20040819Press Release.pdf

IDAHO PUBLIC UTILITIES COMMISSION
Case No. IPC-03-, Order No. 29567
Case No. IPC-04-9, Order No. 29568
August 19, 2004
Contact: Gene Fadness [phone]
Website: www.puc.state.id.
Settlements proposed regarding Idaho Power, PUC issues
Boise - Two separate issues are being proposed for settlement by staff from the Idaho Public
Utilities Commission and Idaho Power Company. A short public comment period begins
immediately and lasts through Sept. 1 after which the commissioners will determine if the
settlements are in the public interest.
In one matter, commission staff and Idaho Power propose a settlement over a disputed income
tax expense issue arising out of Idaho Power s recently concluded rate case. In that case, Idaho
Power received an average 5.2 percent rate increase. It requested 14.5 percent. After the May 25
order, Idaho Power asked the commission to reconsider the portion of the order that said income
tax expenses Idaho Power can recover from customers must be calculated on an historic five-
year average rather than on the statutory federal and state income tax rates. The effect of using
the five-year average was to decrease Idaho Power s annual revenue requirement by $11.5
million.
The settlement proposes to the commission that Idaho Power s income tax expense method be
accepted. However, because the new rates from the rate case became effective June 1 , the
settlement proposes that rates not be adjusted until next year. For the period between June 1
2004, and May 31 2005 , Idaho Power and the commission staff propose a formula to compute
and record monthly in a regulatory asset account an amount equal to the additional revenue that
company would have received using the statutory income tax rates rather than the five-year
average. If the commission accepts the calculated total, it would be included for recovery from
customers when Idaho Power has its annual power cost adjustment process (PCA) next spring.
The settlement also proposes that base rates be adjusted at that time to account for the revenue
requirement change from June 1 2005 forward.
In a separate proposed settlement, staff and the company propose a single comprehensive
settlement of a number of outstanding issues relating to the company s recent rate case and its
power cost adjustment process. The net result of all those issues is a $19.3 million credit to be
paid customers of Idaho Power over the next two years through the company s annual PCA.
The first of the issues in the comprehensive settlement relates to extraordinary expenses the
company incurred securing power from other sources after an equipment failure at the Valmy
generation plant in Nevada. Idaho Power jointly owns the Valmy plant with Sierra Pacific, a
Nevada utility. The generator unit was out of service from June 26 through Sept 8, 2003.
Because of the outage, Idaho Power was required to purchase replacement power at rates
significantly higher than the costs for Valmy. Staff questioned whether customers should pay the
above-normal costs for replacement power. In the settlement, both parties acknowledge that the
outage was atypical and, in part, out of the control of Idaho Power.
In another matter related to the comprehensive settlement, staff and Idaho Power propose to
leave a PCA expense adjustment rate for growth at the current level of 1.684 cents per kWh. In
the recently concluded rate case, Idaho Power argued for a much lower expense adjustment
while commission staff argued for a higher adjustment. The adjustment is credited against the
amount of money the company is able to claim in its PCA due to growth in energy sales. During
those years when Idaho Power has below-normal energy sales, the expense adjustment is added
to the company s power costs.
The third and final portion of the comprehensive settlement resolves certain regulatory
accounting issues related to an income deduction Idaho Power received in 2001.
The commission is not bound by either settlement. It will independently determine if the
settlements are fair, reasonable and in the public interest. The commission may accept, reject or
state additional conditions under which the settlements would be accepted.
Interested parties can file written comments by no later than Sept. 1. Comments can be made via
e-mail by accessing the commission s homepage at www.puc.state.id.and clicking on
Comments & Questions." Those wanting to comment on the settlement regarding the income
tax expense should include the case number, IPC-03-13. Those wanting to comment on the
consolidated settlement addressing the Valmy outage, the expense adjustment rate for growth
and the income tax deduction should include the case number, IPC-04-9. Comments can also
be mailed to P.O. Box 83720, Boise, ill 83720-0074 or faxed to [phone].
END