Idaho Power Proposes Rate Increase

Renew Grid, Tuesday May 01, 2012 - 13:16:11

The portion of Idaho Power Co. electric rates that change every June 1 due to streamflows and the variable costs of purchasing power would increase by an average 5.1%, according to a request filed by the utility with state regulators. For residential customers, the proposed increase is 3.8%.

The Idaho Public Utilities Commission (PUC) is taking comments on the annual power cost adjustment (PCA) through May 15. Idaho Power is proposing a that combination of several other rate increases and decreases to take effect at the same time (June 1) as the PCA and another (Langley Gulch) to become effective July 1. If all the adjustments are approved as submitted, the average increase for all customer classes would be 8.45%. For the residential class, the increase would be 7.13%.

On June 1 of every year since 1993, Idaho Power has been allowed to adjust its rates to reflect its annual cost of providing electricity. Because about half of the company's power generation comes from hydropower facilities, Idaho Power's power supply cost varies from year to year due to changes in Snake River streamflows and changes in wholesale market power prices. The annual PCA surcharge or credit is combined with the company's base rate (which covers fixed costs) to produce an overall energy rate.

This year, Idaho Power claims its power-supply expense is $43 million above what is now collected in the PCA, thus requiring about a 5.1% increase. Last year's PCA was a 6.5% decrease. Idaho Power's earnings are not impacted by the PCA. All the revenue collected in the PCA is kept in a deferred account - audited by the PUC - and can be used only to pay down power-supply expense.

This year's water forecast is slightly better than normal hydro conditions for the April-July runoff period, so water is not a primary factor in this year's PCA, according to the PUC. Idaho Power claims that the primary driver of increased power-supply expense is $66.7 million in new power purchases under the provisions of the federal Public Utility Regulatory Policies Act.

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