IV. The Revenue Allocation and Rate Design Settlement

In the proposed revenue allocation and rate design all-party settlement, included as Attachment B to this decision, the parties agreed to the following terms.

· The proposed allocation of the revenue requirement compared to current revenues by customer class is an increase of 7.16% for residential, 2.37% for commercial and industrial,⁶ and 0.0% for public street lighting.

· The Residential Winter Saver Rate is eliminated, and those customers are moved to the applicable residential rate schedule.⁷

· The 10% rate reduction mandated by Assembly Bill 1890 is eliminated.

· The baseline allowances are revised in compliance with D.02-04-026.⁸ The present and proposed baseline quantities are shown in Attachment C to this decision.

· The marginal costing methodology proposed by ORA is used.⁹

· As proposed by ORA, the proposed revenue requirement increases for each customer class do not exceed 2.5% over the overall system average increase of 4.7%.

⁶ Includes agricultural. ⁷ This program was developed in the 1980s to encourage customers to switch from wood heating to electric space heating. It consisted of an experimental tariff that charged an effective fixed price of 4.5 cents per kilowatt-hour for all incremental usage over a customer-specific historic base usage amount. In addition, the customer paid a $2.00 monthly charge during the winter heating season. ⁸ D.02-04-026 required PacifiCorp to use one of three methodologies to update energy usage data. PacifiCorp applied the weather normalization methodology to the historical data used in this general rate increase application. This met the other requirement of D.02-04-026 that baseline allowances be calculated using 1999 or later data. The baseline quantities were developed using the existing bill frequency methodology ordered by D.02-04-026. Baseline quantities were set at 60% of average usage for standard residential customers, and 70% of average winter usage for all-electric residential customers. ⁹ PacifiCorp agreed to the use of this methodology only for the purpose of this settlement.