28665.mod.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
REFUNDABLE EMERGENCY ENERGY
CHARGE FOR THE RECOVERY OF
EXTRAORDINARY POWER SUPPLY
EXPENSES.

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CASE NO. IPC-E-01-7

NOTICE OF APPLICATION

NOTICE OF PUBLIC
WORKSHOPS AND
HEARINGS

NOTICE OF MODIFIED PROCEDURE

ORDER NO. 28665

On February 23, 2001, Idaho Power Company filed an Application for authority to implement a flat “emergency energy charge” of 1.2737¢ per kilowatt-hour (kWh) applicable to all customer classes for a twelve-month period. Idaho Power supplies electricity to approximately 360,000 customers in southern Idaho. The Company requested that the emergency energy charge become effective March 26, 2001. In this Order the Commission finds that the magnitude of the emergency request warrants further scrutiny. Consequently, the requested effective date is suspended until May 1, 2001, to allow time for the Commission to examine the prudency of the Company’s power purchases, review the Company’s promotion of its conservation policies, and conduct public workshops and hearings.
THE APPLICATION
YOU ARE HEREBY NOTIFIED that Idaho Power alleges that the purpose of the charge would be to recover the Company’s unprecedented $161 million in additional power purchase costs over the last ten (10) months. By way of example, the Company states it has purchased power to meet its retail requirements for the last two months at an approximate average price of $265 per megawatt hour (MWh), which is approximately twelve times the embedded cost of energy that the Company is allowed to charge under its current retail rates.
YOU ARE FURTHER NOTIFIED that the Company indicates that imposition of the emergency charge is necessary to send a correct customer price signal, maintain Idaho Power’s economic strength by reducing short-term debt balances, encourage conservation, and allow business customers more opportunity to factor the higher energy costs into their planning.
YOU ARE FURHTER NOTIFIED that the Company’s proposed emergency charge would incorporate expenses normally recovered in the Company’s annual Power Cost Adjustment (PCA) review conducted every April. Consequently, this emergency energy charge Application represents the first of two potential rate increases. The first increase being the recovery of ten (10) months of additional purchased power costs and the second being the April 2001 – March 2002 PCA based on expected Snake River stream flows and storage plus the remaining two (2) months of additional purchased power costs. The energy charge proposed in this Application would pay for the purchased power expenses accrued through January 31, 2001 that exceed the recoverable rates set in last year’s PCA. Power purchases and fuel costs accrued in February and March 2001 would be included in the Company’s annual PCA filing later this spring.
YOU ARE FURTHER NOTIFIED that the Company proposes the emergency energy charge would be a flat 1.2737¢ per kWh for all customer classes for one year. This charge was computed by dividing the $160,893,917 of deferred energy costs by the 1999 normalized Idaho jurisdiction firm sales amount of 12,632,017 MWh to arrive at a uniform cents-per-kWh charge.
YOU ARE FURTHER NOTIFIED that because not all customers pay the same per-kilowatt-hour charge, the proposed 1.2737¢ per kWh charge represents a different percentage increase for each customer class. The approximate percentage impact of this proposed increase for each customer group or class is set out below:
customer group today’s
