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Idaho Public Utilities Commission

Case Nos. IPC-E-10-06,-07 and -08.

April 23, 2010

Contact: Gene Fadness [phone], 890-2712

Website:
http://www.puc.idaho.govwww.puc.idaho.gov

Commission taking comments on Idaho Power requests

Customers have until May 6 to comment on two rate adjustments proposed by Idaho Power Company and until May 13 on another.

Idaho Power is proposing an average 1.26 percent increase to rates for all three adjustments combined. However, the increases, if approved, are expected to be effective on the same June 1 date that customers will likely be getting a 6.5 percent decrease in the annual Power Cost Adjustment (PCA). If approved as submitted, the net result for all customer classes will be a 5.25 percent decrease in overall rates. For residential customers, the net decrease is about 1.4 percent. Details about the proposed PCA decrease will be announced soon.

The three proposed increases are for automated meter installation (0.27 percent), the annual Fixed Cost Adjustment (0.39 percent) and pension expense recovery (0.61 percent.)

Case No. IPC-E-10-06, Automated meter installation (0.27 percent) – Idaho Power is in the second year of a three-year installation of automated meters throughout its territory. Idaho Power is replacing its existing meters with advanced metering infrastructure (AMI) that will eventually allow customers to monitor electric prices and adjust their use to take advantage of lower price-periods. Idaho Power submitted a cost estimate of $71 million for the project and will absorb any costs above that.

In early 2009, the commission directed Idaho Power to "move forward with all deliberate speed" with installation. The meters were installed last year in the Boise area and are being installed this year in Canyon and Payette counties and surrounding regions. During 2011, meters will be installed in the Magic Valley, Pocatello and Salmon areas.

The advanced meters can be read from a remote location, negating the need for an Idaho Power representative to access customer properties. They can provide the company and individual customers with hourly meter readings and inform customers of current electric prices, potentially allowing them to manage their use and reduce their bills.

Customers have until May 6 to comment on this case.

Case No. IPC-E-10-07, Fixed Cost Adjustment (0.39 percent) -- The FCA was implemented in 2007, the first year of a three-year pilot program. The adjustment allows Idaho Power to recover fixed costs it loses when conservation programs result in lower power sales. Without a mechanism like the FCA, there is a financial disincentive for utilities to promote energy efficiency and conservation programs because they lose money when those programs are successful. The FCA allows Idaho Power to recover its fixed costs as established in the most recent rate case. If the company under-collects its fixed costs, customers get a surcharge.  Conversely, if the company over-collects fixed costs, customers receive a credit, as they did in the first year of the program.

This year, Idaho Power reports it under-collected $5.17 million in fixed costs from the residential class and $1.16 million from the small-business class. This was due largely to 7.6 percent increase in energy savings during 2009 and a 28 percent reduction on the company’s energy demand during peak-use periods. To recover fixed costs, Idaho Power proposes a one-year FCA of 0.12 cents per kWh for residential customers and 0.15 cents per kWh for small-business customers.

Customers have until May 6 to comment on this year’s Fixed Cost Adjustment. In a separate docket, the commission is considering whether the FCA should be made permanent. An order in that case, IPC-E-09-28, is expected soon.

Case No. IPC-E-10-08, Pension Funding (0.63 percent) – Customers have always been paying for Idaho Power’s contribution to its pension plan, but it is usually done in the context of general rate case. Last January, the commission approved a moratorium on base rate increases in Idaho Power until January 2012. The moratorium does not include annual adjustments such as the Power Cost Adjustment and the Fixed Cost Adjustment. The moratorium agreement also allowed for an exception to pension plan contributions because the federal Employment Retirement Income Security Act (ERISA) requires companies to make minimum contributions to pension plans by certain deadlines. Idaho Power must make a minimum contribution of $5.8 million by September, well in advance of the time the moratorium allows the utility to file a general rate case.

During recent years, Idaho Power hasn’t had to contribute to its pension plan because the market value of the plan assets was more than enough to cover the future obligations.  Recent market conditions and increasing pension obligations require Idaho Power to begin funding its pension plan again.  Generally speaking, federal law requires Idaho Power to contribute additional funds to the pension plan when the current value of the plan assets is no longer projected to be enough to provide for accrued benefits due in the future.

Customers have until May 16 to comment on this case.

Comments are accepted via e-mail by accessing the commission’s homepage at
http://www.puc.idaho.gov/www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the applicable case number from those cases listed above and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to [phone].

Documents related to these cases are available on the commission’s Web site. Click on the electric icon, then on “Open Electric Cases” and scroll down to the applicable case number.