050313_PACdepreciationrate.pdf

Idaho Public Utilities Commission
Case No. PAC-E-13-02
May 3, 2013
Contact: Gene Fadness [phone], 890-2712
Website: www.puc.idaho.gov

Workshop set for PacifiCorp depreciation update

Staff from the Idaho Public Utilities Commission will conduct a public workshop Thursday, May
9, regarding Rocky Mountain Power’s (PacifiCorp) application to increase its depreciation rate
by 0.7 percent.

The updated depreciation rate, if approved, would not become effective until Jan. 1, 2014.

The workshop will begin at 10 a.m. in the commission hearing room at 472 W. Washington St.
in Boise. Intervenors in the case include the commission staff, Monsanto Company and the
PacifiCorp Idaho Industrial Customers.

The current depreciation rate is 2.54 percent. After completing a depreciation study, the
company proposes to increase the rate to 3.24 percent. About two-thirds of that is attributable
to the early retirement and estimated removal cost of the 172-megawatt Carbon coal plant
near Helper, Utah. Another factor is capital additions to the company’s steam generation
facilities.

In dollar amounts, the proposed increase for the Idaho jurisdiction is $8.8 million. In all of
PacifiCorp’s six states, the total proposed increase is $160.8 million.

Depreciation is a system of accounting that spreads the cost or value of a company’s tangible
assets (less salvage) over their useful life. Electric utilities are capital intensive, requiring major
investments in generation, transmission and distribution plant to provide electric service. If
depreciation rates are set at an unreasonably high or low level, the utility does not recover its
operating expenses, shifting either the costs or the benefits from current customers to future
customers.

At the workshop, interested parties will have an opportunity to discuss a possible settlement.

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