20160719Comments.pdf

BRANDON KARPEN R[3[IVED
DEPUTY ATTORNEY GENERAL
rDAHO PUBLTC UTrLrrrES COMMTSSTON :i 1-i, jlrl- I I PH 2: tr8
PO BOX 83720
IDAHO BAR NO. 7956
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 837 O2-59I8
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF CAPITOL WATER )
coRpoRATION',S APPLICATION TO ) CASE NO. CAP-W-16-01
INCREASE ITS SCHEDULE NO.3 PURCHASED)
POWER COST ADJUSTMENT RATE ) COMMENTS OF THE) coMMrssroN srAFF
)
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Brandon Karpen, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 33545 on June 21,2016, rn
Case No. CAP-W-16-01, submits the following comments.
BACKGROUND
On June 14,2016, Capitol Water Corporation filed an Application to adjust its Schedule
No. 3 Purchased Power Cost Adjustment Rate 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." Application at 1. Capitol Water proposes an effective date of
August 15,20L6, for the proposed change to its Schedule No. 3 Purchased Power Cost
Adjustment Rate. Id. at2.
Capitol Water attributes the proposed rates to increases in Idaho Power's rates and
charges. These rates and charges have a corresponding effect on the Company's costs for
electric power. Application at 1. To that end, the Company requests that the Commission take
STAFF COMMENTS JULY 19,2016
official notice of Idaho Power's rates and charges currently in effect and on file with the
Commission. Id.
ln2009, the Commission approved Capitol Water's request to implement a purchased
power cost adjustment (PPCA) mechanism and established base electric cost rates using a three
year average. Order No. 30881. The Commission adopted an average use of I,454,401 kWh of
electricity consumption, at an average cost of 5.19A, resulting in a total electric power cost rate
of $75,483. The Company claims that Idaho Power's current rates of 7 .l5A per kWh produce an
annual cost for electric power of $103,972, a$28,488 deficiency beyond what is included in
Applicants base water rates. Application at2. The Company claims its costs associated with the
preparation and filing of this Application to be $ 1,100. Id. The current PPCA rate of 4.25Vo
represents a total revised incremental power cost of $21,725. Order No. 33370.
ln summary, Capitol Water is seeking the Commission's authorization to recover the
electric power costs described above and the preparation and filing costs, by increasing its
current Schedule No. 3 Purchased Power Cost Adjustment Rate from 4.25Vo to a revised rate of
4.54Vo.
STAFF REVIEW
Capitol Water's proposed increase will allow the Company to recover its purchased
power costs arising from recently approved changes to Idaho Power's electric rate schedules.
The Company is currently collecting$.21 ,725 from the 4.25Vo PPCA. See Order No. 33370. The
Company proposes an increase of .29Vo bringing the PPCA rate to 4.54%o to generate the revised
PPCA of $29,588 - an increase of $1,863.
The Company calculates the PPCA using the same methodology as used in previous
PPCA rate adjustments. Staff agrees that a change in the PPCA rate is appropriate with some
changes as discussed below.
Idaho Power Rate Adjustments
Historically, the Commission has approved PPCA adjustments commensurate to changes
in Idaho Power Rates. See Order Nos. 32056,32325,32607,32858, 33128 and33370. In this
case, the rate adjustment is attributed to the following:
o An increase to the Fixed Cost Adjustment (FCA) rates of 2.2Vo for Small General
Service customers (IPC-E-16-02, Order No. 33527); and,
STAFF COMMENTS JULY 19,2016
o An increase to the PCA rates of l.167o for Small General Service customers and
l.69Vo for Large General Service customers (IPC-E-16-08, Order No. 33526).
The increase to the Idaho Power FCA and to the Idaho Power PCA resulted in overall
higher power cost rates for Capitol Water Corporation as of June 1, 2016, when compared to last
year's power costs for the Company.
Commission Approved Methodology in Calculating PPCA
The Commission has approved the methodology for the Company's PPCA filings, and
use of a three-year average normalized annual energy use level based on2006-2008 energy use.
The normalized base rate power supply costs of $75,483 was determined by multiplying
normalized energy and the average rate per kwh (1,454,401 x $0.0519).
Using the same methodology used in the previous cases, and applying the new Idaho
Power rates effective June 1,2016, the Company calculated the average rate of approximately
$0.0715 per kWh. With this new rate, the expected power cost is $103,972 (1,454,401x
$0.0715). Given that $75,483 in electric power cost are currently embedded in the base rates, the
revised incremental power cost to Capitol Water due to Idaho Power's rate changes is $28,488
($r03,972 - $75,483).
Case Preparation Costs
The Company's Application requests $1,100 to cover its costs to have a consultant review
Idaho Power's rate changes, determine the effect on Company power costs, and prepare and file
the Application. In previous cases, the Commission has approved this cost. Staff believes the
$1,100 consultant fee is reasonable, and recommends the Commission allow the Company to
recover this expense.
