20200422Final_Order_No_34640.pdf

ORDER NO. 34640 1

Office of the Secretary
Service Date
April 22, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF ROCKY MOUNTAIN
POWER’S APPLICATION FOR APPROVAL
OF THE 2020 PACIFICORP INTER-
JURISDICTIONAL ALLOCATION
PROTOCOL
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CASE NO. PAC-E-19-20

ORDER NO. 34640

On December 3, 2019, Rocky Mountain Power (“Company”), a division of
PacifiCorp, applied to the Commission for approval of the 2020 PacifiCorp Inter-
Jurisdictional Allocation Protocol (“2020 Protocol”). PacifiCorp provides electric service
in six states. It operates as Rocky Mountain Power in Idaho, Utah, and Wyoming, and as
Pacific Power in Oregon, Washington, and California. The Company requests the
Commission approve its use of the 2020 Protocol with an effective date of January 1, 2020.
On January 8, 2020, the Commission issued a Notice of Application and Notice
of Intervention Deadline establishing a January 29, 2020 intervention deadline.
Idaho Conservation League, Monsanto, and PacifiCorp Idaho Industrial
Customers intervened.
On March 17, 2020, the Commission issued a Notice of Modified Procedure
establishing public comment and Company reply deadlines. Staff filed the only comments
and supported the Company’s Application. The Company did not reply.
Having reviewed the record, we now approve the Company’s Application as
discussed below.
THE APPLICATION
The 2020 Protocol would supersede the allocation methodology in (1) the 2017
Protocol for California, Idaho, Oregon, Utah, and Wyoming; and (2) West Control Area
Inter-Jurisdictional Allocation Methodology for Washington. The 2020 Protocol would
continue to use both allocation methodologies, with modification, for an interim period
from January 1, 2020 through December 31, 2023 (the “Interim Period”). The proposed
modifications to the 2017 Protocol include: (1) eliminating the Equalization Adjustment,
(2) changing the Embedded Cost Differential (“ECD”) Adjustments; (3) changing the
treatment of qualifying facilities; and (4) changing the general governance sections. Parties
have agreed that the 2020 Protocol can be used to set just and reasonable rates, and that
ORDER NO. 34640 2
they would support its use in rate filings in all states where PacifiCorp provides electric
service.
The 2020 Protocol would be effective during the Interim Period. Besides the
above modifications to the 2017 Protocol, the 2020 Protocol includes these provisions:
• Agreement on issues to be implemented during the Interim Period
(“Implemented Issues”);
• Agreement on certain issues to be implemented following the Interim Period,
subject to final resolution of all outstanding issues identified in the 2020 Protocol
(“Resolved Issues”);
• A process and timeframe to attempt to resolve all outstanding issues that the
parties intend to resolve during the Interim Period if the Commission should
approve the 2020 Protocol. The issues include implementing a Nodal Pricing
Model, Resource Planning, New Resource Assignment, Limited Realignment,
Special Contracts, and post-Interim Period capital additions on coal plants
(collectively, the “Framework Issues”)1;
• A description of inter-jurisdictional allocation policies, procedures, or methods,
which if applied during the Interim Period, would provide the Company a
reasonable opportunity to recover its prudently incurred cost of service; and
• A description of how costs and revenues associated with all components of the
Company’s regulated service—including costs and revenues associated with
generation, transmission, distribution, and wholesale transactions—should be
assigned or allocated among the six states in which PacifiCorp provides electric
services.
Assuming all Framework Issues are resolved during the Interim Period, a new
Post-Interim Period Method of cost allocation, incorporating the Implemented Issues,
Resolved Issues, and final resolution of Framework Issues, will be presented to the
Commission for approval before 2024.

