ML20054B915
| ML20054B915 | |
| Person / Time | |
|---|---|
| Site: | 05000514, 05000515 |
| Issue date: | 04/08/1982 |
| From: | Lobdell J OREGON, STATE OF |
| To: | PORTLAND GENERAL ELECTRIC CO. |
| Shared Package | |
| ML20054B905 | List: |
| References | |
| 82-251, UP-3796, NUDOCS 8204190313 | |
| Download: ML20054B915 (10) | |
Text
'S I
' N ORDER NO.82-251 ENTERED Apri) 3, 1982 BEFORE THE PUBLIC UTILITY COHUISSIONER OP ORI. MON UF 3796 In the fiatter of Ravined Tariff ) .
Schedules for Electric Service ) SUPPLEME!PritL in the State of Oregon filed by ) ORDER PORTLisND GEIERAL ELECTRIC COMPhHY. )
By thin order I am authoricing Portland General Electric Company (PGE) to increact itu ratec by 8.6 parcent.
Thic ic c.n interim incroace, pending dinpocition of the company's request for a genernl rato incrence.
7.t tne car.c tirca, I am cignnling to the con.pr.ny my ir,tention to i; pore in ny final or:1er in this can: nringent new rcqui rementa, including write-off. of 1% inve n br. ant in the Penble Springr nuclear po.:cr project in)d a redu c ti on :.n centrollabic cxpencec.
On Februr.y 2",. 19:?2, the r:ninpany.requertod c.n ane:;enne of $69.9 million, or 13.5 percent, t.o be oficct.u r n?.rch 25, 1982. I nm granting only an interie. incroace at
$51.6 million, or G.6 percent, and vill not parrr.i t it to becomo effactiv : unti) May 1, 1982.
The increane l'or recidential and cmull farm cunterert.
uill be lecc becauce of additional crcdits to be rec 3ived by PCC throur;h it: recidentia) e>: change ag. oe: tent vi th the Bonneville Power Ad;ninistration under the Regional Pouer /.et. .
The interim increace in granted an a recult of n.y review of exhibita filed by PCE. The company requented an interim incrence of $53.4 million, or 8.9 percent, i found unat thre compr.ny hau made a pri:r.a facic chowing that an increase in revenue of $51.6 million in neccccary to continue to provide adequate electric cervice to the pu1311c. The mount proposed to be recovered from ratopayere ic $40.3 million, inna:::uch ac the company anticipaten receiving an additional
$10.8 million frem the racidential enchange agreement. Ev.:n with the inter. a incrence, PGE's return on equity will be lena than the 16.25 percent return found reasonable in the /spril, 4
ItJS1 Touche, Roco & Co. Report.
The rato cpread acconpanying thic interin incronce chould not acterially change the re.onuo relationchipa between 4hgo G
- . ORDER NO.82-251 customer clausec or batueen the revenues derived from demand chargos and energy charges. ORS 757.210(5).
A hearing will be held by my Proceedings Division on the overall increaue cought by the company. A prehoaring.
conference han been acheduled for April 12. If any part of the interim incroace is found, during the hearing, to be unwarranted, the company has agreed to provide for refunda.
Stody to Reduce Exoencen by 10 Percent I am approving thic increase for PGE reluctantly.
The requent for a rate increase has hit Cregoniana at a poor time. A deprecced timber inductry, severe unemployment, a cutback of governmental benefits to tnene in need, and continuing high interect rates have combined to cut into concumerc' budgets. They have cacrificed, and PGE munt -
sacri fice .
In the courso of the public hearings, I will reqaire the ccmpany to chow why it carinot ribonrb some or all of the additional increane it request. As part of this process, 1 v; 11 reuuire the company to chou why it cannot reduce controllable expenaec by 10 parcent over the next year.
I have heard appeals from thu ;>ublic at large urgim; th.: t I not grant an increase of any kind to Pc,rtland Genn :1 Ele:.tric Compnny. I cannot fully renpond to that appani Like ao many other buninesace, PGE muot tr. net conta ovar Un.ch it has no control, nuch ac the over-increaning prices for t.rancportation of coal and for other goodn it u.uut have to conduct itn busineca. The company in dramntically and adversely affected by bic.;h intercut rates it nuut pay on nou debt.
