20190403Application.pdf

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ROCKY MOUNTAIN
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Salt Lake City, Utah 84116
Re:
April 3,2019
VU OVERNIGHT DELIVERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise,ID 83702
CASE NO. PAC-E-19.04
IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER
REQUESTING APPROVAL OF $15 MILLON NET POWER COST DEFERRAL
Dear Ms. Hanian:
Please find enclosed a replacement of the original filing, including an original and nine (9)
copies of Rocky Mountain Power's Application in the above referenced matter, along with direct
testimony and exhibits. Enclosed is a CD containing the Application, direct testimony, and
exhibits. A second CD with confidential work papers is also provided. The Company requests
that interested parties and the Idaho Public Utilities Commission replace in its entirety and
discard the original filing the Company made on March 29,2019 (March 29 Filing) because the
Load Change Adjustment Rate was not updated to reflect resulting changes from the Tax Cuts
and Jobs Act that are applicable to the Company's ECAM application changing many of the
amounts in the Company's March 29 Filing.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very truly yours,
lce lation
Enclosures
CC: Ron Williams
Eric Olsen
Randall C. Budge
James R. Smith
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Yvonne R. Hogle (lSB# 8930)
1407 West North Temple, Suite 320
Salt Lake city, Utah 84116
Telephone No. [phone]
Facsimile No. [phone]
E-mail: [e-mail]
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Attorneyfor Roclqt Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
rN TIIE MATTER OF THE APPLICATION ) CASE NO. PAC-E-19-04
oF ROCr(Y MOUNTAIN POWER )
REQUESTTNG APPROVAL OF $15.1 ) APPLICATION OF
MILLON NET POWER COST DEFERRAL ) ROCKY MOUNTAIN 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 $15.1 million of defened costs from the deferral period
beginning January 1,2018 through December 31, 2018 ("Deferral Period") with 0.4 percent
increase to Electric Service Schedule No. 94, Energy CostAdjustment ("Schedule 94"). In support
of its Application, Rocky Mountain Power states as follows:
l. Rocky Mountain Power is a division of PacifiCorp, &r 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.
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BACKGROUND
2. The ECAM became effective July l, 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 ("Actual NPC") incuned to serve customers in Idaho and the NPC collected from
Idaho customers through rates set in general rate cases ("Base NPC").
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. 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 (fuel, 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 (fuel, other generation),
. Account 555 (purchased power, 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 ActualNPC to the Base NPC and
defers the difference into the ECAM balancing account. This comparison is on a system-wide,
dollar per megawatt-hour basis.
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I 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. Beginning this year, the ECAM also includes three additional components related
to tax benefits ("Tax Savings") arising from the federal 'oact to provide for reconciliation pursuant
to titles II and V of the concurrent resolution of the budget for fiscal year 2018" (the "Tax Reform
Act") and the 2013 incremental depreciation regulatory asset that will be described in more detail
below.
7. 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 EITF 04-06 coal stripping costs. The components of the ECAM subject to the sharing band are
described in more detail below.
8. Commission Order 334402 authorized 100 percent recovery of the Deer Creek
Mine's unrecovered investment by amortizing the investment over its original life with deferral of
the amortization expense in the ECAM. The Deferral Period includes $1.1 million of Deer Creek
Mine amortization expense which completes the amortization of Deer Creek's unrecovered
investment.
rAs approved in OrderNo. 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 Deferred Accounting Order, Case No. PAC-E-14-10, Order No. 33304 (May 27,2015).
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o 9. Pursuant to the stipulation in Case No. PAC-E-13-04, which was later approved by
Commission 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
1,2015, 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 $5.4 million dollars or
2,729,500 megawatt-hours for the calendar year.
