Idaho Public Utilities Commission
Case No. PAC-E-08-08, Order No. 30904
October 7, 2009
Contact: Gene Fadness (208) 334-0339, 890-2712
PacifiCorp rates will be adjusted annually to account for power supply
Rates for customers of Rocky Mountain Power will be adjusted either up or down every April 1 to account for varying costs of power supply needed to serve the utility’s eastern Idaho customers.
The Idaho Public Utilities Commission has adopted a negotiated settlement that allows a yearly rate adjustment called the Energy Cost Adjustment Mechanism, or ECAM, for PacifiCorp, which does business in eastern Idaho as Rocky Mountain Power. The ECAM will be either a one-year surcharge (increase) to customer bills or a one-year credit (decrease) depending on the company’s power supply expenses that are not already included in the fixed base rates paid by customers.
A greater portion of PacifiCorp’s generation now comes from natural gas. The utility also gets about 30 percent of its generation from hydropower. Changing water conditions and volatility in the natural gas markets can cause fluctuations that sometimes result in power supply expense that is greater than that already included in base rates and sometimes in power supply expense that is less than that included in base rates. When those expenses are higher, customers will get a surcharge and when they are lower, customers will get a credit.
The commission said the yearly adjustment is “supported by the volatility in the energy market and the changing character of the company’s resource portfolio.”
“The commission finds that the designed ECAM will send better price signals to the company’s customers of the cost of power by adjusting their rates on a more current basis,” the commissioners said.
A benefit to customers, even if the ECAM is a surcharge, is that a more timely recovery of power supply expenses should reduce for the frequency of filings by the company for general rate increases. As part of the agreement approving the ECAM, PacifiCorp has agreed not to file a rate case before May 1, 2010.
Another benefit to a yearly adjustment is lower borrowing costs for the company. PacifiCorp is in a period of increased investment, thus assurances to financial markets of timely recovery of expenses allows for financing at lower interest rates, benefitting both the company and its customers.
To incent the company to be prudent in its power supply purchase decisions, the ECAM requires that shareholders pay 10 percent of the power supply expenses not already included in rates.
The Idaho Irrigation Pumpers Association supported the settlement.
Other utilities serving Idaho customers have annual rate adjustments similar to PacifiCorp’s ECAM. Idaho Power Company, which serves customers across southern Idaho, and Avista Utilities, which serves customers in northern Idaho, both have an annual Power Cost Adjustment, or PCA.
Rocky Mountain Power serves about 70,000 in southeastern Idaho.
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 Case Number PAC-E-08-08.
Interested parties may petition the commission for reconsideration by no later than Oct. 20. 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.