$58 Million Rate Reduction Proposed

On April 15, IDACORP, Inc. primary subsidiary Idaho Power filed its annual Power Cost Adjustment proposal with the Idaho Public Utilities Commission. If approved by the commission, this year’s PCA will reduce customer rates by $58 million, or 6.5 percent overall beginning June 1. The actual percentage of change will vary by customer group based upon the rate they pay.

The typical residential customer using 1,050 kilowatt-hours (kWh) of energy per month will see a decrease of approximately $2.45 on their monthly summer bill and $3.25 a month for non-summer months.

“To be able to reduce rates for our customers in this way is very positive, especially this year, in these difficult economic times,” said General Manager of Regulatory Affairs Greg Said. “This decrease to customer rates while leaving base rates unchanged until 2012 demonstrates our ongoing commitment to the prosperity and health of the communities and people we serve.

“The collaborative settlement Idaho Power reached earlier this year with the IPUC staff and nearly all of the parties who intervene in our Idaho general rate cases was a major component in this year’s PCA,” Said pointed out. “This filing is a testament to the power of working together to achieve a win-win result. It allows for a rate reduction for our customers, and also ensures Idaho Power will receive appropriate rate recovery so the company can continue to provide reliable, responsible electric services to our customers who count on us.”

“All of our customers will see lower bills. Our larger load customers have experienced the highest percentage of PCA impacts historically, and therefore will receive a larger share of the decrease.”

Idaho Power’s PCA has been in place since 1992. It is strictly a cost recovery mechanism that passes on both the benefits and costs of supplying energy to Idaho Power customers. It reflects Idaho Power’s anticipated fuel costs for generating electricity, costs of power purchases to meet customer demand and benefits resulting from sales of surplus energy for the coming year.

The PCA also brings last year’s forecasted costs in balance with actual expenses (also known as the “true-up”). Although forecasted power supply costs are projected to be higher this year, last year’s forecast was far more accurate than in recent years due to new forecasting methodology. As a result, the true-up portion of the PCA provides for the significant decrease in customer rates.

This year’s combined impact of changes in rates from forecast to forecast and true-up to true-up resulted in an initial $87 million total rate reduction. Based upon the predetermined and stipulated revenue sharing allocation of this amount, customers will receive $58 million of that benefit. Per the settlement agreement, the remaining $29 million will offset the first year of a permanent rate increase with $25 million allocated to address general increases in the company’s cost of service and $4 million allocated to cover an allowed increase to base power supply expenses.

In years when water is plentiful Idaho Power is able to more fully utilize its 17-dam hydroelectric system, resulting in lower power production costs and associated benefits passed on to customers. When hydroelectric generating conditions are below average as they have been for 10 of the past 11 years, Idaho Power must use more expensive resources to meet customers’ need for electricity.

As of Feb. 23, the company expected to generate between 6.5 and 8.5 million megawatt-hours (MWh) from its hydroelectric generation resources in 2010 compared to 6.9 and 8.1 million in 2008 and 2009 respectively. The anticipated range for 2010 is below the median annual hydrological generation of 8.6 million MWh, and will be updated on May 6 when the company files its quarterly SEC Form 10-Q.

Return to May 2010 Western Energy News

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