20050718Gale letter re February letter.pdf

IDAHO POWER COMPANY
O. BOX 70
BOISE, IDAHO 83707
ILEO
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HI, An IDACORP company
JOHN R. GALE
Vice President
Regulatory Affairs
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July 15, 2005
Ms. Jean Jewell
Commission Secretary
472 West Washington Street
Boise , Idaho 83720-0074
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Re:The February 17 , 2005 System Risk Limit Breach Notification Letter
Dear Ms. Jewell:
On February 17, 2005 the Company notified the Commission of the breach of the Tier
One System Risk Limit established for the 2005-2006 PCA Year. The driving force behind
the breach was a rapidly deteriorating water forecast and adverse power market movements.
Breach of the Tier One limit requires action under the Company s Risk Management Policy.
Accordingly throughout the past six months the Company has executed purchases (both
power and gas) to cover deficits indicated by the Operation Plan , in an effort to reduce and if
possible eliminate the breach. In an effort to inform the Commission Staff and Customer
Advisory Group of the. breach and describe the actions taken by the Company to address the
situation , the Company held a special meting on February 28 , 2005 with the aforementioned
parties.
During the most recent Risk Management Committee meeting, the committee was
notified that the Tier One variance was once again below the System Risk Limit. The
reduction in the variance was primarily due to actual net power supply costs being lower than
those forecasted under the low water! high price scenario for May 2005 and June 2005.
The Company is planning another Customer Advisory Group (CAG) Meeting for
August 1 , 2005. At this meeting the Company will review the performance of the Risk
Management Policy during the current PCA Year as well as establish Risk Guidelines for the
2006-2007 PCA Year
Cordially,
t!
JRG:mac: Terri Carlock, IPUC
Randy Lobb, IPUC
Bart Kline
Betsy Galtney
CAG Members
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