Case No. IPC-E-05-26

Notice of Settlement, Request for Public Comment

April 11, 2006

Contact: Gene Fadness (208) 334-0339



Proposed settlement shares emissions sales proceeds with customers


The Idaho Public Utilities Commission will take comments through April 24 on a proposed settlement that shares 90 percent of after-tax proceeds from Idaho Power’s sale of emissions allowances with the utility’s customers. The remaining 10 percent would be retained by the company as a shareholder benefit.


Idaho Power has sold 78,000 emissions allowances for about $81.6 million. After subtracting transaction fees and paying a 39 percent income tax rate, the total amount of sales allocated to Idaho Power’s Idaho territory is $46.8 million. Under the proposed settlement, Idaho customers would get $42.1 million applied against their bills in June 2007. The shareholder benefit is $4.7 million.


The credit would be applied as part of the annual power cost adjustment next spring. The average reduction to a residential customer who uses 1,000 kWhs a month would be about 5.6 percent or $3.32 per month. That is absent any other modifications to the PCA, which annually results in either a surcharge or a credit to customer bills depending on stream flows and market conditions. Idaho Power anticipates filing its 2006 PCA later this week.


The commission recently granted Idaho Power Co. blanket authority to sell its surplus sulfur dioxide allowances. However, commission staff and others who participated in discussions were not able to agree on how much of those sale proceeds should be shared with Idaho Power customers. After settlement negotiations with the company, commission staff, the Industrial Customers of Idaho Power and Micron, the parties were able to agree on the proposed settlement.


An amendment to the 1990 Clean Air Act establishes a national program for the reduction of acid rain. Scientists have determined that sulfur dioxide (SO2) and nitrogen oxide (NOx) are the primary causes of acid rain. In the United States, about two-thirds of all SO2 and one-fourth of all NOx comes from thermal (coal and natural gas) electric generating plants.


Under the federal program, thermal power plant owners are issued limited allowances for their plants’ sulfur dioxide emissions based on a specific plant’s past emissions and a nationwide cap placed on the total amount of SO2 that can be emitted.


Each allowance authorizes the utility to emit one ton of SO2. At the end of each year, a utility generating unit must hold allowances equal to its allotted annual SO2 emissions. A utility that holds over its annual requirement is considered to have surplus allowances that can be sold on the open market or through auctions sponsored by the Environmental Protection Agency.


Idaho Power has an ownership interest in three coal-fired plants: Jim Bridger in Wyoming, North Valmy in Nevada and Boardman in Oregon. Last August, the commission agreed to give Idaho Power blanket authority to sell its emissions allowances as long as each sale is reviewed.

Public comments on the proposed settlement will be accepted through April 24 via e-mail by accessing the commission’s homepage at and clicking on "Comments & Questions." Fill in the case number (IPC-E-05-26) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.


Documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.