Under the law, investor-owned utilitica are entitled to have an opportunity to earn a reaconable return on theie i n v o u t n.a n t u . ORS 757.210(1). The Public Utility Corniscione:r any not ]cgally d'iny them than opportunity. [ Soc Federal Power Cc minaion v. Hope lhturni Gna C4., 320 US 591 (19M) '
The company's invectment in plant and equipment :tay be fixed, &nd the return required by the rnarket in beyond the company's control. However, I believe there are areas where I'GE might reduce its revenue requirement by cutting back on expencec. Therefore, PGE nhould be required to produca, by April 23, 1982, exhibito and other evidence showing the effect of a 10 percent reduction in controllable expantes on itn revenue requirement, and to show why it cannot absorb the remainder of the increase sought in thic case. If the cor.pany feelc that some conta are not controllable, it muct explain
. uhy, to my catiefaction.
t
-2.
t ORDER MO. 82- m U;-i te-Of f of Invest::ent i n Pebbl e_ Sqr_.i_.n_.o._n While I cannot deny invectorn on opportunity to earn a reaconable return on their invoutmente, I have the renponsibility and legal authority to ennure, on bohalf of consumers, that thece utilition oparnte in a prudent mannar.
Concequently, it ic n.y intention to require, in a final order I vill innue in this caco, that FGE writo off itn invasta.cnt in the propoaed Pebble Springa nuclear power plant.
Circumutances have created a cignificant financial exposure for ctcchholdelc and a potential liability for r.M v-paycrs. The corpany n:uct f ace up to the fact that Pcbble f.prings is a " dry holo." It teill not be built in thin decade, and perhaps never. It would he fruitlecc for the company to continue to purcue thic project in light of preacnt ci rcuinotancoc .
The company nnd ot.her p.u tica to thic cat.e vill h..vn
.s full opportunity to try to persu .de me that Pebble Spring.-
3.hould not b aba nd:ennd . They face .: heavy burden. Pebble Sp:ringc bcu not been licenced by either the State of Orogen or the fGderal Mucicar Royalatory Commiunion. Tuo licennuti pir.nte in this region--Wanhington Public Pouer Supply Synton.
(UPPSS) plsnt Hon. 4 t.nd 5--have bcOn tominated by their nponnor. Thia ic partly due to financial conditionc. But,
- 4. t.
alco is dua to n:ntd ler projected de2.mnd for electrici ty.
Inventors in Febble Springs must accept the truth cond get out be fore the coct oi getting out becomen vor:.2.
To cot:@cund the proble.1 would be an enormous mintake.
I warned PGE two yearn ago that i1. deac not seem realictic to erpect that the Pebble Springo plant would b,.
conctructed. In an order nigned January 14, 1980, I commn t -o on the high risk confronting a utility, nuch au PCE, when it.
ettemptc to bring now povar recourecc into service in tori.'y':-
poli tical, economic, environmental, financial, and cocial climate. Recogniaing thin, I dctormined thr.t the increan H r Ok varranted grantinrj the company an opportunity to carn c ;.
itc inve:st; tents at a highar rato than beforo. But nt the r.: ne time I rebuked tho ecmpany for nat taking uteps to r cci.'o the Pebble Springc dilemma.
I a:a of the opinion th.It. PGP racy share my vieu, nov.
In the last several montho the company has engaged in creative financing to iuprove itc ability to abco2.5 the cccut: of writing off the plant. Under tho federal Economic Recovery Tax Act it han ar. acned approximately $30.6 million by acceleratin.T the reccipt of tar benefit 0 through the " Safe Harbor" Icacinq provicion of that Act. The company also anticip.:tos roti: ir.g acne of its cut::tanding debt through an cr.changa for ecpity,
- i.
- t ORDER h'O.82-251 which should result in a subctantial one-time gain. FGE stockholders would. bent be served by uning thene funda to tenper the impact of retiring the investment in Pebble Springs.
