Idaho Public Utilities Commission

Case No. IPC-E-11-04, Order No. 32248

May 19, 2011

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



Idaho Power rates to increase slightly due to pension expense


State regulators are allowing Idaho Power Company to increase rates by an average 1.39 percent to recover the company’s cash contribution to its defined benefit pension plan.  The increase will be effective June 1, the same effective date for two other rate adjustments that will likely result in an overall decrease in rates.   


Also anticipated to be effective June 1 are changes to the annual Fixed Cost Adjustment (FCA) and Power Cost Adjustment (PCA). If the Idaho Public Utilities Commission were to adopt Idaho Power’s proposals in those cases, the result would be an average increase of 0.36 percent to the FCA and an average decrease of 4.78 percent to the PCA. Combined with today’s order allowing pension expense recovery, the net impact to customers would be an average 3 percent overall rate decrease. 


In the pension case, Idaho Power sought commission authority to increase pension plan expense from $5.4 million annually to $17.1 million annually over three years in order to recover a $60 million contribution Idaho Power made to its defined benefit pension plan. The company had to make a contribution to its plan to satisfy requirements of the federal Employee Retirement Security Act (ERISA). 


While allowing the expense recovery, the commission continued to urge the company to consider modifying its plan to one that would require shareholders and employees to participate in a greater share of costs.  “The commission remains concerned that Idaho Power’s defined benefits pension plan places the burden solely on customers to pay all increased costs of the plan,” the commission said.  The commission, in a separate order, directed the Idaho Power to annually review the company’s total employee compensation and benefits package and compare it with those offered by other utilities. 


The company had the option, under ERISA, to contribute a minimum requirement of $5.8 million, but making the larger contribution now saves the company and ratepayers about $11 million.  In addition, the large contribution now will result in another $1 million savings to the variable portion of the company’s premiums. 


Idaho Power’s contributions to its pension plan have always been included in base rates. However, since 2003, the company was not required to contribute to the plan because the market value of the plan’s assets was more than enough to cover future obligations. Recent market conditions and increasing pension obligations require Idaho Power to begin funding the plan again.  



The commission’s order is final.  Interested parties may petition for reconsideration by no later than June 16.  Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous.  Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, 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 Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-11-04.