Agenda Date:  December 29, 1999
Item Number:  2A

Docket:   UE-991832
Company:   Pacific Power & Light Company     

Staff:    Roland C.  Martin, Regulatory Consultant, Energy  
    Assigned Rate Case Team

Recommendation:

Issue a complaint and order suspending the filing in Docket UE-991832 and set 
the matter for hearing.


Discussion:

On November 24, 1999, PacifiCorp (dba Pacific Power & Light Company) filed 
revised tariff sheets applicable to electric service supplied by the Company in 
Washington. The filing seeks to increase revenues from Washington operations in 
two phases: First phase (Year 1) requests a general price increase of 8.10 
percent or $14.6 million effective January 1, 2000, while Second phase (Year 2) 
provides for an overall price change of 5.73 percent or $11.2 million effective 
one year after the Year 1 increase.  The total proposed increase in base prices 
over two years is $25.8 million.  In addition to the base price increase, the 
Company also requests to implement a 1.5 percent ($2.8 million) System Benefits 
Charge through a tariff rider to fund energy efficiency programs and renewable 
resource development.   

The Company’s last general rate increase in Washington was in September 19, 
1986.  In that proceeding, the Commission granted  a revenue increase of $12 
million including an attrition allowance of $3.8 million.  That increase was  
based on $327.9 million  pro forma  rate base and 10.42% overall rate of return 
and 13.25% return on common equity.  In the current filing,  the Company is 
requesting a return on common equity of 11.25% with an overall rate of return 
of 9.10% to be applied to a pro forma rate base of $609 million.

According to the Company, the key factors driving the need for a price increase 
at this time are rising capital expenditures ($2.9 billion system-wide 
investment over past 5 years), falling prices ( four rate decreases since 
1986), and inflationary pressure on costs (over 60% increase in general price 
levels since 1986).  The Company claims the combination of these factors 
resulted in its earning a current normalized rate of return of 6.5 percent in 
Washington.  

In addition to the implementation of a System Benefits Charge in this filing, 
the Company is also proposing to reduce subsidization across customer classes, 
and to modify certain Company rules regarding provision of electric service.

Docket UE-991832
December 29, 1999
Page 2

The company serves approximately 120,000 retail electric customers in five 
counties in 
Washington (Yakima, Walla Walla, Kittitas, Garfield, and Columbia), and 
approximately 1.45 million retail customers in the States of Oregon, Utah, 
Wyoming, Idaho, California, and Washington.

Summary of Rate Increase  Impacts:

The following portrays the magnitude of proposed revenue increases for the 
major customer classes:
 
Year 1 Increase (Inclusive of System Benefits Charge) 
Customer Class:              Annual  Percent
           Revenue     Change
Residential       $  9,126,000   12.00%
Commercial & Industrial         8,239,000     7.97%
Public Street Lighting                 50,000     4.00%
Total        $17,415,000     9.64%

Year 2 Increase (Inclusive of System Benefits Charge) 
Customer Class:              Annual  Percent
           Revenue     Change
Residential       $  6,246,000     7.33%
Commercial & Industrial         4,925,000     4.41%
Public Street Lighting                 26,000     2.00%
Total        $17,415,000     5.65%

In order to determine whether the proposed tariff revisions are fair, just, 
reasonable, and sufficient, Staff recommends the Commission issue a complaint 
and order suspending the filing in Docket UE-991832 and set the matter for 
hearing.