Power bills may rise up to 44% Idaho Power files emergency request

By John Tucker The Idaho Statesman Ric Gale -Says increase now will help save energy

Idaho Power put a preliminary price tag on the power crisis Friday.

The electric utility said it has spent $161 million more this winter than it expected to buy electricity for Idaho customers, and it needs an emergency rate increase to pay for it.

If granted, the rate increase would boost residential customer bills by 24.3 percent as early as March 26.

Farmers and some businesses would be hit even harder, with increases ranging from 32.8 percent to 44.5 percent.

Officials for the company filed their request on Friday with the Idaho Public Utilities Commission, asking for an emergency 1.3-cent-per-kilowatt-hour increase, across the board, that would stay in effect for a year.

And even if the increase is granted, Idaho Power officials said rates could go even higher in April when the company and the Public Utilities Commission adjust rates through the "power cost adjustment" mechanism. Under the PCA, the two organizations try to evaluate what power will cost to supply in the coming year and then set the rates accordingly.

With the emergency increase requested Friday, the average customer -- one who uses 1,200 kilowatt-hours a month -- would pay a $78 monthly bill rather than the current $63.

If approved by the PUC, the electricity rate increase would pay off about $161 million in excess funds Idaho Power was forced to pay for power on the open market since last April, when the last PCA adjustment occurred.

Company officials warned in January they might have to ask for a 24 percent increase.

Since then, matters have gotten worse rather than better.

A year ago, electricity purchased on the open market cost Idaho Power $26.56 per megawatt-hour. Rates peaked in December at more than $770 per megawatt-hour, and Idaho Power has had to spend $300 a megawatt-hour in recent months.

"This reflects another month of purchasing power in a $300 per megawatt-hour market," said Ric Gale, general manager of pricing and regulatory services at Idaho Power.

It would be the second major increase in utility bills this year.

Natural gas prices were raised by 20 percent in January, the second time in 12 months, leaving residential customers who use gas to heat their homes and water heaters paying, on average, $44 a month more than they did a year ago for the same amount of fuel. Monthly gas bills have been even higher, according to an Intermountain Gas Co. spokesman, because this winter has been 15 to 20 percent colder than last winter.

Idaho Power wants its electricity rate increase to take effect in March rather than waiting for the annual PCA adjustment in April because that would give industrial, large commercial and irrigation electricity users time to see the effects on their bills before the peak usage season hits in June, July and August, Gale said.

That's important, he said, because many irrigators and other users will base their production decisions on how much the electricity will cost.

Industrial, large commercial and irrigation users will be hit harder than residential customers by the increase, percentage-wise, with rates increasing 44.5 percent, 34.7 percent and 32.8 percent, respectively. Small commercial users face a 19.9 percent increase.

The increases have business leaders worried, with some large users of electricity already curtailing production and laying people off.

"There's no doubt (the rate increases) will impact some businesses in the Treasure Valley," said Nancy Vannorsdel, executive director of the Boise Metro Chamber of Commerce. "Most businesses will have to practice even more discipline in balancing this new expense against their revenues," she said.

At Astaris LLC in Pocatello, whose phosphate plant is the largest user of power in Idaho, the company has already decided to permanently shut down two of its four electric smelter furnaces in July because of electricity prices.

"A year ago when we operated all four furnaces, it was costing us $125,000 a day," said Astaris spokesman Arlen Wittrock. "Today, if we tried to operate all four it would cost us $750,000 a day," he said.

The company gets half of its electricity under contract at a set price from Idaho Power and has to buy the other half on the market, he said. When in full production, the phosphate plant uses five times the amount of electricity the entire city of Pocatello uses, Wittrock said.

On March 1, the company will lay off 21 of its 440 employees as it pares down to the two-furnace level.

Other large power users said the increased costs would have an effect, but wouldn't cause any layoffs or plant closures.

"No question, it will be a big hit, given that we don't have the ability to adjust our prices, which are all under contract," said Fred Zerza, a spokesman for the J.R. Simplot Co., which is the third-largest electricity user in Idaho.

"While the increases are large, the costs are not a large percentage of operating costs at our potato plants," he said. "We don't anticipate any layoffs or plant closures."

Should high rates persist in the long term, he said, it might jeopardize the competitiveness of Idaho's potato production. That's because low power rates in Idaho offset the cost of transporting potatoes long distances, Zerza said.

Officials at Micron Technology Inc. said the increase didn't bother them as much as worries about blackouts.

"With us, reliability is the issue," said company spokesman Grant Jones.

The increases aren't just an Idaho issue, and are happening throughout the West, said Dick Watson, director or power planning at the Northwest Power Planning Council.

The city of Tacoma, which generates some electricity, buys some from the Bonneville Power Administration and some on the open market, has implemented a 43 percent rate hike for residential users and a 75 percent hike for industrial plants, he said.

The city of Seattle and utilities throughout the region are following suit, Watson said.

Raising rates earlier than anticipated -- giving irrigators and industrial users time to make decisions before the peak usage period hits, should translate into energy savings, Gale said.

"We believe when people see the increases, they will react on it," Gale said. "We could see (consumption drop) by at least 4 percent through conservation efforts."

It's unclear at this point whether there will be public hearings on Idaho Power's emergency rate request, said Ron Law, a spokesman for the Idaho Public Utilities Commission.

"Once the commissioners review the application, they'll decide what procedure they'll use to make a decision. We won't know until some time next week," he said.

http://www.idahostatesman.com/news/daily/20010224/LocalNews/83915.shtml

-- Martin Thompson (mthom1927@aol.com), February 24, 2001