Idaho Public Utilities
Commission
March 30,
2012
Case Nos. IPC-E-12-06,
-07, -08, -09, -12, -13, -14
Contact:
Gene Fadness (208) 334-0339, 890-2712
Website: www.puc.idaho.gov
Commission processing seven
rate adjustments
The Idaho
Public Utilities Commission is taking comments or conducting workshops on seven
rate adjustment applications from Idaho Power Company that, if approved in
their entirety, would increase customers rates by an average 3.35 percent by no
later than July 1.
Not
included among these seven adjustments is the annual Power Cost Adjustment
(PCA) which also becomes effective June 1 each year and could have a positive
or negative impact on the 3.35 percent increase now proposed. Idaho Power is expected to file its PCA
application on or about April 15.
The proposed
adjustments having the largest impact on rates are the Langley Gulch gas plant,
a 7.1 percent increase and the second year of a revenue sharing mechanism, a
3.2 percent decrease.
A summary
of all the applications follows:
Langley Gulch, Case No. IPC-E-12-14,
7.1 percent increase
Idaho Power
seeks to increase its annual revenue by $60 million to pay for a $398 million
natural gas plant five miles south of New Plymouth. According to the company’s figures, the
average increase if approved will be 7.1 percent effective July 1.
The
300-megawatt plant came in under the $427 million commitment estimate provided
when the commission granted Idaho Power a Certificate of Public Necessity and
Convenience to construct the plant in 2009.
The plant is scheduled to be online on or before July 1.
Intervening
parties to date include the Industrial Customers of Idaho, Idaho Irrigation
Pumpers Association and Micron Technology.
Intervening parties will convene a prehearing conference to discuss the
scheduling of the case and a formal public comment period will soon be
announced.
Revenue Sharing, Case No.
IPC-E-12-13, 3.2 percent decrease
As part of
its 2010 rate case settlement, Idaho Power agreed to share 50-50 with customers
all revenue exceeding a 10 percent return. The agreement was later modified to state that
if the rate of return exceed 10.5 percent, 75 percent of the company’s
share of those earnings will be used to offset company pension expenses that
would otherwise be included in customer rates.
In this application, Idaho Power states the amount due customers is $27
million. About $20.3 million of that will be used to apply against the
company’s pension balancing account that would otherwise e collected through
rates. The result is about a 3.2 percent reduction to rates.
The
commission will take comments on this application through May 4.
Automated metering depreciation,
Case No. IPC-E-12-07, 1.25 percent decrease
Idaho Power
is seeking authority to decrease base rates as the result of removing about
$10.5 million in accelerated depreciation expense associated with its recently
installed automated metering equipment.
The meters
are now fully installed, covering roughly 99 percent of the company’s service
territory. The metering equipment will be fully depreciated by May 31, 2012;
therefore the company is seeking a June 1 effective date for a reduction in
base rates of about 1.25 percent.
The
commission is taking comments on this application through April 10.
Depreciation rates, Case No.
IPC-E-12-08, 0.31 percent increase
Idaho Power
is seeking a $2.65 million increase to base rates to account for an increase in
depreciation rates for plant-in-service. The increase is based on updated net
salvage percentages and service life estimates for all plant assets, with the
exception of the Boardman coal plant and automated meters, which are being
handled in separate applications.
The
proposed increase varies from 0.29 percent to 0.32 percent, with the proposed
residential increase at 0.31 percent.
Commission
staff will conduct an informal workshop on this application (and the one below)
on Thursday, April 5, at 9 a.m. in
the commission hearing room, 472 W. Washington St. The commission is also taking comments on this
application, though a firm comment deadline has not been established.
Boardman balancing account, Case No.
IPC-E-12-09, 0.18 percent increase
In
February, the commission approved Idaho Power’s application to establish a
balancing account related to the early closure of the Boardman coal plant in
Oregon. Idaho Power is a 10 percent of the owner of the plant due to be closed
in 2020.
The
balancing account tracks, on a cumulative basis, the difference between
revenues and expenses associated with the shutdown. It ensures customers pay
only for actual expenditures. Idaho’s
share of the annual change to base rates the company is requesting to recover
is $1.58 million. The proposed increase varies among customer classes from 0.17
percent to 0.2 percent, with the proposed residential increase at 0.18
percent.
The $1.58
million includes the return associated with Boardman capital investments net
the accumulated depreciation forecasted through Boardman’s remaining life, the
costs of accelerating the plant’s depreciation and the decommissioning costs
associated with the shutdown.
Commission
staff will conduct an informal workshop on this application (and the one below)
on Thursday, April 5, at 9 a.m. in
the commission hearing room, 472 W. Washington St. The commission is also taking comments on
this application, though a firm comment deadline has not been established.
Fixed cost adjustment, Case No.
IPC-E-12-12, 0.28 percent increase
The FCA,
implemented in 2007, allows Idaho Power to recover the fixed costs it loses
when conservation programs result in lower power sales.
Without a
mechanism like the FCA, there is a financial disincentive for Idaho Power to
promote energy efficiency and conservation because it loses revenue when
conservation results in power sales declining. Sometimes referred to as
“decoupling,” the FCA decouples or separates Idaho Power’s fixed costs from its
energy sales, assuring the utility will be able to recover its fixed costs as
established in the most recent rate case regardless of how much energy
customers save. If the company under collects its fixed costs of serving
customers, customers get a surcharge.
Conversely, if the company over collects fixed costs, customers receive
a credit, as they did in the first year of the program. The commission capped the percentage increase
that could be collected from residential and small-business customers at no
more than 3 percent.
This year,
Idaho Power under-collected $8.83 million in fixed costs from the residential
class and $1.48 million from the small-business class. Building on what already exists in the FCA
account, the company is proposing an increase of $1.16 million from both the residential
and small-business classes of 0.28 percent effective June 1. This equates to a new FCA rate of 0.2028
cents per kWh for residential customers and 0.2597 cents per kWh for
small-business customers.
The
commission is taking comments on this application through April 10.
Transmission deferral, IPC-E-12-06,
0.06 percent decrease
In this
application, the company seeks to amortize $2 million over three years to
recover lost transmission revenue associated with a federal transmission
case.
In that
case, the Federal Energy Regulatory Commission (FERC) found that Idaho Power
had assessed transmission fees to PacifiCorp for transmission service on Idaho
Power lines that were significantly lower than the Open Access Transmission
Tariff (OATT) rates Idaho Power proposed to charge other customers for similar
transmission service. The rate charged
PacifiCorp was part of three “Legacy Agreements” the two utilities entered into
during the 1960s regarding transmission service from the Jim Bridger power
plant in western Wyoming to each utilities’ respective service
territories. Since the initial FERC
order, Idaho Power amended portions of the Legacy Agreements and was not
successful in its petition for rehearing.
The
commission is taking comment on this application through April 19 and the company may file a reply no later than April
27.
To submit comments on any of the
above cases, go to the commission’s Website at www.puc.idaho.gov and click on
"Comments & Questions About a Case." Fill in the appropriate case
number listed above and enter your comments. Comments can also be mailed to
P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.
You
can read further information about any of these cases by going to the
commission’s Web site, clicking on the electric icon, then on “Open Electric
Cases,” and scrolling down to the appropriate case number.
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