Idaho PUC taking comments on cost allocation plan of PacifiCorp

The Idaho Public Utilities Commission (PUC) is taking comments on a new cost allocation plan of PacifiCorp, which does business as Rocky Mountain Power (RMP) in Idaho, that would extend an agreement set to expire on Dec. 31, the PUC said April 22.

PacifiCorp at the end of 2015 filed an update of its “Multi-State Protocol” that is used to determine how the company’s costs to serve customers in its six-state service territory are allocated among the six states – Idaho, Wyoming and Utah for RMP and Oregon, California and Washington for affiliate Pacific Power.

The updated protocol builds on one adopted in 2010, and if it is approved, would determine how PacifiCorp’s costs would be allocated in all rate proceedings beginning in 2017 and continuing through 2018, with the possibility of a one-year extension, the PUC said in an April 22 press release.

The development of the protocol stemmed from a 1989 utility merger that created PacifiCorp, when the six state commissions apportioned costs to customers using different methods, and the utility claimed that each state’s differing methods resulted in PacifiCorp not being able to fully recover its costs, the PUC explained. The Multi-State Protocol was formed to allow PacifiCorp and all six states to discuss an equitable way to allocate costs so that customers pay for the benefits they receive, without subsidizing customers in other states, with the first protocol adopted in 2005 and the second version in 2010, the PUC said.

PacifiCorp, in its Dec. 31, 2015, application, asked the Idaho PUC to approve the 2017 protocol because the 2010 protocol is set to expire at the end of 2016. Following a notice of the application and intervention period, PUC staff conferred with parties about whether a hearing would be needed, subsequently proposing to use a Modified Procedure to address the case, the PUC said in a March 23 order.

The March 23 order notified parties that the PUC determined that a formal hearing may not be required, and that it would use the Modified Procedure and take written comments, which “have proven to be an effective means for obtaining public input and participation.”

In its application, PacifiCorp asserted that the proposed 2017 protocol still does not fully recover the company’s costs, but makes progress in reducing a shortfall, the PUC related in the April 22 press release.

To address the shortfall, PacifiCorp proposed a fixed amount “equalization adjustment” to be added to the revenue requirement that PacifiCorp will seek from each state, with the total from all states being an additional $9.1m, or less than 1% of each state’s annual revenue requirement, the Idaho PUC noted.

Idaho’s allocation — about $986,000 – represents an increase of $150,000 from the 2010 protocol, the PUC said.

The proposed 2017 protocol, which was negotiated and agreed to by PacifiCorp, interested stakeholders and PUC staff among several states, does not make significant changes to the 2010 agreement because of uncertainty over the impact of the Environmental Protection Agency’s proposed Clean Power Plan and the possibility that PacifiCorp may become part of a regional independent system operator in the West, the PUC said.

PacifiCorp costs that are unique to each state, such as demand-side management or renewable portfolio requirements, are not apportioned to all states, but allocated to each state based on the unique contracts or programs within those states, the PUC noted.

California did not participate in the negotiations but intends to implement the allocation methodology adopted by the other states, and Washington participated in early negotiations but has already adopted a different allocation methodology, the Idaho PUC said.