Idaho Public Utilities Commission

Case No. IPC-E-10-20, Order No. 32162

January 24, 2011

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

Website: www.puc.idaho.gov

Proceeds from emission allowances go to Idaho Power customers

About $490,000 of proceeds from Idaho Power Company’s sale of surplus emissions allowances will be applied against customers’ annual Power Cost Adjustment this spring.

Consistent with prior orders from the Idaho Public Utilities Commission, the company will share 95 percent of the proceeds from the sales with customers and 5 percent with shareholders. The PCA is a yearly adjustment to rates – up or down – to account for the variable costs of power supply not already included in base rates. The inclusion of the emissions proceeds in the PCA will either reduce the size of the increase customers may get with the June 1 adjustment or increase the size of the credit customers may receive.

The commission denied a request by the Idaho Energy Education Project (IEEP) that 8 percent of the proceeds be used to continue funding a two-year pilot project for energy education and efficiency programs in public schools. The commission agreed with findings of the commission staff that more funding directed toward the education project not be approved until the two-year pilot is completed this June. Further, the commission noted, almost $375,000 of the original $500,000 allocated for the project is still available for use.

A 1990 amendment to the Clean Air Act established a national program for reducing acid rain. Sulfur dioxide (SO2) and nitrogen oxide (NOx) are the primary causes of acid rain.  In the United States, about two-thirds of all SO2 and one-fourth of all NOx comes from thermal (coal and natural gas) electric generating plants. Idaho Power has an ownership interest in three coal-fired plants: Jim Bridger in Wyoming, North Valmy in Nevada and Boardman in Oregon.

Under the federal program, thermal power plant owners are issued limited allowances for their plants’ sulfur dioxide emissions based on a specific plant’s past emissions and a nationwide cap placed on the total amount of SO2 that can be emitted. Each allowance authorizes the utility to emit one ton of SO2.  At the end of each year, a utility generating unit must hold allowances equal to its allotted annual SO2 emissions.  A utility that holds over its annual requirement is considered to have surplus allowances that can be sold on the open market or through auctions sponsored by the Environmental Protection Agency.

During 2010, Idaho Power sold 20,000 surplus allowances and reported net sales proceeds of $543,000, after deducting brokerage fees of $5,000.

“By including the SO2 funds in the PCA mechanism, it will provide an immediate benefit to all customers,” the commission said.