20101227Press Release.pdf

Idaho Public Utilties Commission
Case No. PAC-E-l0-07, Interlocutory Order No. 32151
December 27, 2010
Contact: Gene Fadness [phone], 890-2712
Website: www.puc.idaho.gov
Rocky Mountain residential customers get net 5.5 percent increase
Residential customers of Rocky Mountain Power will pay a net increase of about 5.5
percent in electric rates effective January 1. For all customer classes combined, the
average base rate increase approved by the Idaho Public Utilities Commission is 6.78
percent.
Rocky Mountain Power, serving 70,000 customers in eastern Idaho, filed last May
with the Idaho Public Utilities Commission for an average 13.7 percent rate increase.
In October, Rocky Mountain Power lowered its request to 12.3 percent, seeking an
additional $24.9 million in annual revenue. The additional annual revenue
requirement approved by the commission is $13.75 million.
The commission adjusted the amount allowed in rates by reducing pension expanse
and eliminating wage increases which, the commission said, addresses some of the
concerns of customers and takes into account the economy in southeast Idaho. The
commission also reduced the company's proposed investment it sought to include in
rates for the Populus to Terminal transmission line from eastern Idaho into northern
Utah.
The commission conducted two public workshops, a three-day technical hearing and
five public hearings during the six-month investigation of the case and received
hundreds of written customer comments. The commission was pleased by the large
turnout at the public workshops and hearings where customers expressed concern
about rate increases given the current state of the economy and also about paying
for wind and transmission projects they thought would benefit other states and not
Idaho. "Customers may rest assured that this commission will never approve
expenses for generation and transmission projects that do not benefit customers in
Idaho," said Commissioner Marsha Smith, who chaired the hearings.
For residential customers, the average base rate increase is 6.8 percent. However,
the commission reduced customers' Energy Efficiency Charge from 4.72 percent to
304 percent, resulting in a net average increase for residential customers of about
5.5 percent.
Residential customers will actually pay less than the current rate for their first 700
kilowatt-hours of use in the summer months and their first 1,000 kWhs of use in the
winter months. The commission approved a two-tiered rate structure that increases
rates as consumption increases. From May to October, standard residential
customers will pay 9.58 cents per kWh for their first 700 kWh. The current May-
October rate is lOA cents. For use exceeding 700 kWhs during summer, the new
rate is 12.9 cents. From November through April, residential customers will pay 7.33
cents per kWh for the first 1,000 kWhs. The current winter rate is 8 cents. For use
above 1,000 kWh, the rate is 9.9 cents.
The commission rejected a Rocky Mountain Power request to increase rates of
residential customers in the optional Time of Day program by 15.6 percent, while
increasing standard residential customer rates by 8 percent. Instead, the commission
approved the same percentage increase for all residential customers.
For the other major customer classes, the average increase with the company's
proposal in parenthesis is as follows:
· General service (commercial) - 4.5 percent (9.7)
· General service (large power) - 704 percent ((13.3)
. Irrigation - 2.9 percent (7.6)
· Monsanto - 9.6 percent (18.2)
· Agrium - 904 percent (14.7)
The commission approved an upper limit of Return on Equity at 9.9 percent, less
than the company's current ROE of 10.25 percent and its requested ROE of 10.6
percent. The utility is not guaranteed an ROE, but an opportunity to earn a return of
up to 9.9 percent on the investments it makes to serve customers. Under its
previous ROE of 10.25 percent, the company earned an average 6 percent over the
last 10 years.
Addressing the continued needs of the low-income sector in Rocky Mountain's Idaho
territory, the commission increased the company's annual funding level for low-
income weatherization from $150,000 to $300,000.
State statutes require that all rate requests be considered by the commission to
determine whether 1) expenses the utility has already incurred and now seeks to
recover through customer rates were necessary to serve customers and 2) if those
expenses were necessary, were they prudently incurred. The commission may deny
expense recovery to a utility if the utility fails to provide evidence that adequately
supports the new expenses as needed to serve customers and prudently incurred. All
commission decisions can be appealed to the state Supreme Court by the utility,
intervenors or customers.
A final order in this case will not be issued until late February. Issues related to the
contract between Rocky Mountain Power and its largest customer, Monsanto, will be
further examined over the next two months, with a technical hearing scheduled for
Feb. 1. The final order will determine what Monsanto should be paid for allowing
Rocky Mountain to interrupt service during certain times of the year.
Petitions for reconsideration or appeals can be made after the final order is issued in
February.