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Power Rates Headed Higher by Dave Wilkins Capital Press, June 15, 2007

Low water condition surcharge kicks in

No matter how you figure it, power rates for Idaho farmers and ranchers are going up.

Idaho Power Co. rates increased by 11 percent for residential customers and 14.6 percent for irrigation customers effective June 1, when a surcharge related to low water conditions kicked in.

And rates could be heading much higher.

Idaho Power announced on June 8 that it's seeking a general rate increase of 10.3 percent on average. For irrigation customers, the proposed rate increase would be 20 percent.

Meanwhile, a recent Ninth Circuit Court of Appeals decision related to the distribution of wholesale power by the Bonneville Power Administration has also resulted in the elimination of credits to residential and small farm customers in the state.

It all adds up to some hefty cost increases, especially for farmers who use electricity to run irrigation pumps.

"We're looking at (power rate increases) of at least 20 percent just this year, and if Idaho Power gets its way, it could be 30 percent," said Lynn Tominaga, executive director of the Idaho Irrigation Pumpers Association.

Idaho Power rates are adjusted each year on June 1 according to water conditions.

The Idaho Public Utilities Commission approved an increase this year because of reduced snowpack levels.

With lower runoff, Idaho Power's hydroelectric dams can't generate enough electricity to meet demand, so it must acquire power from other sources.

The utility said it's seeking a general rate increase because of increased costs and growing demands on its system.

The company estimates that by the end of this year it will have put into service about $300 million in system improvements since 2005.

The upgrades include $200 million for improvements to its distribution and transmission system, including nearly 650 miles of new transmission and distribution lines and 10 new substations.

Operating and maintenance expenses have increased substantially over the past two years, driven by increased power purchases, continued customer growth and inflation, Idaho Power officials said.

The IPUC could take up to seven months to consider the rate increase request.

The Ninth Circuit Court decision has had an immediate impact on many ratepayers throughout the state.

The court ruled that BPA failed to act in accordance with law when it negotiated a settlement regarding the distribution of wholesale power and credits to investor-owned utilities in the Northwest.

As a result, the IPUC has approved applications from Idaho Power, Avista and Rocky Mountain Power to eliminate credits to their customers because the utilities are no longer receiving wholesale credits from BPA.

As a result, the average bill for Rocky Mountain Power's irrigation customers in southeast Idaho will increase by 51 percent on or after July 12.

The increase comes at an already difficult time for the utility's Idaho customers because of dry conditions, the IPUC said in a statement issued May 31.

"Farmers who have already completed their business plans for the year and planted crops face higher fuel and fertilizer costs," commissioners noted. "The court's decision exacerbates this many times over."

The BPA, along with the public utility commissions in Idaho, Oregon, Washington state and Montana have asked the Ninth Circuit Court for a re-hearing in the case.