20200529Final_Order_No_34679.pdf

ORDER NO. 34679 1
Office of the Secretary
Service Date
May 29, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF ROCKY MOUNTAIN
POWER’S APPLICATION REQUESTING
APPROVAL OF $21.2 MILLION NET
POWER COST DEFERRAL
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CASE NO. PAC-E-20-02

ORDER NO. 34679

On April 1, 2020, PacifiCorp dba Rocky Mountain Power (“Company”) applied to
the Commission for an order authorizing the Company to adjust its rates under the Energy Cost
Adjustment Mechanism (“ECAM”). If approved, the Company’s ECAM adjustment would
collect $21.2 million from its Idaho customers between June 1, 2020 and May 31, 2021. The
Company requested that its Application be processed by Modified Procedure and have an
effective date of June 1, 2020.
Monsanto and PacifiCorp Idaho Industrial Customers (“PIIC”) intervened in the
case.
On April 28, 2020, the Commission issued a Notice of Application and Notice of
Modified Procedure setting deadlines for public comments and the Company’s reply. Order No.
34648. Commission Staff submitted comments in support of the Company’s Application. PIIC
also submitted comments. Additionally, three public comments were received. The Company
replied to PIIC’s comments.
Having reviewed the record, the Commission enters this Order approving the
Company’s Application as discussed below.
BACKGROUND
The ECAM is a rate component that allows the Company to recover the difference
between its actual net power cost (“NPC”) and the base NPC included in customer rates during
the Deferral Period. Base NPC is set in the Company’s general rate case and modeled using the
Company’s Generation and Regulation Initiative Design (“GRID”). Each month, the Company
compares the actual NPC to the NPC embedded in rates and defers the difference into the
ECAM balancing account. The ECAM is calculated to recover or credit the accumulated
difference between base NPC and actual NPC on a cents-per-kilowatt-hour basis. The annual
ECAM recovery or credit is combined with the Company’s base rates to produce a customer’s
overall energy rate for the ECAM recovery period.
ORDER NO. 34679 2
The ECAM rate component is effective for one year and is updated annually to
account for changes in the Company’s power cost expenses. The mechanism addresses only
power cost expenses. Specifically, actual NPC expenses include amounts booked in the
following Federal Energy Regulatory Commission (“FERC”) accounts:
• Account 447 – Sales for resale, excluding on-system wholesale sales and other
revenues not modeled in GRID;
• Account 510 – 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 resources;
• Account 547 – Fuel, other generation;
• Account 555 – Purchased power, excluding Bonneville Power Administration
residential exchange credit, if applicable; and
• Account 565 – Transmission of electricity by others.

Besides the NPC, the ECAM includes: (1) the Load Change Adjustment Revenues
(“LCAR”)1; (2) an adjustment for the treatment of coal-stripping costs; (3) a true-up of
Renewable Energy Credit (“REC”) revenues; (4) the Production Tax Credit (“PTC”); (5) the
Lake Side 2 generation resource adder; and (6) a Resource Tracking Mechanism (“RTM”). The
ECAM includes a 90/10 sharing band whereby customers pay/receive 90% of the
increase/decrease for the NPC, the LCAR, and coal-stripping costs and the Company
incurs/retains the remaining 10%.
For the second year, the ECAM also includes three components related to the 2017
Tax Reform Act as agreed to in the Tax Stipulation.2 These items are: (1) the Company’s tax
savings from reduced federal income tax, which were not refunded to customers under Schedule
197; (2) 2019 protected property excess deferred income taxes (“EDIT”); and (3) 2019 non-
protected and non-property EDIT. This year’s ECAM also includes recovery of the 2013
incremental depreciation expense approved for deferral.3
The Commission first approved the annual ECAM in 2009. The mechanism has
been modified several times since then. See Orders No. 30904, 32432, 32910, 33440, 33492,
33776, and 34331. ECAM rates are reflected in the Company’s Electric Service Schedule No.
94.

