Idaho Public Utilities Commission

Case No. PAC-E-10-01

February 25, 2010

Contact: Gene Fadness (208) 334-0339, 473-8791

Website: www.puc.idaho.gov

 

Commission taking comments on Rocky Mountain power cost adjustment

 

Residential customers of Rocky Mountain Power in eastern Idaho would see their bills go up by about 91 cents a month if regulators approve the utility’s first annual Energy Cost Adjustment Mechanism, or ECAM.

 

The Idaho Public Utilities Commission is taking comments through March 10 on the proposal, which would raise residential rates by 1.29 percent, effective April 1. Irrigation rates would increase by 1.55 percent and commercial rates by about 1.34 percent.

 

The Energy Cost Adjustment Mechanism was approved by the commission last fall as a method to annually adjust power supply costs not already included in base rates. That adjustment will better match customer rates with the actual cost of providing power and should reduce the frequency of filings by the company for general rate increases.

 

The ECAM will be adjusted up or down every April 1. If net power costs are higher than those set in the most recent general rate case, the company collects the difference through a one-year surcharge listed as a separate item on customer bills. If net power costs are lower, customers receive a one-year credit. In this filing, Rocky Mountain claims that net power costs for the latter half of 2009 are $2.2 million higher than what was collected in base rates.

 

Power costs include expenses for coal, natural gas and electricity that Rocky Mountain buys on the wholesale market. Revenue the company makes from sales of electricity or natural gas on the market is credited to customers. During those years when there is a surcharge, all the revenue collected from the surcharge must go toward paying power supply costs. ECAM revenue cannot be used to increase company earnings. Power supply costs are placed in a deferred account audited by the commission. Over the next few weeks, commission staff will review Rocky Mountain’s power costs to ensure that the company was prudent in its power buying and selling decisions and that customers were not harmed by those decisions.

 

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. In approving the ECAM last fall, 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 yearly ECAM should also decrease borrowing costs for the company. Rocky Mountain Power is in a period of increased generation and transmission investment to meet customer demand. Assurances to financial markets of timely recovery of expenses allows for financing at lower interest rates, benefitting both the company and its customers.

 

To encourage 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.

 

Rocky Mountain Power serves about 70,000 customers in southeastern Idaho.

 

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 (PAC-E-10-01) 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.