Summary of Request

PacifiCorp requests authority to modify its ECAC rates so as to allow recovery of its 2008 adjusted actual net power costs, adjusted actual and forecast net power costs for 2009, and its forecasted net power costs for 2010. This modification will result in a rate decrease of approximately $4.6 million, or 5.1% overall, to PacifiCorp's California retail customers with an effective date of January 1, 2010. Specifically, PacifiCorp asserts that its 2008 adjusted actual net power costs and adjusted actual and forecast net power costs for 2009 are lower than was forecast in A.08-08-003, resulting in an estimated $3.1 million balance owed to customers. Net power costs are generally defined as the sum of fuel expenses, wholesale purchase power expenses and wheeling expenses, less wholesale sales revenue. PacifiCorp asserts that its forecast net power costs for 2010 are lower than the net power costs adopted in D.08-11-058 as a result of lower system retail sales and declining market prices for electricity and natural gas costs. PacifiCorp's proposed decrease would result in the following price changes by customer class:

Rates for net power costs are unbundled from other rates and are collected through the ECAC Tariff Rate Rider, Schedule ECAC-94. Energy costs and revenues subject to the ECAC are accounted for in a balancing account. The balancing account is intended to be recovered annually through the ECAC filing. Thus, the ECAC provides PacifiCorp the opportunity to recover net power costs in a timely manner.

The ECAC separates the rate component into two parts: the Balancing Rate and the Offset Rate. The Balancing Rate is the rate that either returns to or recovers from customers the Total California Balancing Account. The rate is calculated by dividing the sum of the changes in the 2008 adjusted actual net power costs since the 2009 ECAC Filing and the 2009 adjusted actual/forecast Total California Balancing Account by the California retail sales that were included in the Company's most recent general rate case (A.05-11-022), then grossing up that amount for the Franchise Fees & Uncollectible Accounts Expense Factor. If the Balancing Rate exceeds the current rate by 5%, the rate is updated for the upcoming forecast period.

The second component of the ECAC, the Offset Rate, allows PacifiCorp to reset rates to reflect the forecast of net power costs for the upcoming year. To determine updated net power costs, PacifiCorp incorporates updates to: (1) forward price curve; (2) forecast loads; (3) normalized hydro generation; (4) forecast fuel prices; (5) contract updates; (6) heat rates, planned outages, and de-rates; (7) wheeling expenses; and (8) new resource acquisitions. PacifiCorp calculated the current Offset Rate by dividing the 2010 California-allocated net power costs by California retail sales and then grossing up that amount by the Franchise Fees & Uncollectible Accounts Expense Factor.⁶ As with the Balancing Rate, where the new Offset Rate exceeds the current rate by 5%, the rate must be updated for the upcoming forecast period.

PacifiCorp proposes a Balancing Rate effective January 1, 2010, of $-3.67 per megawatt-hour (MWh); a Balancing Rate of $0.54 is currently in effect.⁷ PacifiCorp also proposes an Offset Rate of $22.14 per MWh. This Offset Rate differs from the current rate of $23.29 per MWh by 4.9 percent. The impact of the Offset Rate is a reduction of about $1 million to PacifiCorp's California customers. Overall, the result of the proposed changes is a rate decrease of approximately $4.6 million, or 5.1% overall, to California retail customers.

⁶ See Exhibit PPL/100 at 5.

⁷ See Exhibit PPL/100 at 4.