Rate Analysis
Based on its analysis of the Company's Application, Staff has determined that the
historical normalized three year average (2006-2008) of I,454,401 kwh used to calculate annual
power supply costs is no longer representative of current actual energy consumption. Staff
argues that current actual energy consumption levels producing the same volume of water results
in annual power supply costs that would be $92,608, rather than $103,9'72, as requested. This
results in a2.8Vo PPCA rate, rather than the 4.54Vo rate, as proposed in the Company's
STAFF COMMENTS JULY 19,2016
Application. Consequently, Staff recommends that actual energy consumption of 1,295,445
kWh be used in this case and all future PPCA filings.
The intent of the PPCA is to provide the Company with an adjustment for increased or
decreased purchased power costs. The current mechanism relies on the assumption that the
amount of electricity consumed by the Company is stable over time and that the total electricity
cost is only affected by changes in electricity rates charged by Idaho Power. However, Staff has
found the total annual amount of electricity consumed has gone down by l0.3%o over the last 18
months even though annual water production has been stable. This is illustrated in the graph
below which shows a declining trend in the Company's annual energy usage and billed
electricity cost from the period of January 2015 through June 2016.
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Because Staff s analysis did not show any significant change in customer water demand,
Staff believes that the lower energy consumption is due to efficiency improvements related to
well maintenance and cleaning completed in early 2015 and recent equipment upgrades.
4STAFF COMMENTS JULY 19,2016
To more accurately account for the reduction in energy consumption, Staff believes that
1,295,445 kWh of actual electricity consumed over the past 12 months be used to calculate the
PPCA rate, instead of the 1,454,40I kWh used in the Application. Staff believes this electricity
usage amount is more accurate. Applying this amount to the updated electricity rate of 7.I5Q per
kWh results in an overall PPCA decrease from $27,699 to $18,225. This is a reduction inthe
overall PPCA rate of approximately l.4%o. This calculation is shown in Attachment A to these
comments.
It should be noted that Staff recognizes that the energy consumption recommended for
use in this case and going forward is based on a single year of actual consumption and could
change in the future. Staff believes it is significantly more accurate than an average from nearly
ten years ago. Staff maintains that rather than change the energy consumption used in the
methodology each year that it be monitored and modified if circumstances change.
Customer Relations
Tariff Clarification
Staff found that the description of the PPCA in Schedule No. 3 does not clearly explain
what the charge is for or how it is calculated. See Attachment B. The PPCA is only applied to
the monthly charges for water usage as listed in Schedule Nos. I and}. It does not apply to the
total bill amount, which includes other charges such as the DEQ fee and franchise fee. Staff
recommends that the Company revise its description in Schedule No. 3 to reflect both the
purpose of the PPCA and how it is calculated.
Bill Statement
Billing statements describe the PPCA charge as an "elec. adj." Staff recommends that the
billing statement be revised to reflect the Company's tariff and identify the line item charge as
"Purchased Power Cost Adjustment."
Customer Notice and Press Release
The Company included its customer notice with bills mailed on July l,2016. See
Attachment C. A press release was sent to the Idaho Statesman and the Idaho Business Review
on June 14,2016. Staff reviewed both documents and found two deficiencies. Specifically, the
Notice failed to mention: ( 1) the total dollar amount of the increase, and (2) the percentage
STAFF COMMENTS JULY 19,2016
increase for the major customer classes, as required by Rule 125 .U . IDAPA 3 I .01 .01 . 125 .U .
In the future, Staff recommends that the Company review the Commission's Rules of Procedure
and consult with Staff to ensure compliance.
Customer Comments
As of July 19,2016, the Commission has received one customer comment which
supported the Company's proposed increase.
STAFF RECOMMENDATIONS
Staff recommends the following:
l. The Commission authorize an overall 2.80Vo PPCA rate starting August 15,2016.
2. The Commission approve an energy consumption of 1,295,445 kWh from July 2015
through June 2O16 for use in this and future PPCA filings.
3. The Commission authorize the $1,100 case preparation cost for recovery.
4. The Commission order the Company to file tariffs that reflect approved Schedule No. 3
rates.
5. The Commission direct the Company to consult with Staff on making changes to its
billing statements and tariff within 60 days, and direct the Company to work with the Staff in
preparing its customer notice and press release prior to the filing of any future cases.
Respectfully submitted this nfi-day of July 2016.
