20130711Comments.pdf

KARL I.KLEIN
DEPUTY ATTORNEY GENERAL ri’r.‘rd-_I I ‘£0
IDAHO PUBLIC UTILITIES COMMISSION
PC BOX $3720
BOISE,IDAHO 83720-0074 UT!JT1
[phone]
IDAHO BAR NO.5156
Street Address for Express Mail:
472 W.WASHTNGTON
BOISE,IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
CAPITOL WATER CORPORATION TO )CASE NO.CAP-W-13-Ol
CHANGE ITS SCHEDULE NO.3 PURCHASED )
POWER ADJUSTMENT RATE.)COMMENTS Of THE
)COMMISSION STAFF
____________________________________________________________________________________________)
The Staff of the Idaho Public Utilities Commission comments as follows on Capitol
Water Corporation’s June 14,2013 Application to change its Schedule No.3 Purchased Power
Cost Adjustment (“PPCA”).
BACKGROUND
On June 14,2013,Capitol Water Corp.(“Capitol Water,”the “Company”)applied to the
Commission for authority to change its Schedule No.3 PPCA rate.Application at 1.Capitol
Water seeks to recover its increased electrical costs arising from Commission-approved changes
to Idaho Power Company’s electric rate schedules.Id.The Company asks that the case proceed
under Modified Procedure and that the proposed Schedule No.3 changes take effect on August
1,2013.Id.at2.
Capital Water says its costs of purchasing electric power have increased due to changes
in Idaho Power Company’s rates and charges.Id.at 1,citing Order Nos.32811 (Case No.
IPC-E-1 3-06)and 32821 (IPC-E-1 3-10).
STAFF COMMENTS 1 JULY 11,2013
Capitol Water asks the Commission for permission to replace the Company’s current
Schedule No.3 PPCA of 1.85%(see Case No.CAP-W-12-01)with a new PPCA of 4.22%that
incorporates Idaho Power’s current rates and Capitol Water’s costs of processing this
Application.Id.
STAFF ANALYSIS
Capitol Water requests an increase in the PPCA rate that the Commission most recently
approved in Order No.32607 (Case No.CAP-W-12-0l).The proposed increase will allow the
Company to recover its increased purchased power costs arising from recently approved changes
to Idaho Power’s electric rate schedules.The Company calculates the PPCA using the same
methodology as used in previous PPCA rate adjustments (i.e.,Order No.30881,Case No.
CAP-W-09-0 1;Order No.32056,Case No.CAP-W-1 0-01;Order No.32325,CAP-W-11-01;
and Order No.32607,Case No.CAP-W-12-1).
Staff agrees that an increase in the PPCA rate is appropriate.However,Staff proposes
minor corrections in the Company’s PPCA calculations as discussed below.
Revenue Band
In 2009,Capitol Water filed a case (Case No.CAP-W-09-01)to initially establish a tariff
to recover its cost of electricity related to the increase in Idaho Power Company’s Schedule 55,
Power Cost Adjustment (‘PCA”).In the 2009 case,Order No.30881,the Commission directed
Capitol Water to ‘utilize 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.”When Staff reviewed the
Company’s current Application,Staff calculated a slightly different incremental power cost
amount than that calculated by the Company.Staff nevertheless agrees that the change in power
supply costs meets the requirement for filing an adjustment under the revenue band.
In this case,Staff calculates the incremental increase in the Company’s power costs to be
$15,347.and the percent increase in the Company’s total revenue requirement to be 2.3 1%
($15,347 incremental power cost/$663,7$4 revenue per Order No.32325 x 100).The 2.31%
increase exceeds the 0.25%band as required by Order No.308$I.Therefore,it is appropriate
for the Company to file for rate adjustments.
STAFF COMMENTS 2 JULY 11,2013
Idaho Power Rate Adjustments
When the Company filed Case No.CAP-W-09-0 1,it asked the Commission to approve a
new tariff rate that would enable the Company to recover purchased power costs directly related
to Idaho Power’s PCA from Case No.IPC-E-09-11.Staff interprets Commission Order No.
30881,specifically the directive to “file for an adjustment of its total revenue to recognize
changes in power costs,”to include changes in Idaho Power’s PCA costs and all other
miscellaneous Idaho Power rate changes.This interpretation is also incorporated in Commission
decisions in Order Nos.32056,32325 and 32607.’In the current case,the rate adjustment
includes the Idaho Power rate increase due to the following:
•Changes to the Fixed Cost Adjustment C’FCA”)rates (IPC-E-13-06,Order No.32811);
•Changes to the PCA rates (IPC-E-13-10,Order No.32221);and
•Changes to Idaho Power Company’s Boise City Franchise Fee from 1%to 1.5%.
Commission Approved Methodology in Calculating PPCA
The methodology used to calculate the incremental power cost increase in Capitol
Water’s previous four PPCA cases2 started with actual 2005 energy consumption and actual
2008 energy cost to determine an actual 2008 cost per kWh ($0.05 19 per kWh from Order No.
30762).A 2005 test year was used in Capitol Water’s most recent general rate case.Because
actual energy consumption in 2005 was determined to be significantly above normal (1,940,746
kWh),a three-year average was used to calculate normalized annual energy (1,454,401 kWh).
Normalized,base rate power supply costs of $75,483 were then determined by multiplying
normalized energy and the average rate per kWh (1,454,401 x $0.0519).
The average cost per kWh for Capitol Water under Idaho Power’s new rates was then
calculated using the 2005 actual energy consumption model.The average rates in 2009,2010,
2011,and 2012 were calculated to be $0.0580 per kWh,$0.0552 per kWh,$0.052891 per kWh,
and $0059357,respectively.These rates were then multiplied by the normalized energy
(1,454,401 kWh)to determine the expected annual power cost each year.The difference
Case Nos.CAP-W-10-0l,CAP-W-l 1-01,and CAP-W-12-01,respectively.
2 Order No.30881,Case No.CAP-W-09-01;Order No.32056,Case No.CAP-W-10-01;Order No.32325,
CAP-W-11-01;and Order No.32607,CAP-W-12-01.
STAFF COMMENTS 3 JULY 11,2013
between the expected power cost under new rates and power costs already collected through base
rates ($75,483)was collected from customers through Schedule 3.
By using the methodology from the previous cases and applying the new Idaho Power
rates effective June 1,2013,the Company calculated the average rate of $00701 per kWh.This
is the restated average cost per kWh.With this new rate,the expected power cost is $101,915
(1,454,401 x $0.0701).Given that $75,483 in electric power cost are currently embedded in the
base rates,the incremental power cost calculated by Capitol Water due to Idaho Power’s rate
changes is $26,431 ($101,915 -$75,483).
However,in reviewing the Company’s input of current Idaho Power rates to the power
cost model,Staff discovered the following:(1)an incorrect energy rate for Idaho Power
Schedule 9-Large General Secondary Service applied during periods of winter/summer transition
billing,(2)an overestimate for the first 300 kWh for non-summer rates under Idaho Power
Schedule 7 during periods of winter/summer transition billing,(3)an underestimate for the
Energy Service rates under Idaho Power Schedule 91 during periods of winter/summer transition
billing,and (4)an overestimate for the Franchise Fee rates under Idaho Power Schedule 95.
Using the corrected values and formulas,Staff recalculated the average cost per kWh to be
$0.0700.See Attachment A for a Company to Staff comparison of calculations.
Based on an average cost per kWh of $0700 the revised expected power cost is $101,777
(1,454,401 x $0.0700)and the incremental power cost due to Idaho Power’s rate change is
$26,293 ($101,777-$75,483).The Company is currently collecting $10,946 from the 1.85%
PPCA (see Order No.32607 in Case No.CAP W-12-01).Therefore,the PPCA must increase to
4.2%to generate the additional $15,347.This increase is proposed to be reflected in the
Company’s Schedule 3,Other Recurring and Non-Recurring Charges,resulting in an overall
percent impact to annual non-metered customer bills of 2.31%.Metered commercial customers
wit!experience the same incremental percentage increase,although the annual dollar impact will
vary based on usage.See Attachment B for the overall percent impact to annual customer bills.
Case Preparation Costs
The Company’s Application requests $1,000 to cover its costs to have a consultant
review Idaho Power’s rate increases,determine the effect on Company power costs,and prepare
and file the Application.Workpapers attached as Application Exhibit 1 set these costs at $1,100.
In prior cases,the Commission has allowed the Company to recover $500 for consultant
STAFF COMMENTS 4 JULY 11,2013
expenses in both Order No.30881 (Case No.CAP-W-09-01)and Order No.32056 (Case No.
CAP-W-10-01);$1,000 in Order No.32325 (CAP-W-11-01)and $1,200 in Order No.32607
(Case No.CAP-W-12-01).
Staff notes that while the Application’s text requests 51,000,the Company calculated the
new rate using the $1,100 in costs listed in the workpapers.As part of its review,Staff asked the
Company to verify and justify the consultant fees.The Company responded with detailed
information on the total time the consultant took to quantify Idaho Power’s Commission-
approved rate increases,determine the effect on Capitol Water,and prepare the filing including
new tariffs.The consultant anticipated that the Application would require 10 hours of work,at
the rate of$l10 per hour,for a total charge of $1,100.
It was anticipated in the last case that the fee may be lower in this case primarily because
last year’s case was complex due to the many rate changes implemented on June 1,2012.The
case preparation costs have decreased by $100 from the last case.Staff notes that while the time
required for this case has decreased as anticipated,the consultant’s hourly rate has increased.
