Idaho Public Utilities Commission
Case No. PAC-E-11-12, Order No. 32432
January 10, 2012
Contact: Gene Fadness (208) 334-0339, 890-2712
Rocky Mountain Power rate increase is effective today
Electric rates for residential customers of Rocky Mountain Power will increase by an average 5.88 percent effective today and 5.4 percent in on Jan. 1, 2013, according to an order from the Idaho Public Utilities Commission. The overall average increase for all customers classes combined is 7.8 percent in 2012 and 7.2 percent in 2013.
Rocky Mountain Power serves about 72,400 customers in eastern Idaho.
Today’s order is in response to a settlement proposed by commission staff, parties representing customer groups and Rocky Mountain in response to its request last May for an average 15 percent increase. The settlement is a 48 percent decrease from the company’s requested 2012 increase and prevents the company from filing another rate case to impact 2013 rates. The company’s own testimony indicated that, absent this settlement, it would have filed another general rate case later this year to recover what it estimates will be a dramatic increase in its power supply costs. Commission staff estimated that increase would have been for at least $30 million above the $34 million allowed in this case. The $34 million allowed is spread over two years, $17 million in each 2012 and 2013. As part of the settlement, the company agrees to not file another base rate case with rates to become effective before Jan. 1, 2014. (That agreement does not include annual adjustments such as the ECAM explained below.)
Commission staff stated said the settlement “represents a significantly better deal for customers,” than had the case progressed to a full hearing. The settlement represents an acceptance of every reduction proposed by staff plus an additional $700,000, according to commission utilities division director Randy Lobb.
The average bill for a residential customer who uses the company average of 837 kilowatt-hours per month will increase by $5.47 and $4.20 in summer and winter respectively in 2012 and by $5.36 and $4.10 per month in summer and winter respectively in 2013.
About $11 million of the $17 million added revenue for both years is attributable to the expense incurred by the utility to meet power supply demand from customers. Those increased costs are due to declining revenue from surplus electricity sales, the expiration of low-cost power purchase agreements and increasing coal costs. The remaining $6 million in non-power supply expense represent fixed costs such as operations and maintenance and investment in power plants and transmission. The $6 million allowed in fixed costs for each 2012 and 2013 is 62 percent less than that sought by the company.
Customers should be aware, however, that some of the company’s power supply costs were not included in base rates and will be recovered through the company’s annual Energy Cost Adjustment Mechanism (ECAM) in April 2013. “Cost recovery decisions in this case have a multi-year impact on customer rates,” Lobb said. The commission allowed $1.045 billion in base rates for variable power supply costs, up from $1.02 billion. If the changing costs of power supply are in fact higher than $1.045 billion, the company recovers that through a one-year ECAM surcharge which is set every April 1. If costs of power supply are lower than that amount, customers get a credit. An ECAM surcharge can be used only to pay down power supply expense and cannot be used to increase company earnings.
The commission’s order addressed two issues repeatedly addressed by customers during public workshops and hearings in Rocky Mountain Power’s eastern Idaho territory.
Residential customers on the company’s “Time of Use” rate were confused by a seemingly larger increase for them as compared to standard residential customers. The increase is 5.88 percent in the standard residential rate, but 7.96 percent for residential customers who sign up for Time of Use, which is a lower rate when customers shift a portion of their power consumption to off-peak hours such as late nights and weekends. Many time-of-use customers believed they were being punished because the percent of increase for that customer class is higher. However, the current average rate for Time of Use customers is 4.2 cents per kWh, compared to 9.6 cents per kWh for standard residential customers. The overall cents-per-kWh increase for Time of Use customers is .3 of a cent smaller than the increase for standard customers but appears larger because the percentage calculation is made from a smaller number. If customers compare the actual standard rate to the Time of Use rate “they will see the substantial value ... if they are able to shift their electrical consumption to off-peak hours,” the commission said.
Despite that savings, only about 26 percent of Rocky Mountain residential customers (15,000 of 57,000) participate in the Time of Use program. “We can only surmise that this relatively low percentage of participation is at least partially attributable to the lack of information about the cost savings potential,” the commission said. It ordered the company to provide a plan on how it can better educate its customers about the benefits of the program.
A second issue raised by customers is the perceived frequency of momentary outages. The commission directed the company to continue is service and performance quality reporting requirements adopted in a previous case, but with an enhanced emphasis on options for improvement.
Other issues addressed in the order included:
n The company agreed to abandon its pursuit of an increase the monthly customer service charge for residential customers. That charge will remain at current levels.
n The settlement approved the remaining 27 percent expense for the Populus to Terminal transmission line denied in the 2010 rate case until the line was fully utilized and benefitting customers. However, that expense will not be included in customer rates until on or after Jan. 1, 2014. Rocky Mountain agreed to drop its state Supreme Court appeal of the commission’s prior ruling regarding recovery of the transmission expense.
n The commission denied a request by the Community Action Partnership Association of Idaho (CAPAI) to increase by 26 percent the money made available for a low-income weatherization assistance (LIWA) program. The commission said CAPAI has failed to provide an adequate accounting of previous allocations to the program. “While CAPAI is under no legal requirement to disclose to the commission a full accounting of its LIWA program distributions, the commission has a fiduciary duty to ensure that all of the allocations it directs the company to make to CAPAI are appropriately spent.” The commission is opening a separate case to determine appropriate criteria for establishing funding levels for LIWA.
n Rate increase percentages for each major customer class in 2012 are 5.88 residential, 7.96 for Time of Use residential, 6.88 for commercial, 7 for industrial, 8.9 for irrigation and 8.9 for large industry and special contract customers.
n The cost to serve each customer class was brought 50 percent closer to actual cost, which represents “a step toward each class paying its fair share of the costs,” while mitigating an even greater rate impact that would occur with a full cost of service move, the order said.
n The settlement allows large industrial customers Agrium and Monsanto to defer and amortize their ECAM balances through 2015 and establishes a new value that Monsanto will be paid for agreeing to curtail its consumption during peak use times.
n Parties signing the settlement include the Monsanto Company, the Idaho Irrigation Pumpers Association and the PacifiCorp Idaho Industrial Customers.
n The Community Action Partnership Association of Idaho (CAPAI) participated in settlement discussions but did not sign. CAPAI agrees with portions of the settlement but did not sign because the agreement does not include an increase for the Low Income Weatherization Assistance (LIWA). CAPAI also expressed concern over the frequency of Rocky Mountain Power rate increases, a perceived lack of transparency in the settlement negotiations and the impact on residential customers of simultaneous rate increase requests from Idaho Power Company, Avista Utilities and Boise-based United Water Idaho.
n Public workshops were held in Grace and Rexburg and public hearings in Downey and St. Anthony. Approximately 60 attended the Downey hearing with 12 testifying and about 115 attended the St. Anthony hearing with 26 testifying. The commission also conducted a telephonic hearing during which two testified. The commission received 75 written comments, nearly all opposed to any rate increase.
n The commission cannot, by state law, arbitrarily refuse to consider utility rate increase requests. State statutes require that all rate requests be considered by the commission to determine whether the expenses the utility seeks to recover through customer rates were needed to serve customers and if they were prudently incurred. When the commission denies expense recovery it must be able to legally demonstrate why the expenses were not needed or prudently incurred. All commission decisions can be appealed to the state Supreme Court by the utility, intervenors or customers.
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 No. PAC-E-11-12.
Interested parties may petition the commission for reconsideration by no later than Jan. 31. 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.