10. Through Commission Order No 334403 production tax credits ("PTC") were
authorized to be tracked in the ECAM without applying the sharing band. Under the Intemal
Revenue Code ("IRC"), a wind facility generates a PTC equal to an inflation-adjusted 1.5 cents
per kilowatt hour of electricity produced and sold to a third-party for a period of l0 years beginning
on the date the facility is placed in-service for income tax purposes.a In 2018, the inflation-adjusted
PTC rate for electricity generated from quali$,ing wind facilities was2.4 cents per kilowatt hour.s
PTCs are reflected as a reduction to current income tax expense on the financial statements and
for ratemaking purposes. A forecasted level of PTCs are included in base rates benefiting
customers; however, the quantity of PTCs received is dependent on the amount of generation at
eligible facilities. The generation is highly dependent on weatheq 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 PTCs that customers receive. Since the Company began placing wind
3 Case No. PAC-E-15-09.
4 IRC section 45(a).
s IRS Notice 2018-50.
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facilities in service in2006, many have passed their l0-year anniversary and are no longer eligible
for PTCs, thereby reducing the actual amount received.
I I . In Case No. PAC-E- I 3-04, the Commission authorized, through Order No. 329 I 0,
the deferral of incremental depreciation expense associated with the 2013 depreciation study (the
"2013 incremental depreciation expense").
12. In Case No. PAC-E-17-02, the Commission authorized, through Order No 33776,
the recovery of the 2013 incremental depreciation expense through the ECAM.
13. Parties to the stipulation in Case No. GNR-U-18-01 ("Tax Stipulation") agreed to
the ratemaking treatment for the remaining deferral balances associated with the Tax Savings
arising from the Tax ReformAct, which includes refunding certain Tax Savings through the ECAM
and offsetting the 2013 incremental depreciation expense with Tax Savings.
14. Specifically, the Thx Stipulation6 provides that the Tax Savings related to the
reduction in the federal income tax rate from 35 percent to 2l percent that have not been refunded
to retail customers through Schedule 197, approximately $1,141,000, will be tracked and
amortized over two years ($570,500 annually) through the ECAM, and are not subject to the
sharing band.
15. Additionally, the Tax Stipulation provides that actual annual protected property
excess deferred income taxes ("Protected EDIT"), currently estimated in the amount of
approximately 52,564,410 for calendar 2018, less the associated rate base offset, will be refunded
to retail customers through a cents per kilowatt-hour credit applied to Idaho retail load effective
June l, 2019 through May 31,2020 on the ECAM's rate effective date, and not subject to the
sharing band.7
6 Case No. GNR-U-18-01.
7 The estimated annual Protected EDIT savings will be updated the following year based on actual tax retum data.
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16. Lastly, the Tax Stipulation provides that the non-protected and non-property EDIT,
amortized over seven years (approximately $2,126,215 annually less the rate base offset) arising
from the Tax Reform Act will be used to offset the 2013 incremental depreciation expense through
the ECAM, not subject to the sharing band and until the rate effective date in the next general rate
case.
PROPOSED ECAM RATE
17. In support of this Application, Rocky Mountain Power has filed the testimony and
exhibits of Company witnesses Mr. Michael G. Wilding and Robert M. Meredith. Mr. Wilding's
testimony describes the Actual NPC incurred by the Company to serve retail load for the Deferral
Period, and explains the differences between Actual NPC and Base NPC. Mr. Meredith's testimony
describes how the Company's proposed rates to recover the 2018 ECAM deferral balances through
Schedule 94 were developed.
18. Exhibit No. 1 to Mr. Wilding's testimony ("Exhibit l") illustrates the detailed
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 Deferral Period the NPC
differential was approximately $7.2 million before the 90/10 percent sharing band.
19. 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.
20. The difference between including coal stripping costs recorded on the Company's
books under the guidance of the accounting pronouncement EITF 04-6, and expensing coal
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o stripping costs when the coal was excavated decreased the ECAM deferral by $139,271 before
applying the sharing band.
21. The total NPC deferral adjusted for LCAR and EITF 04-6 was $5,490,509 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 54,941,498.