1 The LCAR accounts track the over- or under-collection of the Company’s energy-related production revenue requirement
(excluding net power costs) due to variations in Idaho load. Id. at 7.
2 See Order No. 34331.
3 See Order No 33776.
ORDER NO. 34679 3

THE APPLICATION
The Company asked the Commission to: (1) approve the Company’s deferral, for
later recovery, of $21.2 million in power supply costs during a Deferral Period running from
January 1, 2019 through December 31, 2019 (“Deferral Period”); and (2) revise Electric Service
Schedule No. 94, Energy Cost Adjustment. The Company indicated that if its Application were
approved, the prices for customer classes would increase as follows:4
• Residential Schedule 1 – 2.2%
• Residential Schedule 36, Optional Time-of-Day Service – 2.6%
• General Service Schedule 6 – 3.1%
• General Service Schedule 9 – 3.6 %
• Irrigation Customers – 2.7%
• Commercial or Industrial Heating Schedule 19 – 2.9%
• General Service Schedule 23 – 2.5%
• General Service Schedule 35 – 3.7%
• Public Street Lighting – 1.2%
• Industrial Customer, Schedule 400 – 3.8%
• Industrial Customer, Schedule 401 – 3.9%

This ECAM includes a difference of about $13.5 million between base NPC and
actual NPC. It also includes LCAR credit of about $800,000 and costs of about $115,000 related
to the accounting treatment of coal-stripping costs. (These figures are unadjusted for the 90/10
sharing band).
The deferral amount also includes about $4.5 million associated with the Lake Side
2 resource adder, about $4.7 million representing the difference between actual PTC and the
base PTC embedded in rates, and $500,000 for the RTM. In addition, it includes about $32,000
in credit for the difference between actual REC revenue and the REC revenue in base rates.
The ECAM deferral amount is partially offset by about $3.1 million in tax reform
credits.5 This amount includes about $570,000 in tax savings due to the reduction of the federal
income tax that was not refunded to customers under Schedule 197, about $2.3 million in 2019
protected EDIT, and about $2.1 million in 2019 non-protected EDIT.6 These ECAM tax reform

4 Source: Application, Exhibit No. 2 to Direct Testimony of Robert M. Meredith; See also, News Release and Customer Notice
filed with the Company’s Application.
5 See Direct Testimony of Steven McDougal at 5.
6 See Table 1 of Direct Testimony of Steven R. McDougal at 5.
ORDER NO. 34679 4
credits are partially reduced by about $1.9 million in 2013 incremental depreciation expense
assigned to the ECAM.
In summary, the ECAM balance of $27.2 million at the end of the Deferral Period
included $21.2 million from the Deferral Period, plus $6.1 million remaining balance from prior
ECAM filings, reduced by about a $100,000 credit balance in the depreciation regulatory asset.
The Company estimated that the $27.2 million would be reduced by approximately $4.9 million
from the Schedule 94 revenue collection less interest accrued from January 1 through May 31,
2020, resulting in an ECAM balance of about $22.3 million. This balance was reduced by
approximately $3.1 million from tax savings from the 2017 Tax Reform Act resulting in a net
balance of $19.2 million to be collected.
THE COMMENTS
Staff, PIIC, and three members of the public commented on the Company’s
Application. The Company also filed a reply to PIIC’s comments. Staff supported the
Company’s proposed ECAM rates as filed, with no objection to the Company’s calculations or
analysis. PIIC’s comments addressed several issues with power costs for repowering of wind
farms and the assignment of state-specific expenses to the ECAM. The public comments all
requested the Commission deny the Company’s Application because it would increase rates.
The comments are more thoroughly described below.
A. Commission Staff
Staff’s comments focused on: (a) Deferral Analysis; (b) NPC Analysis; and (c)
Proposed Rates.
a. Deferral Analysis
Staff reviewed the Company’s external audit reports, journal entries, invoices,
contracts, and customer bills. Based on this review, Staff believed the Company used accurate
actual loads, prudently incurred actual costs and revenues, and applied the correct loads, costs,
and revenues embedded in base rates. Additionally, Staff believed the Company’s methodology
complied with previous Commission orders.
Staff verified the calculations and adjustments in the Company’s Application were
accurate. Staff also verified the Company included certain savings from the 2017 Tax Reform
Act, which the Commission has ordered be passed to consumer through the ECAM.

