20100721Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6864
r'r~f:l lj
20IU JUL 21 PH 2: 52
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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 )
)
)
CASE NO. CAP-W-IO-Ol
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilties Commission, by and through its Attorney of
Record, Neil Price, Deputy Attorney General, in response to the Notice of Application and
Notice of Modified Procedure, issued on June 30, 2010, Order No. 32022, submits the following
comments.
BACKGROUND
On June 11,2010, Capitol Water Corporation ("Capitol Water" or "Company") fied an
Application requesting the Commission's approval to change its Schedule NO.3 Purchase Power
Cost Adjustment 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").
Capitol Water noted in its Application that since its last case to establish a new tariff rate
to recover its purchased power costs (CAP-W-09-01), Idaho Power Company has been granted a
STAFF COMMENTS 1 JULY 21, 2010
STAFF COMMENTS 2 JULY 21, 2010
wil be transmitted to the Idaho Statesman and the Idaho Business Review newspapers. A copy
of the customer notice and news release were fied as Exhibit Nos. 3 and 4, respectively.
INTERIM ORDER
As par of the Application, Capitol Water requests that the Commission approve the
change on less than 30 days notice on an interim basis subject to refund effective July 1,2010
with a final Order making the changes permanent on August 1,2010. On June 30, 2010, the
Commission issued Order No. 32022 approving the Company's request to replace, subject to
refud, its current Schedule 3 Purchased Power Cost Adjustment of 1.45% with a new Purchased
Power Cost Adjustment of 0.81 % in order to recover the Company's cost of electricity. The
Order further states that the interim rate shall be effective for service rendered on or before July
1, 2010 and shall remain in place until such time as the Commission has completed its review
and issued a subsequent ruling regarding the Company's request.
STAFF ANALYSIS
Capitol Water requests authority to change its Purchased Power Cost Adjustment Rate
under Schedule NO.3 - Other Recuring and Non-Recurring Charges. The change wil allow
recovery of the Company's Cost of electricity related to Idaho Power Company's electric rate
schedules that were recently approved by the Commission.
In 2009, Capitol Water fied a similar case (Case No. CAP-W-09-01) to establish a new
tariff to recover its cost of electricity related to the increase in Idaho Power Company's Schedule
55, Power Cost Adjustment. In the 2009 case, a 1.45% incremental revenue requirement
increase was granted to Capitol Water by the Commission. Order No. 30881. In the same
Order, the Commission states:
"For future fiings, 0.25% revenue band shall be calculated based on the total revenue
previously approved by the Commission ($651,738 base revenue approved in Order No.
30762 + $9,456 approved herein) and is applicable while the Commission-approved
average electric consumption of 1,454,401 kWh is in effect. Future changes in the
Company's normalized kWh consumption and base revenue requirement may necessitate
changes to the present incremental power cost adjustments."...
"IT IS FURTHER ORDERED that Capitol Water utilze a 0.25% revenue band in
determining each year whether to file for an adjustment of its total revenue to recognize
changes in power costs."
STAFF COMMENTS 3 JULY 21,2010
Staff notes that when the Company fied Case No. CAP-W-09-01, Capitol Water sought
approval from the Commission to establish a new tariff rate to recover purchased power costs
directly related to Idaho Power Company's Power Cost Adjustment (Case No. IPC-E-09-11).
Staff interprets Commission Order No. 30881 as cited above, to include changes in Idaho
Power's PCA costs and all other miscellaneous Idaho Power rate changes such as the FCA, the
DSM tariff rider and base rate changes caused by increased pension costs and cost recovery of
Automated Meter Installation. In analyzing this case, Staff considers all of these costs to be
included in "changes in power costs" as noted in Order No. 30881.
Commission orders addressing Idaho Power rate issues listed above include Order No.
30814 (Case No. IPC-E-09-05), Order No. 31081 (Case No. IPC-E-I0-07), Order No. 31091
(Case No. IPC-E-IO-08), Order No. 31093 (Case No. IPC-E-I0-12), and Order No. 31097 (Case
No. IPC-E-I0-06). The Company maintains that the combined effect of these Idaho Power rate
changes on Capitol Water's Schedule NO.3 is a reduction in the Purchase Power Cost
Adjustment, Schedule 3, from 1.45% to 0.81 %.
