Case No. IPC-E-07-08, Order No. 30508

February 28, 2008

Contact: Gene Fadness (208) 334-0339, 890-2712



Commission approves Idaho Power rate case settlement


The Idaho Public Utilities Commission is adopting a settlement proposed by several parties in the Idaho Power Company rate case that will result in an average overall 5.2 percent rate increase for customers effective Friday. For residential customers, the increase is 4.7 percent. Idaho Power requested an overall 10.35 percent increase.


With the increase, the residential non-summer rate increases from 5.4 cents per kWh to 5.7 cents. The summer rate for use beyond 300 kWh increases from 6.1 cents per kWh to 6.4 cents. For an average residential customer using 1,050 kWh per month, an average non-summer monthly bill would increase from $63.60 to $66.36. An average summer bill (June through August) increases from $68.61 to $71.73. Those calculations include the $4 per month customer service charge and the annual Power Cost Adjustment (PCA), which this year is a surcharge of 0.24 cents per kWh. The increase for commercial, industrial and irrigation customers is 5.65 percent.


The settlement did not propose a rate of return or a return on equity, so the commission’s order addresses only the amount of revenue granted. The company was granted a $32.1 million increase in annual revenue after requesting $63.9 million.


Idaho Power filed the case last June. It said the increase was necessary to pay for an additional $300 million investment for new and upgraded transmission and distribution facilities, for equipment upgrades and environmental protection measures and for relicensing and equipment investment related to its hydroelectric projects.


Idaho statutes require that regulated utilities be able to recover prudently incurred expenses. When the commission denies cost recovery to a utility, it must be able to legally demonstrate why the utility’s costs were not prudently incurred or in the best interests of customers. All commission decisions can be appealed to the state Supreme Court.


According to the Energy Information Administration, Idaho’s statewide average retail electric rate of 6.77 cents per kWh (as of October 2007) is the lowest in the nation. However, requests for rate increases from all of Idaho’s regulated utilities, as well those nationwide, are becoming more frequent. This is a result of rising electrical demand, long overdue transmission upgrades and expansions and the continued increase in wholesale prices for oil and natural gas. The commission continues to encourage customers to increase conservation and energy efficiency efforts where possible.


The commission recognizes the impact rate increases have on customers, especially those on low- and fixed-incomes. There are financial assistance programs available. Customers can learn about them by contacting their utility or the commission at 334-0300 or 1-800-432-0369. They can also access the commission’s Web site at Click on “Consumer Information,” in the upper left-hand corner and then on “Energy Assistance and Other Types of Financial Assistance.”


Parties to the case, called intervenors, included the Idaho Irrigation Pumpers Association, the Industrial Customers of Idaho Power, Micron Technology, Inc, the U.S. Department of Energy and Kroger Company. All parties, with the exception of Kroger, signed the settlement. Kroger, which represents the Fred Meyer and Smith’s Food King stores in Idaho, generally supports the settlement but wants large commercial customers like itself to be afforded a Time of Use rate similar to that allowed industrial customers. The order directs Idaho Power to develop a time-of-use rate proposal for large commercial customers and present it to the commission for approval. Time-of-use rates give customers the ability to shift their electrical use to those hours when demand is not at its peak in exchange for a reduced rate.


The commission ordered that issues not resolved in the case be addressed in future discussions with commission staff and interested parties before the company files its next rate case.


Those issues include:


n       deciding on whether to include actual historical financial information during a 12-month “test year” to determine a future rate or whether to use forecasted data. Historically, the commission has approved only the use of historical data or a blend of historical and forecasted data. Idaho Power favors using forecast data, arguing that continued load growth and infrastructure additions during the pendency of a rate case results in the company being already revenue deficient when a new rate is finally implemented. “The company’s test year was a contentious issue,” the order said, with commission staff and most intervenors filing testimony strongly disagreeing with Idaho Power’s test year methodology. The settlement states that parties will participate in good-faith discussions regarding a forecast test year methodology that “balances the auditing concerns of staff and intervenors with the company’s expressed desire for timely rate relief.”

n       devising a mechanism that will either adjust or replace the current Load Growth Adjustment Rate. The load growth rate is intended to compensate for additional revenues attributable to load growth between rate cases. An amount related to load growth is subtracted from the company’s power supply expenses during the Power Cost Adjustment (PCA) process, resulting in a lower PCA for customers.

n       updating Idaho Power’s “Irrigation Peak Rewards Program,” to encourage more participation from irrigators. Currently, only about 10 percent of Idaho Power irrigation customers participate in the program, which gives irrigators financial credits for agreeing to curtail their use during times of peak demand. Irrigators want a larger credit and want to be able to participate in a dispatchable program as well as scheduled curtailments. Under a dispatchable program, Idaho Power could remotely curtail irrigation systems during peak hours. The ability for the company to remotely curtail irrigation demand makes the program more valuable to the company and irrigators.


The commission’s order is available on the commission’s Web site at Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-07-08. Interested parties may petition the commission for reconsideration by no later than March 20. Petitions must set forth specifically why the petitioner thinks 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.