Idaho Public Utilities Commission
Case No. IPC-E-09-28, Order No. 30948
December 8, 2009
Contact: Gene Fadness (208) 334-0339, 890-2712
Idaho Power wants to make FCA permanent
Idaho Power Company is asking state regulators to make permanent a program that allows the utility to recover its fixed costs of delivering energy regardless of the impact energy efficiency and conservation programs have on energy sales.
The Idaho Public Utilities Commission implemented the Fixed Cost Adjustment (FCA) in 2007 as a three-year pilot program. The adjustment, sometimes referred to as a “decoupling mechanism,” allows Idaho Power to recover its fixed costs of delivering energy as established in its most recent general rate case even if there is a reduction in energy sales and revenues because of energy efficiency and demand reduction efforts.
Without a mechanism like the FCA, Idaho Power claims there is a financial disincentive for it to promote energy efficiency and conservation programs because energy sales may decline. The FCA allows Idaho Power to recover its established fixed costs through a surcharge when it under-collects fixed costs because of reduced electrical use. Conversely, if Idaho Power collects more than its established fixed costs, customers receive a credit instead of a surcharge.
During the first year of the pilot, the FCA resulted in a credit of about 48 cents per month on an average residential bill. During the second year, customers were assessed a surcharge, or an increase of about 56 cents per month on an average residential bill. The FCA applies only to residential and small-business customers.
Idaho Power claims that implementation of the FCA has been a major factor in the utility’s substantial increase in its level of investment in energy efficiency and conservation, from $11.5 million in 2006 to $21.2 million during 2008. That investment has resulted in significant increases in the number of megawatt-hours saved – a 29 percent increase after the first year and a 54 percent increase after the second year. According to the company’s figures, the megawatt-hours saved during 2006 was 70,766; during 2007, the total saved was 91,145; and during 2008, the total was 140,156.
The commission has established a Dec. 16 deadline for parties who want to participate in hearings or file testimony. The commission will later establish a schedule for processing this case, including comment deadlines for the utility’s customers or other interested parties.
Documents related to this case can be found on the commission’s Web site at www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. IPC-E-09-28.