IDAHO PUBLIC UTILITIES COMMISSION

Case No. IPC-E-05-36, Order No. 29936

December 28, 2005

Contact: Gene Fadness (208) 334-0339

Website: www.puc.idaho.gov

Commission allows deferral of Idaho Power cloud seeding costs

The Idaho Public Utilities Commission will allow Idaho Power Company to defer expenses it incurs from a cloud seeding program for recovery from customers to a later date, allowing time for the current Idaho Power rate case to be resolved.

Idaho Power sought commission approval to include about $1 million in annual costs to operate its cloud seeding program in its annual power cost adjustment ((PCA) account. Idaho Power claims the additional streamflows produced by cloud seeding generate more electricity from its hydroelectric facilities and prevents the company from having to acquire power from more expensive sources.

In today’s order, commissioners said the company has presented sufficient evidence to establish that the financial benefits of the cloud seeding program exceed costs. However, the commission wants to wait until the current rate case is completed before determining how much of the cloud seeding costs should be included in the PCA, which covers variable costs, and how much, if any, should be included in permanent base rates.

Customer rates are divided into two components, the base rate and the PCA. The PCA annually increases (through a one-year surcharge) or decreases (with a credit) customer rates to account for above-normal or below-normal power supply costs. Power supply costs are above normal when water is plentiful and below normal during drought conditions. Cloud seeding would bring down power supply cost by increasing precipitation. Base rates include fixed costs such as capital investment and maintenance and operations. The company is currently seeking an average 7.8 increase in base rates.

Today’s order allows Idaho Power to defer its 2005-06 cloud seeding costs to the 2006-07 PCA year. By then, the commission will know how much, if any, of the investment in cloud seeding should be assigned to base rates and how much to PCA rates. "We will do no more in this case than to state generally that it may be appropriate to include the variable costs of cloud seeding in future PCA rates, if the commission approves recovery of program costs in permanent customer rates," the commission said.

The company’s most recent cloud seeding efforts began in 2001 during the Western energy crisis caused by drought and record-high wholesale market prices. Cloud seeding during the 2002-03 winter produced an estimated 110,000 acre-feet of increased run-off to feed Idaho Power’s hydroelectric generators. During the winter of 2003-04, cloud seeding produced another 68,000 acre-feet. Without that additional runoff, Idaho Power would have had to spend between $1.6 and $1.8 million in additional generation during the 2002-03 winter and $1.4 million last winter.

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 www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-05-36.

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