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Commission Resolves PacifiCorp Power Costs
August 6, 2002 (2002 - 022) (UE 127)
Contacts: Contacts: Roy Hemmingway, Chairman, 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Lee Beyer, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR – Effective August 7, 2002 PacifiCorp will be allowed to collect $45 million a year to begin paying down $131 million in excess net power costs it incurred between November 1, 2000 and September 9, 2001. The amount is equal to six percent of the company’s annual gross retail revenues.
The Commission voted one to one. Commissioner Joan Smith voted yes and Commissioner Lee Beyer voted no. By law, the change goes into effect on a tie vote.
Customer groups including the Citizens Utility Board (CUB) and Industrial Customers of Northwest Utilities (ICNU) did not oppose the change.
The adjustment translates to a 2.6 percent rate increase for residential and commercial customers. Large industrial customers will see their rates rise by 4.0 percent.
The company has been paying down the account at an amortization rate of three percent. The adjustment increases the rate to six percent.
Commissioner Joan Smith said, "This is a reasonable approach because the shorter period should result in PacifiCorp recovering more of the deferred costs from the customers who received power during the deferral period, as opposed to customers added to the system after the deferral period. And the carrying charges will be less."
"My feeling was that while the deferred cost should appropriately be recovered, I feel the timing is wrong for increasing rates at this point given the nature of the Oregon economy," said Commissioner Lee Beyer.
The amount of excess power costs was determined in a previous order, UM-995, issued by the Commission July 18, 2002. It allowed the company to recover approximately $131 million. The amount is nearly half what the company initially asked for.
In the 1999 Oregon legislative session lawmakers changed the accounting law to allow electric utilities to amortize deferred accounts up to six percent a year based on a company’s gross retail revenues. The previous law allowed three percent.
The Citizens Utility Board (CUB) and Industrial Customers of Northwest Utilities (ICNU) had requested the amount in the deferred account be subject to refund. However, a motion to make it subject to refund failed because of a tie vote.
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