20200401Application.pdf

ROCKY MOUNTAIN
m,EB"",
1407 West North Temple, Suite 330
Salt Lake City, Utah &4116
RECEIVED
2020 April 1,PMl:23
IDAHO PABLIC
UTILITIES COMMISSIONApril1,2020
WA ELECTRONIC DELIYERY
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
I l33l W Chinden Blvd.
Building 8 Suite 20lA
Boise,lD 83714
Re: CASE NO. PAC-EA0-02
IN THE MATTER OF TIIE APPLICATION OF ROCKY MOUNTAIN POWER
REQUESTING APPROVAL OF $21.2 MTLLON NET POWER COST
DEFERRAL
Dear Ms. Hanian:
Please find Rocky Mountain Power's Application in the above referenced matter, along with the
direct testimony and exhibits of Company witnesses Messers. David G. Webb, Robert M.
Meredith, and Steven R. McDougal.
An original and nine (9) copies of the Application, direct testimony, and exhibits will be provided
as soon as possible. A non-confidential CD with the Application, direct testimony, and exhibits
and a confidential CD containing the work papers will also be provide with the hard copy filing.
Informal inquiries may be directed to Ted Weston, Idaho Regulatory Manager at (801) 220-
2963.
Very truly yours,
Vice President, Regulation
Enclosures
CC: Ron Williams
Eric Olsen
Randall C. Budge
James R. Smith
Adam Lowney (158#10456)
McDowell Rackner Gibson PC
419 SW llthAvenue, Suite 400
Portland, OR 97205
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Emily Wegener Qtro hac vice pending)
1407 West North Temple, Suite 320
Salt Lake ciry, utah 84116
Telephone No. [phone]
Mobile No. [phone]
Email: [e-mail]
Attorneys for Roclgt Mountain Power
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TIIE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN PO\ryER
REQUESTTNG APPROVAL OF $21.2
MILLON NET POWER COST DEFERRAL
) CASE NO. PAC-E-20-02
)) APPLICATION OF
) ROCKY MOUNTATN POWER
Rocky Mountain Power, a division of PacifiCorp ("Company" or "Rocky Mountain
Power"), in accordance with tdaho Code $61-502, $61-503, and RP 052, hereby respectfully
submits this application ("Application") to the ldaho Public Utilities Commission
("Commission") pursuant to the Company's approved energy cost adjustment mechanism
("ECAM"). The Company is requesting approval of approximately $21.2 million of deferred
costs from the deferral period beginning January l, 2019 through December 31, 2019
("Deferral Period") with a 3.0 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, an Oregon corporation,
which provides electric service to retail customers through its Rocky Mountain Power division
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in the states of ldaho, 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 ldaho pursuant to ldaho Code $61-129. Rocky
Mountain Power is authorized to do business in the state of Idaho providing retail electric
service to approximately 82,000 customers in the state.
BACKGROUND
2. The ECAM became effective July l, 2009 pursuant to an agreement among
parties.l The ECAM allows the Company to collect or credit the difference between the actual
net power costs ("Actual NPC") incurred to serve customers in ldaho 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 ("GR[D")
production dispatch model.2 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 fuelhandling, start-up fuel/gas,
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
I In the Matter of the Application of Roclry Mountain Powerfor Approval of an Energt Cost Adjustment
Mechanism (ECAM), Case No. PAC-E-08-08, Order No. 30904 (September 29,2009) (*ECAM Order").
2 Id. al2-3.
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pass-through if applicable), and
. Account 565 (transmission of electricity by others).
4. On a monthly basis, the Company compares the Actual NPC 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.3
5. In addition to the difference between Actual NPC and Base NPC, the ECAM
includes six additional components: the Load Change Adjustment Revenues ("LCAR"),4 ,n
adjustment for the treatment of coal stripping costs under Emerging Issues Task Force ("EITF")
04-6, atrue-up of 100 percent of the incremental Renewable Energy Credit ("REC") revenues,
Production Thx Credits ("PTC"),5 the Lake Side 2 generation resource adder,6 and a resource
tracking mechanism ("RIM";2. These components are described in more detail below.
6. This is the second year that the ECAM also includes three additional
components related to tax benefits ("Thx Savings")8 arising from the federal "act to provide
for reconciliation pursuant to titles II and V ofthe concurrent resolution ofthe budget for fiscal
year 2018" (the "Tax Reform Act") and the 201 3 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,
3 Id. at3.
4 Id. at
s In the Matter of PacifiCorp DBA RoclE Mountain Power's Application to Modifu the Energt Cost Adjustment
Mechanism and Increase Rates, Case No. PAC-E-15-09, Order No 33440 at 5 (December 23,2015) (2015
ECAM Order).
