Idaho Public Utilities Commission
Case No. PAC-E-10-07, Order No. 32224
April 19, 2011
Contact: Gene Fadness (208) 334-0339, 890-2712
Commission denies most of Rocky Mountain Power petition
The Idaho Public Utilities Commission has denied nearly all Rocky Mountain Power’s petition that the commission reconsider the decision it made Feb. 28 to grant it an average 6.8 percent rate increase. The commission did grant a small portion of Rocky Mountain’s petition which increases average base rates by just under three-tenths of 1 percent, from 6.8 percent to 7.07 percent. The approximate 0.3 percent adjustment will be applied to rates April 25. When Rocky Mountain Power originally filed its request last May, it sought a 13.7 percent increase, but later adjusted its request to 12.3 percent.
The commission denied Rocky Mountain Power reconsideration on its earlier decisions to:
The commission granted reconsideration in the following areas:
Other minor adjustments, including those above, resulted in a new annual revenue requirement of $14.35 million. The revenue requirement previously approved by the commission was $13.75 million. The company originally requested $27.7 million.
The commission also clarified its intent regarding the value of the credits awarded Monsanto Company for agreeing to have its electrical service interrupted during peak load times. The commission said the value of the credits can be changed when the company’s overall demand and energy charges change as the result of a rate case and that the credit applies only to 162 MW of Monsanto’s billing demand and not on the entire load.
The commission decided to address later the question of whether an order that directs Rocky Mountain Power to commit $50,000 for low-income conservation education is a one-time commitment or an annual expense. The commission said the issue can be taken up in the company’s next general rate case which is expected to be filed in late May.
Regarding its overall decision in this case, the commission said it “strongly disagrees” with Rocky Mountain’s assertion that the commission based its decision on public perception and allowed the ratemaking proceeding to become a political referendum. The commission said its decision was based on evidence in the record presented at hearings.
Rocky Mountain Power claims the new Populus transmission line that begins near Downey and extends into the Salt Lake City area benefits customers even if it not yet entirely utilized because it increases system reliability and transfer capability. It also allows the company to use the line to import lower-cost market energy and to sell excess energy off system, Rocky Mountain claims. Rocky Mountain asked that if the entire cost of the line isn’t included in customer rates that it be allowed a carrying charge on the portion placed in Plant Held for Future Use.
The commission denied both requests, noting that state statute (Idaho Code § 61-502A) prohibits the commission from granting utilities a rate of return on Property Held for Future Use that is not used and useful in providing service to customers. “This statute is clear and unambiguous,” the commission said.
“Contrary to the company’s argument, the commission has not denied recovery of a full portion of the investment made in the transmission line,” the commission said. “Recovery has simply been deferred until such time as the transmission line is fully utilized and available to the benefit of Idaho ratepayers.” The commission did, however, clarify that no depreciation of the investment will occur on the portion of transmission expense held for future use.
Regarding pay increases, Rocky Mountain Power argued that the state of Idaho awarded its employees a 3 percent increase in 2009, citing that as evidence that the company’s base wage increases were reasonable. Commission staff asserted that only 3 percent of all state employees received increases during 2009 and that Gov. Butch Otter ordered state agencies to reduce payroll costs by 5 percent during that year. “The commission finds that Rocky Mountain Power has failed to present any evidence which would compel us to revisit the issue of wage increases. Instead, the company has made spurious and false assertions regarding alleged wage increases received by state of Idaho employees during 2009,” the commission said.
The company argued that just as expense to integrate wind into its transmission expense ($6.50 per megawatt-hour) is allowed for PURPA projects, it should also be allowed for company-owned wind plants. The commission said Rocky Mountain failed to adequately prove its actual wind integration expense. The $6.50 per MWh allowed for non-company owned wind projects does not mean the expense is the same for company-owned projects, the commission said.
Rocky Mountain also asserted that the 9.9 percent return on equity (ROE) allowed by the commission is erroneous because it invents a new standard of “poor economic conditions.” The commission disagreed, stating the ROE is based on “expert testimony and exhibits available in the case record.” The U.S. and state constitutions grant the commission a “broad range of reasonableness” in establishing rates of return, the commission said, noting that the 9.9 percent ROE was within the range proposed by staff and Monsanto.
The commission’s order closes a case that began May 28, 2010. Any appeal to this order or others issued in this case must now be directed to the state Supreme Court. A copy of this order and other documents related to this case is available on the commission’s Web site at www.puc.idaho.gov. Click on the electric icon and scroll down to Case No. PAC-E-10-07.