Refunds to Occursants of Multifamily Ruaidential Housing On October 1, 1981, credits for residential and small farm cuctomara of investor-cuned utilities began flowing f rom the Bonneville Power Administration through an exchange of power. This had the impact of louering the cost of electricity to those customern of PGE by 27.5 percent.
To encourage continued electric energy connervation, PCE and other utilition filed inverted rate structuros. Thuce residential connamers using the least amounts of electricity within each dwelling clace obtained the major portion of the benefitc. Becauce studies show that average electricity une by persone living in mult.ifamily units is lens than use by those in ningle-family dwellings, neparate rate structures for the two clasces of customer were filed by PGE. From a technical, overall standpoint the decision was logical.
However, on a cace-by-caen basin there were both real and per,ceived inequities. .
Last month FCE filed new tariffa to Dake the rate ntructure for the two clauses identical. Requents then were rc. 2 d e to me by c.cm3 residents of multif amily unitu for refunds of the difference between what they had been charged and what _
they would have been charged hau the ningle rate structure been in effect beginning October 1. r I pointed out that I could not order a refund. The Public Utility Commissioner in prohibited f rom retroactive ratemaking unleso it is provided for by lau or under agreement with the utility. There ia no legal bacic for a refund in thic cace, and there van no agreement with PGE for a refund.
However, at my request PGE connidered the isnue and hss concluded that refunds should be made as a matter of fairnucc. It wac reprecented to n.e that refunda to cuntomera would total approximately $500,000. The company will make
! thoce refundo from procent resourcec.
!j,ormalization _o_f Tax Dooreciation, Investment Tax Credits One other comment should be made with renpect to thcne filings. The Economic Recovery Tax Act of 1981
( 11. R . 4242) requirca, to take advantage of certain tay.
benefits, ratomaking nornalization of tax depreciation on 1981 and subaequent plant additionc. The Itet alao requiroc 4
~
s.
ORDER NO.82-251 the same treatment for invent =cnt tan credita for 1981'and subsequent additions. Beginning with the 1981 additions included in the rate baue, ratemaking taxes have been .
calculated ucing normalization methodo au defined in the Act.
IT IS THEREFORE ORDERED that Order 110.82-182, which !
uunpended the company's rato cace filing, in supplomonted by l permitting Portland General Electric Company an interim rate increace of-8.6 percent (7.86 percent not following applica- )
tion of Regional Power Act rooidential exchange credit), to be effective for service rendered on and after May 1, 1982. ;
Itates filed by Portland General Electric Company shall not change the revenue relationships among cuatomer classos or between the revenues derived from demand charges and from energy charges. Tariff a in.plementing thin increaso chall be filed no later than April 23, 1982. Accompanying the filing will be revenue reconciliation and average syntem cost work papera.
,tVM fi.'ik. _ .
Ihde, v , effective i
' ; X k* s v*
?,
P* %,* , HN Q )BDELL l>1.gy%}g-ry q/ - *
Public Ut. ty Comiscioner
\ ( . \* h, D .'**.
1
~h'
% &*h/
f e
O . _ , - - - - - - - -- _ _ _ _ .__ ,
ru,--~ny r.e,. ;a twy,4r rmes
. A (pli G,re,qon r ,,uhptZ Uilfn.y ' Jim'1:37cnGr
'i
'.d.i.0 h.3. 's.w f_N/m /?:shp U Y.p.] l.!b:,r!AIndU2,tdOSf3Uii.#[ng.
p- a:a . .., g-cs,
.w h... . . . . , ., , , , , ,
a p .
(Effi Gw,.mp)th,! arsOrr~., uregenp,-r3'tv o
. ,,+
t;g gyy,. n .p" v- 2'- t s!
i
?., p. .i. > r~>
April 8, 1982 LODDL*LL ORDERS URITE O1? OF PUBDLP i: WPPSS 5 ; GRidi?S !!:'TERi!3, _
liiCREliSE SALEH -- Public Utility Commi ncioner John Lobdell naid today he will authorir.e a slight increnne in uites for Pacific Power L Light Co. and Portland General Electric Co. !!a t ht said he also will. requite the colnpaniec to try to absorb thr ough a reduction i ri exprinnen the remainde r of the- incr . .e each con.pany has requented.
