150804_PACECAM.pdf

Commission taking comments through Sept. 4
on Rocky Mountain proposal to modify ECAM

BOISE (Aug. 4, 2015) – The Idaho Public Utilities Commission is taking comment through
September 4 on a Rocky Mountain Power request to shift $10.2 million in net power supply
cost from a temporary rate mechanism into permanent base rates. If approved, the shift would
result in an average 3.9 percent increase to base rates, 2.7 percent for residential customers.
The monthly bill for a residential customer using the company’s average of 801 kilowatt-hours
per month would increase by about $2.35.

Parties to the case include commission staff, Monsanto Company, the PacifiCorp Idaho
Industrial Customers and the Idaho Irrigation Pumpers Association. Settlement conferences for
the parties have are scheduled for August 11 and again for August 19, if needed.

Rates for Rocky Mountain Power go up or down every year on April 1 as part of the company’s
annual Energy Cost Adjustment Mechanism (ECAM), which tracks the company’s variable
power supply expenses. These are expenses the utility incurs to secure generation beyond its
own power plants, such as wholesale electric market purchases and sales contracts with
independent power producers. Because the amount of variable expense cannot be precisely
known, the ECAM annually matches forecasted variable costs to actual cost. If the variable costs
are less than that already included in base rates, customers get a one-year credit. If the costs
are greater than that collected in base rates, customers get a one-year surcharge. The utility’s
earnings cannot increase as a result of the ECAM. The company is to collect or credit only the
amount needed to match forecasted power supply expense with actual power supply expense.

In this application, Rocky Mountain Power is asking the commission to shift $10.2 million from
the ECAM account into permanent base rates. The utility is also seeking to remove a sharing
mechanism that requires the company’s shareholders to be responsible for 10 percent of the
variance between forecasted and actual power supply expense. If the ECAM is a refund (credit)
to customers, shareholders get 10 percent and ratepayers 90 percent. If it is a surcharge,
customers pay 90 percent and shareholders 10 percent. The 90/10 sharing mechanism was
implemented by the commission to incent the company to be prudent in its power purchasing
decisions, knowing that both shareholders and ratepayers must pay portions of that expense.

The utility claims the sharing mechanism worked well initially because the company had more
control over the output from it power purchasing decisions. However, in recent years, the
company claims, power supply expense is shifting from more predictable sources of supply to
sources with generation characteristics largely outside the company’s control.

The most drastic change is the increased reliance on short-term market purchases. Also,
company-owned wind has increased by 47 percent and purchases from independent renewable
developers is up by 15 percent. Rocky Mountain Power is required by federal PURPA law to buy
power from qualifying renewable projects over which, the company claims, it has little or no
control. The PURPA projects are largely intermittent with output dependent on weather.

Rocky Mountain Power claims that its parent company PacifiCorp’s decision to join an Energy
Imbalance Market (EIM) with the California Independent Systems Operator is “ample evidence”
that Rocky Mountain is controlling its net power costs. The EIM automates and optimizes the
dispatch of generation sources every five minutes to serve customer load.

Rocky Mountain claims that its proposed modifications and the resetting of base net power
costs is a preferred alternative to a general rate case, which could impact customers even
more. Net power costs are the largest single component of base rates, thus a properly designed
ECAM without sharing bands would lessen the need for the company to file as many rate cases,
Rocky Mountain Power claims. In California where there is no sharing band, there has not been
a general rate case since 2009.

Rocky Mountain Power further requests changes to how the ECAM is calculated and that the
effective date for the ECAM surcharge or credit be moved from April 1 to June 1.

This year, the ECAM was a 1.8 percent increase. In 2014, it was a 2.6 percent decrease. In 2013
and 2012 there was no change to residential rates, but Rocky Mountain’s large contract
customers, Monsanto and Agrium, received a slight increase to their ECAM.

Comments are accepted via e-mail through September 4, 2015, by accessing the commission’s
Website at www.puc.idaho.gov and clicking on "Case Comment Form,” under the “Consumers”
heading. Fill in the case number (PAC-E-15-09) and enter your comments. Comments can also
be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to [phone].

To view Rocky Mountain Power’s application and supporting testimony, go to the commission
Website. Click on “Open Cases” under the “Electric” heading and scroll down to Case No. PAC-
E-15-09. Later, testimony from commission staff and other parties will be added to the case file
and also available for public viewing.

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