20231130Reply Comments.pdf

1407 W. North Temple, Suite 330 Salt Lake City, UT 84116

November 30, 2023

VIA ELECTRONIC DELIVERY Jan Noriyuki
Commission Secretary
Idaho Public Utilities Commission 11331 W. Chinden Blvd Building 8 Suite 201A Boise, ID 83714
RE: CASE NO. PAC-E-23-18 IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER FOR A DEFFERRED ACCOUNTING ORDER RELATED TO INSURANCE COSTS
Attention: Jan Noriyuki
Pursuant to Commission Order No. 35913 providing public notice of the Company’s Application, authorizing the processing of the Application by Modified Procedure, and establishing the procedural schedule please find Rocky Mountain Power’s Reply Comments in the above referenced matter.
Informal inquiries may be directed to Mark Alder, Idaho Regulatory Manager at [phone]. Very truly yours, Joelle Steward Senior Vice President, Regulation and Customer & Community Solutions
RECEIVED
Thursday, November 30, 2023 2:58:49 PM
IDAHO PUBLIC
UTILITIES COMMISSION

Reply Comments of Rocky Mountain Power Page 1
Joe Dallas (ISB# 10330)
PacifiCorp, Senior Attorney
825 NE Multnomah Street, Suite 2000
Portland, OR 97232
Email: [e-mail]

Attorney for Rocky Mountain Power

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER FOR A
DEFFERRED ACCOUNTING ORDER
RELATED TO INSURANCE COSTS
) CASE NO. PAC-E-23-18
)
) REPLY COMMENTS OF
) ROCKY MOUNTAIN POWER

Pursuant to Rule 202.01(d) of the Rules of Procedure of the Idaho Public Utilities
Commission (“Commission”) and the Commission’s September 7, 2023, Notice of Application
and of Modified Procedure, Rocky Mountain Power a division of PacifiCorp (the “Company”)
hereby submits reply comments in the above-referenced case.
I. BACKGROUND
1. On August 21, 2023, the Company applied for Commission authorization for an
accounting order to record a regulatory asset associated with the costs associated with increased
insurance premiums (“Application”). PacifiCorp estimates that the commercial insurance costs
are approximately $125 million (total company) for the policy period beginning August 15, 2023
or later. Current rates reflect $32.7 million (total company), which would result in a deferral for
Idaho’s allocated share of approximately $92.3 million (total company) for the difference between
the new costs and the amount in rates.
2. On September 7, 2023, Commission Order No. 35913 provided public notice of the
Company’s Application, authorized processing of the Application by Modified Procedure, and

Reply Comments of Rocky Mountain Power Page 2
established the procedural schedule allowing persons who would like to file written comments to
have until November 9, 2023, and the Company having until November 30, 2023, to file reply
comments.
3. In addition to the Commission Staff (“Staff”), Idaho Conservation League filed a
petition to intervene and was granted intervener status in the case.
4. On November 9, 2023, Commission Staff filed comments.
II. REPLY COMMENTS
5. Staff conducted a thorough review of the Company’s Application, which included
responses to production requests, and is recommending that the Commission approve the
Application. However, Staff also makes several recommendations that should be either rejected or
clarified.
6. First, Staff recommends that the Commission not allow a carrying charge on the
regulatory asset without explanation.1 The Commission should allow a carrying charge on the
regulatory asset as the amounts deferred reflect costs of doing business that the Company is
incurring. The cost of premiums for available insurance coverage is increasing greatly as a result
of wildfire liability risk. Staff even states that it “believes the Company’s request is reasonable
based on the extraordinary circumstances of the insurance markets.” The Company recommends
a carry charge of 2.0 percent, which is the interest rate approved by the Commission for customer
deposits for 20232 and below the 5.0 percent interest rate approved by the Commission for
customer deposits for 2024.3

1 Staff Comments at 6.
2 In the matter of the Interest Rate on Deposits Collected from Customers of Gas, Electric, Telephone, and Water
Public Utilities for Calendar Year 2023, Case No. GNR-U-22-05, Order No. 35621 (Dec. 13, 2022).
3 In the matter of the Interest Rate on Deposits Collected from Customers of Gas, Electric, Telephone, and Water
Public Utilities for Calendar Year 2024, Case No. GNR-U-23-01, Order No. 36000 (Nov. 15, 2023).

