Idaho Power Files Annual Power Cost Adjustment
Boise, Idaho, April 16, 2009 - Idaho Power filed for the annual power cost adjustment (PCA) with the Idaho Public Utilities Commission (IPUC). This filing reflects a true-up of last year's forecasted costs to actual expenses, as well as anticipated fuel costs for generating electricity, power purchases and offsets from the benefit of off-system sales for the coming year. The PCA, an annual filing in place since 1992, is strictly a cost recovery mechanism that passes on both the benefits and costs of supplying energy to Idaho Power customers. It does not contain a profit component.
If approved, today's filing means a rate increase of $93.8 million for the company's Idaho customers, or 11.40 percent overall. For the typical residential customer using 1,050 kilowatt-hours of electricity each month, the monthly increase will be approximately $7.20. The actual percentage of change varies by customer group based upon the rate they pay for electricity.
"A number of factors contribute to this year's PCA and the resulting increase," said Idaho Power General Manager of Power Supply Operations and Planning Karl Bokenkamp. "One factor is the significant increase in last year's actual energy costs compared to those forecast. We also forecast higher than normal energy costs for the coming year due to expected below-normal stream flows impacting hydroelectric generation. This impact reduces off-system sales benefits, increases power purchases and results in higher fuel costs to produce electricity with our system's thermal resources."
The company actively manages its system operations to help lower power supply costs without jeopardizing its system reliability, service quality or obligation to serve.
"Customers benefit from our system's surplus energy sales to the wholesale market," added Bokenkamp. "Off-system sales revenues are deducted from our power supply costs and reduce the rates our customers pay. However, this coming year, our ability to sell and the revenue generated are projected to be significantly less than the normal benefit derived from these off-system sales."
In years when water is plentiful Idaho Power more fully utilizes its 17-dam hydroelectric system, resulting in lower power production costs and associated benefits passed on to customers.
When hydroelectric generating conditions are below average as they have been for nine of the past 10 years, Idaho Power must use more expensive resources to meet customers' need for electricity. The company expects to generate between 6.5 and 8.5 million megawatt-hours (MWh) from its hydroelectric generation resources this year compared to 6.2 and 6.9 million in 2007 and 2008 respectively. The anticipated range for 2009 is below the median annual hydrological generation of 8.5 million MWh.
"Although below-normal hydro generation is anticipated for 2009, recent weather conditions may provide customer benefits through reduced power supply expenses," said Idaho Power's Vice President of Regulatory Affairs Ric Gale. "The Commission will review the company's application and determine whether any additional changes should be reflected in rates at this time."
This chart illustrates the overall percentage increase for each major customer group as a result of today's PCA filing:
Revenue Impact By Class
Percentage Change from Current Rates
General Large Overall
Residential Service Power Irrigation Change
9.30% 12.05% 16.37% 11.08% 11.40%
"While we continue to provide some of the nation's lowest electric rates, we recognize increased electric rates are difficult for customers and are sensitive to the issue of affordability," added Gale. "We are committed to all our customers through a variety of ongoing energy assistance initiatives, and actively pursue opportunities to minimize the impacts of higher costs. The most important is educating our customers on how to use energy efficiently and providing them programs that help reduce their bills by reducing their consumption."
Idaho Power's PCA application is available to the public at the IPUC or Idaho Power Company offices or on Idaho Power's Web site, www.idahopower.com.
IDACORP, Inc., 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 2,000 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 487,000 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.
Certain statements contained in this news release, including statements with respect to future earnings, ongoing operations, and financial conditions, are "forward-looking statements" within the meaning of federal securities laws. Although IDACORP and Idaho Power believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. Factors that could cause actual results to differ materially from the forward-looking statements include: the effect of regulatory decisions by the Idaho Public Utilities Commission, the Oregon Public Utility Commission and the Federal Energy Regulatory Commission affecting our ability to recover costs and/or earn a reasonable rate of return including, but not limited to, the disallowance of costs that have been deferred; changes in and compliance with state and federal laws, policies and regulations including new interpretations by oversight bodies, which include the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, the Idaho Public Utilities Commission and the Oregon Public Utility Commission, of existing policies and regulations that affect the cost of compliance, investigations and audits, penalties and costs of remediation that may or may not be recoverable through rates; changes in tax laws or related regulations or new interpretations of applicable law by the Internal Revenue Service or other taxing jurisdiction; litigation and regulatory proceedings, including those resulting from the energy situation in the western United States, and penalties and settlements that influence business and profitability; changes in and compliance with laws, regulations, and policies including changes in law and compliance with environmental, natural resources, endangered species and safety laws, regulations and policies and the adoption of laws and regulations addressing greenhouse gas emissions, global climate change, and energy policies; global climate change and regional weather variations affecting customer demand and hydroelectric generation; over-appropriation of surface and groundwater in the Snake River Basin resulting in reduced generation at hydroelectric facilities; construction of power generation, transmission and distribution facilities, including an inability to obtain required governmental permits and approvals, rights-of-way and siting, and risks related to contracting, construction and start-up; operation of power generating facilities including performance below expected levels, breakdown or failure of equipment, availability of transmission and fuel supply; changes in operating expenses and capital expenditures, including costs and availability of materials, fuel and commodities; blackouts or other disruptions of Idaho Power Company's transmission system or the western interconnected transmission system; population growth rates and other demographic patterns; market prices and demand for energy, including structural market changes; increases in uncollectible customer receivables; fluctuations in sources and uses of cash; results of financing efforts, including the ability to obtain financing or refinance existing debt when necessary or on favorable terms, which can be affected by factors such as credit ratings, volatility in the financial markets and other economic conditions; actions by credit rating agencies, including changes in rating criteria and new interpretations of existing criteria; changes in interest rates or rates of inflation; performance of the stock market, interest rates, credit spreads and other financial market conditions, as well as changes in government regulations, which affect the amount and timing of required contributions to pension plans and the reported costs of providing pension and other postretirement benefits; increases in health care costs and the resulting effect on medical benefits paid for employees; increasing costs of insurance, changes in coverage terms and the ability to obtain insurance; homeland security, acts of war or terrorism; natural disasters and other natural risks, such as earthquake, flood, drought, lightning, wind and fire; adoption of or changes in critical accounting policies or estimates; and new accounting or Securities and Exchange Commission requirements, or new interpretation or application of existing requirements. Any such forward-looking statements should be considered in light of such factors and others noted in the companies' Annual Report on Form 10-K for the year ended December 31, 2008, and other reports on file with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
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