1. What is meant by “load-factor”?  How is it computed?
2. What is load-factor energy pricing?
3. How large is the price differential between the first and second segment energy rates?
4. How would energy be charged if load-factor pricing had not been adopted?
5. Why did Idaho Power request the adoption of load-factor pricing?
6. Does load-factor energy pricing reward or penalize small energy users?
7. Can customers still benefit from load-factor pricing if they participate in either the company’s Irrigation Efficiency Rewards Program or the Irrigation Peak Rewards Program?

1. What is meant by “load-factor”?  How is it computed?

“Load-Factor” can be described generally as the ratio between kWh (kilowatt-hour) energy usage and kW (kilowatt) demand over a specific time. In order to attain efficiency goals, it is beneficial to maximize this ratio as much as possible.

If one wishes to compute a single month’s load factor, the equation is:
Load Factor = kWh / (Billed kW * Hours in the month)

For example, if a customer’s Billing Demand in June is 10 kW and energy usage is 4,000 kWh, then:
Load Factor = 4000 / (10*720) = 55.6 percent

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2. What is load-factor energy pricing?

Instead of applying a single uniform energy rate to all in-season energy sales, the proposed load-factor energy pricing mechanism divides the monthly kilowatt-hour sales into two segments:

• First Segment - First 164 kWh per kW of Demand
• Second Segment - All Other kWh per kW of Demand

For example, if one month a customer has a Billing Demand of 10 kW and energy usage of 4,000 kWh, the usage portion of the bill would include:

• 1,640 kWh at First Segment energy rate (164 * 10 kW)
• 2,360 kWh at Second Segment energy rate (4,000 kWh total usage – 1640 kWh Segment 1)

3. How large is the price differential between the first and second segment energy rates?

The First Segment energy rate is 3 percent higher than the Second Segment energy rate. 

• 4.6169 cents per kWh  (First 164 kWh per kW of Demand)
• 4.4822 cents per kWh  (All Other kWh per kW of Demand)

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4. How would energy be charged if load-factor pricing had not been adopted?

There would continue to be just a single in-season energy usage rate.  It would be lower than the First Segment rate but higher than the Second Segment rate. The total dollar energy charges for all customers combined would be essentially equal under either single-rate or load-factor pricing.

5. Why did the Idaho Power request the adoption of load-factor pricing?

The Load-Factor Pricing mechanism supports Idaho Power's combined goals for establishing prices reflecting the costs of the services provided as well as encouraging wise and efficient use of energy. It financially rewards customers who have right-sized their equipment and utilize service in an efficient manner. As long as a customer’s in-season monthly load factor is at least the irrigation group average of 46 percent, load-factor energy pricing provides them financial benefits. 

6. Does load-factor energy pricing reward or penalize small energy users?

The pricing mechanism rewards efficiency in the same manner for both large and small users of energy.  All customers having an in-season monthly load factor of at least 46 percent will have lower energy bills than if the company had continued its flat rate for all energy.

7. Can customers still benefit from load-factor pricing if they participate in either the company’s Irrigation Efficiency Rewards Program or the Irrigation Peak Rewards Program?

The right-sizing of the equipment in the Irrigation Efficiency Rewards Program should enhance the customer’s load factor. Generally, participants in the Irrigation Peak Rewards Program only shift their usage to another time period and therefore, participation should not affect their monthly load factor. In summary, participation in either program should not negatively impact a customer’s bill. In some cases, it is possible that load-factor pricing may even provide a second set of benefits. 

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