20180516notice_of_settlement_order_no_34064_pac.pdf

Office of the Secretary
Service Date
May 16,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION )CASE NO.GNR-U-18-01
INTO THE IMPACT OF FEDERAL TAX )CODE REVISIONS ON UTILITY COSTS AND )NOTICE OF SETTLEMENT
RATEMAKING )STIPULATION (PACIFICORP)
)NOTICE OF MODIFIED
)PROCEDURE
)ORDER NO.34064
On May l1,2018,Rocky Mountain Power,a division of PacifiCorp (the "Company")filed
a settlement Stipulation (the "Settlement Stipulation").The Settlement Stipulation is signed by
the Company,the Staff of the Idaho Public Utilities Commission,and intervenors Idaho Irrigation
Pumpers Association Inc.,PacifiCorp Idaho Industrial Customers,and Monsanto Company.If
approved,the Settlement Stipulation would return to customers 100%of the tax benefits the
Company realizes under changes in tax law that decreased the Company's corporate tax rate and
expenses.
With this Order,the Commission provides notice of the Settlement Stipulation and that the
matter will be processed by Modified Procedure,with deadlines to submit comments about the
Settlement Stipulation as set below.
BACKGROUND
The federal Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act")decreased the federal
corporate tax rate from 35%to 21%,effective January 1,2018.In response,the Commission
opened this multi-utilitycase to investigate whether to adjust the rates of certain utilities so that
the benefits from the reduced tax rate can flow through to customers.See Order No.33965.The
Commission directed all affected utilities-includingthe Company-toimmediately account for
the tax benefits as a regulatory liability,and to report on how the tax changes affected them,and
how resulting benefits could be passed on to customers.See id.at 1-2.The Company filed its
report,which the Company styled as an application,on March 30,2018.
ORDER NO.34064 1
NOTICE OF SETTLEMENT STIPULATION
YOU A RE HEREBY NOTIFIED that the Settlement Stipulation is availabic for pubbe
review as described below.The Settlement Stipulation,if approved,would return to customers
the tax benefits the Company has realized under the Tax Reform Act.The Settlement Stipulation
provides,in summary:
1.If the Company's costs and ratemaking expenses decrease,then the Company will defer
associated net savings effective January 1,2018,and return all benefits to customers,
a.Effective June 1,2018,Idaho retail revenues will decrease by $8.385 million
(about 3.0%).The decrease consists of a $6.185 million in current federal and
state income tax savings to be returned to customers through new Electric
Service Schedule No.197,and a $2.2 million reduction to Electric Service
Schedule No.94 -Energy Cost Adjustment rate.
b.The Commission's 2017 Energy Cost Adjustment Mechanism ("ECAM")order
authorized the Company to amortize the 2013 depreciation regulatory asset by
$4 million per year (35%of the annual $11.5 million ECAM recovery).See
Order No.33776.On May 31,2017,the 2013 depreciation regulatory asset
account had a $5.7 million balance,with an extra $1.8 million in incremental
depreciation to be deferred each year.On May 31,2018,the 2013 regulatory
asset balance will be about $3.5 million.The Company will offset this amount
with $3.5 million of Idaho's allocation of deferred tax savings,which will
decrease the annual ECAM rate by $2.2 million.Additionally,the final
Schedule 94 ECAM rate will collect $1.8 million more than the approved 2017
ECAM deferral to continue offsetting the $1.8 million incremental depreciation
deferral.
2.The Company will record any under or over allocation of the benefits as a Tax Reform
Act regulatory liabilityor asset,and will continue to defer any difference until base rates are reset
through a general rate case.
3.On June 15,2018,the Company will file a final report on the Tax Reform Act's net
savings.The final report will:(1)include the calculation of excess deferred federal income taxes
associated with both protected and unprotected deferred tax balances;and (2)reconcile the
ORDER NO.
accounting for the benefits from the Tax Reform Act,including a true-up of any under or over-
allocation of the customer credits described above.
4.Once the Company files its final report on June 15,2018,the parties will initiate a
second phase in this proceeding as it relates to Rocky Mountain Power.In this Phase II,the parties
will review the remaining deferred balances,after accounting for the stipulated rate decrease,and
propose ratemaking treatment for them.The normalization of tax savings subject to the average
rate assumption method ("ARAM")will be identified as required by tax normalization provisions
in the Tax Reform Act.The ratemaking treatment of deferred tax savings not subject to ARAM
will be specifically determined in Phase IL
5.The Company will continue deferring the balance of the Tax Reform Act regulatory
account,including any balance after Phase II,until the Commission determines its regulatory
treatment and no later than in next general rate case.During Phase II,the parties will identifyhow
the Company will report and describe the remaining deferral balances on June 15 each year until
all tax benefits are included in Commission-approvedrates.The Company will return all balances
to customers through Schedule 197 as reductions or offsets for rate stabilization purposes in the
ECAM.
