28685.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE IDAHO POWER
COMPANY APPLICATION FOR A
REFUNDABLE EMERGENCY ENERGY
CHARGE FOR THE RECOVERY OF
EXTRAORDINARY POWER SUPPLY
EXPENSES.
)
)
)
)
)
)
)
CASE NO. IPC-E-01-7

IN THE MATTER OF THE IDAHO POWER
COMPANY APPLICATION FOR AUTHORITY
TO IMPLEMENT A POWER COST
ADJUSTMENT (PCA) RATE FOR ELECTRIC
SERVICE FROM MAY 1, 2001 THROUGH MAY
15, 2002.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
CASE NO. IPC-E-01-11

NOTICE OF APPLICATION

NOTICE OF PUBLIC
WORKSHOPS AND
HEARINGS

NOTICE OF MODIFIED PROCEDURE

ORDER NO. 28685
On March 21, 2001, Idaho Power Company filed an Application with the Commission for authority to increase the Power Cost Adjustment (PCA) rate schedule from the existing 0.1371¢ per kilowatt hour (kWh) rate to 0.6152¢ per kWh. 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 Company power supply costs during the preceding twelve (12) months, which include off-system power purchases from the regional power market beyond the amount allocated in customer base rates, and 2) the projection of the next year’s power supply costs based on expected Snake River stream flows and storage. The proposed rate increase in Case No. IPC-E-01-11 is primarily based upon below average water flows in Idaho’s hydroelectric system. This request (IPC-E-01-11), if approved, would result in an overall increase of approximately $66.4 million in revenues. Idaho Power supplies electricity to approximately 360,000 customers in southern Idaho. The Company has requested an effective date of May 1, 2001.
This PCA rate increase request is in addition to the 1.2737¢ per kWh “emergency energy charge” applicable to all customer classes previously requested by the Company in Case No. IPC-E-01-7. Although the Company requested that the emergency energy charge become effective March 26, 2001, the Commission suspended the effective date until May 1, 2001, to allow the Commission time 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. Order No. 28665 (Case No. IPC-E-01-7).
Even though these two Applications were filed separately, the recovery of off-system purchased power expenses sought by the proposed emergency energy charge are historically included in the Company’s annual PCA filing. Consequently, in this Order the Commission combines the proposed emergency energy charge (IPC-E-01-7) and Power Cost Adjustment (IPC-E-01-11) into a single proceeding to facilitate comprehensive consideration of all components of the PCA. Furthermore, the Commission affirms the public workshop and hearing schedule set out in Order No. 28665 as an opportunity for public information and testimony on both of these Applications (hereinafter referred to as the “combined PCA filing”).
THE COMBINED PCA FILING
YOU ARE HEREBY NOTIFIED that Idaho Power’s combined PCA filing requests a 1.8889¢ per kWh rate increase for all customer classes for a period of twelve (12) months. This rate increase would generate approximately $227.4 million in revenues from the two PCA components. First, Idaho Power seeks approximately $186 million to recover above normal power supply costs during the April 2000 – February 2001 PCA period. These costs are predominantly off-system purchased power costs. Second, the Company requests approximately $66 million in anticipation of above normal power supply costs for the April 2001 – March 2002 PCA period due to below normal Snake River stream flows and storage. Large quantities of off-system purchases in the past year and the forecast for significantly below normal water conditions in the coming year combine to produce rate increases of the magnitude reflected in the table below.
YOU ARE FURTHER NOTIFIED that because not all customers pay the same per-kilowatt-hour charge, the proposed 1.8889¢ 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 7.1 cents per kWh 34.4% Irrigation 3.9 cents per kWh 5.8 cents per kWh 46.8% Small Commercial 6.4 cents per kWh 8.3 cents per kWh 27.9% Large Commercial 3.7 cents per kWh 5.5 cents per kWh 49.6% Industrial 2.9 cents per kWh 4.7 cents per kWh 62.8%
YOU ARE FURTHER NOTIFIED that the overall proposed rate change reflects an average 45.6% 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 $84.34 if the proposed 1.8889¢ rate increase is approved.
YOU ARE FURTHER NOTIFIED that the Company’s Application to increase its rates is merely a proposal subject to Commission review and approval.
BACKGROUND
Notwithstanding this combined PCA filing, 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. Electric rates have gone up five times since the PCA originated in 1992, with those increases totaling $61.1 million. Conversely, rates have also decreased three times in the last nine (9) years, with reductions totaling $57.6 million.
In its March 1, 2001 forecast, the National Weather Service River Forecast Center projected the April through July Brownlee runoff to be 2.4 million acre-feet, far below last year’s 4.2 million acre feet. 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. As exhibited by this week’s rolling blackouts in California, there remains considerable volatility in the regional power markets. According to the Wall Street Journal, average wholesale power prices have increased more than ten (10) times from prices one year ago. Consequently Idaho Power’s power supply costs, which are made up primarily of energy purchases under these market conditions, comprise approximately 76 percent of the $227.4 million the Company seeks to recover with the proposed 1.8889¢ per kWh increase.
NOTICE OF PUBLIC WORKSHOPS AND HEARINGS
YOU ARE HEREBY NOTIFIED that the Commission has scheduled five public workshops and four hearings to discuss the Company’s combined PCA rate increase. These proceedings will be held 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 public hearing to obtain public testimony regarding the Company’s proposed 1.8889¢ per kWh PCA increase. 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 specifically Idaho Code §§ 61-307 and 61-622.
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)

