20190924final_order_no_34445.pdf

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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CAPITOL WATER CORPORATION'S
APPLICATION TO INCREASE ITS
SCHEDULE NO.3 PURCHASE POWER
ADJUSTMENT RATE
CASE NO. CAP-W-19.01
ORDER NO. 3444s
On June 20,2019, Capitol Water Corporation ("Capitol Water" or the "Company")
filed an Application to increase its Schedule No. 3 Purchased Power Adjustment Rate (the
"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."
Application at 1. Capitol Water requested an effective date of August 15,2079, for its proposed
PPCA rate. Id. at2.
On July 24, 2019, the Commission issued a Notice of Application, Notice of
Modified Procedure, and Order where it suspended Capitol Water's proposed effective date for
thirty (30) days and five (5) months, or until the Commission issues an earlier Order approving,
rejecting, or modifying the Company's Application. See Order No. 34383 at2-3.
On August 14,2019, the Commission Staff filed written comments containing its
review and recommendations on Capitol Water's Application. The Company did not file reply
comments, and no other comments were filed with the Commission.
BACKGROUND
In April 2009, the Commission issued final Order No. 30762 that established just and
reasonable rates for Capitol Water. See Order No. 30762. In that Order, the Commission used
Capitol Water's three-year electric power consumption average to calculate the Company's
annual power costs to be embedded in base rates. Order No. 30762 at 3. The Commission found
the Company's average annual electricity consumption to be 7,454,407 kilowatt-hours ("kWh").
Id.; see also Order No. 30881 at 2-3. Based on this average consumption the Commission
determined that the Company would incur $75,483 in annual electric power costs. Id. at3.
In August of 2009, the Commission approved Capitol.Water's request to establish a
new tariff rate to recover the Company's higher costs of electricity resulting from an increase in
Idaho Power Company's Schedule No. 55, Power Cost Adjustment rate. Order No. 30881 at 1.
Capitol Water's new tariff established the PPCA mechanism which provided the Company with
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ORDER NO. 34445 1
the means to adjust for increased or decreased purchased power costs annually by accounting for
differences between power costs in base rates and projected rates and power costs to be paid by
the Company. Id; see also 33876 at3.
In 2017, the Commission approved a change that simplified Capitol Water's PPCA
methodology by calculating the difference between the actual electricity costs the Company paid
during the previous calendar year, and the cost of electricity embedded in the Company's
Schedule No. 3 rates that are recovered through customer billing. Order 33876 at 3.
Additionally, the Commission ordered Capitol Water to provide calendar year information on the
total average number of customers, the total volume of water pumped in gallons, and the total
electric energy used by the Company in kWhs with its annual PPCA filing. Id. at 4.
THE APPLICATION
Capitol Water's Application requested Commission authority to increase the
Schedule 3 PPCA rate from 2.61% to 2.93o/o to reflect the higher power costs the Company
incurred in 2018. Application at 1. Capitol Water asserts its current base rates assumed the
Company would incur $75,483.41 in annual electric power costs. Id. citing Order No. 30762.
The Company reported that its actual electric power cost for 2018 exceeded the costs in base
rates by $19,088. 1d.
STAFF COMMENTS
The Commission Staff filed written comments on August 14,2019. In its comments,
Staff reported that the Company accurately described its power costs and the proposed increase
to its schedule 3 PPCA rate.
Staff continues to support Capitol Water's simplified PPCA methodology which has
lowered costs by eliminating the Company's need to retain a consultant for PPCA applications.
Staff Comments at 3. Staffalso reported the simplified PPCA methodology is accurate without a
true-up as the number of customers remains stable because there is little room for customer
growth in the Company's service territory. Id. at 3. Accordingly, Staff recommended that the
Commission approve the Company's proposed increased PPCA rate. Id.