6..The Company will create a new Electric Service Schedule No.197 -Federal Tax Act
Adjustment,to pass a rate reduction associated with the Tax Reform Act back to customers.This
schedule will be billed under a separate line item on customers'bills until the next general rate
case.Of the $8.385 million decrease,$6.185 million will be returned to customers on Schedule
No.197 and $2.2 million will be returned through a reduction to Schedule No.94 -Energy Cost
Adjustment.
7.The Company will allocate $6.185 million to customer classes using the cost of service
Fl01 -Rate Base factor.The Company will allocate the rate reduction to all retail tariff customers
based on the rate base allocation to each customer class from the Company's cost of service study
as filed in Case No.PAC-E-11-12.
8.The Company will base its per kilowatt-hourenergy price for Schedule No.197 on the
same kilowatt-hour volumes by class that it used in its annual ECAM filing.To determine these
rates,the Company will calculate the price for each rate schedule by dividing the $6.185 million
by the corresponding annual energy for each rate schedule.
ORDER NO.34064
9.To avoid affecting demand-side management programs,the Company will apply
Schedule No.191,Customer Efficiency Services Rate Adjustment,to customers'bills before
applying the proposed Schedule No.197 sur-credit.
YOU ARE FURTHER NOTIFIED that this docket,the Settlement Stipulation,and any
supporting workpapers,testimony,and exhibits are available for public inspection during regular
business hours at the Commission offices.They also may be viewed on the Commission's website
at www.puc.idaho.gov by clicking on "File Room"and then "Multi-Utility Cases"and going to
the case number referenced in the above caption.
YOU ARE FURTHER NOTIFIED that the Commission is not bound by the parties'
agreement as reflected in the Settlement Stipulation.The Commission will independently review
the Settlement Stipulation consistent with Commission Rules 271-280,IDAPA 31.01.01.271-280,
to decide whether to approveor reject it,or state conditions under which to accept it.The proposed
settlement's proponents ultimatelybear the burden to prove that it is just,fair,and reasonable,in
the public interest,or otherwise in accordance with law or regulatory policy.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the public
interest may not require a formal hearingin this matter,and will proceed under Modified Procedure
pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission's Rules of Procedure,
IDAPA 31.01.01.201-204.The Commission notes that Modified Procedure and written comments
have proven to be an effective means for obtaining public inputand participation.
YOU ARE FURTHER NOTIFIED that the parties,and any person desiring to state a
position on this Settlement Stipulation,may file a written comment about the Settlement
Stipulation with the Commission no later than May 22,2018.The comment must contain a
statement of reasons supporting the comment.Persons desiring a hearingmust specifically request
a hearing in their written comments.Written comments concerning this Settlement Stipulation
may be mailed to the Commission and the Company at the addresses reflected below:
ORDER NO.34064
Commission Secretary Yvonne R.Hogle
Idaho Public Utilities Commission Assistant General Counsel
PO Box 83720 Rocky Mountain Power
Boise,ID 83720-0074 1407 West North Temple,Suite 320
Salt Lake City,Utah 84116
Street Address for Express Mail:e-mail:[e-mail]
472 W.Washington Street
Boise,ID 83702-5918
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission's home page at www.puc.idaho.gov.Click the "Case Comment or Question Form"
under the "Consumers"tab,and complete the form using the case number on the front of this
document.These comments must also be sent to the Company at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the parties may file reply comments no later than
May 24,2018.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received
within the time limit set,the Commission will consider this matter on its merits and enter its Order
without a formal hearing.If written comments are received within the time limit set,the
Commission will consider them and,in its discretion,may set the same for formal hearing.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be conducted
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code,and the Commission
may enter any final Order consistent with its authorityunder Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted
pursuant to the Commission's Rules of Procedure,IDAPA 31.01.01.000,et seq.
ORDER
IT IS HEREBY ORDERED that the Settlement Stipulation be processed under Modified
Procedure,Rules 201-204 (IDAPA 31.01.01.201-.204).The parties and any interested persons
shall have until May 22,2018 to file written comments.The parties shall have until May 24,2018
to file reply comments,if any.
ORDER NO.34064 5
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of May 2018.
PAUL KJ T
KRIST NE RAPER C 1S ONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
GNRUl801 PAC NtcSettlementMod kk
ORDER NO.34064