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 intervene at the hearings must file a Petition to Intervene on or before March 30, 2001 and/or orally petition to intervene at the start of the March 27, 2001 Pocatello hearing. 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
YOU ARE FURTHER NOTIFIED that the Commission has determined that the public interest may not require a formal hearing in this matter and will proceed under Modified Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules of Procedure, IDAPA 31.01.01201 through –204.
YOU ARE FURTHER NOTIFIED that in addition to the public workshops and hearings, the Commission solicits written comments regarding the requested rate increase. Any person 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. Persons desiring a formal hearing must specifically request a formal hearing in their written comments. 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 if the Commission were to approve the sizable PCA rate increase requested by the Company, immediate implementation of the higher rate could cause rate shock. Consequently, the Commission requests that Staff, Company and the public submit comments on a plan to phase-in the rate increase over time. Parties should also comment on how such a plan would affect the company, its customers, and the established PCA methodology. Related ramifications including fairness and equity should also be addressed.
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 captions and case numbers shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that the Applications in Case Nos. IPC-E-01-7 and IPC-E-01-11 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 Applications in IPC-E-01-7 and IPC-E-01-11 are combined into a single proceeding to facilitate comprehensive consideration of all components of the proposed Power Cost Adjustment (PCA).
IT IS FURTHER ORDERED that the Commission does hereby solicit public, Company and Commission Staff oral and written comment on the Company’s PCA request as more particularly described above, and in accordance with the foregoing schedule.
IT IS FURTHER ORDERED that persons intending to intervene at the hearings must file a Petition to Intervene on or before March 30, 2001 and/or orally petition to intervene at the start of the March 27, 2001 Pocatello hearing.
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:IPCE0111_ln
In March 1993, the Commission authorized Idaho Power to file proposed Power Cost Adjustment (PCA) surcharges or rebates to take effect in May each year. Order No. 24806 (Case No. IPC-E-92-25).

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

The Company may recover 90 percent of the difference between the projected power cost and the Commission’s approved base power cost. Order No. 25880.

Typically this forecast is based upon an April 1st projection of April through July Brownlee runoff. Because the Commission requested that Idaho Power file its PCA early, the Company substituted a March 1st projection of the April through July Brownlee runoff.
Although power purchases for March 2001 would normally be included in this 2000 – 2001 PCA filing, the early filing of this PCA at the Commission’s request made March’s inclusion impossible. Consequently, the Company contemplates that additional March 2001 power purchases will be included in the next PCA.
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/

An acre-foot is the amount of water that would cover one acre to a depth of one foot.

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. 28685 1

Office of the Secretary
Service Date
March 23, 2001