Technical Staff: Kathy Stockton
Rick Keller
Chris Hecht
i:umisc/comments/capw I 6. lbkklsrkcwh comments
STAFF COMMENTS JULY 19,2016
Capitol Water Corporation
Staff Proposed - Calculation of Purchased Power Cost Adjustment
1 Base Revenue $ 651,738 Per Order#30762 in CAP-W-08-02
2 Normalized 3 Yr Ar,erage Power Consumption (KV/h) 1,454,401 Per Order #30762 in CAP-W-08-02
3 Arerage Cost per KWh
4 Power Cost Embeded in Basic Rates
0.051 9 Per Order #307 62 in CAP-W-08-02
$ 75,483.41 Line 3 X Line 2
5 Restated Average Cost Per KWh @ New IPC Rates $ 0.0715 Calculated in Workpapers
5A Current l2 Month Power Consumption (KWh) 1,295,445 Staff Revised Value
6 Power Cost with New IPC Rates $ 92,608 Line 5 X Line 5A
7 Power Cost above Embeded Base Power Supply Costs $ 17,125 Line 6 - Line 4
8 Rate Case Costs 1 ,100
9 Revised Total Expenses above Embeded Base Expenses $ 18,225
10 Total Rerenue Required with new IPC Rates $ 669,963 Line 9 + Line 1
11 Existing Epenses aborc Embeded Base Rates $ 27,699 Line 1 at cunent PPCA rate o|'4.25%
12 TotalCurrent Revenue $ 679,437 Line 1 +Line 11
13 lncrease or (Decrease) in Power Costs $ (9,474) Line 9 - Line 1 1
14 % lncrease or (Decrease) in Total Revenue -1.3940 (Line 10 - Line 12) lLi:e 12
16 Purchased Power Cost Adjustment (PPCA) Required 2.80% Line 9 / Line 1
Attachment A
Case No. CAP-W-16-01
Staff Comments
07n9/16
Tarriff No.
TOL WATER CORPORATION
SCHEDULE NO. 3
OTHER RECURRIN6 AND NON-RECURRING CHARGES
RECURRIN6 CHARGES
Applicable: To all customer bills
Purchased Power Cost Adjustment:
-Aueust 15,2016 4.5.%
Beginning sepl?ffidi i,"20i5itr customer bills will be increased by 4.25%for recovery of the I c
Company's costs of electric power related to changes in ldaho Power Company's Rate Schedules
City of Boise Franchise Fee:
All customer bills will be increased by3%tor payment of Franchise Fees assessed by the City of Boise.
Department of Environmental Quality Fee:
All customer bills will be increased by SO.ga to collect the assessment required by the ldaho
Department of Environmental Quality.
NON.RECURRING CHARGES
Applicable: To all customer bills
Reconnection Charges: A reconnection charge will be assesed to any customer who has
been voluntarily or involuntarily disconnected in compliance with the ldaho Public Utilities
mission's Uniform Customer Relations Rules (UCRR). Charges do not apply to customers
have been involuntarily disconnected for the convenience of the Company.
Reconnection Charge 520.00
The following "Customer Requested Service Calls" charges also apply.
Requested Service Calls: During Normal Business Hours SO.OO
Other Than Normal Business Hours 520.00
Service call charges will be waived if the service call resulted in repair
to Company's equipment through no fault of the customer.
I Business Hours are 8:00 AM to 5:00 PM Monday through Friday excluding
Holidays recognized by ldaho State Government Offices
Returned Check Charge: ln the event a customers check is returned by the Company's bank for
any reason, the Company will charge the customer's account a reprocessing fee of SfS.OO
Meter Testing Fee: Not Currently in Use.
Per Commission Order No. 33370
June 14,2018 August 15, 2016 _t-lssued June 22,2015 Effective September i,2o1s -"
Attachment B
Case No. CAP-W-16-01
StaffComments
07 /t9lt6
By Tiile
President
NOTICE TO OUR CUSTOMERS
Capitol Water Corporation filed an application on June 14th with the ldaho Public Utilities
Commission to increase its Purchased Power Cost Adjustment from 4.25o/o to 4.54Yo, an increase
of 0.2gpercentage points. The Purchased Power Cost Adjustment is applied to customer bills
after all other charges for water service have been accumulated. The Company has requested
an effective date of August 15th after the Commission has had an opportunity to thoroughly
review the application. The application is in response to changes in the elebtric rates ldaho
Power charges Capitol Water Corporation for the electric power it uses to provide water service
to customers. The application is subject to the approval of the Commission and is available for
review at the Company's office at 2626 Eldorado St. in Boise and on the Commissions web site
at www.puc.idaho.gov. Customers may make written comments to the Commission regarding
the application. Customers may subscribe to the Commissions RSS feed available at the
Commissions web site to receive periodic updates on the application.
Attachment C
Case No. CAP-W-16-01
Staff Comments
07119/16
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19TH DAY OF JULY 20T6,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. CAP-W.16-OI, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
ROBERT PRICE
PRESIDENT
CAPITOL WATER CORP
2626ELDORADO
BOISE ID 83704
E-MAIL : [e-mail]
ROBERT E SMITH
2209 N BRYSON RD
BOISE ID 83713
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE