November 9, 2009
Collaborative Rates Settlement Reached
BOISE, Idaho—Collaborative negotiations between Idaho Power, its customer groups, and the staff of the Idaho Public Utilities Commission (IPUC) resulted in a significant achievement with considerable benefits expected to be realized by all parties. Agreement was reached on a number of rate issues, now requiring approval by the IPUC. If approved, the agreement enables Idaho Power to avoid the anticipated filing of its 2010 general rate case indicated in the company’s August Notice of Intent filed with IPUC.
A formal settlement stipulation on this agreement was signed by the parties and filed with Idaho Power’s supporting testimony with IPUC on Nov. 6. Besides the general rate moratorium, the settlement provides for sharing an expected 2010 Power Cost Adjustment (PCA) cost reduction between the customers and the company. The settlement also includes a provision to share earnings with customers if the company earns more than its authorized rate of return in any year through 2011.
“This is truly a win-win-win situation for our customers, our owners and for our company,” said Ric Gale, Idaho Power vice president of regulatory affairs. “The Settlement is a creative and resourceful response to a complex set of issues. We appreciate the engagement and customer-focused advocacy of the IPUC Staff and customer groups throughout the process. The outcome is a testament to what can be accomplished when people come together and work collectively to find solutions.”
Idaho Power President and CEO J. LaMont Keen pointed out another important factor in the settlement. “As a provider of an essential service, remaining financially healthy even during challenging economic times is critical to the communities we serve,” said Keen. “Our need to make necessary investments for providing reliable service both today and tomorrow when the economy recovers is recognized by our customers and the Staff of the IPUC in this agreement. At the same time, all parties are cognizant of the need to mitigate rate impacts on customers during periods of financial stress for homes and businesses. This agreement provides required regulatory cost recovery and financial support to the company while establishing a period of relative rate stability for our customers.”
In general terms, the settlement contains three important elements: (1) a general rate freeze until January 1, 2012; (2) a specified distribution of the expected 2010 PCA decrease to directly reduce customer rates, providing some general rate relief to the company and resetting base level power supply costs for the PCA going forward; and (3) an equal sharing of any Idaho earnings exceeding the authorized level.
The PCA is an annual filing that balances last year’s forecasted costs of providing energy to customers to actual expenses, including anticipated fuel costs for generating electricity, power purchases and benefits of off-system sales for the coming year. During negotiations, Idaho Power estimated the expected 2010 PCA decrease to be approximately $160 million. The 2010 PCA is planned to be filed April 15 with an effective date of June 1.
The next step in this process is public comment on and consideration of the settlement stipulation by IPUC. The parties hope for a commission order in late December or early January.
IDACORP, Inc. (NYSE: IDA), Boise, Idaho-based and formed in 1998, is a holding company comprised of Idaho Power Company, a regulated electric utility; IDACORP Financial, a holder of affordable housing projects and other real estate investments; and Ida-West Energy, an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978. IDACORP’s origins lie with Idaho Power and operations beginning in 1916. Today, Idaho Power employs approximately 2,050 people to serve a 24,000 square-mile service area in southern Idaho and eastern Oregon. With 17 low-cost hydroelectric projects as the core of its generation portfolio, Idaho Power’s 489,000 residential, business and agricultural customers pay some of the nation’s lowest prices for electricity. To learn more about Idaho Power or IDACORP, visit www.idahopower.com or www.idacorpinc.com.
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