180426 IPC Power cost adjustment.pdf

Case No. IPC-E-18-06
Contact: Matt Evans
Office: [phone]
Cell: [phone]
www.puc.idaho.gov

IPUC accepting comments on Idaho Power
proposal reflecting lower power costs

BOISE (April 26, 2018) – Idaho Power has proposed decreasing the portion of its rates that
changes every year due to the variable costs of providing power to its customers.
If approved by the Idaho Public Utilities Commission, the change to the company’s Power
Cost Adjustment (PCA) mechanism would lead to a decrease of $1.29 per month for the
typical residential customer who uses 950 kilowatt-hours (kWh) per month.
That equates to a 1.29-percent decrease.
The Commission is accepting comments on the proposal through May 3.
The change would take effect June 1.
Idaho Power said the proposed decrease to the PCA is due primarily to water conditions
that were better than expected, which helps its hydro generation. Expenses related to coal-
fired generation are also projected to decrease in the coming year.
The PCA allows Idaho Power to adjust its rates up or down each year to reflect the actual
power-supply costs incurred by the company over the previous year.
Those costs can vary significantly based on a number of factors beyond the company’s
control, including market prices for power, transmission costs, revenue from selling
surplus power and water conditions that affect hydro generation, which accounted for
nearly 50 percent of Idaho Power’s energy portfolio in 2017.
There are three components to the PCA: a forecast component, a true-up component and a
“true-up of the true-up.”
In the first step, the company forecasts its power costs for the coming year – June 1, 2018
to May 31, 2019.
Then the prior year’s forecasted costs are “trued up” based on the actual costs incurred,
reflecting either a surplus or a deficit. The company then reconciles the true up by
adjusting the PCA to either credit customers when there was a surplus or increasing the
surcharge when a deficit occurred. This final step, or “true-up of the true-up,” ensures the
company recovers its actual approved costs, and that customers pay only for the power
supply costs the company incurred to meet the demand for energy.
The PCA proposal now before the Commission calls for a revenue decrease of
approximately $22.6 million for the year beginning June 1. With the proposed change, the
company expects revenue from the PCA to exceed $90.3 million in 2018-2019.
If approved, the PCA amount effective June 1 will be $0.4854 cents per kWh for all
customer classes.
A year ago, the Commission approved a PCA increase of 0.93 percent, leading to a 59-cent
increase on the monthly bill for a typical residential customer.
The PCA is one of three proposals pending Commission approval that would lead to lower
rates – the Fixed Cost Adjustment and a direct rate reduction as a result of the new federal
tax law.
If the Commission approves the three proposals in full, residential customers would see a
price decrease of 7.04 percent effective June 1.
The Commission is accepting comments on the PCA proposal through May 3. Go here to
comment. Or go to the Commission’s web site, www.puc.idaho.gov. Under the “Consumers”
heading, click on “Case Comment Form.” Please include the case number, IPC-E-18-06.
Comments can also be mailed to PO Box 83720, Boise, ID 83720-0074, or faxed to (208)
334-3762.
The company’s application and all other case documents are available for review on the
Commission’s web site, www.puc.idaho.gov. Click on “Open Cases” under the “Electric”
heading and scroll down to case number IPC-E-18-06. Or go here.