20060410_1513.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DONOV AN E. WALKER
DATE:APRIL 6, 2006
SUBJECT:INVESTIGATION OF THE APPROPRIATE RA TEMAKING
TREATMENT OF IDAHO POWER'S02 ALLOWANCE SALE
PROCEEDS - CASE NO. IPC-OS-
BACKGROUND
On June 9, 2005, Idaho Power Company (Idaho Power, Company) filed an
Application requesting: (1) blanket authority to sell surplus sulfur dioxide (S02) allowances;
and (2) an accounting order to provide for recording any sale(s) of such allowances. Case No.
IPC-05-20. The Company s Application also suggested that a determination of ratemaking
treatment for the proceeds be made at a later date.
On August 22, 2005, the Idaho Public Utilities Commission (Commission) approved
the Company s Application. Order No. 29852. The Commission, while reserving the review of
the reasonableness of each sale, granted Idaho Power s request for blanket authority to sell S02
emissions allowances and approved the accounting treatment proposed by the Company, on an
interim basis, until such time as the Commission determines the appropriate ratemaking
treatment of the proceeds from the sale of the S02 allowances. !d. The Company was ordered
to file a report with the Commission within 60 days of the receipt of any S02 proceeds. Id.
Additionally, the Commission ordered that a separate docket be opened for Staff to conduct
workshops and make a recommendation to the Commission regarding the appropriate
ratemaking treatment of S02 proceeds. Id.
This docket, IPC-05-, was opened and two workshops were held on November 7
and November 23, 2005, respectively. During the workshops the parties were unable to reach
agreement upon the ratemaking treatment of the proceeds. On March 6, 2006, the Commission
DECISION MEMORANDUM
issued Order No. 29989, establishing a comment deadline of March 31 , 2006 , and a subsequent
briefing schedule. On March 30, 2006, this comment deadline and briefing schedule was
vacated based upon the parties' notification that an agreement had been reached. The Industrial
Customers of Idaho Power and Micron were the only parties to petition for intervention, which
was granted.
THE STIPULATION
The parties met on March 23 , 2006, and reached agreement upon an appropriate
ratemaking treatment for the allowance proceeds. The parties have signed a Stipulation
providing for the inclusion of the S02 allowance sales proceeds to be included in the Company
annual PCA, with 90% of the net proceeds to be passed on to customers, and 10% of the net
proceeds to be retained as a shareholder benefit. This Stipulation has been filed with the
Commission. Idaho Power has filed a Motion for Approval of the Stipulation asking the
Commission to accept the Stipulation in its entirety without material change or condition.
STAFF RECOMMENDATION
Staff recommends that the Commission establish a comment period for interested
parties to comment on the Stipulation. Staff intends to file comments supporting the Stipulation
and asking the Commission to approve and accept it.Because of Staff availability and
scheduling, and the fact that this matter has been officially noticed several times including a
previously vacated comment period, Staff recommends a comment deadline of April 24, 2006
which would be a 14-day comment period for the Stipulation.
COMMISSION DECISION
Does the Commission wish to establish a comment period for the Stipulation, with a
comment deadline of April 24 , 2006?
DONOVAN E. WALKER
M:IPC-O5-26 dw4
DECISION MEMORANDUM