1 The resolution of Framework Issues combined with the Implemented Issues and the Resolved Issues are all intended to
result in a new allocation methodology referred to as the “Post-Interim Period Method.”
ORDER NO. 34640 3
STAFF COMMENTS
Staff recommended the Commission approve the 2020 Protocol as a pathway
for the Company to handle differing state policies. Staff’s comments focused on: (1)
difference between the 2017 Protocol and the 2020 Protocol; (2) Resolved Issues; and (3)
Framework Issues.
1. Differences between the 2017 Protocol and the 2020 Protocol
Staff noted the ECD would remain unchanged in Idaho. This will increase
Idaho’s jurisdictional annual revenue requirement by $800,000. But as the parties have
refined the protocol processes between 2010, 2017, and now 2020, the need for the
Equalization Adjustment has decreased and that adjustment is now being eliminated.2 The
2020 Protocol includes a process for states to exit coal plants in compliance with their
respective jurisdictions’ statutory and regulatory requirements. This process will begin
when a state issues an exit order. After an exit order has been issued, the Company will
analyze whether the plant should continue to operate, or close. Each state that exits a plant
will have to pay its share of decommissioning costs upon exiting. If the plant continues to
operate, then the exiting state’s contribution to decommissioning will be held in a reserve
account until the plant is decommissioned. The Company must still prove that the
decommissioning costs are prudently incurred before it can recover them. The final
difference Staff noted was how qualifying facility (“QF”) resources are allocated.
Beginning January 1, 2020, all new or renewed power purchase agreements for QFs will
be situs allocated instead of system allocated. Beginning in 2030, all QF contracts—
regardless of formation date or location—will be situs allocated. Between 2030 and 2032,
when Idaho’s high-cost QF contracts expire, this modification will cost Idaho customers
an estimated $25 million annually.3
2. Resolved Issues
Staff discussed Resolved Issues, which deal with allocating costs for purposes
of the revenue requirement. The Resolved Issues will become effective after the Interim

2 Eliminating the Equalization Adjustment will save Idaho customers about $150,000 annually.
3 When allocating the costs of QF contracts to their situs, the Idaho-allocated part of PacifiCorp’s revenue requirement
will significantly change because: (1) Idaho has the highest Weighted Average Cost per Megawatt Hour; and (2) Idaho
produces more energy from QFs proportionate to its load than any other state in PacifiCorp’s jurisdiction. QF’s satisfy
1.61% of PacifiCorp’s Idaho load. These projections are based on best available data at the time.
ORDER NO. 34640 4
Period only if the parties agree to Post-Interim Period Method. Specifically, the Resolved
Issues relate to new generation resources, transmission costs, distribution costs, system
overhead costs, and demand-side management costs. These costs will be allocated via fixed
factors, system costs, directly, and situs.
3. Framework Issues
Finally, Staff discussed the Framework Issues. The Framework Issues to be
resolved before the end of the Interim Period are resource planning and new resource
strategy, Net Power Costs/Nodal Pricing Models, special contracts, and interim capital
additions to coal resources post 2023. Staff noted that the Multistate Protocol Working
Group will continue to meet regularly to work through the Framework Issues and create a
post-2023 protocol.
Staff also noted that the annual commission forum is no longer required but can
be convened if requested by a signatory or commission.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company’s Application and the
issues in this case under Title 61 of the Idaho Code including, Idaho Code §§ 61-501, 502,
and -503. Based on its review of the record, the Commission finds the 2020 Protocol offers
a methodology that fairly and reasonably allocates the Company’s system costs to the
jurisdictions during the Interim Period. As such, the 2020 Protocol is in the public interest.
The Commission believes the 2020 Protocol appropriately allows the Company, Idaho, and
other stakeholders to more thoroughly examine long-term allocation options given
evolving state policies on carbon based electricity and the decision to either retire or
continue operating coal generation assets.
The changes in the 2020 Protocol will ensure that states continue to receive the
appropriate allocation of costs and benefits from the Company’s integrated system during
the Interim Period. These are steps towards allocating and pricing resources based on the
individual jurisdiction—wherein the Company can consider various jurisdictional
policies—instead of a single system. The Company and Multistate Protocol Working
Group should continue working to resolve the Framework Issues as the Company moves
toward developing a Nodal Pricing Model.
ORDER NO. 34640 5
O R D E R
IT IS HEREBY ORDERED that, effective January 1, 2020, the 2020 Inter-
jurisdictional Allocation Protocol is approved through December 31, 2023.
THIS IS A FINAL ORDER. Any person interested in this Order may petition
for reconsideration within twenty-one (21) days of the service date of this Order regarding
any matter decided in this Order. Within seven (7) 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
22nd day of April 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Diane M. Hanian
Commission Secretary

I:\Legal\ELECTRIC\PAC-E-19-20\orders\PACE1920_final_dh.docx