6 In the Matter of the Application of PacifiCorp DBA RoclE Mountain Power to Initiate Discussions with
Interested Parties on Alternative Rate Plan Proposals, Case No. PAC-E-13-04, Order 32910, at2 (October 24,
2013) (*2013 Order").
1 In the Matter of the Application of Rocky Mountain Power for Binding Ratemaking Treatment for Wind
Repoweing, Case No. PAC-E-I7-06, OrderNo. 33954 @ecember 28, 2018).
8 In the Matter of the Investigation into the impact of Federal Tax Code Revisions on Utility Costs and
Ratemaking, Case No. GNR-U-18-01, Order No. 34331.
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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. The ECAM deferral also includes a resource adder for the Lake Side 2
generation facility that is not subject to the sharing band.e 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 l,2015.It 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 $5.4
million dollars or 2,729,500 megawaff-hours for the calendar year.l0
9. PTCs are tracked in the ECAM without applying the sharing band.rr Under the
Internal Revenue Code ("[RC"), a wind facility generates a PTC equal to an inflation-adjusted
1.5 cents per kilowatt hour of electricity produced and sold to a third-party.t2 The PTC is in
place for a period of l0 years beginning on the date the facility is placed in-service for income
tax purposes.l3 In 2019, the inflation-adjusted PTC rate for electricity generated from
quali$ing wind facilities was 2.5 cents per kilowatt hour.la PTCs are reflected as a reduction
to current income tax expense on the financial statements and for ratemaking purposes. A
forecasted level of PTCs at the then current IRC value was included in base rates benefiting
customers; however, the quantity and value of PTCs received is dependent on the inflation-
adjusted rate effective when they are produced and the amount of generation at eligible
facilities. Generation from these facilities is highly dependent on weather, varying from year
e 2013 Orde\ at2.
to Id.tr 2015 ECAM Order at 5.t2IRC section 45(a).
t3 IRC section 45(a).
14IRS Notice 2019-41.
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to year as weather patterns fluctuate. To the extent that actual generation from these facilities
varies from the level in base rates, the value of the energy is reflected in Actual NPC and a
corresponding adjustment is made to the amount of PTCs that customers receive through the
ECAM. Facilities that meet IRC qualifications are eligible for PTCs for the first ten years after
becoming commercially operational. While many of the Company's wind facilities have
reached their ten-year anniversary and would no longer be eligible for PTCs, the repowering
program under taken by the Company has extended this benefit for an additional ten years.
10. The ECAM also includes recovery of the 2013 incremental depreciation
expense that was authorized for deferral.ls
I l. Parties to the Thx Stipulation agreed to the ratemaking treatment for the deferred
balances associated with the Tax Savings arising from the Tax Reform Act, which included
refunding certain Tax Savings through the ECAM and offsetting the 2013 incremental
depreciation expense with some of those Tax Savings.
12. Specifically, the Tax Stipulationl6 provides that the Tax Savings related to the
reduction in the federal income tax rate from 35 percent to 2l percent that had 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. This is the second and final year of that two-year amortization.
13. Additionally, the Tax Stipulation provided that the annual protected property
excess deferred income taxes ("Protected EDIT"), estimated in the amount of $2,352,309 for
ts 2013 Order at 3 (permitting deferral of 201 3 incremental depreciation expense); In the Matter of PacifiCorp
DBA Roclcy Mountain Power's Applicationfor Approval of lts $16.7 Million Deferral of Net Power Costs, and
Authority to Decrease Rates by 59.0 Million, Case No. PAC-E-I7-02 OrderNo. 33776 (permitting recovery of
20 I 7 incremental depreciation expense).
t6 Case No. GNR-U-18-01, Order No. 34331.
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calendar 2019, 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, 2020 through May
31,2021on the ECAM's rate effective date, and not subject to the sharing band.l7
14. Lastly, the Tax Stipulation provides that the non-protected and non-property
EDIT, arising from the Tax Reform Act will be amortized over seven years (approximately
$2,126,215 annually less the rate base offset) and 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
15. In support of this Application, Rocky Mountain Power has filed the testimony
and exhibits of Company witnesses Messers. David G. Webb, Robert M. Meredith, and
Steven R. McDougal. Mr. Webb'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 2019 ECAM deferral balances through Schedule 94 were developed. Mr.
McDougal's testimony describes the new RTM and changes to the amortization of the
protected EDIT balances.
