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Irrigators Protest Proposed Electric Rate Hike by Patricia R. McCoy Capital Press, April 2, 2004

Idaho Power Co. wants to raise irrigation rates by 25 percent, and the Idaho Irrigation Pumpers Association says that will devastate rural Idaho.

“Farmers haven’t been generating the demand for more power plants, yet we’re being asked to bear the brunt of rate increases to help pay for those plants. This effort to make rural Idaho pay for urban growth will devastate the state’s agricultural economy,” said Lynn Tominaga, IRPA executive director.

Idaho Power is asking the Idaho Public Utilities Commission for increases of 25 percent for irrigators, 19 percent for residential customers, 15 percent for large commercial customers, and 8 percent for Micron Technology. That would raise $86 million a year to meet growth-related expenses, helping the company recover $156 million invested in new generating facilities, $198 million in new transmission facilities and $366 million in new distribution facilities, all added since 1993, the last year the company brought a rate increase to the Idaho Public Utilities Commission, Tominaga said.

Over the past 10 years, the total amount of electricity used by irrigators has remained unchanged, while the amount used by homes has increased 18 percent, that used by large commercial interests has increased 54 percent, and the amount used by Micron has increased by 130 percent, he said.

“Clearly, Idaho Power hasn’t been assessing the kinds of fees necessary to make growth pay for itself. IPCo. should embrace assessing hookup fees to fund growth. Such fees would provide them with more certainty,” said Mark Mickelson, an Idaho Falls farmer and IRPA president.

Make Growth Pay

Some way must be found to make growth pay its fair share, he said.

The proposed rate hike will set off a domino effect statewide. For instance, Bell Rapids Irrigation Company uses 62 million kilowatts to pump water vertically 550 feet out of the Snake River near Buhl. About 16,500 acres of farmland are irrigated by the system, producing about $12 million worth of crops each year, said Bruce Brown, chairman of the Bell Rapids board.

The irrigation company spends about $3 million a year on electricity, which is about 83 percent of its cost of doing business. Electricity costs have increased by 63 percent since 2000, Brown said.

“If you raise power rates 25 percent, I know I can’t pay it, and neither can a lot of farmers I know. We just couldn’t stand a 100 percent increase in power rates in four years. Bell Rapids would cease to exist,” he said.

Bell Rapids farmers are a significant source of sugar beets for Amalgamated Sugar Co., which has plants in Nyssa, Ore., and in Nampa, Twin Falls and Paul, Idaho. Amalgamated employs 2,000. The company would be severely hurt if farmers go out of business, said Vic Jaro, vice president of agriculture for Amalgamated.

The proposed rate increases are an effort to move irrigation fees closer to what it costs to provide the service, but would not bring them up to 100 percent of that cost, said Dennis Lopez, IPCo. spokesman.

“Irrigators use electricity in the summer when it’s the most expensive, but the infrastructure to provide that service is there year around, and must be maintained. This case drew ll interveners, four of whom say irrigation rates should be moved much closer to the full cost of service. We at Idaho Power Co. have argued against that,” Lopez said.

Court Rulings

The IPUC tried in two previous rate cases to assess an impact fee. Both times that was appealed, and the Idaho Supreme Court ruled against such fees, said Gene Fadness, IPUC spokesman.

“IPCo. charges a connection fee, but the state Supreme Court rulings say discriminatory rates charging some within a customer class more than other members of the same class are illegal,” Fadness said.

Micron Technology built its own substation and distribution system at its own costs. That’s why a lower rate increase is proposed for Micron, he said.

“IPCo. had to build substations and install meters and power lines to serve most of the rest of us. It costs more to serve us than them,” he said.

The IPUC can take factors such as rate shock and economic impact into consideration when looking at proposed rate increases. When that latitude is exercised, though, it means the costs are spread among other customer classes, who may have grounds to appeal, he said.

“In this particular case, the PUC staff recommended about a 15 percent increase for irrigators,” Fadness said.

The IPCo. proposed rate increase currently before the PUC is case number IPC-E-03-13. It is the subject of technical hearings that started March 29, and four public hearings held around the company’s service area. Those hearings were in Pocatello, Jerome and McCall, ending March 31 with one in Payette. Written testimony in the case will be accepted until April 30. These can be e-mailed, or mailed to the IPUC, Commission Secretary, at P.O. Box 83720, Boise, Idaho, 83720-0074. All correspondence should refer to the case number, he said.