Staff identified the PPCA mechanism passes through the actual cost of electricity to
customers, so there is no incentive for the Company to use electricity efficiently. Id. at 3. Staff
performed an analysis to ensure that the Company incurred electricity costs during the period in
a prudent manner. Id. Staff s analysis appears to show that the pumping efficiency of the
2oRDERNO.3444s
Company's wells has begun to decline. Id. at 3-4. This suggests the wells need maintenance to
restore pumping efficiency to historically efficient levels. Id. at 4. Staff stated the Company is
asking for an increase of $2,054 in this year's PPCA even though the 2018 average cost of
electricity on a kWh basis declined 5oh, from I .47 to 7.10 cents per kwh, compared to the prior
year. Id. Staff alleged the amount of electricity needed to serve customers in 2018 increased
7.3ohfrom the prior year, while the amount of water pumped only increased by 0.7%. Id. The
difference in the amount of electricity used and the amount of water pumped indicates more
energy was used to pump each gallon of water as compared to the previous year.
Id.DISCUSSION AND FINDINGS
The Commission has jurisdiction and authority over Capitol Water Corporation, a
water utility, and the issues raised in Case No. CAP-W-19-01, pursuant to Title 61 of the Idaho
code, including but not limited to, Idaho code $$ 61-124, 61-125, 61-129, 6l-301,61-502 and
61-503 and the Commission's Rules of Procedure, IDAPA 31.01.01 .000 et seq.
The PPCA allows the Company to adjust its rates to reflect changes in power supply
costs. See Order No. 30881 at l-2; see also Order No. 33876 at 3. The Company's power costs
are determined by two factors: the amount of electric power used, and the rate paid for electric
power. See Order 3387 6 at 3 . This year, Capitol Water's power costs increased as reported by
the Company and verified by Commission Staff. See Application at l; see also Staff Comments
at2. Accordingly, we find it just and reasonable to approve the Company's request to increase
the Schedule No. 3 PPCA rate from 2.61% to 2.93o/o. The Company's revised Schedule No. 3
rates are cost-based and appropriate. The new PPCA rates will increase monthly bills for
unmetered customers with a 314 inch service line by $0.09, May through September, and $0.04,
October through April. Metered customers' bills will vary with water usage, but the PPCA
portion of the bill will increase by 0.32%.
We also find that Staff s analysis of the pumping efficiency of Capitol Water's wells
demonstrates that the Company needs to continually monitor and maintain its system so that it is
operating in a safe, efficient and cost-effective manner. Accordingly, we direct the Company to
diligently monitor and maintain its water system, in light of what appears to be the decreased
pumping efficiency of its wells, to ensure that the costs of electric power are prudently incurred.
Staff noted that in Order No. 33876, the Commission found that "[g]oing forward, the
Company shall provide calendar year information on total average number of customers, total
JORDER NO. 34445
volume of water pumped in gallons (gal), and total electric energy used in kilowatt-hours (kWh)
with its PPCA filing." Order No. 33876 at 4. The Company already provides the total average
number of customers and the total volume of water pumped in its annual report. Id. In an effort
to eliminate the redundancy, we find it reasonable for the Company to cease providing this
information in its annual PPCA filing. However, the Company still must provide the total,
annual amount of electric energy it uses in its PPCA filings.
ORDER
IT IS HEREBY ORDERED that Capitol Water's Application is approved. The
Company shall increase its PPCA rate from 2.61% to 2.93o/o. The effective date for the approved
PPCA rate shall be the service date of this Order. The Company shall file conforming tariffs
with the Commission within ten (10) days of the service date of this Order.
IT IS FURTHER ORDERED that the Company cease providing the total average
number of customers and the total volume of water pumped in its annual PPCA filing. The
Company shall continue to include the total amount of electric energy it uses each year with its
annual PPCA filing.
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 ldaho Code $ 6l-626.
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4ORDER NO. 34445
&DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of September 2019.
PAUL PRESIDENT
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rnats inqg nepe{ cb Mvr-r s s roNER
ERIC ANDERSON, COMMISSIONER
ATTEST:
Diane M.
Commission Secretary
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5ORDERNO.34445
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