161018_PACRMP.pdf

Idaho commission approves two-year extension
of cost-sharing arrangement among PacifiCorp states

Case No. PAC-E-15-16, Order No. 33623
Contact: Gene Fadness [phone]
www.puc.idaho.gov

BOISE (October 18, 2016) – The Idaho Public Utilities Commission is approving a two-year
extension of a plan that allocates PacifiCorp’s cost of serving its customers across its six-state
territory based on each state’s share to PacifiCorp’s total system load. PacifiCorp does business
in eastern Idaho, Utah and Wyoming as Rocky Mountain Power.

The “Multi-State Protocol,” increases the revenue requirement by 1.7%, or $150,000 above the
current Idaho share of $986,000. The increase does not immediately impact rates, but allows
PacifiCorp to set aside $12,500 per month for possible recovery from customers in a rate
adjustment that would be effective Jan 1, 2018 at the latest.

In 1989, Pacific Power and Light merged with Utah Power & Light to create PacifiCorp. After
that merger, each of the six state commissions in PacifiCorp’s territory apportioned costs to
customers using different methods. PacifiCorp claimed at the time that each state’s differing
methods resulted in the utility not being able to fully recover its costs. That led to uncertainty in
financial markets about whether PacifiCorp would be able to recover its investment in capital
improvements and additions. A multi-state process was formed in about 2002 to allow the
company and all six states to continue discussions about an equitable way to allocate costs so
that customers pay for the benefits they receive, while not subsidizing customers in other
states. The first protocol was adopted in 2005 and the second in 2010.
The 2010 protocol still did not collect enough to fully recover PacifiCorp’s cost, the utility
claimed. To address the shortfall, PacifiCorp and the signers of the agreement agreed to a fixed-
dollar “equalization adjustment” to be added to each state’s revenue requirement. The total for
all states is an additional $9.1 million, or about a two-tenths of 1 percent increase in each
state’s annual revenue requirement.

The 2017 Protocol update was negotiated and agreed to by representatives of PacifiCorp, the
staffs of the Idaho, Oregon, Utah and Wyoming commissions and other interested stakeholders.
California did not participate in the discussions but implements the allocation methodology
adopted by the other states. Washington participated in early discussions, but previously
adopted a different allocation methodology.
The protocol does not make other changes to the 2010 agreement because of uncertainty over
the impact of the federal government’s proposed Clean Power Plan as well as the possibility
that PacifiCorp may become part of a regional independent system operator.
The protocol continues the past “rolled-in method,” that ensures each state pays only for
PacifiCorp’s prudently incurred costs to serve that state.
“We recognize that different rolled-in methods exist, and that some of them could have
increased PacifiCorp Idaho’s revenue requirement beyond the increase proposed here,” the
commission said.
The 1.7 percent increase to the Idaho revenue requirement “appropriately follows the principle
that cost-causers should be the cost-payers and reasonable ensures Idaho customers will pay
only for the share of total system costs that PacifiCorp prudently incurs to serve them,” the
commission said.

###