Friday, March 5, 2010

Idaho Power earnings jump $26M in 2009

Regulations govern how money is used

Express Staff Writer

No one has to be told that 2009 was a bad year for business. The final year of the millenium's first decade was filled with red ink for many companies, big and small, from the Atlantic to the Pacific.

Southern Idaho's primary power supplier, Idaho Power Co., was unusual in that its 2009 income—$124.4 million—was up 26 percent over the previous year. That's $26 million more than 2008 income of $98.4 million.

The increased income is due mostly to higher rates. But the company doesn't just get to keep all this profit, according to Gene Fadness, spokesman for the Idaho Public Utilities Commission, which, with the Oregon Public Utilities Commission, rules on rate-increase requests. Ninety-one percent of Idaho Power's customers are in Idaho.

A breakdown of Idaho Power's 2009 income shows $49 million more was collected than in 2008 because of rate and other regulatory changes increasing customers' prices by an average of 17.1 percent. But that increase was drawn down to $26 million for the year because the company sold less electricity and had higher operating costs.

Even though the company increased its income by $26 million from 2008—mostly due to five rate increases—Fadness said most of the increases are approved to cover higher operating costs. Since they are determined in anticipation of future economic conditions, he said, they can turn out wrong. He said that if costs don't increase as much as predicted, the extra money that Idaho Power earns from the rate increases will be returned to customers the next year.

Fadness said that of the 17 percent rate increase in 2009, only about 3 percent would increase Idaho Power's profit in the long run. Idaho Power doesn't get to simply keep the money.

Every year on June 1, customers receive either a one-year surcharge or credit to their rates, depending on market conditions from the previous year and a forecast of the following year's conditions. It's called a power-cost adjustment.

In July, Idaho's PUC allowed Idaho Power to apply a power-cost adjustment to increase rates by an average of 10.2 percent per customer—the largest rate increase of the five—because of expected increases in energy costs caused by things such as river flows. Fadness said that since rivers will likely be running lower this summer, Idaho Power won't be able to generate as much electricity through hydroelectric facilities and will need to use more expensive methods. Plus, the PUC said last year's forecast "grossly underestimated" the company's actual expenses. Because the 2009 power-cost adjustment was making up for 2008's, the commission said customers shouldn't see a power-cost adjustment even close to a 10.2 rate increase next year.

Several of the 2009 rate increases are for steps taken to encourage less electricity use, saving customers money in the long run.

For example, one rate increase of 1.8 percent was implemented to cover the cost of installing new meters, which will allow customers to monitor electricity prices and adjust their use to take advantage of lower price periods. Another was for promotional costs of the Peak Rewards program, which will save customers in the long run by spreading out power use during the day.

From 2007 to 2009, electricity use has dropped among Idaho Power customers. Total electricity use across all Idaho Power sectors—residential, commercial and others—was 16.8 million megawatt hours in 2009, a 1.1 percent increase over 2008 but a 3 percent decrease compared to 2007.

In 2009, residential customers—the largest customer section—used 5.3 million MWh of electricity, less than a 1 percent increase from 2008's 5.297 million MWh.

Even with the five rate increases in 2009, Idaho Power electricity is cheap compared to most American utilities.

The bill for a house using 10,000 kilowatt hours a month is $85.42 under Idaho Power, according to the Edison Electric Institute's survey of 150 independently owned utilities. That same amount of power use would cost $92.35 in Missoula, Mont.; $103.57 in Portland, Ore.; and $249.72 in San Diego, Calif.

Idaho Power isn't at the bottom of the list in the institute's survey, but it's near the bottom.

Trevon Milliard:

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