20110513Comment.pdf

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Boise Inc.
1111 West Jefferson Street i Suite 200 PO Box 990050 Boise, 1083702-5388
T 208-384-7000
-BelSE
Michael J. Hale
Manager, Energy
May 12, 2011
Via Facsimile
Idaho Public Utilities Commission
POBox 83720
Boise, Idaho 83720-0074
FAX: [phone]
Dear IPUC Commissioners:
Boise Inc. (UBoise") is an integrated manufacturer of paper and packaging products,
headquartered in Boise, 10. Boise's container plant located in Nampa, 10, is a customer
of Idaho Power Company ("Company"). We appreciate the opportunity to submit
comments to the IPUC in response to the Company's filing for a rate increase to recover
its 2010 pension cash contribution (case no. IPC-E-11-04).
Boise is concerned about ongoing increases to recover costs associated with the
Company's defined benefit pension plan. As the Commission noted in its order no.
31091, there wil likely be substantial future funding requirements for the Company's
pension and u... it is unreasonable for Idaho Power's customers to be solely responsible
for large contributions to the Company's defined benefit pension plan.',1
The Company continues to assert in its application that it must offer a pension plan,
among other benefits, u... to attract and retain a highly skiled workforce... 112. Defined
benefit plans are increasingly a rarity as companies, governments, and municipalities
face the reality of the unsustainable funding burdens these plans place on organizations
and their investors, customers, and tax payers. Yet, the Company continues to expect
rate payers to shoulder the burden for its "Cadilac" employee benefits. In case no. IPC-
E-1 0-25, the Company filed for approval of its retirement benefits package and
responded to Commission directive to consider changes to its pension plan to shift the
investment risk burden away from rate payers. In its response, the Company provided
its analysis of alternatives in the context of providing the same excessive level of retiree
benefits. In order no. 32239, the Commission rightfully directed the Company to
broaden its next annual review of the retirement benefits package to include total
employee compensation and benefits.
Boise has experience with defined benefit programs and the challenges of funding
pension plans and providing competitive, sustainable employee benefits. In November,
2003, Boise stopped offering the defined benefit pension planto new salaried
1 Order No. 31091, page 3
2 Case No. IPC-E-ll-04, Company Application, page 2
U5(12(2011 THU 16: 06 FAX [phone] Boise ~002/002
Idaho Public Utilities Commission, May 12, 2011- Page 2
employees hired after this date. In 2009, Boise froze the salaried employee defined
benefi pension program. We have also bargained a freeze of defined benefit pensions
into many of our union contracts. Boise made these difficult changes because we
recognized that significant costs associated with defined benefi plans were
unsustainable and not in the interest of Boise's customers, investors, and employees.
Contrary to the Company's assertion that a defined benefit pension is necessary"... to
attract and retain a highly skiled workforce...," Boise has not experienced any material
change in our abilty to attract and retain qualified employees since freezing our defined
benefit pension plans.
Boise respectfully requests the Commission deny Idaho Power's request for an increase
in pension related expense and direct the company to not only study, but propose
meaningful changes to its retirement and other employee benefits in order to mitigate
impacts to rate payers. To the extent the Company feels compelled to continue offering
such rich benefits, its shareholders should share in the burden, particularly since an
organization's employees work to benefit not only customers, but also shareholders by
creating shareholder value. Absent Commission directive, it is unlikely the Company
wil undertake the difficult yet necessary steps to modify its retirement benefits and total
employee compensation to achieve a more reasonable balance in the interest of alL.
Sincerely,~
Michael Hale