Lobdell' n ord: r Nlcor.aidheintendstorequire .r corpn ies to write off their invecin.entn in tro of t "c- v.ip-llorthvent'n stalled nuclear poves projects, Pebble tipt i - !r en:
i:r shi ngton Pub) ic Po.:c; Supply Jynt.en. (UPPSS) plant. :Jo. ..
The order in r.u e d by t h e to.:.r.i n i o n e r today prw.';'e . ;
r a t e 2 n 0 1 a ..'- Ior each company of !: .h ptu r:en t , li e c h o :-
of ad:li t io nal b e ne t' it e. that ill c0:m under the tctn': ;
ikt,! ! Or,a l Pc.tet Act , t h r- incroaue util raine t c : i d e n i :: :
r a t. .i t only 0 parctnt f or resitienti a l custon.e r t: et P P !. . .
i G p :ecnt for r e c icia n t .el c us tor.e r r. o f. PGU.
The 0.6 inter im ir. crease will not provide eithe- c, c ' .y with an increate in rate of return. A 19 til c epor t by 'I.w : a F.oc G 6 Co. rc.ccnce nded a l'). 25 percent return on corn.cn : r.
, but nr.ither company hna had cuf ficinnt earnings to achim .-
that level ot' return.
- - :~. ~. r c - -
' C *. LiN 107 kU OTWiti iOI.f __CGniO~.2* Conya Smith, I n f o r D 3 t io n ' D_i r e:c_L o r - 17) -
- s. -
Both PGE and PP&L filed for iate inctertara in Pobruary.
On Feb. 23, PGE reque::ted an incrrtana of 13. 5 percen t c.r J
SG9. 0 nillion in additional annua; revanucc. PPirL cego;i S t.e:1 24.0 percent, $105 million, e n F<:: b . . B o t h c o s:p h n i e n t. '. <
1 the co::ctii cc io ne r in their filing:c to pt ovide i n te r i t:. r.o -
relief within 30 days while their I: quests ur:re be:.n(! crr-cidered and public hearin?n '. care held.
Lobdell said ha uill cquirts th r: corp::nies to shx: t j during public hearings why they cannet abnou, ucce, if nn ail, of the additional incrence they b:me r: qocrted.
"1 cm npproving thew increases reluctantly," r, b l >. i - i l :4 a id . "The r. qtw:,tn have hit Or t gonisent; at a poor t i r.e t.
i dept unr.ed ticbi. t inductry, ccvet e une:*.ploytent, a cuPbn*. OT governn. ental benefit- to those in neuri, and con t:i nuirvi n' .
3 s
i n te r e::t rate . have cc:::bined tc cut- inte connurac rc' b udg e ': 0.
cc,nsur.n c r. have nacr i f iced, and PGE and PPi.L must n a cr i t ic e ,
i i s
- t.,,o , n he natu.
Labs:1 .: aid ha oc i .' u c a.
- i. h a t. ::.e t e ,ro r u.c e ..
1 a t h c o::p a r. i e c n i .; b t. reduce the26 revenue :oqu tc .: ant b t
eutting back on expenr.en. La can..aniec 'will b.: requirw? '
.-rcm ca evidunce showing the ct:.ect at n 10 p o .:c.2 n r. r e n . n u . v . ,
l n contro11shi, c::p t:n ,0 c ni. :.i.ci r r.' venue r equ i t ar .nt, b ..
"If tiw congenies iiel that norc costo are not controllabl+ they cust e. plain uhy, to ny satisfaction,
, Lobdel! uaid.
I i
S c: .e o f t h ini.n in increace , wt-ich ca.ounts to
! 551.6 million Lo: PGE and $36.4 cill;on for PW.L, will &
i 1
-- no r e --
l 3 . . . . . . . . . . . .- r......_,
1 .
, - - - - - - . ,, ,.,- - - --,--n - - - - - ~ - ~ _ . . - . _ , , - . . . . , . - _ . - . _ . . . . . . , . . - - - , , , . - - . _ . . , . _ _ . . _ ~ _ . .
- - - - . . - - ~
offset for residential and small Carm customers through an exchange of power with the Bonneville Pouer lidninittration.
