20090717press release.htm

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Idaho Public Utilities Commission

Case No. PAC-E-08-08, Order No. 30862

Notice of Proposed Settlement and Comment Deadline

July 17, 2009

Contact: Gene Fadness [phone], 890-2712

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

Utility proposes annual rate adjustment to cover unanticipated power supply costs

The Idaho Public Utilities Commission is taking public comment through Aug. 14 on a proposal by Rocky Mountain Power and major customer groups to create a new rate mechanism that would adjust customer rates either up or down each year on April 1.

The mechanism, called the Energy Cost Adjustment Mechanism (ECAM), is similar to the annual Power Cost Adjustment (PCA) now in place for Idaho’s other regulated electric utilities, Idaho Power Company in southern Idaho and Avista Utilities in northern Idaho.

The ECAM proposal is the result of a settlement between Rocky Mountain, Public Utilities Commission staff, Monsanto Company and the Idaho Irrigation Pumpers Association. Rocky Mountain Power, a division of PacifiCorp, serves about 70,000 customers in eastern Idaho.

The settlement proposes that Rocky Mountain defer its net power costs (the difference between power supply costs established in the most recent rate case and actual power supply costs) and true-up the difference every April 1 with a one-year surcharge or a one-year credit to customers.

Net power costs include those expenses the company incurs generating power or buying power to serve customers as well as related fuel and transportation expense. Anticipated power supply expenses are included in customer rates after every rate case, but those expenses will vary every year as expenses, such as fuel costs, fluctuate. When net power costs are higher than the amount collected in base rates, customers would get a one-year surcharge to allow the company to recover the difference. When net power costs are lower than the amount collected in rates, customers would get a one-year credit. Rocky Mountain Power’s earnings would not increase as a result of the proposed ECAM. Money collected in the surcharge can go only toward meeting power supply expense.

The proposed settlement also includes these features:

To incent the company to be prudent when purchasing power supply, the ECAM proposes that 10 percent of all net power costs be paid by shareholders.

The ECAM includes an offset adjustment for the company’s investment in renewable generation. The adjustment recognizes that actual power supply costs have been reduced by power generated from renewable projects, but that the costs of these projects are not yet being covered in Idaho base rates.

The company has agreed to meet with commission staff and interested parties at least 30 days in advance of filing an ECAM application that seeks a surcharge of 7 percent or greater.

If the ECAM is approved, the company also agrees not to file a general rate case before May 1, 2010.

The company agrees to hold a risk management hedging seminar to educate parties about the company’s risk management practices and hedging strategies.

Proceeds from the sale of sulfur dioxide emissions credits made after June 30, 2009, will be included as an offset to the ECAM amount, with customers getting 90 percent of the proceeds and shareholders 10 percent.

The commission plans to handle this case in a modified procedure that uses written comments rather than conducting a hearing, unless customer comments can demonstrate a need for a public hearing. 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 case number (PAC-E-08-08) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to [phone].

A full text of the commission’s order, along with other documents related to this case, 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 number.