May 12, 2006


Case No. IPC-E-05-26, Order No. 30041

Contact: Gene Fadness (208) 334-0339



Customers to benefit from 90 percent of emission allowance sales


The Idaho Public Utilities Commission today approved a negotiated settlement that will grant Idaho Power customers 90 percent of the proceeds from Idaho Power’s sale of sulfur dioxide emissions allowances. Customers would benefit with nearly $70 million applied against the annual Power Cost Adjustment (PCA), beginning in the spring of 2007. The remaining 10 percent will be retained by the company as a shareholder benefit.


The PCA tracks the company’s above-normal or, as is the case this year, below-normal power supply costs. The PCA appears as a surcharge or credit on customer bills to account for changing streamflow and market conditions. The commission is expected to issue an order shortly on the 2006 PCA. In that PCA, Idaho Power is proposing an average 19.4 percent reduction due to above average streamflows.


Idaho Power has sold 78,000 emissions allowances for about $81.6 million. The negotiated settlement called for customers to receive about $42.1 million, after taxes, but commission staff and the U.S. Department of Energy pointed out that the after-tax credit to customers should be grossed-up to recognize the tax savings that will accrue when the credit is actually provided to customers through the PCA. That brought the customer allocation up to about $70 million.


Last August, the commission granted Idaho Power Co. blanket authority to sell its surplus sulfur dioxide allowances. However, commission staff and the intervening parties – Idaho Power, Micron and the Industrial Customers of Idaho Power – were not able to agree on how much of those sale proceeds should be shared with Idaho Power customers. After settlement negotiations, the parties were able to agree on a proposal on March 23. Today’s order approves that settlement, along with the grossed-up tax credit calculation.


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.


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site at Click on “File Room” and then on “Electric Cases” and scroll down to Case Number IPC-E-05-26.


Interested parties may petition the commission for reconsideration by no later than June 2. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.