After argument over coal capacity, California PUC okays PacifiCorp delay request

The California Public Utilities Commission, in a decision issued on Oct. 3, granted PacifiCorp’s petition to forgo filing a General Rate Case application for Test Year 2018.

PacifiCorp’s next General Rate Case will now need to be filed for rates effective Jan. 1, 2019.

PacifiCorp is a multi-jurisdictional utility providing electric retail service to customers in California, Idaho, Oregon, Utah, Washington and Wyoming. PacifiCorp serves approximately 48,000 customers in Del Norte, Modoc, Shasta, and Siskiyou counties in Northern California. PacifiCorp is required to file a General Rate Case (GRC) application on a three-year cycle. PacifiCorp filed its last GRC in November 2009 for Test Year 2011.

Since PacifiCorp’s last GRC, PacifiCorp has made a series of requests that the California commission grant a waiver of the three-year GRC filing cycle. The commission granted PacifiCorp’s requests to forgo filing a GRC for Test Years 2014 through 2017 and to file Post Test Year Adjustment Mechanism (PTAM) attrition factor rate increases for those years.

The most recent request the commission granted authorized PacifiCorp to forgo filing its GRC for Test Years 2016 and 2017 and to file a PTAM attrition factor increase for rates effective Jan. 1, 2017. On May 12, PacifiCorp filed a petition requesting that the commission: modify a prior order to the extent that it requires PacifiCorp to file a GRC for Test Year 2018; grant PacifiCorp a waiver of the three-year GRC filing cycle and authorize PacifiCorp to file its next GRC for rates effective Jan. 1, 2019; and expedite consideration of the petition. 

PacifiCorp’s petition was supported by an agreement between PacifiCorp, the Office of Ratepayer Advocates (ORA) and the California Farm Bureau Federation (CFBF). The essential elements of the agreement are:

  • PacifiCorp agrees not to file a PTAM for major coal-related capital additions during the extension of the GRC cycle. Any coal-related major capital additions will be included in PacifiCorp’s next GRC. During the GRC extension, PacifiCorp may continue to file PTAMs for major capital additions that are not for coal-related expenditures. PacifiCorp has several coal-fired power plants outside of California in states like Wyoming (including the Naughton plant) and Utah (the Hunter and Huntington plants).
  • PacifiCorp agrees not to file a PTAM attrition factor increase for rates effective Jan. 1, 2018.
  • PacifiCorp will not file a GRC for rates effective Jan. 1, 2018;
  • PacifiCorp’s next GRC will be for rates effective Jan. 1, 2019.

The continuation of both the PTAM for non-coal-related major capital additions and the Energy Cost Adjustment Clause facilitate PacifiCorp’s extension of the GRC period.

In its response to the petition, the Sierra Club argued that if PacifiCorp’s petition is granted, it will mean an eight-year gap since the commission and stakeholders have been permitted to review PacifiCorp’s capital spending and operations. In particular, the Sierra Club objected to PacifiCorp’s recovery of coal-related capital expenditures from California ratepayers. Since PacifiCorp’s last GRC, PacifiCorp has filed advice letters to increase rates pursuant to the PTAM for major capital additions. According to Sierra Club, two PacifiCorp advice letters, which were approved by Energy Division, included capital expenditures for coal plants that resulted in a California annual revenue requirement of $781,000. Sierra Club asserts that these capital expenditures were not reviewed for prudency and will only undergo such a review in PacifiCorp’s next GRC.

Sierra Club proposed that if the commission decides to grant PacifiCorp’s petition, the commission should immediately remove the $781,000 currently in rates and allow PacifiCorp to file a limited rate case that includes only its capital expenditures on coal plants and related revenue requirement since the last rate case.

Said the Oct. 3 commission order: “We grant PacifiCorp’s Petition. With the granting of the Petition, PacifiCorp’s rates will remain low and relatively stable as PacifiCorp has agreed not to file a PTAM attrition factor rate increase for 2018 or any PTAMs for coal-related capital additions during the GRC extension. Moreover, it is in the ratepayers’ best interest if the GRC is delayed a year to ensure ORA has sufficient staff to devote to PacifiCorp’s GRC.

“We find that that the arguments raised by Sierra Club in its response do not warrant denial of PacifiCorp’s Petition and we decline to adopt Sierra Club’s recommendation to hold a limited rate case to review the expenditures authorized in Advice Letters 476-E and 507-E. Sierra Club fails to demonstrate that PacifiCorp’s use of the PTAM for major capital additions was improper. The Commission authorized PacifiCorp’s continued use of the PTAM for major capital additions in D.10-09-010. Energy Division reviewed Advice Letters 476-E and 507-E and approved these advice letters because they were consistent with the authority the Commission had granted to PacifiCorp in D.10-09-010. Any objections to these advice letters should have been raised in a protest to the advice letter during the advice letter process. We decline to revisit the approval of these advice letters in this proceeding.

“Sierra Club objects to the fact that an additional $781,000 will continue to be included in California customers’ annual revenue requirement as a result of coal-related capital expenditures approved in these advice letters. We find that these capital expenditures do not have a significant impact on rates. Sierra Club objects to PacifiCorp’s capital expenditures for emissions-control equipment installed at the following coal plants: Dave Johnston 4, Naughton 1, and Hunter 1. According to PacifiCorp, the capital expenditures related to these plants result in a bill impact of $0.91 to the average residential customer. Therefore, we do not find the rate impact of a one year deferral of the GRC to be significant. Furthermore, as PacifiCorp has agreed not to file any PTAMs for major coal-related capital additions during the extension period, no additional coal-related expenditures will be placed in rates before the next GRC.”