Idaho Power sees lower transmission revenue following asset swap with PacifiCorp

The Idaho Public Utilities Commission (PUC) on April 13 issued a notice of an application by Idaho Power that indicated Idaho Power has seen transmission revenue drop following a FERC order on its formula transmission rate.

The PUC is taking comment on Idaho Power’s filing, which was made Feb. 19 as a compliance filing following Idaho Power’s transmission asset exchange with PacifiCorp.

That transaction, which was approved by FERC and regulators in several states in 2015, was needed to address various legacy agreements and improve wheeling rights from the 2,100 MW Jim Bridger coal-fired power plant in Wyoming, the companies said when the deal was announced. The transmission assets that were exchanged each had a value of about $43m, the companies said.

When it approved the deal, the Idaho PUC included conditions that called for Idaho Power to file a yearly report showing changes in transmission revenues, the utility said in its Feb. 19 filing. That filing, which was deemed an application by the PUC in its April 13 notice, explained that FERC issued an order Nov. 19, 2015, on the transmission formula rate set in Idaho Power open access transmission tariff (OATT).

The result of that FERC order is reduced transmission revenue for Idaho Power following the asset exchange with PacifiCorp, with a $1.1m decline in revenue in 2015, but the deal will still be a net positive for Idaho Power, with revenue gains in subsequent years, the utility told the PUC.

“The company is not requesting any rate increase as a result of this filing,” the PUC said in its notice. Idaho Power anticipates that its total cumulative transmission revenue will decrease over the next three years before turning positive in 2019, the PUC said.

The PUC determined to handle the case under its Modified Procedure, taking written comments and gaining public input on whether a formal hearing will be needed. The notice indicated that parties seeking to comment or request a hearing on Idaho Power’s filing should do so by June 9.

In its filing, Idaho Power said that the full impact of the asset exchange will not be reflected in the transmission formula rate until Oct. 1, 2017, creating a delay in the increased transmission revenue that was expected when the deal was announced. The net transmission revenue change during 2015 was a decrease of about $1.1m, “meaning Idaho Power recovered less transmission revenue in 2015 as a result of the asset exchange, creating a temporary regulatory liability balance,” the utility said.

The utility estimated that the revenue delay related to FERC’s OATT rate order “will result in negative cumulative differences in total transmission revenue over the next three years before turning positive in the fourth year.”

As noted in the asset exchange application that was approved by the PUC, Idaho Power agreed to convey to PacifiCorp all or part of its ownership interests in the following bulk power transmission lines, in addition to other facilities:

·         345-kV Bridger to Goshen transmission line

·         345-kV Kinport to Midpoint transmission line

·         345-kV Borah to Adelaide to Midpoint #1 and #2 transmission lines

·         161-kV Goshen to Jefferson to Big Grassy transmission line

PacifiCorp agreed to convey to Idaho Power all or part of its ownership interest in the following bulk power transmission lines, in addition to certain other facilities:

·         500-kV Hemingway to Summer Lake transmission line

·         500-kV Midpoint to Hemingway transmission line

·         345-kV Bridger to Populus #1 and #2 transmission lines

·         345-kV Populus to Kinport transmission line

·         345-kV Populus to Borah #1 transmission line

·         345-kV Goshen to Kinport transmission line

·         230-kV Walla Walla to Hurricane transmission line

·         161-kV Antelope to Goshen transmission line

·         138-kV American Falls to Malad transmission line

·         138-kV Antelope to Scoville transmission line