Commission taking comments on proposed PCA credit
The Idaho Public Utilities Commission will take comments through May 12 on Idaho Power’s proposal to apply an average 19.4 percent reduction to customer bills to reflect this year’s positive stream flows and more normalized market conditions. For residential customers, the proposed PCA credit is a 15.4 percent reduction in the overall rate effective June 1.
Customer bills are divided into two components, the base rate and the power cost adjustment (PCA). The PCA is shown as a surcharge or a credit on a customer bill and changes every spring to account for Idaho Power’s above-normal or below-normal power supply costs. In Idaho Power's territory, where about half its electricity is generated from hydroelectric dams, streamflow levels largely determine power supply costs. When streamflow levels are above normal the company doesn’t have to generate as much power from more expensive coal or natural gas resources and does not have to buy as much power on the wholesale market. A second factor in determining the PCA is the cost of power on the wholesale market. When streamflows are above normal and market conditions are normal, customers typically get a PCA credit. When streamflows are below normal and Idaho Power must generate power from more expensive thermal sources or buy more power on the wholesale market, customers typically get a PCA surcharge.
This year, with Snake River streamflows at 33 percent above the 30-year average. Idaho Power’s annual power costs have decreased by $46.8 million, 90 percent of which is credited back to customers. It represents the largest credit for customers since the PCA mechanism was put into place in 1993. It is also the first time, after six continuous years of drought conditions, that customers may receive a credit rather than a surcharge.
The power cost adjustment portion of the bill is now a surcharge of 0.6039 cents per kWh that is added to the residential customer rate of 5.428 cents per kWh for a combined overall rate of 6.0319 cents per kWh. The proposed PCA would remove the current surcharge entirely and credit another 0.3689 cents from the current residential base rate.
Also yet to be resolved is the company’s new base rate. Last October, Idaho Power applied to the commission for a 7.8 percent increase in the base rate component of electric bills. Negotiations with commission staff and other parties lowered Idaho Power’s request to 3.2 percent. The commission has yet to approve that settlement.
Idaho Power is requesting that the base rate change and the power cost adjustment both be effective June 1. If that were the case, the overall rate change would be an average rate reduction of 16 percent for all customer classes and about 12.2 percent for the residential class. According to the company’s calculations, an average non-summer residential bill would decrease from $76.91 to $65.72 if both the base rate increase and the power cost adjustment credit were approved. An average summer residential bill would decrease from $82.61 to $71.93.
Those wishing to submit comments must do so by no later than May 12. Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the case number (IPC-E-06-07) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.
A full text of the commission’s order, along with other 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.
(The PCA amount reflects how much power supply costs exceeded or fell short of the amount of power supply costs the company had included in base rates. For example, in 1993 the company spent $4.94 million more on power supply than had been included in base rates. The 2001 and 2002 adjustments are the result of the Westwide energy crisis that included a record high wholesale market prices on top or record drought conditions.)
1993 $4,942,418 surcharge
1994 $14,705,336 surcharge
1995 $8,117,476 surcharge
1996 -$17,578,509 credit
1997 -$16,685,560 credit
1998 $17,257,322 surcharge
1999 $-$23,150,141 credit
2000 $14,811,616 surcharge
2001 $220,174,559 surcharge
2002 $240,022,041 surcharge
2003 $81,268,080 surcharge
2004 $70,773,149 surcharge
2005 $73,100,565 surcharge
2006 -$46,832,456 credit proposed