Lauren McLean: Idaho Power is steps behind the energy-efficiency movement

This week, IdaCorp's shareholders are voting on a resolution calling on Idaho Power Co. to establish greenhouse gas emission reduction goals, and to report its plans to meet them. Opposed by management, this resolution gained the support of RiskMetrics, the highly influential and respected provider of voting advice to financial market participants, because Idaho Power's "current level of disclosure relevant to its GHG emissions appears to lag its industry peers."

This is a question about whether Idaho Power's management is properly attending to some of the most far-reaching risks to its business and our supply of affordable energy. Without question, it is out of step with many of its peers. There is growing evidence that utilities that take early action on the transition to cleaner fossil energy sources may be in a better position to face pending changes to the regulatory landscape - protecting ratepayers and ultimately enhancing shareholder value.

We applaud Idaho Power's decision in 2007 to indefinitely delay its proposed 250-megawatt pulverized coal generation facility and to substantially enhance its customer energy-efficiency programs over the last few years. Yet we believe that Idaho Power needs to significantly reduce its greenhouse gas emissions and that its heavy reliance on fossil fuels causes undue financial risk to both shareholders and its ratepayers.

Reducing Idaho Power's reliance on fossil fuels and increasing renewable resources will protect Idaho rate payers against likely emissions charges, fluctuations for energy in the open market, and significantly and positively raise Idaho Power's environmental profile, enhancing its reputation and competitive position. It also will enable the state of Idaho to continue to attract new businesses and investments due to its competitive costs of doing business - something more important now than ever.

Idaho's position as having the lowest cost of power in the country is tenuous due to Idaho Power's energy allocation. The company's current power mix of 53 percent coal, 46 percent large hydroelectric, and 1 percent natural gas raises the likelihood of financial risk fees that could be imposed for emissions levels. At times, nearly one-third of the energy supplied to customers is purchased on the open market, so ratepayers are subject to price fluctuations that have an impact on utility bills.

A growing number of utilities such as Pacific Gas and Electric and neighboring NV Energy and Portland General Electric, see climate change as a strategic issue with material impacts on company value. Companies working to mitigate risks, reduce carbon emissions, and capitalize on potential opportunities posed by a climate-constrained world are positioning themselves as leaders in an increasingly challenged industry - and by doing so, helping protect long-term shareholder value.

Business leaders are increasingly finding that addressing carbon is good for the bottom line. It's no longer conventional to question the cost of reducing greenhouse gas emissions. Instead, companies are asking how much money can be made in doing it. Smart companies are taking advantage of new power sources, markets and competitive advantages that are inherent in a low-carbon economy. Ratepayers and shareholders alike would do well were Idaho Power to join the ranks of leading utility companies in doing the same.

Idaho Power can either take the steps to prepare, and be ahead of the ball, or it can sit back and wait for a mandate. As investors, we believe our company - and investment - is better positioned with a proactive plan to reduce greenhouse gas emissions, invest in renewables, and to help steer the solutions - both here at home and nationally.

Lauren McLean is part of the Boise-based portfolio management team of Trillium Asset Management. She serves on Ceres' Utilities Stakeholder Committee, a global network of utilities, investors and conservationists working to improve sustainability reporting and climate risk management within the industry.