ALJ/MFG/jva Mailed 12/18/2006

Decision 06-12-011 December 14, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of PACIFICORP (U 901-E) for an Order Authorizing a General Rate Increase and Implementation of an Energy Cost Adjustment Clause and a Post Test-Year Adjustment Mechanism.

Application 05-11-022
(Filed November 29, 2005)

Order Instituting Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service and Facilities of PacifiCorp. (U 901-E).

Investigation 06-03-002
(Filed March 2, 2006)

Law Offices of William Booth, by William H. Booth, Attorney at Law, and Goodin, MacBride, Squeri, Ritchie, & Day, LLP, by Michael B. Day and Joseph F. Wiedman, Attorneys at Law, for PacifiCorp, applicant.

Morrison & Foerster, LLP, by Peter W. Hanschen, for
Klamath Water Users Association; Berliner Law PLLC., by Roger Berliner, Attorney at Law; Hanson Bridgett, by Courtney M. Coates, and Frank J. DeMarco, Attorney at Law, for the County of Siskiyou; U.S. Department of the Interior, by Steve Palmer, Attorney at Law, for the U.S. Bureau of Reclamation and U.S. Fish and Wildlife Service; Karen N. Mills, Attorney at Law, for the California Farm Bureau Federation; Anderson & Poole, by Edward G. Poole, Attorney at Law, for Western Manufactured Housing Community Association; Davison Van Cleve, PC, by S. Bradley Van Cleve, Attorney at Law, for Roseburg Forest Products; Morisset, Schlosser, Jozwiak & McGaw, by Thomas P. Schlosser, Attorney at Law, and Grett L. Hurley, for Hoopa Valley Tribe; William F. Grader, Jr., Attorney at Law, and Glen H. Spain, for Pacific Coast Federation of Fishermen's Association; and James V. McCarthy and Steven E. Pedery, for Oregon Natural Resources Council, interested parties.

Diana L. Lee, Attorney at Law, for the Division of Ratepayer Advocates.

Table of Contents

Title Page

FINAL OPINION RESOLVING GENERAL RATE CASE 2 2

B. Source of Benefit 6 6

1. Water Storage 8 8

2. Lost River Tributary 8 8

3. Return of Diverted Water 9 9

C. Discussion 10 10

VI. Revenue Requirement 12 12

A. Proposed Settlement 12 12

B. Discussion 13 13

VII. Revenue Allocation and Rate Design 17 17

A. Proposed Settlement 18 18

B. Discussion 19 19

VIII. Comments on the Proposed Decision 21 21

IX. Categorization and Need for Hearing 21 21

X. Assignment of Proceeding 22 22

Findings of Fact 22 22

Conclusions of Law 24 24

FINAL ORDER 24 24

Attachment A

Attachment B

Attachment C

FINAL OPINION RESOLVING GENERAL RATE CASE

I. Summary

By this decision, we adopt an unopposed settlement of a 2007 test year revenue requirement for PacifiCorp. We also adopt a revenue allocation and rate design settlement, disputed only as it relates to irrigation rates for the Klamath Water Users Association (KWUA).¹

For the 2007 test year, PacifiCorp is authorized to increase its revenue by $7.3 million. This revenue increase is designed to provide PacifiCorp an opportunity to earn a 10.6% return on a 50.0% equity ratio, which results in a 8.531% return on rate base. PacifiCorp is also authorized to implement an energy cost adjustment clause (ECAC) balancing account and a post-test year adjustment mechanism (PTAM).

As a result of the revenue increase granted by this decision, the monthly bill for residential customer using 926 kilowatt-hour (kWh) of energy would increase by $10.43 or 13.3% to $ 88.77 for the year 2007.

¹ KWUA is a nonprofit corporation comprised of approximately 20 public agencies, most of which are irrigation districts, and many family farms and ranches and other agricultural-based businesses located in and around the Upper Klamath River Basin. Many KWUA members receive water for irrigation through facilities constructed or improved by the United States Department of Interior as part of a federal reclamation project located within the vicinity of Klamath Falls, Oregon and encompasses reclamation and irrigation lands in the States of California and Oregon.