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Power Bills will Drop, Thanks to Plentiful Water by Melissa McGrath Idaho Statesman, April 13, 2006

Utility says rates could decrease by 16% on June 1

Electric bills could drop nearly 16 percent June 1 because of above-average water levels this season, Idaho Power Co. officials said Wednesday.

That means the average residential bill in the summer would drop more than $10, from $82.61 to $71.93 a month. In the winter, the average bill for a resident using 1,200 kilowatt hours of electricity a month would drop more than $11, from $76.91 to $65.72.

Idaho Power, which serves about 457,000 customers in southwestern Idaho and eastern Oregon, announced the rate decrease when it filed its annual Power Cost Adjustment (PCA) Wednesday afternoon with the Idaho Public Utilities Commission. The company asked the commission to approve a 19 percent drop to its PCA, a rate that changes each year depending on water and snowpack levels.

In a dry year, the PCA goes up because Idaho Power has to buy more electricity on the open market. In a wet year like 2006, the PCA drops because Idaho Power can generate enough electricity from the water on hand.

"Today's filing reflects the benefits of above-normal snowpack and stream flows, which will result in more low-cost energy being produced at our hydroelectric facilities," said Ric Gale, Idaho Power's vice president of regulatory affairs.

In all likelihood, the drop in the PCA this year will be partially offset by a 3.2 percent increase to Idaho Power's base rate that the company proposed earlier this year. The base rate is a permanent rate that will change only when the company files a rate request with the commission. The money the company earns through this portion of electric bills helps pay for employee salaries, infrastructure and other essentials.

Idaho Power requested an increase in its base rate this year to help meet the demands of its growing customer base. Idaho Power added 16,737 accounts in all customer categories during 2005.

The electric utility originally asked for a 7.8 percent increase in its base rate in October, but reduced its request to 3.2 percent after negotiating with commission staff and customer groups. That marked the first time Idaho Power has reached a tentative settlement in its rate increase rather than arguing it before the commission.

If the commission approves Idaho Power's PCA and base rate requests, electric customers rates would drop 16 percent, on average. But the decreases would differ by customer group. Residents would get a 15.4 percent rate drop, small businesses' bills would drop about 12.8 percent, large businesses' bills would go down 21.9 percent, industrial customers would get a 27 percent rate decrease and irrigators would see a 19.4 percent drop.

The rate decrease this summer would keep money in people's pockets and provide a little help to those hurt by the rise in energy costs in the past year, said Mike Ferguson, the state's chief economist.

Still, the $10-a-month drop probably won't have a significant impact on the local economy, he said.

Both rate requests are awaiting approval from the commission, but no one expects major changes to the proposals.

"(The commissioners) won't be too inclined to change it," said Gene Fadness, a commission spokesman. Still, the commission has to look into proposed rate decreases the same way it considers rate increases, he said.

The agreement Idaho Power reached with the state Tuesday -- allowing the state to divert some water from the Snake River to the Eastern Snake Plain Aquifer to recharge the aquifer in high water years -- will not affect rates in 2006, an Idaho Power spokesman said.

Rate increases caused by recharging the aquifer could show up in 2007 rates. However, Idaho Power has already stored some money away to help keep customer rates low in 2007. The company sold 78,000 sulfur dioxide emission allowances recently and made $42.1 million for its Idaho customers. That money could lower the average resident's bill about $3.32 next year, the company estimated.

A federal program gives thermal power plant owners a certain number of allowances to limit how much sulfur dioxide they can emit each year. Under the program, if one owner has more allowances than it can use, it can sell those to other plant owners.

After negotiations with the commission and industrial customers, Idaho Power agreed to put the money it made in the bank and use it toward next year's PCA in case 2007 does not prove to be as good a water year, Gale said.