Commission taking comments on decoupling mechanism
The Idaho Public Utilities Commission is taking comments through March 1 on an Idaho Power Company application to make its pilot Fixed Cost Adjustment (FCA) program permanent.
The FCA, which allows Idaho Power to recover its fixed costs of providing service when conservation results in reduced energy sales, has been in place since 2007 as a pilot program. When Idaho Power filed to make the program permanent in 2009, the commission denied the request stating results of the program are “mixed” and there are still too many unanswered questions. However, the commission allowed the program to continue for another two years as a pilot program.
With two more years of the pilot completed and after further discussion between commission staff, the Idaho Conservation League, Micron Technology, Inc., and Northwest Energy Coalition, the commission is taking comment through March 1 on an Idaho Power proposal to make the program permanent. Reply comments are due March 15.
Regulated utilities have a built-in disincentive to invest in energy efficiency and conservation programs because they lose revenue when electric consumption declines. To remove that disincentive, the Fixed Cost Adjustment, which can be no higher than 3 percent, is designed to ensure the company recovers its fixed costs of serving customers regardless of the amount of energy conservation. Often referred to as “decoupling,” the FCA decouples the link between energy efficiency and energy sales.
If the actual fixed costs recovered from customers by Idaho Power are less than the fixed costs authorized in the most recent rate case, residential and small-commercial customers get a surcharge. If the company collects more in fixed costs than authorized by the commission, customers get a credit.
With implementation of the FCA, the commission expected Idaho Power to significantly increase the size and availability of energy efficiency programs, which the commission said the company has done. Energy efficiency is the least expensive energy source for utilities. Program that encourage reductions in energy demand and more efficient use of energy can delay or defer the utility’s need to build more power plants or buy energy from more expensive resources.
The following is the average monthly rate impact of the FCA for residential and small-business customers from 2007 through 2010:
2007 – 48 cent reduction
2008 – 56 cent increase
2009 -- $1.28 increase
2010 -- $1.89 increase
Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (IPC-E-11-19) 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. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.