Clever bookkeeping, bloated rates
In moviemaking, "Hollywood accounting" is a
synonym for bookkeepers who cook studio books to make a profit look like a
loss.
Tales are familiar: a movie is made for, say, $50 million.
It brings in $100 million at the box office. But studio accountants later
claim the film lost money.
If that doesn’t add up to clear thinkers, then ponder
the claims of Idaho Power, the only source of electricity for tens of
thousands of businesses and homes in Idaho, Oregon and Nevada.
Sounding like a pitiable waif in need of a square meal,
Idaho Power pleaded with the Idaho Public Utilities Commission that it
faces bleak times without a huge rate hike — 34 percent for homeowners.
But while claiming losses, the utility’s parent, IdaCorp,
made a record profit of $139.9 million (enough to pay a 15 percent bonus
to employees), with more than half of the profit ¾ an estimated $66
million — from selling electricity bought on the spot market to Idaho
Power at inflated prices.
Idaho Power resents what some call this, self-dealing.
But facts are painfully clear: Parent company IdaCorp’s
other subsidiary, Idaho Energy Systems, buys electricity then sells it to
sister company Idaho Power at bloated prices.
The IPUC says that in 155 of 161 transactions, Idaho
Energy Systems charged Idaho Power significantly more than it paid
wholesale for electricity.
Logically, if Idaho Power weren’t charged inflated
prices by its own parent, then it wouldn’t need a bailout from financial
despair.
This may be perfectly legal— insulating one company from
PUC regulation so it can slap overbearing charges on a IPUC-regulated
offspring, which in turn requests a rate increase to cover bookkeeping
losses created by the parent’s profit demands.
This is an outrage for Idaho Power customers who’re
victims of a cynical scheme in corporate bookkeeping to create artificial
losses for a corporation that’s actually profitable.
Idaho’s regulators must demand more of the Idaho Power
monopoly than clever devices that profit shareholders. The IPUC’s
overarching moral mandate to Idaho Power should be to serve customers with
reliable energy and with ethical pricing.
The IPUC staff correctly recommended that Idaho Power’s
rate hike request be cut to 16 percent. Meanwhile, if Idaho Power needs
funds, it can ask a hand from the parent company, which is bloated with
profits.
Once the IPUC disposes of Idaho Power’s rate case, it
must promptly impose rules eliminating schemes that force Idaho Power
customers to provide undeserved pass-through profits to a monopoly’s
parent that does little to justify its income.
