Case No. IPC-E-08-04, Order No. 30521
Idaho Power seeks expansion of energy efficiency programs
The Idaho Public Utilities Commission is taking comments through mid-May on two proposed rate adjustments by Idaho Power Co., both dealing with the company’s energy conservation and efficiency programs. One adjustment slightly increases residential rates and one slightly decreases them.
To encourage utility investment in energy conservation, the commission last year authorized a three-year pilot program called the Fixed Cost Adjustment (FCA). The annual rate adjustment is designed to remove the financial disincentive that occurs when conservation programs cause Idaho Power sales to decline.
If, because of reduced electrical use, Idaho Power under-collects its fixed cost per customer of doing business, the company can collect the difference through a surcharge. If Idaho Power over-collects its authorized fixed costs, customers are refunded through a credit.
During 2007, the company claims it over-collected about $3.5 million from residential customers and under-collected $1.2 million from small-commercial customers. Thus, the company is proposing a 1.17 percent monthly rate credit beginning June 1 for residential customers and a 3 percent monthly surcharge for small-commercial customers. Recovery of the full amount from small-commercial customers would require a 7.3 percent surcharge, but part of the FCA pilot program is a 3 percent cap on any increase.
In a separate case, the commission is taking comment on an Idaho Power proposal to increase the surcharge it collects to fund demand response and energy efficiency programs from 1.5 percent of base revenue to 2.5 percent.
Demand response programs are designed to reduce the actual megawatts the company needs at specific times of the day and year when electricity is in short supply and at high cost. Through the use of load control devices installed on customer meters, Idaho Power can reduce the amount of power it needs during peak periods when electricity is most expensive. Idaho Power claims it was able to shave 57 megawatts of off peak demand during 2007. One megawatt is enough to power about 700 average-sized homes during the non-summer months and 350 average-sized homes during summer.
In addition to demand-response programs, the surcharge also funds energy efficiency programs that reduce megawatt-hours consumed. Energy efficiency programs can include cash incentives, information and services that aid in the construction of energy-efficient buildings and the installation of energy-efficient appliances. During 2007, Idaho Power claims it was able to reduce consumption by 91,145 megawatt-hours as a result of its energy efficiency programs.
Idaho Power seeks to increase its annual investment in demand response and energy efficiency programs with a 1 percent increase in the rider for all customer classes. If approved, that increase would allow the company to collect $16 million annually for these programs instead of the current $9 million. A commission decision approving the rider increase allows the company to pursue expanded energy conservation as an alternative to acquiring often more expensive additional resources. A factor for the commission in determining whether to approve the rider increase is if it finds that customers benefit because the company saves more in energy costs than it spends on the programs.
Idaho Power’s application also seeks to remove rate caps the commission placed on residential and irrigation programs when it initially approved the surcharge in 2002. The current 1.5 percent rider is capped at $1.75 per month for residential customers and at $50 per meter per month for irrigation customers.
According to the company’s figures, the net result of both the Fixed Cost Adjustment and the energy efficiency rider increase is an average 1.3 percent increase for residential customers, or about 78 cents during the non-summer months and $1.01 during June, July and August.
For small-commercial customers, the average increase is 5.3 percent; for large-commercial, 2.4 percent; for irrigation, 2.7 percent and for industrial, 2.4 percent.
This proposal does not include the company’s requested 1.4 percent increase to pay for a natural gas plant in Mountain Home scheduled to be operating by June 1. Nor does it include the company’s annual Power Cost Adjustment (PCA) expected to be filed by mid-April. The PCA recovers the company’s power supply expenses not already included in base rates. The size of the surcharge or credit depends on snowpack levels and wholesale market conditions.
Comments on the Fixed Cost Adjustment proposal are due May 9 and comments on the Energy Efficiency Rider are due May 15. 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-08-04 for the Fixed Cost Adjustment and IPC-E-08-03 for the Energy Efficiency Rider) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.