Idaho Public Utilities Commission

Case No. PAC-E-10-01, Order No. 31033

April 2, 2010

Contact: Gene Fadness (208) 334-0339, 890-2712

First ECAM will raise rates about 1.3 percent

The Idaho Public Utilities Commission has accepted the first Energy Cost Adjustment Mechanism (ECAM) for PacifiCorp, which does business as Rocky Mountain Power in eastern Idaho.

The mechanism allows the utility to recover power supply expense not already included in base rates. Rates for residential users will increase by about 1.29 percent, effective April 1, or about 90 cents per month. Irrigation rates increase by 1.55 percent and commercial rates 1.34 percent.

The annual adjustment will better match customer rates with the actual cost of providing power and should reduce the frequency of filings by the company for general rate increases.

The ECAM will be adjusted up or down every April 1. If net power costs are higher than those set in the most recent general rate case, the company collects the difference through a one-year surcharge listed as a separate item on customer bills. If net power costs are lower, customers receive a one-year credit. In this filing, Rocky Mountain claimed that net power costs for the latter half of 2009 were $2.2 million higher than what was collected in base rates. The commission accepted $2 million of those expenses.

Power costs include expenses for coal, natural gas and electricity that Rocky Mountain buys on the wholesale market. Revenue the company makes from sales of electricity or natural gas on the market is credited to customers. During those years when there is a surcharge, all the revenue collected from the surcharge must go toward paying power supply costs. ECAM revenue cannot be used to increase company earnings. Power supply costs are placed in a deferred account audited by the commission.

A greater portion of PacifiCorp’s generation now comes from natural gas. The utility also gets about 30 percent of its generation from hydropower. Changing water conditions and volatility in the natural gas markets can cause fluctuations that sometimes result in power supply expense that is greater than that already included in base rates and sometimes in power supply expense that is less than that included in base rates.

The yearly ECAM should also decrease borrowing costs for the company. Rocky Mountain Power is in a period of increased generation and transmission investment to meet customer demand. Assurances to financial markets of timely recovery of expenses allows for financing at lower interest rates, benefitting both the company and its customers.

To encourage the company to be prudent in its power supply purchase decisions, the ECAM requires that shareholders pay 10 percent of the power supply expenses not already included in rates.

Rocky Mountain Power serves about 70,000 customers in southeastern Idaho.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. PAC-E-10-01.

Interested parties may petition the commission for reconsideration by no later than April 21. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.

Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.