ORDER NO. 34679 5
b. NPC Analysis
Staff separately analyzed the NPC to better understand the increased ECAM deferral
and to provide a recommendation on prudency for actual NPC incurred by the Company. Staff
concluded that 94% of the difference in the base-to-actual differences in NPC was due to
reduced wholesale energy sales. Other major contributing factors in the NPC deferral included
increases in purchased power (54%) and reduced coal costs (-49%). Staff opined that the
Company likely used its own resources to meet customer demand instead of using them to
generate revenues from outside sales. Staff also noted that wind generation (-26%) and hydro
generation (-31%), both of which are zero fuel cost resources, generated significantly below
what was assumed in base rates for the Deferral Period. Staff suggested this helped explain the
higher fuel costs and additional reliance on the Company’s own resources to serve its load
instead of to make wholesale sales. The reduction in wind generation can be attributed to the
nine repowering projects completed in 2019. These facilities will operate during the 2020
Deferral Period.
c. Proposed Rates
Staff verified that the Company calculated the proposed Schedule 94 rates using the
method approved in Order No. 33440. Staff noted that the proposed revision to Schedule 94
would increase Company revenues by about 3%, with differences between classes due to rate
design. Residential customers would experience an approximate 2.3% increase, or about $2.04
per month for the average customer using 801 kWh per month.
B. PIIC Comments
PIIC questioned whether the ECAM should include the cost of repowering lost
energy. PIIC recommended the Commission remove repowering test energy from the ECAM
and that the costs of two non-Idaho jurisdictional expenses be situs assigned.
a. Repowering Lost Energy
PIIC noted that lost energy from repowering wind farms was a key cause in the
difference between base-to-actual NPC, but the Company could not estimate its value. PIIC
also stated that the Company could not cite any place in the record of Case No. PAC-E-17-06
where lost energy associated with repower was discussed. PIIC requested that the Commission
consider whether it is appropriate to include the costs of repowering lost energy in the ECAM.

