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Idaho Power Rates Won't be Dropping by Ken Dey Idaho Statesman, April 16, 2004

Warm spring weather translates to bad water year

Another bad water year means Idaho Power customers won't receive any relief in their power rates.

On Thursday, the company filed its annual Power Cost Adjustment with the Idaho Public Utilities Commission, asking that the annual adjustable rate remain the same in 2004 for most customers.

The current PCA rate is 0.6 cents a kilowatt hour, which amounts to $7.20 a month for a residential customer who uses 1,200 kilowatts a month.

Idaho Power customers are charged two rates on their bills. The base rate, which the company is currently asking the commission to increase, and the annual PCA rate, which can fluctuate up or down each year depending on a number of factors. These include how much water the company has available to generate power and how much it costs the company to either purchase or generate other sources of power.

In good water years, the rate typically goes down because it's less expensive to generate power through the company's hydropower dams. In bad water years, it goes up because the company often has to generate from other sources like coal and natural gas plants, or buy more expensive power on the wholesale market to meet demand.

Residential and large commercial rates will remain the same this year, but the rates for irrigation, small commercial and industrial will receive a decrease this year of 15.7 percent, 3.6 percent and 6.6 percent, respectively.

That decrease will happen because those customers reached an agreement in 2002 to pay that year's PCA increases over a two-year period that ended in 2003.

Last fall when company officials announced plans to ask for a base rate increase, they were banking on a good water year.

"It was our hope that there would be sufficient snow this winter to provide for a PCA reduction that would help offset any increases from our proposed general rate increase," said Greg Said, Idaho Power's manager of revenue requirement.

Said added that the company expects power costs to be up slightly this year, which normally would have meant a request to increase the PCA rates.

But he said they don't want customers to face another increase on top of a base rate increase, so they opted to keep the rates flat.

In March, the water outlook in Idaho took a turn for the worse with unseasonably dry and warm weather that reduced the state's snowpack. Idaho Power relies on the snowpack to provide water to its dams.

The company is facing its fifth consecutive year of drought and now estimates that it will have only about half the water it needs for its hydropower dams.

Brownlee Reservoir, the company's main water facility for its Hells Canyon dams, is only projected to have an inflow from April to July of 3.13 million acre-feet, less than half of the 30-year average.

In a normal water year, the company's dams can provide about 60 percent of the company's electricity needs.

Idaho Power has asked the PUC to act on its PCA rate request at the same time it acts on the company's average 14.5 percent base rate increase request.

The commission has not yet set dates for public comment on the PCA rate request.

The PUC should rule on both cases sometime in late May.