Idaho Public Utilities Commission

Case No. IPC-E-07-18, Order No. 30529

April 16, 2008

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

Commission directs emission sales proceeds toward reducing PCA

The Idaho Public Utilities Commission has determined that nearly all of the proceeds Idaho Power Company earned through its sale of sulfur dioxide (SO₂) emissions credits during 2007 should go toward offsetting the company’s proposed Power Cost Adjustment surcharge.

On Tuesday, Idaho Power filed its annual Power Cost Adjustment, requesting a one-year surcharge to recover $87 million in power supply and fuel expenses. To recover the full $87 million, Idaho Power would need to raise rates an average 12.7 percent for one year for all customer classes effective June 1. In this order, the commission is directing that about $16 million in proceeds earned by the company from its sale of surplus SO₂ emission credits be applied against the PCA, which would decrease the PCA to $71 million and the overall proposed surcharge to about 10.4 percent.

Idaho Power sold 35,000 SO₂ allowances during 2007 for $19.6 million less brokerage fees. The company proposed several ways of using revenues from the emissions sales to benefit customers including 1) buying green tags from owners of small-wind projects or other renewable projects; 2) allowing Idaho Power to enter negotiations or solicit bids to buy a wind project’s development rights; 3) using $500,000 to develop classroom education programs about energy efficiency with the remaining balance directed toward other energy efficiency operations; and 4) applying the proceeds against the PCA to provide rate relief to customers.

The commission conducted workshops and solicited public comment regarding the best use of the SO₂ proceeds. Micron, the Industrial Customers of Idaho Power and PUC staff all endorsed using the revenues to offset the PCA. The Idaho Conservation League and wind developers Ridgeline Energy and Windland supported buying the rights of a wind project. The Snake River Alliance advocated the funding of energy education programs and well as investment in renewable projects and energy efficiency programs.

The commission commended Idaho Power and other participants for the variety of proposals. “We, too, believe that it is beneficial to ‘think outside the box’ and consider non-traditional uses of one-time revenues,” the commission said. However, the commission felt customers would most benefit by applying the proceeds against this year’s PCA deferral balance, one of the highest on record.

The commission did agree to set aside $500,000 of the proceeds to be directed toward energy education as proposed by the Idaho Energy Education Project. However, before authorizing the money, the commission wants more specifics about the program such as a syllabus, curriculum or more details about existing programs with school districts or state agencies. It gave the IEEP 14 days to file the added information.

An amendment to the 1990 Clean Air Act establishes a national program for reducing acid rain. Sulfur dioxide (SO₂) and nitrogen oxide (NOx) are the primary causes of acid rain. In the United States, about two-thirds of all SO₂ and one-fourth of all NOx comes from thermal (coal and natural gas) electric generating plants.

Under the federal program, thermal power plant owners are issued limited allowances for their plants’ sulfur dioxide emissions based on a specific plant’s past emissions and a nationwide cap placed on the total amount of SO₂ that can be emitted. Each allowance authorizes the utility to emit one ton of SO₂. At the end of each year, a utility generating unit must hold allowances equal to its allotted annual SO₂ emissions. A utility that holds over its annual requirement is considered to have surplus allowances that can be sold on the open market or through auctions sponsored by the Environmental Protection Agency.

Idaho Power has an ownership interest in three coal-fired plants: Jim Bridger in Wyoming, North Valmy in Nevada and Boardman in Oregon.

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 Case No. IPC-E-07-18.

Interested parties may petition the commission for reconsideration by no later than May 5. 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.

The Idaho Public Utilities Commission has determined that nearly all of the proceeds Idaho Power Company earned through its sale of sulfur dioxide (SO₂) emissions credits should go toward offsetting the company’s proposed Power Cost Adjustment surcharge.