HomeMy WebLinkAbout131125_PACdepreciation.pdfIdaho Public Utilities Commission
Case No. PAC-E-13-02
November 25, 2013
Contact: Gene Fadness (208) 334-0339, 890-2712
Website: www.puc.idaho.gov
PUC adopts settlement to PacifiCorp depreciation case
State regulators have approved the first update to PacifiCorp’s depreciation rate
since 2008, but only at slightly more than half that originally proposed by the
utility, which operates in eastern Idaho as Rocky Mountain Power.
A settlement proposed by a number of interested parties increases the current
depreciation rate of 2.54 percent to 2.93 percent effective Jan. 1. 2014. PacifiCorp
originally proposed 3.24 percent. In dollar amounts, the original proposed increase
for the Idaho jurisdiction was $8.9 million. After settlement discussions, Idaho’s
proportion is $4.6 million and the total six-state increase is about $88.3 million,
down from an original proposal of $160.8 million.
The Idaho Public Utilities Commission adopted the settlement, which does not
immediately impact customer rates. The amount allocated to Idaho customers of
PacifiCorp will likely be included whenever the utility next adjusts base rates, not
anticipated until Jan. 1, 2016 at the earliest. Commission staff, PacifiCorp,
Monsanto and the PacifiCorp Idaho Industrial Customers participated in settlement
discussions.
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. 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.
About two-thirds of the increase in the depreciation rate at is attributable to the
early retirement and estimated removal cost of the 172-megawatt Carbon coal
plant near Helper, Utah. Another contributing factor is capital additions to the
company’s steam generation facilities.
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