20100826final_order_no_32056.pdf

Office of the Secretary
Service Date
August 26 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF CAPITOL WATER CORPORATION TO
REVISE ITS SCHEDULE NO.3 PURCHASE
POWER ADJUSTMENT RATE ORDER NO. 32056
CASE NO. CAP-IO-
On June 11 , 2010, Capitol Water Corporation ("Capitol" or "Company ) filed an
Application requesting authority from the Commission to change its Schedule No.3 Purchase
Power Cost Adjustment ("PPCA") to recover the Company s cost of electricity related to Idaho
Power Company s electric rate schedules that have been approved by the Idaho Public Utilities
Commission ("Commission
).
Application at 1.
Capitol Water requested that the Commission process its Application through
Modified Procedure and approve the change on less than 30 days' notice on an interim basis
subject to refund, effective July 2010. Id. at 2. Thereafter, Capitol Water requested a final
Order making any changes permanent with an effective date of August 2010. Id.
On June 30, 2010, the Commission issued a Notice of Application and Modified
Procedure with a 21-day comment period. See Order No. 32022. In that Order, the Commission
approved the proposed change to Capitol Water s Schedule No.3 PPCA rate on an interim basis
and later subject to refund. In this Order, the Commission affirms that decision.
THE APPLICATION
In its Application, Capitol Water noted that since its last case to establish a new tariff
rate to recover its purchased power costs (CAP-09-01), "Idaho Power Company has been
granted a number of changes. . . which increased rates and charges paid by Applicant to Idaho
Power Co. for electric service.Id.
Capitol Water s current base rates were established in Case No. CAP-08-, Order
No. 30762. Id. In Order No. 30762, the Commission approved "a three (3) year average of
1,454,401 KWh of electricity consumption at an average cost of 5 .19~ to establish rates for
Applicant." Id. The Company stated that its total cost of electric power is $75 483.41. Id.
recalculation of Capitol Water s average cost per kWh at Idaho Power s current rates for electric
power "produces an average cost of 5.52~ per KWh.Id. at 2. Capitol Water estimates that this
ORDER NO. 32056
revised average cost per kWh yields an annual cost for electric power of $80 295 - an increase of
811 or 6%. Id.
Capitol Water requested that it be permitted to replace its "currently approved
Schedule No.3 Purchased Power Cost Adjustment of 1.45% with a new Purchased Power Cost
Adjustment of 0.81 %.Id. Additionally, Capitol Water seeks to recover $1 000 for its "costs to
review the Idaho Power Company cases, determine their effect on Applicant and prepare and file
this application.Id.
Capitol Water stated that the reduction of the Schedule No.3 rate is "due to the
change in Applicant's incremental costs approved in Case No. CAP-09-01 that utilized Idaho
Power Company s PCA rate of 1.4717~ per KWh" and was "recently reduced to 0.3114~ per
KWh.Id.
Capitol Water attached two exhibits to its Application. Exhibit No.1 lays out the
calculations used by the Company to reach its proposed Schedule No.3 Purchase Power Cost
Adjustment rate. Exhibit No.2 is a copy of the Company s current Schedule No.3 with
corrections to reflect the proposed changes to the Purchased Power Cost Adjustment. Capitol
Water also attached a copy of its proposed Schedule No.3 for the Commission s approval with a
proposed effective date of July 1 2010.
Capitol Water stated that it was "unable to file this application in a timely manner to
meet the Commission s 30 day notice requirement due to the date Commission Order Nos.
31081 31091 and 31097 were issued on May 28, (2010).Id. Consequently, Capitol Water said
that it "was unable to review those orders and the effect on Applicant until after June I , (2010).
Id.
Capitol Water assured the Commission that it would issue a notice advising its
customers of its pending Application before the Commission and that the notice would be
included with customer bills to be mailed July 1 , 2010 and by a news release that is being sent
to the Idaho Statesman and the Idaho Business Review newspapers" in conjunction with the
filling of its Application. Id. at 2-3. Copies of the customer notice and news release were filed
as Exhibit Nos. 3 and 4, respectively. Id. at 3.
ST AFF COMMENTS AND RECOMMENDATION
Commission Staff reviewed Capitol Water s Application and recommended the
Commission approve Capitol Water s Application to change its Schedule No.3 PPCA rate from
ORDER NO. 32056
its current level of 1.45% to 0.81 % on a permanent basis. Staff acknowledged that in Capitol
Water s last PPCA filing, CAP-09-, the Commission recommended the Company file an
application for a rate adjustment when its power costs fell outside a 0.25% revenue band. Staff
stated the Company demonstrated in its filing that its increased annual power costs fall well
outside that band.
Staff believes that Capitol Water should be allowed to recover $500 in costs
associated with its review of recent Idaho Power cases and their potential impact on the
Company s costs of electricity and noted that Capitol Water was awarded an equivalent amount
in Case No. CAP-09-01.
COMMISSION DECISION AND FINDINGS
The Commission notes that in its previous Order addressing the Company s last
PPCA filing, Case No. CAP-09-, we found that "the use of a 0.25% revenue band in
determining each year whether to file for a rate adjustment in future years is a reasonable means
to address the issue of annual power rate adjustments." Order No. 30881 at 2. The Company
has dutifully presented calculations showing that the percent change in power costs related to the
revenue requirement is 0.80%. See Application, Exhibit No.1. Thus, the change in power costs
experienced by Capitol Water exceeds the 0.25% revenue band selected by the Commission.
Based upon our review of the Company s Application and written comments filed by
Commission Staff, the Commission affirms its previous ruling, Order No. 32022, and grants
Capitol Water s request to adjust its Schedule No.3 PPCA rate from 1.45% to 0.81%. The
Commission also finds that the Company s request to recover $500 as an expense embedded
within the requested rate adjustment to be reasonable. Therefore, we affirm our prior decision in
Order No. 32022 which resulted in a percentage decrease from the previously approved Schedule
No.3 PPCA of 1.45% to 0.81 % incremental revenue requirement increase.
CONCLUSIONS OF LAW
The Commission has jurisdiction over Capitol Water Corporation, a water
corporation operating a water system in the State of Idaho, and the issues presented in this case
pursuant to Title 61 of the Idaho Code, including, but not limited to Idaho Code 99 61-124 61-
125 61-129 61-301 61-305 61-307 and 61-313.
ORDER NO. 32056
ORDER
IT IS HEREBY ORDERED that Capitol Water Corporation s Application, approved
on an interim basis in Order No. 32022, to change its Schedule No.3 Purchased Power Cost
Adjustment from 1.45% to 0.81 %, an incremental revenue requirement increase of $4 811 or
37%, in order to recover the Company s annual cost of electricity, is approved.
IT IS FURTHER ORDERED that Capital Water Corporation s request to recover
$500 as a reasonable and necessary expense associated with the preparation and filing of the
Company s Application, for a total increase of $5 311 to the Company s annual revenue
requirement, is approved.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~t0
day of August 2010.
D. MPTON, P SIDENT
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MARSHA H. SMITH, COMMISSIONER
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MACK A. REDFORD, COMMI IONER
ATTEST:
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Barbara Barrows
Assistant Commission Secretary
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ORDER NO. 32056