PUC considers whether decoupling program should be made permanent
Idaho Power Company would like to make permanent a pilot program that reimburses the utility when it fails to recover its fixed costs of providing electricity due to customer participation in conservation programs.
The Idaho Public Utilities Commission is taking comments through March 23 on whether the Fixed Cost Adjustment (FCA), in place since April 2007, should be made permanent. In 2008, the FCA resulted in about a 1.3 percent increase in rates to residential and small-business customers. In 2007, the FCA was nearly a 1 (0.8) percent decrease.
The FCA is an annual adjustment to electric rates – up or down – designed to prevent the company from losing money when it invests in energy efficiency programs. Often referred to as “decoupling,” the FCA removes the link between energy efficiency and energy sales by allowing the company to recover its fixed costs regardless of the volume of energy sales. Removing that link removes the disincentive of utilities to promote conservation because of potential lost revenue.
The FCA is a “true-up” between fixed costs actually recovered through rates and the fixed cost amount authorized by the commission for recovery in the company’s most recent rate case. If the fixed cost recovered is less than the authorized fixed-cost rate, customers get a surcharge. If the company collects more in fixed costs than authorized by the commission, customers get a credit. The surcharge or credit lasts one year and is then updated. The commission capped the surcharge to not exceed 3 percent and applied it to only residential and small-business customers.
With implementation of the FCA, the commission expects Idaho Power to significantly increase the size and availability of energy efficiency programs and to support more energy efficient building and energy codes.
In 2007, the company upped its investment in conservation programs from $11.5 million to $15.66 million, resulting in an energy savings of 91,145 megawatt-hours, a 29 percent increase from energy saved in 2006. In 2008, conservation investment jumped from $15.66 million to $21.2 million and megawatt-hours saved totaled 104,156, a 54 percent increase over 2007.
The commission plans to handle this request in a modified procedure that uses written comments rather than conducting a hearing, unless customer comments can demonstrate a need for a public hearing. 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-09-28) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.