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PUC Approves Electricity Rate Hike by Greg Stahl Idaho Mountain Express, June 4, 2008

Residential rates went up 10.1 percent over weekend

Idaho Power Co. customers are about to experience rate increases of between 10.1 percent and 17.6 percent on their electricity bills. On Friday, May 30, state regulators approved several rate adjustments to Idaho Power Co. customer bills that became effective Sunday. The largest is an increase in the annual power cost adjustment that this year is a surcharge that increases rates for all customer classes by an average 10.7 percent. For residential customers, the increase is 10.1 percent, says a news release from the Idaho Public Utilities Commission.

Average increases are the result of an equation that averages various adjustments to different Idaho Power programs. The commission approved an increase to base rates of 1.37 percent for $63.4 million in costs for the new Danskin natural gas plant near Mountain Home.

There is also a 1 percent increase to fund an expansion to Idaho Power's demand-side management programs. Finally, rates for residential and small-commercial customers will decrease by 0.08 percent as a result of an annual fixed-cost adjustment. Combining all four adjustments, an average residential customer who uses 1,050 kilowatt hours per month will see an increase of about $6.80 per month.

Every year on June 1, customer rates are adjusted either up or down to reflect Idaho Power's annual power supply costs, which vary from year to year depending on changes in Snake River stream flows and the market price of power. Snowpack and river flows from the winter of 2006-2007 were below normal and reservoirs were low heading into this past winter. In addition, temperatures broke the 100-degree mark 14 times in July 2007 alone. Idaho Power's record for customer demand was broken five times before setting an all-time high of 3,193 megawatts on July 13, 2007. Due to better snow during the winter of 2007-2008, the forecast for next year is normal.

Due to lack of hydroelectric generation, Idaho Power had to go to the wholesale market and buy power. It had to fire up its natural gas "peaker" plants to meet load during those peak-use days. Consequently, the company spent about $163 million buying power and natural gas to serve its customers.

During some years, the power cost adjustment is a credit rather than a surcharge. In 2006, customers received an average 16 percent power cost adjustment credit. Unlike a change in base rates, which can increase company profits, the annual power cost adjustment surcharge or credit does not affect company profits. Revenues collected from the power cost adjustment are kept in a deferred account, audited by the Public Utilities Commission, and used only to pay power supply and fuel expenses.