Commission Decides Idaho Power Customers
Idaho Power customers are going to pay a lot more for power this year.
The Idaho Public Utilities Commission rejected pleas by Idaho Power, environmental and consumer groups and even its own staff to spread the 15.3 percent, one-time rate increase over multiple years. The three-member commission said keeping all of the Power Cost Adjustment surcharge in one year makes sense because low water again this year could cause another big hike next year.
"We are sympathetic to the request to spread the authorized rate increase over time, and we understand that allowing full recovery in one year will have an immediate, negative impact on all customers, some more than others," the commission said. "Our concern for creating the risk of compounding or 'pancaking' rate increases in the future overshadows the impact we know will be felt this year."
Low water, reduced revenue from surplus energy sales and a balloon of wind power costs made the power cost adjustment $140 million, the fourth highest since it was started in the early 1990s. Residential customers will pay an average 12.5 percent effective June 1. For all customers classes combined, the average increase is 15.3 percent.
For an average residential customer who uses 1,050 kilowatt-hours per month the average monthly increase will be about $11.38.
"Forecasts for water are, at best, uncertain," the commission said in its order. "Given this, we find it too risky and potentially could compound rate shock for customers to spread this year's PCA recovery across multiple future years."
Idaho Power doesn't increase its earnings or pay its executives' salary from this surcharge so don't blame it on the stockholders. On top of low water, reduced power sale revenues the lost revenue from the failed Hoku polysilicon plant in Pocatello increased the adjustment.
A negotiated settlement in Idaho Power's last base rate case under which all parties agreed to keep wind and Hoku expense in the PCA rather than moving them into base rates causes a higher surcharge. If not for that decision, the commission said, the costs from the wind projects would have been included in base rates and customers would already be paying to recover them spread out over more years.
So the future of the power cost adjustment is now on the line. Several utility watchers suggest going back to more frequent base rate cases may be in the cards. The commission said that until Idaho Power files a general rate case, the wind costs will accumulate and appear each year in the company's surcharge. That's about $62 million worth right now.
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