ORDER NO. 34679 6
b. Repowering Test Energy
PIIC identified test energy expenses for repowering included in the ECAM. PIIC
noted that test energy is an expense based on the market value of the energy less the cost of
fuel. Therefore, the energy expense for repowering is the value of the energy produced while
the facility is removed from service. PIIC argued that by including this expense in actual NPC,
the Company had assigned a value to test energy that estimates the energy’s value.
PIIC is concerned that the Company did not track or estimate the value of lost energy
from repowering, but it did track and estimate the value of actual energy produced when the
facilities were out of service and then removed the value from the NPC. Further, PIIC noted
that the Company had no record of hourly electric prices in the Deferral Period, giving the
Company no way to calculate the true value of the test energy.
PIIC recommended removing the repowering test energy cost from the ECAM.
c. Allocation of State-Specific Purchases and Expenses
In analyzing the Company’s FERC Form 1, PIIC noted a power purchase expense
for California Greenhouse Gas (“GHG”) Allowance Purchases and another power purchase
expense with the Utah Retail Solar Customers for net metering in Utah. PIIC recommended
these costs be situs assigned to their respective states and excluded from the NPC.
d. Additional Points
PIIC noted that the Company had included approximately $530,000 in revenues for
assigned power purchase agreements from its Grant Meaningful Priority (“Grant”) account in
its FERC Account 461.1. PIIC argued that the costs of this contract would be included in the
NPC, so it would be unreasonable to exclude the assignment of revenues from the ECAM.
Finally, PIIC asked that the Company be required to justify the prudence of the
major Lakeside 2 outage that occurred during the Deferral Period.
C. Company Reply Comments
a. Repowering Lost Energy
The Company refuted PIIC’s point that lost energy from repowering was not
discussed in PAC-E-17-06 by citing direct testimony from that case discussing the annual
change in coal generation due to wind repowering. The Company added that the incremental
lost energy should be recoverable in the ECAM because the Commission determined the
ORDER NO. 34679 7
repowering project was “prudent and in the public interest” in Case No. PAC-E-17-06 and “lost
energy was considered in the project economics” at that time.
b. Repowering Test Energy
The Company stated that when test energy was generated during repowering, NPC
was reduced by $4.9 million. The Company removed the NPC savings by increasing NPC and
crediting the Construction Work In-Progress account per FERC Electric Plant Instruction 3A,
subsection 18. The Company argued that reducing the repowering test energy NPC, as
suggested by PIIC, would double count the value of the test energy.
c. Allocation of State-Specific Purchase and Expenses
The Company stated that the California Independent System Operator (“CAISO”)
requires the purchase of GHG allowances for wholesale market transactions within the state,
including transfers in the Western Energy Imbalance Market (“EIM”). The Company added
that wholesale sales and purchases with CAISO benefit customers in each jurisdiction and the
GHG obligation is more than offset by the EIM savings. The Company noted that the GHG
expense related to wholesale transactions in California and EIM transfers are separate from the
retail GHG program for California customers.
The Company also responded that the Utah retail net metering program is situs
assigned to Utah. The Company clarified that the Idaho customers receive an adjustment to the
system-wide purchased power expense for the Utah retail net metering program. The
adjustment reduces the rate Idaho customers pay for NPC expenses related to power purchased
from Utah’s retail net metering program to near market price.
d. Additional Points
The Company noted that it has the option to take delivery under the Grant, and that
it chose not to in 2019. Therefore, the Company stated it incurred no cost or revenue impacts
for any ECAM accounts. By electing not to take the contract, it can sell the option. These are
not power costs, so it recorded the revenues from the sale of the Grant option in FERC Account
456-Other Electric Revenue and not FERC Account 461.1. FERC Account 456 is not part of
the Company’s NPC and therefore the revenues are excluded from the ECAM.
The Company responded to PIIC’s request to justify the prudence of the Lake Side
2 outage during the Deferral Period. The Company detailed the events that caused the prolonged
ORDER NO. 34679 8
shutdown and the Company’s and manufacturer’s efforts to eventually return Lake Side 2 to
service in early January 2020.
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.
The Commission is empowered to investigate rates, charges, rules, regulations, practices, and
contracts of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order. Idaho
Code §§ 61-501, -502, and -503. The Commission has thoroughly reviewed the Company’s
Application, including the attached testimony and exhibits, and the comments filed in PAC-E-
20-02. Based on its review of the record, the Commission finds it fair, just, and reasonable to
approve the Company’s Application and adjustments to Schedule 94 as filed, effective June 1,
2020.
Specifically, the Commission finds that the Company’s Application complies with
the Commission’s prior orders and directives concerning the recovery, through the ECAM, of
deferred NPC incurred by the Company during the Deferral Period.
Accordingly, the Commission approves adding approximately $21.2 million from
the Deferral Period to the ECAM for recovery under Schedule 94.
The Commission acknowledges PIIC’s comments. However, the Commission finds
that the Company properly included costs associated with repowering test energy under FERC
Electric Plant Instruction 3A, subsection 18. Further, the Commission finds that lost energy
from repowering was considered in Case No. PAC-E-17-06 and, in this case, should be
included, The Commission reminds the Company that finding the project “prudent and in the
public interest” does not change or modify the Commission’s authority to determine the
prudency of individual costs when presented for recovery in customer rates. Finally, the
Commission is satisfied with the Company’s explanations of the California GHG expenses
related to CAISO requirements, the Utah retail net metering expense treatment, and the
justification of the expenses related to the Lakeside 2 outage in 2019.
O R D E R
IT IS HEREBY ORDERED the Commission approves the Company’s Application.
The proposed Schedule 94 is approved, as filed, with new rates effective June 1, 2020.
ORDER NO. 34679 9
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 29th
day of May 2020.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Diane M. Hanian
Commission Secretary

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