Idaho Public Utilities Commission

October 8, 2008

Case No. PAC-E-08-07, Notice of Application and Intervention Deadline

Contact: Gene Fadness

Website: www.puc.idaho.gov

Commission opens docket in Rocky Mountain case

The Idaho Public Utilities Commission has suspended for six months Rocky Mountain Power’s request for an average 4 percent rate increase and established an Oct. 24 deadline for parties wanting to intervene in the case.

Rocky Mountain Power, which has about 70,000 customers in eastern Idaho, filed an application with the commission on Sept. 19, seeking an annual increase in revenue of $5.9 million. As it typically does in major rate cases, the commission is suspending for up to six months Rocky Mountain Power’s proposed effective date of Oct. 19.

If the commission were to grant Rocky Mountain’s request in its entirety, the bill for an average residential customer who uses 850 kilowatt-hours per month would increase by $3.55 per month, or 4.73 percent. The company is requesting a 2.31 percent increase for irrigators, no increase for small commercial customers and a 7.96 percent increase for large commercial customers.

The commission established an intervention deadline of Oct. 24 for parties who want to intervene in the case to present evidence, cross-examine witnesses and participate in settlement and negotiation conferences. Customers who do not intervene can provide written comments and testify at public hearings. Dates for possible future public workshops and/or hearings will be announced later.

The commission’s role is to represent the public interest, which includes the interests of both the utility and its customers. The commission is required by state statute to allow utilities to recover expenses that are necessary to serve customers and are prudently incurred. The commission’s staff of auditors, engineers and attorneys now begin an examination of the company’s application and an audit of its financial records to determine if Rocky Mountain’s claimed added expense is needed to serve customers and if the company was prudent in the financial decisions.

Rocky Mountain claims that as demand for electricity has grown, it has made investments in new infrastructure and facilities in its territory which includes much of Utah, eastern Idaho and western Wyoming. The company expects to spend $2 billion annually over the next 20 years on new plant investment including new generation resources, transmission lines and distribution facilities needed to meet customer demand. In addition, the company asserts that the cost for fuel the company must acquire to serve customers – such as natural gas – has also increased.

In addition to allowing utilities to recover prudently incurred expenses, the commission is also required to establish a rate of return and a return on equity. Rocky Mountain Power claims that an overall revenue requirement of $19.4 million is needed for the company to earn the return on equity of 10.75 percent the company is requesting. However, caps placed on Rocky Mountain by previous agreements, including one with its large industrial customers, Monsanto and Agrium, reduces the request from Rocky Mountain Power to $5.9 million.

The commission has the authority to accept, deny or modify Rocky Mountain’s request. However, when it denies expense, the commission must be able to demonstrate that the expenses was not necessary to serve customers or was not prudently incurred. All commission decisions can be appealed to the state Supreme Court.

Customers can review the company’s application, including the testimony of company officials, on the commission’s Website at www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. PAC-E-08-07. Copes of the application are also available for inspection at the company’s offices in Rexburg, Preston, Shelley and Montpelier.