average rate proposed average rate percentage increase RESIDENTIAL 5.2 cents per kWh 6.5 cents per kWh 24.3% IRRIGATION 3.9 cents per kWh 5.2 cents per kWh 32.8% SMALL COMMERCIAL 6.4 cents per kWh 7.7 cents per kWh 19.9% LARGE COMMERCIAL 3.7 cents per kWh 4.9 cents per kWh 34.7% INDUSTRIAL 2.9 cents per kWh 4.1 cents per kWh 44.5% YOU ARE FURTHER NOTIFIED that the overall proposed rate change reflects an average 32% increase to current Idaho Power rates. More specifically, the Company’s bill stuffer notifies customers that a typical monthly residential bill for 1,200 kWh will increase from $62.72 to $78.01 if the proposed 1.2737¢ rate increase is approved.
YOU ARE FURTHER NOTIFIED that the Company also requests that the charge be subject to refund pending a determination of the Company’s power supply costs when the Company’s PCA becomes effective in May 2001. Although the Company indicates that it wants to guard against over-collection, it believes refunds are extremely unlikely.
YOU ARE FURTHER NOTIFIED that the Company’s Application to increase its rates is merely a proposal subject to public review and Commission approval.
BACKGROUND
Notwithstanding this proposed emergency energy charge, Idaho residents enjoy some of the least expensive electric service in the nation according to a survey conducted by the Energy Information Administration (EIA) of the U.S. Department of Energy. A 1999 EIA study also found that the average U.S. rate for residential customers is 8.19¢ per kWh; commercial, 7.26¢ per kWh; and industrial, 4.43¢ per kWh. These national averages compare less favorably to Idaho Power’s current rates of 5.2¢ per kWh for residential customers; 6.4¢ per kWh for small commercial customers; 3.7¢ per kWh for large commercial customers, and 2.9¢ per kWh for industrial customers.
Idaho Power rates are adjusted each May when the Company files its Power Cost Adjustment (PCA). The PCA is comprised of two major components: 1) excess Idaho Power power supply costs that include off-system power purchases from the regional power market beyond the amount set by the most recent PCA and; 2) the projection of the next year’s power supply costs based on expected Snake River stream flows and storage. As proposed, this emergency energy charge covers only the first ten (10) months of actual power costs for the April 2000 - March 2001 PCA period. The Company contemplates that a second rate increase may be needed to recover excess costs in the remaining two (2) months of the PCA period and the projected excess costs attributable to low stream flows in the April 2001 - March 2002 PCA period.
As noted by the Commission in its Emergency Hydro Generation Order on December 22, 2000, National Weather Service data indicated that the December snow pack was projected at 26% below normal in the Snake River Basin with less than normal precipitation projected for the next several months. That prediction of a dry winter has come to pass; Natural Resource Conservation Service data indicates that the Snake River Basin snow pack is currently in the range of 39% below normal. This is critical because in a normal water year, Idaho Power generates approximately 60% of its total system requirements from its hydropower facilities. With less water available to generate hydroelectricity, the Company is forced to generate more costly thermal power and to purchase additional off-system power to meet its retail customer requirements.
The western wholesale energy market has been extremely volatile since last summer, in large part due to chronic supply shortages in California and poor hydro generation conditions throughout the West. According to the Wall Street Journal, average wholesale power prices have increased more than ten times from prices one year ago. Consequently, Idaho Power’s energy purchases under these market conditions have created the extraordinary $161 million increase in short-term debt that it seeks to recover with the proposed 1.2737¢ emergency energy charge.
NOTICE OF PUBLIC WORKSHOPS AND HEARINGS
YOU ARE HEREBY NOTIFIED that the Commission has scheduled five public workshops and four hearings in this matter in:

