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Idaho Power Seeks Rate Increase by Jon Meyer Idaho Press-Tribune, April 16, 2008

IDAHO - Idaho Power has asked state regulators for an average 13 percent rate hike to cover the higher costs it faced to obtain electricity during last year's drought conditions.

However, an order by the Idaho Public Utilities Commission on Tuesday is expected to reduce the increase some by allowing the company to use proceeds from sulfur dioxide emission sales to partially offset the power production costs.

Overall, this year's filing would increase rates by

$87 million, or 12.76 percent on average. But the sale proceeds should reduce the request to a total of $71 million, the company said.

Idaho Power calculated the costs customers would see using the higher figure. Under those calculations, typical residential customers - those who 1,050 kilowatt-hours each month - would pay an extra $6.80 a month. Their summertime bills would rise from $72.76 to $79.56 a month.

The yearly adjustment reflects the company's fuel costs for generating electricity and power purchases. The Public Utilities Commission will consider the merits of the request and set the final rate adjustment based on its assessment.

"We had a long, hot summer last year," Ric Gale, Idaho Power's vice president for regulatory affairs, said. "A string of summer days with temperatures above the 100-degree mark brought a record-setting customer demand for electricity. At the same time we had a run-off of just 2.8 million acre-feet, which meant reduced hydropower generation. It wasn't a good combination for our customers or us."

Gale said customers broke the company's previous record for power use five times before reaching an all-time high of 3,193 megawatts.

There is a relationship between stream flow in the Snake River and Idaho Power rates. Better flow can mean lower rates in the following year.

Flows this year are expected to be 5.4 million acre-feet between April and July - substantially better than last year - Idaho Power officials said.

In years when water is plentiful, Idaho Power can rely more heavily on its hydroelectric system, a less-expensive energy source.

Idaho Power also reported that it had increased the benefit of hydropower generation to customers this year. Traditionally, customers receive 90 percent of the benefit of increased hydropower generation, but utility officials increased that to 100 percent for 2007.

Just last month, a separate rate hike went into effect for the state's largest electric company.

The Public Utilities Commission adopted a settlement proposed by several parties that resulted in an average overall 5.2 percent base rate increase. It added about $3 more a month to bills for typical households.