PGE residential customer bills will increase 6.6 percent and small f arm customer bills will increane 6.2 percent.
Likewise, PP&L's residential customers will experience a-6 percent increase and small f arn customn bills will rice 7.1 percent. One thousand kilowatt-hours of electricity will cost residential custor.ners of PG'd an additional $2.22 and PP;h euctom2rs will pay $1.97 r. ore for 1,000 kuh.
I A public hearing on the PP&L increase han b: ten nehr-d . led f or !!ay 18. A prehea ring conference on the PGE case will i.e n.1d April 12 at 10 a.m. in Naring Roon D of the Labor 5 Ir. duet:ies BuiIdi ng in Daleta.
Lobdull, in the ordt-r innue,I hod e.y , told PP&L an.; P;iC
, rn.:.L he in tendt: to reyulre ther.i to urite of f investcent. ' ! *.
ter. "d ry hole:' nuclea r powe r projects Pabble Springr and iii.chington Public Power Supph' S'/stua plant No. '
.) .
Por t lr.nd G'ene ral 1; lect r ic Co. 4as investe.: .H N <
i..
i the .T hble Sp:in'jn nuclear plani . :id. Lobdull sc ia t i. - company to rctica that. i nv en'.ce n t . PGE i n m:i j o r '. P - 9 n '-
v: thn project. ci tii a C.1 parc:nt : hare.
"C i rc ur. : . an ce:. h.we cr c Led . cign!ficant finn '. I
!xpocute f.cr s tocknold.:rc find n poten tial li;ibility f or r -
psyers. Yne company nuut face up to the fact tha t Nh:.:le Sprintjc 10 a ' d r y h u l e ' , '- Lobdell :s a i d .
"It uauld be fruitlesc for che cocpany to continua
--uore--
1
~; . to purcue thic project in light of precent circumstancen.
Investors in Pebble Springs must accept the truth and get out bef ore the cost of getting out becomes worse. To co:rpound the problem would be an enorcous mistake," Lobdell said.
Pebble Springu hac not been licenced by either the State of Oregon or the federal Nuclear Regulatory Commission.
Two licensed plants in the region--WPPSS plants Noc. 4 end 5--have been terminated. ' thin io par tly due to financial condi tions, Lobdell said, but, in addition, projected der::nn n for electricity have declined.
PP&L has a 29.4 percent intercut in Pebble Sprinar. '
as well as a 10 percent investment in WPPSS Plant No. 5.
Tsccording to Lobdell, PPLL uil1 be directed to amortice
$59 million of its investment in UPPSS uo. 5, and urit.e off 0.:9 million of itc inves tri.ent in Pebble Springs. Overall, PP&L has inveated ES3 million in Pebble Springs and ?.99 m: 11ic.n in WPPSS No. 5. Only slight.ly more than 50 percent of t .+ n .
cmita are at t: r ibut abl e to the company 's 0:caon operatin..,..
"My cor.::1osion, that the Einancial liabilities ci Pebble Springt. and LTPPSS 5 chould be retired, points t.m.tn the rin,. a u t ility f t.c e in bringin'3 neu recourcen i n t- """!.
for the benefit of the public. Th e cr;5. pan i e n wi ll h avr.- chr opportunity in hearings to persuade me that. th es e inv e c ur.c r.t:
should not be abandoned. They will f ace a heavy burden, '
Lobdell said.
Unlike other Northwest utilitics, PP&L may be ceught short of po-er recources in the foreseenble future, Lo b d c- 11
--ac:e--
,,,n - . _ _ _ , __ _,
e said. The company ownc major generating facilitics in the state of Wyoming that are currentl:/ supplying power to mnet the cortpany 's load in Oregon.
Load growth in Wyo:r.ing is climbing significantly.
Lobdell said the company f aces the prospect of constructing additional energy facilities but no longer can rely on Pehhie Springs or WPPSS No. S to help meet its needs. Lobdell said he will concider increasing PP&L's rate of return to reficot the corr.pany 's incr eased risk if evidence in the rate case shows it is necessary.
,...................,,,,,1.m,,,.,, . . _
i l
I t