American Falls on Monday, March 26, 2001 at the Power County Senior Center located at 180 Idaho Street. The public workshop will begin at 6 p.m. No public hearing is scheduled for this location.

Pocatello on Tuesday, March 27, 2001 at the West Coast Hotel (formerly Cavanaugh’s Hotel and the Quality Inn) located at 1555 Pocatello Creek Road. The public workshop will begin at 5 p.m. and the public hearing will begin at 7:30 p.m.

Caldwell on Wednesday, April 4, 2001 at the Caldwell Library located at 1010 Dearborn Street. The public workshop will begin at 5 p.m. and the public hearing will begin at 7:30 p.m.

Twin Falls on Thursday, April 5, 2001 at the Best Western Cavanaugh’s Hotel located at 1357 Blue Lakes Boulevard North. The public workshop will begin at 5 p.m. and the public hearing will begin at 7:30 p.m.

Boise on Thursday, April 12, 2001 at the Idaho Public Utilities Commission Hearing Room located at 472 West Washington Street. The public workshop will begin at 5 p.m. and the public hearing will begin at 7:30 p.m.

The public workshops will offer the public an opportunity to meet with the Commission Staff to ask questions and receive information. Following each workshop (except the one scheduled in American Falls), the Commission will hold a formal hearing to obtain public testimony regarding the Company’s proposed yearlong 1.2737¢ per kWh emergency energy charge. The Company, customers, local government leaders, and other interested persons are encouraged to testify.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this matter and Idaho Power Company, an electric utility, pursuant to the authority and power granted under Title 61 of the Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that all hearings will be conducted pursuant to the Rules of Procedure adopted by the Idaho Public Utilities Commission. IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act. In order to participate, understand testimony and argument at a public hearing, persons needing the help of a sign language interpreter or other assistance may ask the Commission to provide a sign language interpreter or other assistance as required under the Americans with Disabilities Act. The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, ID 83720-0074
[phone] (TELEPHONE)
[phone] (TEXT TELEPHONE)
[phone] (FAX)

APPLICATION SUSPENDED
YOU ARE FURTHER NOTIFIED that given the workshop/hearing schedule above, the Commission finds that this Application should be suspended until May 1, 2001, from the proposed effective date of March 26, 2001. Idaho Code § 61-622. This will allow sufficient time for the Commission to complete its hearings and consider the public comments in this case.
DEADLINE FOR INTERVENTION
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter for the purpose of presenting evidence or cross-examining witnesses at hearing must file a Petition to Intervene with the Commission pursuant to this Commission’s Rules of Procedure 72 and 73, IDAPA 31.01.01.072 and -.073. Persons intending to participate at the hearing must file a Petition to Intervene on or before March 22, 2001. Persons desiring to present their views without parties’ rights of participation and cross-examination are not required to intervene and may present their comments without prior notification to the Commission or the parties.
NOTICE OF MODIFIED PROCEDURE
In addition to the public workshops and hearings, the Commission solicits written comments regarding the requested rate increase. Any person or party desiring to state a position on Idaho Power’s proposed rate increase may file a written comment with the Commission no later than Monday, April 16, 2001. The Commission has extended the comment period beyond the standard 21 days to give the public additional time to provide written comment regarding the Company’s Application and the proposed increase. Reference IDAPA 31.01.01.202.02.
YOU ARE FURTHER NOTIFIED that written comments concerning this Application must be mailed to the Idaho Public Utilities Commission and the Idaho Power Company at the following addresses:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
P.O. BOX 83720
BOISE, IDAHO 83720-0074

Street Address for Express Mail:
472 W WASHINGTON ST
BOISE, ID 83702-5983 LARRY D. RIPLEY
GREGORY W. SAID
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
All comments should contain the case caption and case number shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that the Application in Case No. IPC-E-01-7 together with accompanying exhibits and workpapers can be reviewed at the Commission’s office and at the principal office of Idaho Power Company during regular business hours. Idaho Power Company is located at 1221 West Idaho Street in Boise, Idaho (388-2200).
O R D E R
IT IS HEREBY ORDERED that Idaho Power Company’s Application to increase its rates is suspended until May 1, 2001 from the proposed effective date of March 26, 2001 or until such time as the Commission may issue an Order accepting, rejecting, or modifying the requested rate increase.
IT IS FURTHER ORDERED that Idaho Power Company file its annual Power Cost Adjustment with the Commission as soon as possible so that these cases can be processed jointly in an efficient manner.
IT IS FURTHER ORDERED that the Commission does hereby solicit public, Company and Commission Staff oral and written comment on the Company’s Application as more particularly described above, and in accordance with the foregoing schedule.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of March 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:IPCE0107_ln
State Electricity Profiles (1998). This study can be viewed online at:
www.eia.doe.gov/cneaf/electricity/st_profiles/table_a3.html

Electric Retail Prices, Monthly Energy Review. This database can be accessed online at:
http://tonto.eia.doe.gov/mer/

In a good water year, Idaho Power may spend less money on spot market purchases than what the PCA allocated. Under those circumstances, the money saved from decreased power purchases defrays retail rates in the next PCA.

This projection is the statistical average of Snake River Basin stream flows from 1961-1990.

Order No. 28605, Case No. GNR-E-00-1.

The Idaho Snow Survey is sponsored by the U.S. Department of Agriculture’s Natural Resource Conservation Service and can be found online at: http://idsnow.id.nrcs.usda.gov/snow/snotel/update.htm

IPUC Comments in FERC Docket No. RM95-8-000 and Docket No. RM94-7-001 at 3 (August 4, 1995).

Gavin, Robert, Some Utilities Rake in Revenue Amid California Energy Crisis, Wall St. J., Feb. 23, 2001.

NOTICE OF APPLICATION
NOTICE OF PUBLIC WORKSHOPS
AND HEARINGS
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 28665 1

Office of the Secretary
Service Date
March 8, 2001