Staff concludes that $1,100 is a reasonable consultant fee and that the Commission
should allow the Company to recover this expense.
STAFF RECOMMENDATION
Staff recommends an increase in the Company’s PPCA from 1.85%to 4.20%to generate
an additional $15,347.The new rate includes recovery of $1,100 for consultant fees.The 4.20%
PPCA should be reflected in the Company’s Schedule 3,Other Recurring and Non-Recurring
Charges.
Respectfully submitted this day of July 2013.
Karl T.Klein
Deputy Attorney General
Technical Staff:Kathy Stockton
Johanna Bell
i:urnisc/comrnents/capw 13.1 kkklsjb comments
STAFF COMMENTS 5 JULY 11,2013
Attachment A:Company and Staff Rate Component Comparison
Line#Rate Component Company Staff Comments
1 Base Revenue $651,738 a!$651,738 Per Order #30762 in CAP-W-08-02
2 Normalized 3 Yr Average Power 1,454,401 1,454,401 Per Order #30762 in CAP-W-08-02
Consumption (KWh)
3 Average Cost per KWh 0.0519 0.0519 Per Order #30762 in CAP-W-08-02
4 Power Cost Embedded in Basic Rates $75,483 $75,483 Line 3 X Line 2
5 Restated Average Cost Per KWh @ New 0.0701 hI 0.0700 Calculated in Work Papers
IPC Rates
6 Power Cost with New IPC Rates $101,915 $101,777 Line 5 X Line 2
7 Incremental Power Cost @ New Rates $26,43 I $26,293 Line 6 -Line 4
8 Rate Case Costs 51,100 S1,100
9 Incremental Costs @ New Rates $27,53 1 S27,393
10 Total Revenue Required with New IPC $679,269 $679,131 Line 9 +Line 1
Rates
11 Total Incremental Power Revenue $12,046 $12,046 Per Order #32607 in CAP-W-12-01
included in Current Capitol Water Rates
12 Total Current Revenue $663,784 $663,784 Line I +Line 11
13 Increase (or Decrease)in Incremental S 15,485 $15,347 Line 9 -Line 11
Power Costs
14 %Increase (or Decrease)in Total 2.33%2.3 1%(Line 10-Line 12)!Line 12
Revenue c/
15 Exceeds +!-0.25%Revenue Band?Yes Yes
16 Purchased Power Cost Adjustment 4.22%4.20%Line 9 /Line 1
(PPCA)Required d/
al From Company Application,Exhibit 1.
b!From Company Worksheets -uncorrected.
c/Calculated %Revenue Band.
d!PPCA =Incremental Power Revenue at new JPC rates/Base revenue x 100.
Attachment A
Case No.CAP-W-13-O1
Staff Comments
7/11/13
Attachment B:Overall Percent Impact to Annual Customer Bills a!
Current Staff
Cust.Proposal Diff.in Overall %
Size of Rates in Bill @ Customer Increase of
Service No.of Effect-Total Bill per 1.85%4.20%Bill per Customer
Line Months Sch.1 Cust.per Sch.1 PPCA PPCA Yr.Bill per Yr.
3 /4-inch
Winter 7 $12.65 $$8.55 $90.19 $92.27 $2.08 2.31%
Summer 5 $16.05 $143.50 b/$146.15 $149.53 $3.37 2.31%
Total per Year cl $232.05 $236.34 $241.80 $5.45 2.3 1%
1 -inch
Winter 7 $15.10 $105.70 $107.66 $110.14 $2.48 2.31%
Summer 5 $16.05 $155.75 b/$158.63 $162.29 $3.66 2.31%
Total per Year $261.45 $266.29 $272.43 $6.14 2.31%
1 1/4—inch
Winter 7 $16.90 $118.30 $120.49 $123.27 $2.78 2.31%
Summer 5 $16.90 $169.00 bI $172.13 $176.10 $3.97 2.31%
Total per Year $287.30 $292.62 $299.37 $6.75 2.3 1%
a!The incrementalpercent increases illustrated here arefor non-metered customers.All
residential customers are non-metered.Metered commercial customers will experience the same
incremental percentage increase,although the annual dollar impact will vary based on usage.
b/Total summer bill (Rates in Effect —Sch.1 +Summer Rate,)x No.ofMonths.
c/Majority of Capitol Water ‘s residential customers have ¼-inch service lines.
Attachment B
Case No.CAP-W-13-01
Staff Comments
7/11/13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 111H DAY OF JULY 2013,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.CAP-W-13-01,BY MAILING A COPY THEREOF,POSTAGE PREPAID,
TO THE FOLLOWING:
ROBERT PRICE ROBERT E SMITH
CAPITOL WATER CORP 2209 N BRYSON RD
2626 EL DORADO BOISE ID $3713
BOISE ID $3704 e-mail:[e-mail]
e-mail:[e-mail]
SECRETARY
CERTIFICATE OF SERVICE