Idaho Public Utilities Commission

Case No. PAC-E-10-07

November 10, 2010

Contact: Gene Fadness (208) 334-0339, 890-2712

Four hearings scheduled in Rocky Mountain rate case

PUC staff, customer groups propose reductions to utility request

The commissioners who will decide the PacifiCorp rate case will be in eastern Idaho December 14 and 15 to hear testimony from the utility’s customers at hearings in four communities. PacifiCorp does business in eastern Idaho as Rocky Mountain Power where it serves about 70,000 customers.

The schedule for the hearings is as follows:

Tuesday, Dec. 14, 1:30 p.m., Shelley Senior Citizens Center, 193 W. Pine, Shelley.

Tuesday, Dec. 14, 7 p.m., Mountain View Conference Center adjacent to the Magnuson Hotel, 450 W. Fourth South, Rexburg.

Wednesday, Dec. 15, 1:30 p.m., Grace American Legion Hall, 50 N. First West, Grace.

Wednesday, Dec. 15, 7 p.m., Robinson Building, 186 W. Second North, Preston.

The purpose of the hearings is to hear testimony from customers and interested parties. There is no presentation from either the commission, Rocky Mountain Power or any of the intervening parties in the case. The commission is also accepting written comment which carries the same weight as oral testimony.

“We look forward to hearing from customers,” said Commission President Jim Kempton. “It is especially helpful to the commission if customers are familiar with the issues in the case and have recommendations of where we can reduce the request and still meet our statutory obligations.”

State statutes require that all rate requests be considered by the commission to determine whether 1) expenses the utility has already incurred and now seeks to recover through customer rates were necessary to serve customers and 2) if those expenses were necessary, were they prudently incurred. The commission may deny expense recovery to a utility if the utility fails to provide evidence that adequately supports the new expenses as needed to serve customers and prudently incurred. All commission decisions can be appealed to the state Supreme Court by the utility, intervenors or customers.

Customers can familiarize themselves with the issues in the case by going to the commission’s Website at www.puc.idaho.gov. Click on “Rocky Mountain Rate Case,” under “Hot Items” in the upper right-hand corner of the page to get the company’s application as well as responding recommendations and comments from commission staff and other parties to the case.

On May 28, PacifiCorp applied for an average 13.7 percent increase to recover expenses associated with $4 billion in new plant investment and $87 million in increased power supply costs. Plant investments include eight new wind generation plants and a 345-kilovolt transmission line from Downey to Salt to Lake City.

On Oct. 14, commission staff, along with several other parties to the case, filed testimony. Commission staff is recommending a 7.3 percent overall increase. For residential customers, the increase would be a 4.78 percent increase if the staff recommendation is approved. The commissioners, who operate separately from commission staff, may accept, reject or modify staff’s recommendations as well as the recommendation of any party in the case. Other parties include Monsanto, the Idaho Irrigation Pumpers Association, the PacifiCorp Idaho Industrial Customers, the Idaho Conservation League and the Community Action Partnership Association of Idaho (CAPAI). CAPAI represents primarily customers on low and fixed incomes.

PacifiCorp is asking for $27.7 million in additional yearly revenue requirement. Commission staff proposes removing $12.9 million from that request. Staff’s largest adjustments include:

-- Removing half the requested recovery for the Populus to Terminal (Downey to Salt Lake City) Transmission line and putting the remainder in a Plant Held for Future Use account until customers begin benefitting from the entire project.

--Removing costs associated with the Dunlap 1 wind project in Wyoming until customers are benefitting.

-- Removing $3.25 million in costs associated with the Irrigation Load Control program. Staff contends these expenses need to be allocated systemwide in PacifiCorp’s six-state territory, not just in Idaho.

-- Removing all salary increases and bonuses for 2009 and 2010 and reducing pension and power supply costs.

Monsanto and the industrial customers have also proposed significant reductions in revenue requirement. Monsanto proposes removing all the Populus to Terminal transmission costs and recommends an overall increase of 5.8 percent. The industrial customers have proposed more than $9 million in reductions.

The deadline for PacifiCorp to file rebuttal testimony to staff and intervenor testimony is Nov. 16. A technical hearing is scheduled to begin in Boise on Nov. 30 at 9:30 a.m. in the commission hearing room, 472 W. Washington St. The hearing may continue through Dec. 2 if necessary.

PacifiCorp’s proposed increases for customer classes vary according to the cost the company incurs to serve each customer class. The company’s proposed increase for residential customers, including all energy and customer service charges, is about 8 percent. Staff is recommending 4.78 percent. The company proposed that residential customers on the optional Time of Day Rates pay 15.6 percent more than current rates. Staff is recommending the same 4.78 increase for Time of Day customers.

The company proposes a 9.6 percent increase for irrigation customers while staff proposes 3 percent. The company proposes a 19.6 percent increase for Monsanto, while staff proposes 12.94 percent.

About 30 percent of PacifiCorp’s requested additional yearly revenue requirement is due to increases in power supply costs which include expenses related to fuel, purchases of power from the wholesale market and transmission wheeling. The largest contributors to the proposed increase in power supply are increasing coal costs and replacement of older power supply contracts that had lower prices with newer, higher-priced contracts.

According to testimony filed by the company, lower load projections and current economic conditions have resulted in PacifiCorp scaling back some transmission and distribution capital expenditures from previously planned levels. The company has reduced its 10-year capital budget from nearly $2.2 billion per year to $1.6 billion annually and plans no investments in new company-owned generation until 2014.

Despite those reductions, PacifiCorp asserts it still must continue its multi-year program of investing in renewable energy, transmission facilities and environmental controls. “It is critical that rates reflect the current and actual costs of serving our customers,” said Richard Walje, company president. “Absent the increase requested in this case, the company will not receive the revenue it requires to fund the future capital investments necessary to provide reliable service to our customers.”

The company’s last rate case was filed in September 2008 when the company requested a 4 percent overall increase. That case was settled in April 2009 when the company was granted a 3.1 percent increase.

Those who choose to provide written comment rather than testifying at the hearings can submit them via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (PAC-E-10-07) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

Customers can track the progress of the case on the commission’s Web site. Copies of the application are also available at company offices in Rexburg, Preston, Shelley and Montpelier.