16. Exhibit No. I to Mr. Webb'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 $13.5 million before the 90/10 percent sharing band.
17. Mr. Webb's testimony specifically addresses the LCAR, EITF 04-6 treatment
r7 The estimated annual Protected EDIT savings will be updated the following year based on actual tax return
data.
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of coal stripping costs, a true-up of 100 percent of the incremental REC revenues, PTCs, and
the Lake Side 2 generation resource adder.
18. 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 $0.8
million before applying the sharing band due to higher usage during the Deferral Period.
19. 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 stripping costs when the coal was excavated increased the ECAM defenal by
$115,324 before applying the sharing band.
20. The total NPC deferral adjusted for LCAR and EITF 04-6 was approximately
$12.8 million for which customers are responsible 90 percent, and the Company is responsible
for the remaining l0 percent. After accounting for the sharing band, the NPC deferral is
approximately $ I I .5 million.
21. During the Deferral Period, the Lake Side 2 resource adder, described in
paragraph 8 above, increased the ECAM deferral approximately $4.5 million on an Idaho-
allocated basis.
22. During the Deferral Period the PTC differential, as described in paragraph 9,
increased the deferral approximately $4.7 million.
23. The ECAM calculation also includes the RTM described in Mr. McDougal's
testimony. For the Deferral Period the RTM increased the deferral by approximately $0.5
million on an Idaho basis, without application of the sharing band.
24. The ECAM also tracks the difference between actual REC revenues during the
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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 $32 thousand higher than the
amount credited to customers in base rates on an ldaho-allocated basis.
25. Interest is accrued on the uncollected balance at the Commission-approved
interest rate for customer deposits. During the Deferral Period the interest rate was 2 percent.
Interest of $463 thousand was added to the ECAM balance.
26. As described in paragraphs l0-ll, the ECAM includes 2013 incremental
depreciation expenses, which are offset by the non-protected Thx Savings. During the Deferral
Period approximately $1.9 million was deferred associated with the 2013 incremental
depreciation which was offset by the amortization of the non-protected EDIT balance. The
depreciation balancing account had a credit balance of $76,878 as of the end of the Deferral
Period as summarized in Exhibit No. I to Mr. Webb's testimony.
27. The ECAM balance at the end of the Deferral Period was $27.2 million,
including $21.2 million from the 2019 ECAM deferral, plus $5.7 million remaining balance
from prior ECAM filings, and $0.5 million interest. This amount is reduced by $0.1 million
credit balance in the depreciation deferred balance. The Company estimates the ECAM balance
will be reduced approximately $4.9 million from Schedule 94 revenue collections less interest
accrued from January I through May 31,2020 resulting with an expected ECAM balance of
$22.3 million to be collected.
28. Mr. Meredith's testimony describes how Schedule 94 rates were designed to
recover the May 31,2020 estimated ECAM balance of $22.3 million. These rates were then
reduced by 0.089 cents per kWh for the 2019 ECAM tax reform act credits. As a result, the
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Company proposes Schedule 94 rates of 0.571, 0.549 and 0.532 cents per kWh for secondary
primary and transmission delivery service voltages, respectively, for all customers.
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 841l6
Telephone : (80 l) 220 -29 63
Email: ted.weston@pacifi corp.com
Emily L. Wegener
SeniorAttorney
Rocky Mountain Power
1407 West North Temple, Suite 320
Salt Lake City, Utah 84116
Telephone : (80 l) 220 -4526
Email : Emi ly.we gener@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 email (preferred)datarequest(Epac i fi 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, ldaho 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 and the Base NPC collected through base rates
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assuring customers pay the actual NPC after sharing. To the best of the Company's knowledge
it has accurately calculated the ECAM defenal with all the other associated Commission
Orders in this Application.
WHEREFORE, Rocky Mountain Power respectfully requests that the Commission
issue an order: (l) authorizing that this maffer be processed by Modified Procedure; (2)
approving approximately $21.2 million ECAM deferral; and (3) approving a 3.0 percent
increase to Electic Service Schedule No. 94, Energy CostAdjustment effective June 1,2020.
DATED this ls day ofApril2020.
Respectfu lly submitted,
ROCKY MOI.JNTATN POWER
Adam 104s6)
McDowell Rackner Gibson PC
419 SW I lft Avenue, Suite 400
Portland, OR 97205
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Emily L. Wegener Qtro hac vice pending)
1407 WestNorth Temple, Suite 320
Salt Lake City, Utah 841l6
Telephone No. (801 ) 220-4526
Mobile No. [phone]
Email: Emil),[e-mail]
Attorneys for Roclcy Mountain Power
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