May 12, 2006


Case No. IPC-E-05-28, Final Order No. 30035

Contact: Gene Fadness (208) 334-0339




Commission approves Idaho Power rate case settlement


The Idaho Public Utilities Commission today approved a settlement that allows Idaho Power Company a 3.2 increase in base rates effective June 1.


On Oct. 28, 2005, Idaho Power asked the commission to approve a 7.8 percent increase in base rates. Since then, parties to the case, including commission staff, the Industrial Customers of Idaho Power, the Idaho Irrigation Pumpers Association and several contract customers, entered into settlement negotiations. On Feb. 27, the parties proposed a settlement for a 3.2 percent base rate increase and an $18.1 million increase in annual revenue. The company originally sought a $44 million increase in annual revenue. Today’s commission order approves that settlement.


Later this month, the commission will issue an order determining Idaho Power’s annual power cost adjustment (PCA), a separate component of customer bills that is adjusted annually to account for stream flows and market conditions. Idaho Power is seeking an average 19.4 percent decrease in the PCA. If the commission approves the PCA, the combined effect of the increase in base rates and the decrease in the PCA will result in a net reduction to customers’ overall rate. However, it should be noted that the base rate increase remains in place until Idaho Power files another rate case, while the PCA is adjusted yearly.


The commissioners commended the parties who “were able to compromise and settle the disputed issues in this case.” Commissioners noted that this is the first instance in their recollection of an Idaho Power rate case being settled.


These are the major components of the settlement:


-- The 3.2 base rate increase applies to all major customer classes, although the parties agreed that the company’s model used to determine the cost of service to each customer class does not create a precedent for any future rate case and the parties’ decision not to object to that model does not preclude an objection to it in a future rate case.


-- The rate of return is 8.1 percent. The company originally requested 8.42 percent.  The parties did not set a return on common equity. The company proposed an ROE in the range of 11 to 12 percent.


-- The monthly service charge for residential and small commercial customers is increased from $3.30 per month to $4. Idaho Power originally requested an increase to $6. Idaho Power agreed to not file for an increase in the service charge for at least two years.


-- The company’s proposal to assess a $10 charge for landlords and property managers who want to participate in the “continuous service reversion” program will be delayed for 60 days to allow Idaho Power time to notify landlords and property managers of the program change. The optional program allows landlords or property managers to have customer accounts automatically transferred to them when their tenants terminate electric service. Thus, property owners avoid the disconnection and new service connection process. Currently, the service is offered without charge.


-- At the request of irrigation customers, Idaho Power agreed to convene a working group to review the current operations and results of the Irrigation Peak Rewards program. Proposed modifications would be presented to the company’s Energy Efficiency Advisory Group and then to the commission in time for the 2007 irrigation season.


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-05-28.


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.