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Idaho Power Plan Would Lower Bills by 9 Percent by Melissa McGrath Idaho Statesman, March 24, 2006

Utility warns rates would rise again if Legislature OKs bill

The abundance of rain and snow this season means homeowners and businesses may see their electric bills drop starting June 1, Idaho Power Co. said Thursday.

The electric utility said it plans to lower customer rates by nearly 9 percent this summer if state regulators approve. But the company also said in a statement that customers would see higher rates in the future if state lawmakers pass a bill that would change Idaho Power's rights to use water from the Snake River.

Supporters of the water-rights bill said Idaho Power was playing politics by announcing the possible rate reduction Thursday.

Idaho Power, which serves about 455,000 customers in southwestern Idaho and eastern Oregon, said it will request a rate reduction of about 12 percent when the company files its annual Power Cost Adjustment in mid-April. The PCA is a rate that makes up part of each Idaho Power customer's bill. It rises or falls every spring based on the amount electricity the utility must purchase from other suppliers. The more water that flows through the Snake River, the more electricity Idaho Power can generate at its Hells Canyon dams and the less it has to buy from other sources.

Idaho has had a good water year with above-average streamflows forecast for many rivers throughout the state. The double-digit rate reduction could more than offset a proposed 3.2 percent increase in the company's general rate. The general rate is different than the PCA because it contributes to company revenues and helps pay for infrastructure improvements and additional capacity. Idaho Power had originally requested a 7.8 percent hike to its general rate, but it lowered its request after negotiating with several customer groups. That proposal is currently before the Idaho Public Utilities Commission.

Thursday's news release is the latest in Idaho Power's efforts to bring its customers into its dispute with the Legislature over recharging the Lake Erie-sized Eastern Snake Plain Aquifer. House Speaker Bruce Newcomb called Idaho Power's announcement a "political strategy" to defeat House Bill 800.

The aquifer, which is an underground lake stretching from Yellowstone National Park to just east of Mountain Home, has been the center of a dispute between people who pump water and those who use the springs that flow out of it.

Newcomb's bill would remove a sentence in a 1994 law that recognizes Idaho Power's right to use the waters of the Snake River to generate electricity -- a right superior to those who would pump or seep water into the aquifer to increase its volume.

"I find it interesting that it is just a few days before the hearing on House Bill 800," Newcomb said. He wants the bill to pass because he and other water users in Eastern and Central Idaho believe Idaho Power unfairly expanded its rights to Snake River water back in 1994.

Idaho Power has said passage of the legislation could cost ratepayers from $80 million to $120 million. Opponents have put the amount at $6 million.

"The proposed bill threatens such benefits in the future," said Idaho Power President and Chief Executive Officer LaMont Keen. "By taking the higher Snake River flows and diverting them to the desert rather than allowing them to flow through the power turbines, less low-cost electricity will be produced. This stream flow diversion could reverse this year's reduction in future years and drive rates up in all years."

Newcomb disagreed.

"In my view, (the bill) won't have any effect on the water they use to generate electricity with," Newcomb said. His bill affects only water that spills over from the river, he said.

Idaho Power has sent letters to customers and aired television advertisements opposing the legislation.

The electric utility released its preliminary estimate of a rate reduction before filing for the PCA to show customers how they can benefit from the amount of water in the Snake River, said Dennis Lopez, a company spokesman.

Idaho Power wanted to let customers know the good news, Lopez said. This is the first time since 1999 that Idaho Power has asked for a reduced PCA rate, he said.