150402_RMPECAM.pdf

Case No. PAC-E-15-01, Order No. 33265
Contact: Gene Fadness [phone], 890-2712
www.puc.idaho.gov

Rocky Mountain’s annual power supply costs increase,
resulting in 1.8% increase to most customers

BOISE (April 2, 2015) – Rates for most customers of Rocky Mountain Power will increase by an
average of 1.8% as a result of the utility’s annual Energy Cost Adjustment Mechanism (ECAM).
Rocky Mountain Power serves about 73,000 customers in eastern Idaho. According to the
company’s calculations, the increase for an average residential customer is about $1.70 per
month. Rates for the company’s two large industrial customers, Monsanto and Agrium, Inc.,
increase by about 8 percent.

The ECAM, which takes effect every April 1, accounts for the difference between the utility’s
actual power supply costs, which vary from year to year, and the amount of power supply costs
already included in customer rates.
Most of the expense an electric utility incurs to provide power supply to its customers is
included in base rates. However, the expense required to provide power to customers varies
each year due to a number of factors including wholesale market prices for electricity and
natural gas, transportation expense and expiration of older, lower-price contracts with energy
suppliers. Because these variable expenses can never be precisely forecast, the ECAM allows
Rocky Mountain Power to make a one-year adjustment every April 1 to capture the difference
between actual expense and that included in base rates. The adjustment is a one-year increase
to customers if power supply costs are higher than the amount already included in base rates or
a one-year decrease if power supply costs are lower. Since the ECAM went into effect in 2010,
there have been two increases, one decrease and two years of no change in rates. (See chart
below.) Rocky Mountain Power’s earnings are not impacted by the ECAM because all the
money collected from the ECAM must go directly to pay power supply expense and cannot be
used for any other purpose such as increased salaries or dividends to shareholders.
Commission staff audited the company’s books and reviewed internal work papers, invoices
and contracts. Staff’s audit recommended a $240,725 reduction to Rocky Mountain’s total
ECAM recovery request of about $23.3 million. The $23.3 million is about $10.7 million more
than that already collected in the ECAM account. About $12.7 million and $1 million of that will
be collected from Monsanto and Agrium Inc.
The biggest drivers increasing Rocky Mountain Power’s power supply costs were decreased
revenue from the company’s energy sales into the wholesale energy market and increased
expense to fuel its coal plants. Sales from energy Rocky Mountain sold to other companies
decreased 42 percent while, at the same time, prices for power purchased by the company
from the market were 7 percent higher than the amount included in base rates.

Coal fuel expense increased by 16 percent, which appeared to be driven by higher coal mining
costs combined with an increase in the price for the coal the company buys.
The Lake Side 2 combined cycle combustion turbine natural gas plant in Vineyard, Utah, began
commercial operation in May 2014 and is included as part of the ECAM until the company files
its next rate case. At that time the commission will determine if the new plant is to be included
in permanent base rates.

To encourage the company to be prudent in its power supply expenditures, the commission
requires that shareholders pay 10 percent of ECAM expense.
The commission’s final order along with other documents, including the company’s application
and testimony and intervenor and customer comments, are available on the commission’s
website at www.puc.idaho.gov. Click on “Open Cases” under the “Electric” heading and scroll
down to Case Number PAC-E-15-01.

Energy Cost Adjustment Mechanism 2010-15 for Tariff Customers
Year ECAM rate Net change

2010 0.10 cents per kWh

2011 0.57 cents per kWh 5.8% increase

2012 0.57 cents per kWh No change

2013 0.57 cents per kWh No change

2014 0.32 cents per kWh 2.6% decrease

2015 0.5 cents per kWh 1.8% increase