Staff has reviewed the calculations made by the Company and agrees with the method of
analysis and calculations resulting in a new Power Cost Adjustment of 0.81% as presented in
Exhibit NO.1 of the Company's Application. Staff also notes that the Company has
appropriately used the 3-year normalized electric power consumption of 1,454,401 kWh and
base revenue of$651,738 (Order No. 30762), and the restated average cost per kWh using the
new Idaho Power rates effective June 1, 2010 as the basis for determining the incremental power
cost change to Capitol Water. The annual electric power cost currently embedded in the basic
rates is $75,483 (1,454,401 kWh x $0.0519 per kWh-from Order No. 30762). The proposed
electric power cost using the restated average cost per kWh is $80,294 (1,454,401 kWh x
$0.055208 per kWh-rounded). The $0.055208 per kWh electric power cost is the recalculated
average cost using the new Idaho Power rates effective June 1,2010. The incremental increase
over base power cost due to Idaho Power's rate changes is $4,811 ($80,294 - $75,483).
Staff notes that the Company expects its costs to review the Idaho Power Company cases,
determine the effect on Applicant and prepare and fie its Application to be $1,000. Application
at 2. However, the Company used $500 for rate case expense in determining the total
incremental revenue cost of $5,311 ($4,811 +$500). Exhibit No.1, Application. The
Commission granted a similar amount of $500 for rate case expense in a previous case (Order
No. 30881, Case No. CAP-W-09-01). Staff recommends $500 as a reasonable expense for this
STAFF COMMENTS 4 JULY 21,2010
case. Adding $500 for rate case expenses results in a total incremental revenue cost of $5,311.
This is the amount that the Company proposes to collect from Schedule 3.
The Company recommends a new Purchased Power Cost Adjustment of 0.81 %. This
percentage is calculated by dividing the incremental cost of $5,311 by the authorized revenue of
$651,738 (Order No. 30762). The 0.81% replaces the current Schedule 3 Purchased Power Cost
Adjustment of 1.45%.
Staff calculated the overall effect on customers due to the reduction in the Company's
Power Cost Adjustment from 1.45% to 0.81 %. The estimated current revenue collected by the
Company with the current power cost adjustment is approximately $661,188 ($9,450 curent
surcharge for power cost + $651,738 base revenue). The total revenue collected by the Company
with the proposed power cost adjustment is $657,017 ($5,279 proposed surcharge for power cost
+ $651,738 base revenue). The decrease in total revenue collection is $4,171 ($657,017-
$661,188) or an overall decrease of approximately 0.64%. See Attachment A.
As par of the Commission Order No. 30881, the Company was directed by the
Commission to utilze a 0.25% revenue band in determining each year whether to fie for an
adjustment of its total revenue to recognize changes in power costs. The Company presented
calculations showing that the percent change in power costs related to the revenue requirement is
0.80% ($5,311 incremental power cost/$661, 194 revenue per Order 30762 x 100). Exhibit No.
1, Application. Staff believes the intent of the 0.25% band was to compare curent power cost
recovery including Schedule 3 to proposed power cost recovery. On that basis, the change in
power cost is 0.70% (9450 - 4811)/661,188). This percentage stil exceeds the 0.25% band.
Staff believes it was appropriate for the Company to fie for rate adjustments.
STAFF RECOMMENDATION
Staff recommends the interim decrease in Schedule 3 approved by Commission Order
No. 32022 covering the changes in power costs plus $500 in rate case expenses be made
permanent. The decrease over current power costs results in a reduction in Schedule 3 from
1.45% to 0.81 %.
STAFF COMMENTS 5 JULY 21,2010
Respectfully submitted this?-\ Fday of July 2010..~
tl~
Neil Price
Deputy Attorney General
Technical Staff: Gerr Galinato
i:umisc:commentscapwIO.lnpgdg
STAFF COMMENTS 6 JULY 21,2010
CAP-W-10-Ol
Calculation of Percent Change in Customer Rates
Base Revenue from Order 30762 in CAP-W-08-02 $651,738
Current power cost embedded in the basic Company rates
Proposed power cost due to IPCo rate changes
Difference in power cost
Percent increase in power cost
$75,483
$80,294
$4,811
6.37%
Proposed rate case cost
Incremental revenue requirement
Power cost adjustment required
$500
$5,311
0.81%
Current Company PCA Adjustment Rate, Sch. 3 (Order No. 30881)
Current amount of surcharge for power cost
Total current revenue collected by Company
1.45%
$9,450
$661,188
Proposed Company PCA Adjustment Rate
Current amount of surcharge for power cost
Total revenue to be collected by Company with proposed PCA rate
0.81%
$5,279
$657,017
Decrease in revenue due to the change in Company PCA rate
Percent decrease in overall rate
-$4,171
-0.64%
Attachment A
Case No. CAP-W-lO-01
Staff Comments
07/21/10
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 21sT DAY OF JULY 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. CAP-W-I0-0l, BY MAILING A COpy THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
ROBERT PRICE
CAPITOL WATER CORP
2626 EL DORADO
BOISE ID 83704
ROBERT E SMITH
2209 N BRYSON RD
BOISE ID 83713
.~~
SECRETARÝ
CERTIFICATE OF SERVICE