22. In addition to the 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 Defenal Period, the Lake Side 2 resource adder increased the ECAM deferral
approximately $5.4 million on an Idaho-allocated basis.
23. Pursuant to Commission Order No. 33440, effective January 1,2016, the ECAM
began tracking the difference between the PTC customers receive through base rates and actual
PTC, without application of the sharing band. During the Defenal Period the PTC differential
increased the deferral approximately $3.3 million.
24. The ECAM calculation also includes the Deer Creek mine amortization expense of
approximately $l.l million for the Deferral Period associated with the unrecovered mine
investment on an Idaho basis, without application of the sharing band.
25. 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 $173 thousand lower than the amount
credited to customers in base rates on an Idaho-allocated basis.
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t 26. Interest is accrued on the uncollected balance at the Commission-approved interest
rate for customer deposits. During the Deferral Period the interest rate was I percent, interest of
$133 thousand was added to the ECAM balance.
27. Commission Order 340768 directed the Company to include the depreciation
regulatory asset, created in Case No. PAC-E-13-02, in future Idaho ECAM filings. The order also
authorized use of approximately $3.5 million of Tax Savings arising from the Thx Reform Act to
offsetthe depreciation regulatory asset balance as of May 31,2018, and use approximately $1.8
million annually of ECAM revenue collections to offset the monthly incremental depreciation
deferral. The depreciation regulatory asset had a credit balance of $86,905 as of the end of the
Deferral Period as summarized in Exhibit No. I to Mr. Wilding's testimony.
28. The ECAM balance at the end of the Deferral Period is $17.3 million, this includes
$15.1 million from the 2018 ECAM deferral, plus $2.2 million remaining balance from prior
ECAM filings, reduced by $0.1 million credit balance in the depreciation regulatory asset. The
Company estimates the $17.3 million will be reduced approximately $3.3 million from Schedule
94 revenue collections less interest accrued from January 1 through May 31,2019 resulting with
a $13.8 million ECAM balance to be collected.
29. Mr. Meredith's testimony describes how Schedule 94 rates were designed to
recover the May 31,2019 estimated ECAM balance of $13.9 million. These rates were then
reduced by 0.0957 cents per kWh for the 2018 ECAM tax reform act credit. As a result, the
Company proposes Schedule 94 rates of 0.312, 0.299 and 0.288 cents per kWh for secondary
primary and transmission delivery service voltages, respectively, for all customers.
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COMMUNICATIONS
Communications regarding this filing should be addressed to:
Ted Weston
Idaho RegulatoryAffairs Manager
Rocky Mountain Power
1407 West North Temple, Suite 330
Salt Lake City, Utah 841 l6
Telephone : [phone]
Emai I : ted.weston@pacifi corp.com
Yvonne R. Hogle,
Assistant General Counsel
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake City, Utah 841l6
Telephone: (801 ) 220-4050
Email : wonne.hogle@pacifi corp.com
In addition, Rocky Mountain Power requests that all data requests regarding this
Application be sent in Microsoft Word to the following:
By emai I (preferred) : datarequest@frac ifi corp.com
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
[phone].
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 Base NPC collected through base rates
assuring customers pay the actual NPC after sharing.
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WHEREFORE, Rocky Mountain Power respectfully requests that the Commission issue
an order: (l) authorizing that this matter be processed by Modified Procedure; (2) approving
approximately $15.1 million ECAM deferral for the Deferral Period; and (3) approving a 0.4
percent increase to Electric Service Schedule No. 94, Energy Cost Adjustment.
DATED this 3'd day ofApril,2019
Respectfu lly submitted,
ROCKY MOUNTATN POWER
R. Hogle
West North Temple, Suite 320
Lake City, Utah 841l6
Telephone No. [phone]
Facsimile No. [phone]
E-mail: [e-mail]
Attorneyfor Roclqt Mountain Power
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