Electric rates for Idaho Power Co. customers will rise Sunday because of a settlement adopted Friday by state regulators.
Part of the increase is a boost in the monthly customer service charge from $4 to $5. That's a 4.2 percent increase in the utility's base rate. But there is also a 0.75 percent decrease in the energy-efficiency rider, resulting in a net average increase of 3.44 percent.
In June, Idaho Power asked for about a 10 percent increase. The company wanted an $81 million increase to annual revenue in light of more than $450 million it invested in infrastructure since its last rate case in 2008. The new settlement allows a $34 million increase.
The revenue requirement was reduced mostly by shifting $24 million in expenses related to small-power projects to the Power Cost Adjustment mechanism made every June 1.
The revenue adjustments “reduce the magnitude of the proposed rate increases and benefit all customer classes,” the commission said. “In particular, we note that the settlement stipulation represents a significant reduction — almost 60 percent — in the company’s initially proposed rate increase.”
The utility, commission staff and customer groups also agreed that there would be no increase in the winter for energy consumption within the third tier, which is above 2,000 kilowatt-hours per month. The commission said maintaining the third tier non-summer rate of 8.46 cents per kWh will moderate the impact on customers who heat their homes with electricity. Rural Idaho customers who do not live near natural gas pipelines have few options to control winter use.
The commission conducted two customer workshops before the settlement and three public hearings and a technical hearing after the settlement was proposed. More than 100 customers submitted written comments, all opposed to the rate increase, citing the weakened economy and adverse impacts on residential customers with low and fixed incomes. All commission decisions can be appealed to the state Supreme Court by the utility, intervenors or customers.
Participants in the settlement representing primarily residential customers included commission staff and the Community Action Partnership Association of Idaho. Other participants included the Idaho Irrigation Pumpers Association, the Industrial Customers of Idaho Power, the Department of Energy, Micron Technology, the Idaho Conservation League, the Snake River Alliance, the Northwest Energy Coalition and Hoku Materials.
The Community Action Partnership did not sign the settlement mainly because Idaho Power has not agreed to increase its funding for a low-income weatherization program. The partnership asked that the company increase its funding for the program by 125 percent, from $1.2 million to $2.7 million. The commission declined, stating concerns about cost-effectiveness.
“Because ratepayers fund Idaho Power’s weatherization programs, we have a responsibility to ensure these programs are cost-effective and designed to maximize benefits for all customers,” the commission said.
The commission will open a case and convene public workshops to determine the best methods for establishing the level of investment in low-income weatherization.
The commission deferred decisions about other issues on which the parties could not agree, including whether the fixed-cost adjustment rider on customer bills should become permanent. A decision on the adjustment will be made by March 30.
The commission also did not decide whether overhead amounts for line extensions for customers requesting new service should be increased.
The energy efficiency rider is reduced from 4.75 percent of customer’s billed rate to 4 percent. It funds a number of conservation programs that reduce the need for Idaho Power to acquire additional generation or buy power from other providers.
All of the programs funded by the rider must pass three cost-effectiveness tests that demonstrate customer rates would be higher without the programs in place. Because $11.2 million of those programs are being shifted into base rates, parties argued the rider should be decreased to as low as 3.4 percent. Others, including the Idaho Conservation League, Snake River Alliance and Northwest Energy Coalition, said the rider should remain at 4.75 percent because Idaho Power is still directed to continue to pursue all cost-effective energy efficiency and some “headroom” is needed to provide for planned growth in conservation programs.
When it filed the rate case in June, Idaho Power said it made significant investment in pollution-control equipment in four units and upgraded a turbine in one unit of the coal-fired Jim Bridger power plant in southwest Wyoming. Idaho Power also completed construction of its new 500-kilovolt Hemingway transmission station and the associated Hemingway to Bowmont 230-kV transmission line at a total cost of $54 million. The company also completed construction of the Long Valley Operations Center in Lake Ford to replace the existing McCall Operations Center.
The company’s application also said the cost of building materials has increased dramatically since the last time the company was granted a general rate increase. In that two-year period, the company claimed aluminum costs increased 59 percent, copper 104 percent and standard plate steel 83 percent.
Idaho Power serves nearly 500,000 customers in southern Idaho and eastern Oregon.
