XI. Comments on Alternate Proposed Decision
On June 13, 2002, the alternate proposed decision (Alternate) of President Lynch was filed with the Commission and served on the parties in accordance with § 311(d) of the Pub. Util. Code and Rule 77.1 of the Commission's Rules of Practice and Procedure. Comments on this Alternate should be submitted by June 20, 2002.
Findings of Fact
1. This application was filed approximately five and a half months after the end of the test period.
2. Five and a half months is a reasonable amount of time in which to gather and finalize the recorded information for the test period, analyze the data, and prepare the application.
3. Actual total company net power costs for the first six months of 2001 were $561 million.
4. PacifiCorp's 1999 actual total company net power costs, $432 million, were more in line with historical power costs than its test year estimate.
5. PacifiCorp's test year results of operations based on 1999 actual total company net power costs yields a return on equity of 1.2% for California operations.
6. PacifiCorp's actual total company return on equity for the test period was 1.166%.
7. PacifiCorp's proposed one-cent per kWh increase would result in a 5.8% return on equity for the test year.
8. PacifiCorp's proposed one-cent per kWh increase would increase California customers' rates by nearly 14%.
9. Historically, PacifiCorp's rates have been set based on California jurisdictional operations.
10. With the requested rate increase, PacifiCorp would have a reasonable opportunity to earn a rate of return of 5.8% on equity.
11. A return on equity of 5.8% is not excessive.
12. PacifiCorp's general rate increase filing, which will be addressed in the second phase of this proceeding, includes some proposed rate increases that are less than one-cent per kWh.
13. PacifiCorp's proposed 1 cent/kWh increase will result in a revenue increase of under $7.5 million annually.
14. The uncertainty of what PacifiCorp's 2002 net power costs will be is hundreds of millions of dollars.
Conclusions of Law
1. PacifiCorp's test year period is reasonable.
2. The need for an interim increase should be based on criteria established in prior Commission decisions.
3. PacifiCorp's test year results of operations based on 1999 actual net power costs should be used to estimate PacifiCorp's 2002 earnings.
4. Pub. Util. Code § 368(a) provides that the transition period shall continue until the earlier of March 31, 2002, or the date on which the Commission-authorized costs for utility generation-related assets and obligations have been fully recovered.
5. The rate freeze has ended for PacifiCorp consistent with Pub. Util. Code § 368(a).
6. Current rates may not be sufficient to allow PacifiCorp an opportunity to earn a reasonable return.
7. A one-cent per kWh rate increase is burdensome to ratepayers.
8. Immediate action is not needed.
9. PacifiCorp should be allowed to increase rates by up to one-cent per kWh, if it's net power costs are high in 2002.
10. PacifiCorp should be allowed to track its 2002 net power costs, and seek recovery of such costs if they are sufficiently high, as described herein.
11. The decision should be effective immediately in order to provide PacifiCorp with assurance that it will have an opportunity to earn a reasonable return.
INTERIM ORDER
IT IS ORDERED that:
1. PacifiCorp's request for an interim rate increase is denied.
2. PacifiCorp may establish a tracking account for its 2002 net power costs, and is allowed to seek recovery in a future application if such costs exceed $425 million.
This order is effective today.
Dated , at San Francisco, California
