20190315notice_of_stipulation_order_no_34272_pac.pdf

Office of the Secretary
Service Date
March 15,2019
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.34272
On March 5,2019,Rocky Mountain Power,a division of PacifiCorp ("Company"),filed a
Phase II Stipulation ("Settlement Stipulation")that proposes to settle all remaining issues as to the
Company and return to customers 100%of the benefits that the Company has realized from recent
tax law changes.The Company,the Commission Staff,and intervenors Idaho Irrigation Pumpers
Association,Inc.,PacifiCorp Idaho Industrial Customers,and Monsanto Company (the sole
intervenors in this multi-utilitycase as it relates to the Company),have signed the Settlement
Stipulation and recommended the Commission approve it in the public interest.
With this Order,the Commission provides notice of the Settlement Stipulation and sets
deadlines for parties and interested persons to submit comments.
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 the
benefits from the reduced tax rate can pass to customers.See Order No.33965.The Commission
directed all affected utilities-including the Company-to immediately 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.
On May 31,2018,the Commission entered an order approving an initial settlement
stipulation signed by the Company and all parties.The initial settlement stipulation required the
Company to use Electric Service Schedule 197-Federal Tax Act Adjustment,to refund
NOTICE OF SETTLEMENT STIPULATION (PACIFICORP)
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$6,185,000 to Idaho retail customers effective June 1,2018.This refund was to be a preliminary
portion of the tax benefits the Company realized from the tax law changes.The initial settlement
stipulation also provided for a Phase II of the case.In Phase II,the parties were to review balances
remaining after accounting for the reduction to rates proposed in the initial settlement stipulation,
and propose ratemaking treatment for the remaining deferred balances.See Order No.34072.
On March 5,2019,the Company filed the Settlement Stipulation at issue here to settle all
remaining issues,and pass back to customers all benefits that the Company realized from the tax
law changes.
NOTICE OF SETTLEMENT STIPULATION
YOU ARE HEREBY NOTIFIED that the Settlement Stipulation is available for public
review as described below.The Settlement Stipulation,if approved,would return to customers the
tax benefits the Company has realized under the tax law changes.The Settlement Stipulation
provides,in summary:
1.Effective June 1,2019,Schedule 197 rates would be revised to refund to Idaho retail
customers about $7,589,000 annually,for an increase to the Phase I refund of about
$1,400,000.The revised Schedule 197 would remain in effect until rates are set in the
Company's next general rate case.
2.Starting June 1,2019,the Company will use the Energy Cost Adjustment Mechanism
("ECAM")to amortize over two years the $1,141,000 deferred balance of the current
tax savings from January 1,2018 through May 31,2019 not yet returned to customers.
3.The Idaho-allocated Excess Deferred Income Taxes ("EDIT")resulting from the new
tax laws include protected property-related EDIT of $105,924,604,with estimated
annual amortizations through the average rate assumption method ("ARAM")of
$2,564,410 in 2018,$2,352,309 in 2019,and $2,306,632 in 2020;and non-protected
and non-property EDIT of $14,883,505.As the EDIT balances amortize in rates,the
amounts will include a rate base carrying charge offset to account for the corresponding
increase in rate base associated with the amortized EDIT until the next Idaho general
rate case.
4.The actual annual ARAM amortization of protected property-related EDIT,and the
annual straight-line amortization of non-protected property and non-property EDIT,
will be reduced by a rate base offset calculated at the pre-tax weighted average cost of
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capital of 9.312%on the after-tax EDIT amounts until the EDIT rate base balances are
updated and included in the next Idaho general rate case.
5.The actual annual ARAM amortization of protectedproperty EDIT,less the associated
rate base offset,will be refunded to Idaho retail customers in the subsequent year
through the ECAM under Schedule 94 and will not be subject to the sharing band.
Additionally,the non-protected property and non-property EDIT will be amortized
over seven years ($2,126,215per year less the rate base offset),beginning June 1,2019,
and be used in part to offset the 2013 incremental depreciation expense deferral
approved by Commission Order 32910 in Case No.PAC-E-13-04.Both will be
included in Idaho retail customer rates in the ECAM until the rate effective date in the
next general rate case and will not be subject to the sharing band.The parties may
propose to change the seven-year amortization period for the unamortized portion of
the non-protected property and non-property EDIT balance in the next Idaho general
rate case.
6.The tax savings to be passed through the ECAM to customers effective June 1,2019
will be accomplished by multiplyingIdaho retail energy for June 1,2019 through
May 31,2020 by $0.957 per megawatt hour ("MWh").
7.Effective June 1,2020,the Company will update the tax amortization rate to include
any over or under collection from the prior period along with the 2019 protected
property EDIT amount updated based on actual tax return data and reduced for the
corresponding rate base carrying charge offset.The current estimated rate before these
true-ups is $0.853 per MWh.
8.When the Company files its next Idaho general rate case,the Company's application
will reflect information relating to the tax laws,including:current federal income taxes
calculated using the test period data;annual amortization and updated balances of
protected property EDIT for the test period;annual amortization and updated balances
'of non-protected property and non-property EDIT for the test period;and the Schedule
197 rider will end with the rate effective date of the general rate case.
9.The on-going incremental depreciation expense associated with the 2013 depreciation
study will be included in base rates beginning on the effective date of the rates set in
the next Idaho general rate case.Any deferred balance associated with the 2013
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depreciation will be trued-up in the next ECAM followingthe rate effective date in the
next general rate case.
10.Regarding rate design,the above-described rate reductions will be passed through to
customers under Schedule 197 or Schedule 94.
11.The $7,589,000 will be allocated to customer classes using the cost of service F101 -
Rate Base factor.The rate reduction will be allocatedto all retail tariff customers taking
service under the Company's electric service schedules based on the rate base
allocation to each customer class from the Company's class cost of service study as
filed in Case No.PAC-E-11-12.
12.To avoid affecting demand-side management programs,Schedule No.191,Customer
EfficiencyServices Rate Adjustmentwill be applied to customers'bills before applying
the proposed Schedule 197 sur-credit.
13.The parties recommend the Commission approve the Phase II Settlement Stipulation in
the public interest,and state that its terms are fair,just,and reasonable.
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's office.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 approve or 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 hearing in 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 input and participation.
NOTICE OF SETTLEMENT STIPULATION (PACIFICORP)
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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 within 21 days from the service date of this Order.The
comment must contain a statement of reasons supporting the comment.Persons desiring a hearing
must 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:
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.cov.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 Company must file any replycomments within
7 days after the comment deadline.
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 authority under 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.
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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 interested persons may
file comments by within 21 days from the service date of this Order.The Company shall have 7
days from the comment deadline in which to file reply comments,if any.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this IS
day of March 2019.
PAUL KJELL 'R,PRESIDENT
KRIKTINE RAPER,JOMMISSIONER
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
GNRUl801 PAC Ntc Settlement Mod kk2
NOTICE OF SETTLEMENT STIPULATION (PACIFICORP)
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