other closing costs in Case No. PAC-E-20-03
and future filings with Commission.
3. If the Company decides to retire any thermal plant besides Cholla Unit 4 before its
next depreciation study, the Company will not seek to shorten the cost recovery
period for such thermal plant prior to the approval of its next depreciation study.
4. Naughton Unit 3 will be converted to a natural gas plant with a retirement date of
December 2029. Additionally, Naughton Units I and2 will also reflect the
proposed retirement date of December 2029. By converting Naughton Unit 3 to
natural gas, the annual depreciation expense, across PacifiCorp's six jurisdictions,
increases by approximately $7 47,7 15.
5. The Company agrees to present an analysis supporting the proposed lives and net
salvage value for all Company-owned wind resources in its next depreciation study.
6. Any solar and/or battery storage assets acquired or developed by the Company
before its next depreciation study is filed would use a 25-year lifespan based on
Iowa Curves and Net Salvage values in Table 3 of the Stipulation.
7. The Parties support a Phase II in this case to evaluate incremental decommissioning
costs filed with the Commission on January 17 ,2020 and March 16,2020
2 Page 7 , Paragraph l7 of the Stipulation contains a typo. The Company will defer the change in depreciation
expense for one year through December 31,2021, not though December 31,2020 as indicated in the Stipulation.
STAFF COMMENTS IN SUPPORT 6 JULY 2T,2O2O
OF SETTLEMENT AGREEMENT
(collectively "2020 Decommissioning Studies") and appropriate ratemaking
treatment. The parties intend to review the regulatory treatment of the 2020
Decommissioning Studies in Phase II to be completed in time to allow the
Commission to issue a final order before December 31,2020.
PUBLIC COMMENTS
As of July 21,2020, the Commission has not received any comments from customers.
STAFF RECOMMENDATIONS
Staff believes the Stipulation represents a fair, just, and reasonable compromise of all
issues raised by the parties to this case and therefore recommends that the Commission approve
the Stipulation and all its terms and conditions.
Respecttully submittea tr,isZls%ay of July 2020.
Deputy Attomey General
Technical Staff: Rick Keller
Joseph Terry
Bentley Erdwurm
Travis Culbertson
i: umisc/comments/pace I 8.8dhrkjtbetnc comments
STAFF COMMENTS IN SUPPORT
OF SETTLEMENT AGREEMENT
7 ruLY 21,2020
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 21't DAY OF JULY 2020, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN SUPPORT OF
SETTLEMENT AGREEMENT, IN CASE NO. PAC-E-18-08, By E-MAILING A
COPY THEREOF, TO THE FOLLOWING:
YVONNE R HOGLE
TED WESTON
ROCKY MOUNTAIN POWER
1407 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: yvonne.hogle @pacificorp.com
ted.weston @ pacificorp.com
DATA REQUEST RESPONSE CENTER
E.MAIL ONLY:
datarequest @ pac i fi c orp. c om
RANDALL C BUDGE
THOMAS J BUDGE
RACINE OLSON PLLP
PO BOX 1391
POCATELLO ID 83204
E-MAIL: [e-mail]
[e-mail]
ERIC L OLSEN
ECHO HAWK & OLSEN
PO BOX 6119
POCATELLO ID 83205
E-MAIL: [e-mail]
RONALD L WILLIAMS
WILLIAMS BRADBURY PC
PO BOX 388
BOISE ID 83701
E-MAIL: ron @ williamsbradbury.com
ELECTRONIC ONLY
KYLE WILLIAMS
BYU IDAHO
E-MAIL: [e-mail]
D MATTHEW MOSCON
LAUREN SHURMAN
STOEL RTVES LLP
201 S MAIN ST STE l IOO
SALT LAKE CITY UT 84111
E-MAIL: matt @stoel.com
lauren. shurman @ stoel.com
BRUBAKER & ASSOCIATES
16690 SWINGLEY RIDGE RD
#140
CHESTERFIELD MO 63017
E-MAIL: mbrubaker @ consultbai.com
kiverson @ consultbai.com
DR LANCE D KAUFMAN
4801 W YALE AVE
DENVER CO 80219
E-MAIL: lance @ aegisinsight.com
ELECTRONIC ONLY
JIM DUKE
IDAHOAN FOODS
E-MAIL: iduke@ idahoan.com
ELECTRONIC ONLY
VAL STEINER
NU-WEST INDUSTRIES INC
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE
BENJAMIN J OTTO
ID CONSERVATION LEAGUE
710 N 6TH STREET
BOISE ID 83702
E-MAIL: botto @ idahoconservation.ors
ANA BOYD
SIERRA CLI.JB
2IO1 WEBSTER ST STE I3OO
OAKLAND CA946I2
E-MAIL: ana.boyd@ sierraclub.ors
MATTHEW GERHART
SIERRA CLUB
1536 WYNKOOP ST STE 2OO
DENVER CO 80202
E-MAIL: matt. gerhart@ sierraclub.org
SECRET
CERTIFICATE OF SERVICE