Idaho Public Utilities Commission

Case No. IPC-E-09-30, Order No. 30960

December 10, 2009

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

Website: www.puc.idaho.gov

 

 

Commission taking comments on rate moratorium

 

The Idaho Public Utilities Commission will take comments through December 22 on an application by Idaho Power Company proposing adoption of a settlement that would place a moratorium on general rate case increases until January 2012 and give the company a better opportunity to earn its allowed rate of return.

 

The settlement, agreed to by Idaho Power and a number of customer groups, would allow Idaho Power to use some of the reduction in the Power Cost Adjustment (PCA) surcharge that customers are expected to get next June. The PCA is a one-year surcharge or a one-year credit depending on the previous year’s water levels and market conditions. The PCA was a significant increase to customers in 2007 and 2008. The last year customers got a PCA credit was in 2006.

 

The agreement would allow the company to convert up to $25 million of the first $50 million of anticipated PCA rate reduction to base rates. Customers are expected to benefit next June with a signification reduction, now estimated to be about $160 million.

 

The agreement also allows the company to accelerate the use of the customer share of tax credits the company receives on its capital investments. Typically, the customer portion of the tax benefit is credited over the lifetime of the investment. Under the proposed settlement, Idaho Power would use the out years of the investment credit to buttress its earnings rather than asking for a general rate increase. The agreement limits the amount of the investment tax credit that can be accelerated to $45 million over three years.

 

The accelerated tax credit would help the company earn up to a 9.5 percent return on equity over the years of the agreement. Without it, the company claims customer rates would increase significantly to bring the company up to its allowed return on equity (ROE) of 10.5 percent. Increasing the ROE adds millions to a general rate case request and is one of the more significant rate case expenses.

 

Idaho Power proposes to share earnings with customers through rate reductions if the company’s ROE is higher than 10.5 percent. When the ROE is less than 9.5 percent, the company would be able to amortize the investment tax credits, but not to exceed $45 million. Idaho Power has not able to earn its authorized rate of return throughout this decade in either Idaho or Oregon jurisdictions.

 

 

The moratorium would affect only changes in base rates. It does not include increases or decreases to the annual PCA, the annual Fixed Cost Adjustment or energy efficiency riders.

 

Parties to the settlement include Idaho Power, the Industrial Customers of Idaho Power, the Community Action Partnership Association of Idaho, the Idaho Irrigation Pumpers Association, Micron Technology Inc., the U.S. Department of Energy and the Kroger Company. Commission staff is also a party to the agreement. The staff operates independently of the three commissioners who will decide the case.

 

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-09-30) 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, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.