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Idaho Power Rates to Drop 14 Percent by Staff KTVB, May 25, 2006

BOISE -- The Idaho Public Utilities Commission today approved a reduction in the Power Cost Adjustment (PCA) for Idaho Power customers effective June 1. The PCA portion of customer bills fluctuates yearly depending on annual streamflows and market conditions.

Combined with the recently approved 3.2 percent increase in the base rate and the expiration of a 2.2 percent tax adjustment, residential customers will see an overall reduction of about 14 percent in their bills, or a decrease of nearly 1 cent for every kWh used. The monthly bill of a residential customer who uses 1,000 kWh per month would decrease from $64.49 per month to $55.44. The summer bill for that same customer will decrease from $69.22 to $60.27.

Currently, the PCA surcharge adds about 0.6 cents per kWh to all major customer class base rates. After June 1, customers will get a PCA credit instead of a surcharge that will subtract 0.3689 cents per KWh from the base rate. The overall (base and PCA credit) non-summer rate decreases from 6.02 cents per kWh to 5.05 cents. The overall residential summer rate will be 5.73 cents per kWh, down from 6.69 cents.

The reduction for commercial customers is 14.82 percent and 19.82 percent for industrial customers. Irrigation customers will see about an 18 percent reduction.

Customer bills are divided into two components, the base rate and the PCA. The PCA is shown as a surcharge or a credit on a customer bill and changes every spring to account for Idaho Power's above-normal or below-normal power supply costs. In Idaho Power's territory, where about half its electricity is generated from hydroelectric dams, streamflow levels largely determine power supply costs. When streamflow levels are above normal the company doesn't have to generate as much power from more expensive coal or natural gas resources and does not have to buy as much power on the wholesale market.

A second factor in determining the PCA is the cost of power on the wholesale market. When streamflows are above normal and market conditions are normal, customers typically get a PCA credit. When streamflows are below normal and Idaho Power must generate power from more expensive thermal sources or buy more power on the wholesale market, customers typically get a PCA surcharge.

This year, with Snake River streamflows at 33 percent above the 30-year average, Idaho Power's annual power costs have decreased by $46.8 million, 90 percent of which is credited back to customers. It represents the largest credit for customers since the PCA mechanism was put into place in 1993. It is also the first time, after six continuous years of drought conditions, that customers receive a credit rather than a surcharge.