20180522Comments-Rocky Mountain Power.pdf

KARL T. KLEIN
DEPUTY ATTORNEY GENERAL
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5156
Street Address for Express Mail
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attomey for the Staff of the
Idaho Public Utilities Commission
IN THE MATTER OF THE INVESTIGATION
INTO THE IMPACT OF FEDERAL TAX CODE
REVISIONS ON UTILITY COSTS AND
RATEMAKING
RECEIVED
?{ll8 HrqY 22 AH tOr L3
_ iL) ','-i,J : UrlllC; i l1 I ;1i": {l0lJMlSSlON
BEFORE THB IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. GNR.U.18.O1
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COMMENTS OF THE
COMMISSION STAFF IN
SUPPORT OF SETTLEMENT
STIPULATION RE: ROCKY
MOUNTAIN POWER
The Staff of the Idaho Public Utilities Commission comments as follows on the
Settlement Stipulation ("Settlement Stipulation") relating to Rocky Mountain Power, a division
of PacifiCorp ("Rocky Mountain Power" or the "Company") in Case No. GNR-U-18-01.
BACKGROUND
On December 22,2017 , the President signed into law the Tax Cuts and Jobs Act of 2017
("TCJA"). Effective January l, 2018, the TCJA decreased the federal corporate tax rate from 35
percent to 21 percent. In response, the Commission opened this multi-utility case to investigate
whether to adjust the rates of certain utilities that benefit from the reduced tax rate. 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.
1STAFF COMMENTS MAY 22,2018
at l-2. The Company filed its report on March 30,2078, requesting to reduce retail rates by $2.8
million to return a portion of the TCJA savings to customers. On April 30, 2018, the Company
updated its report with normahzed2}lT Results of Operations.
A settlement conference occurred at the Commission offices on April 30, 2018.
Representatives of Rocky Mountain Power, Idaho Irrigation Pumpers Association, Inc.,
PacifiCorp Idaho Industrial Customers, Monsanto Company, and Commission Staff
(collectively, the "Parties") attended. Through discussions and compromise, the Parties agreed
to the proposed Settlement Stipulation filed on May 10,2018. If approved, the Settlement
Stipulation would decrease the Company's retail revenues by $8.385 million, or about 3.0o/o, on
June I ,2018. The remaining benefits from the TCJA will be quantified and a method to return
those amounts to customers will be determined later in a second phase to this proceeding ("Phase
II").
STAFF REVIEW
Staff has reviewed the Settlement Stipulation and believes it fairly compromises the
Parties' positions, and is reasonable and in the public interest. Staff thus recommends that the
Commission approve it as written. The Settlement Stipulation, if approved, would return most of
the tax benefits the Company has realized under the TCJA, and provides for a process to
determine the amount of, and method to return to customers, any unaccounted for benefits.
Summary of the Settlement Stipulation
The Parties agree the Company would decrease customer rates by $8.385 million. This
decrease would consist of two rate components: (l) a retail credit through a new rate schedule,
Electric Service Schedule No. 197, and (2) a reduction in the annual Energy Cost Adjustment
Mechanism ("ECAM"). Effective June I ,2018, rates would decrease by $6.185 million to
reflect current federal and state income tax savings. The Company would return this amount to
customers as a credit through the new rate schedule, and allocate it to customer classes using the
cost of service F I 0 I - Rate Base factor as applied in the Company's last general rate case filing
(Case No. PAC-E-11-12). This rate schedule would remain in place until the Company's next
general rate case, at which time the Company would incorporate the tax-rate reduction into its
base rates.
2STAFF COMMENTS MAY 22,2018
The Company would return the remainingt2.2 million to customers by using it to
decrease amounts customers otherwise would pay through the ECAM. In Order No. 33776,
Case No PAC-E-17-02,the Commission authorized the Company begin amortizing the2013
depreciation regulatory asset by $a.0 million, or 35oh of the total $l1.5 million annual ECAM
recovery. In the current ECAM filing, the Company has proposed to maintain the $4.0 million
amortization of that regulatory asset. In this Settlement Stipulation, the Parties agree to amortize
the depreciation regulatory asset by the expected annual incremental deferral of $ 1.8 million, and
thus reduce the ECAM recovery by $2.2 million.
Jonuary I - May 31, 2018 Regulatory Liability
Per Commission Order No. 33965, the Company began to "immediately account for the
financial benefits from the January 1,2018 tax rate reduction to 2loh" by treating the benefits as
a deferred regulatory liability until they are reflected in customer rates and the net deferred
balance has been returned to customers. The balance of the deferred regulatory liability is
estimated to be $3.5 million on May 31, 2018.
The balance of the 2013 depreciation regulatory asset is also estimated to be $3.5 million,
as of May 31, 2018. The Parties agree to the Company would use the estimated $3.5 million
deferred regulatory liability associated with the January through May tax savings to offset the
remaining regulatory asset balance for the 2013 depreciation deferral. Any difference in
amounts between the regulatory asset and the regulatory liability would be addressed in the
proposed Phase II ofthis case.
Final Report and Phase II
The Parties agree that, on June 15,2018, the Company will file a final report on the net
savings under the Tax Reform Act. The Company's report would include the calculation and
amortization of excess deferred income taxes, and reconcile the above-described customer
benefits with the balance recorded as a regulatory liability or asset, as appropriate. The
Company's filing would begin Phase II of this proceeding.
In Phase II, Parties would be able to examine and propose ratemaking treatment of the
balances that remain under the TCJA. The Company would continue to defer the balance of the
TCJA regulatory account, including any balance after Phase II, until the regulatory treatment is
determined by the Commission, but not later than the next general rate case. In addition, the
JSTAFF COMMENTS MAY 22,2018
Parties would identify how the Company will report and describe any remaining deferral
balances on June 15 each year until all tax benefits are included in rates.
STAFF RECOMMENDATION
Staff believes the Settlement Stipulation reasonably resolves this matter for Rocky
Mountain Power and its customers, and recommends the Commission approve it as filed.
Respectfully submitted this 2 2 "A day of May 2018.
rlk
Karl T.Klein
Deputy Attorney General
Technical Staff: Joe Terry
Brad Iverson-Long
Donn English
4STAFF COMMENTS MAY 22,2018
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF MAY 2018,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. GNR-U-I8-01, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
TED WESTON
ROCKY MOI-]NTAIN POWER
1407 W N TEMPLE STE 330
SALT LAKE CITY UT 84116
E-mail : ted.weston@pacifi corp.com
YVONNE R. HOGLE
ROCKY MOUNTAIN POWER
I4O7 W N TEMPLE STE 320
SALT LAKE CITY UT 84116
Email : Yvonne.hoeel@pacifi corp. com
RONALD L. WILIAMS
WILLIAMS BRADBURY PC
PO BOX 388
BOISE ID 83701
E-mail : ron@wi I liamsbradbury. com
RANDALL C BUDGE
RACINE OLSON NYE & BUDGE
PO BOX 1391
2OI E CENTER
POCATELLO ID 83204-1391
E-mail : [e-mail]
ERIC L OLSEN
ECHO HAWK & OLSEN PLLC
505 PERSHING AVE STE IOO
PO BOX 6119
POCATELLO ID 83205
E-mail: elo wk.com
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CERTIFICATE OF SERVICE