Reply Comments of Rocky Mountain Power Page 3
7. Second, Staff recommends that the Commission deny the Company’s request to
include the insurance costs for third-party claims on the Company under both State and Federal
emergencies in this deferral. Such a finding by the Commission is not necessary as the Company
has not requested recovery of any third-party claims as part of its Application. Staff relies on
language in paragraph 6 of the Application to conclude that the Company is seeking recovery of
third-party claims.4 Specifically, paragraph 6 of the Application provides in part,
Additionally, this deferral covers insurance costs for the third-party claims on
PacifiCorp for events that may occur under both Federal and State emergency
declarations. The potential magnitude of the insurance costs exceeds normal
costs anticipated by PacifiCorp and included in its retail rates and could also far
exceed the reasonable business risk associated with these claims.
With this language, the Company was only explaining that the premiums would allow for insurance
coverage for third party claims associated with Federal or State emergency declarations, for
example. The Company’s request in the Application is limited to recording a regulatory asset for
the incremental increase in insurance premiums as compared to what is currently reflected in rates.5
8. Finally, Staff claims that insurance premium invoices for the policy periods
commencing August 15, 2023, or later, total $113,585,367 (system), which results in an amount of
$11,414,663 less than the Company’s estimate of approximately $125.2 million.6 As a result, Staff
recommends that only insurance premiums be considered to be deferred as a regulatory asset,
arguing that additional liability insurance costs, other than premiums, are not appropriate to book
as a regulatory asset at this point in time.7 The Company disagrees with Staff’s recommendation
and underlying assumption that the Company is seeking to defer costs other than the incremental
insurance premiums. The Company is only seeking to defer incremental insurance premiums in

4 Staff Comments at 3.
5 See, for example, Application at 1, 2 (Paragraph 5), 3 (Paragraph 8), and 4.
6 Staff Comments at 5.
7 Id.

Reply Comments of Rocky Mountain Power Page 4
this filing. In its Application, the Company estimated the insurance premiums related to excess
liability insurance was approximately $125.2. However, as insurance is finalized, invoices are
received, and amounts settled, the actual amounts become known. At the time the Company
prepared the responses to Production Request Nos. 1 and 2 in September 2023, the actual amount
paid was $113,585,367 (system). Since that time, that number has been further refined to
approximately $122.4 million. The Company recommends that the Commission not impose a cap
on the amount deferred. As the Company states in its application, the Commission’s approval of
deferred accounting treatment for these increased insurance costs will not, in itself, constitute
approval of ultimate recovery of those costs. Recovery of the costs would be subject to a prudence
review and a final decision on rate recovery in a future regulatory filing. Thus, in a future filing,
the Company will have to demonstrate the prudence of the costs recorded to the regulatory asset,
making a cap unnecessary.
III. CONCLUSION
9. PacifiCorp recommends that the Commission approve its Application and adopt
Staff’s recommendations as modified herein.
DATED this 30th day of November 2023.
Respectfully submitted,
ROCKY MOUNTAIN POWER

__________________________
Joe Dallas (ISB# 10330)
PacifiCorp, Senior Attorney
825 NE Multnomah Street, Suite 2000
Portland, OR 97232
Email: [e-mail]
Attorney for Rocky Mountain Power
Page 1 of 1
CERTIFICATE OF SERVICE
I hereby certify that on this 30th of November 2023, I caused to be served, via e-mail a true and correct copy of Rocky Mountain Power’s Reply Comments to the following: Case No. PAC-E-23-18
Matthew Nykiel
Attorney for ICL 710 N. 6th St. Boise, ID 83702 [e-mail]
Energy Associate, ICL 710 N. 6th St. Boise, ID 83702 [e-mail]

Dated this 30th day of November, 2023.
__________________________________ Carrie Meyer
Adviser, Regulatory Operations