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Idaho Public Utilities Commission

Case Nos. IPC-E-11-03, Order No. 32214. Case No. IPC-E-11-04, Order No. 32215

April 5, 2011

Contact: Gene Fadness (208) 334-0339, 890-2712

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

Commission seeks comment on Idaho Power rate adjustments

The Idaho Public Utilities Commission is taking public comment on two rate adjustments proposed by Idaho Power Company.

One adjustment, the annual Fixed Cost Adjustment, would result in a 0.74 percent increase to residential and commercial customers. The other, to recover pension expense, increases rates by 1.39 percent for all customer classes. However, Idaho Power is asking that these adjustments be made effective June 1, the same date as the company’s annual Power Cost Adjustment (PCA) which is anticipated to be a significant decrease in rates. The company maintains that the net result of all three adjustments will be an overall decrease to customers.

Fixed Cost Adjustment, Case No. IPC-E-11-03

The FCA was implemented in 2007 as a pilot program. The FCA allows Idaho Power to recover the fixed costs (not to exceed 3 percent) 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 $7.9 million in fixed costs from the residential class and $1.4 million from the small-business class.

The commission is taking comments on this application through May 12.

Pension plan funding, Case No. IPC-E-11-04.

Idaho Power seeks to increase its contribution to its pension plan from $5.4 million to $17.1 million each year for the next three years, resulting in a 1.39 percent increase for all customer classes.

Idaho Power maintains it must make a contribution this year to satisfy requirements of the Employee Retirement Income Security Act (ERISA).  The company’s contributions to its pension plan have always been included in base rates. However, since 2003, Idaho Power was not required to contribute to the pension plan because the market value of the plan’s assets was more than enough to cover future obligations. Recent market conditions and increasing pension obligations require Idaho Power to begin funding the plan again.

In a separate case (IPC-E-10-25), the commission has directed Idaho Power to review appropriate changes to its pension plan. After approving a 0.77 percent increase for pension expense last year the commission said, “It is unreasonable for Idaho Power’s customers to be solely responsible for large contributions to the company’s defined pension plan.” The commission said many employers in recent years have replaced their defined benefit plans with pension programs that place greater responsibility and investment risks on employees. “Idaho Power must similarly consider changes to its retirement plan and address shareholder and employee liabilities in the assignment of pension plan investment risk,” the commission said.

In October, Idaho Power filed an application asking that the commission approve its 2011 retirement benefits package. The company said it has evaluated the costs of its retirement benefits package and implemented changes that will save about $1.97 million annually once the company’s entire workforce is transitioned into the modified plan.

Commission staff and the Industrial Customers of Idaho Power filed comments stating that Idaho Power failed to follow the commission’s instructions and recommended that the commission deny the company’s application.

In February, Idaho Power filed a report with the commission stating what it has done to consider alternatives. Commission staff and other parties to the case are filing comments in response to Idaho Power’s report on April 8 and Idaho Power will file reply comments on April 15.

Public comment regarding the current filing to recover from customers $17.1 million in pension expense is being accepted through April 20.

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 About a Case." Fill in the case number (IPC-E-11-03 or IPC-E-11-04) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

A full text of the commission’s order, along with other documents related to these cases, is available on the commission’s Web site at
http://www.puc.idaho.gov/www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to the above case numbers.