1. Why does it seem like my rates go up even in years when we have good snowpack?


2. Why do you sell electricity out of state?


3. Some say you sell water out of state. Do you?


4. Why don’t you just breach the dams and use wind?


5. What does Idaho Power think of Governor C.L. "Butch" Otter’s idea to build more dams?

1. Why does it seem like my rates go up even in years when we have good snowpack? In years of above-average hydroelectric generation, the company’s power supply costs go down and customer rates are lowered.

When hydroelectric generation is reduced, Idaho Power relies more heavily on its thermal (coal and gas) generating resources and must purchase more power from the market. In Idaho, most of the costs for this energy are passed on to customers. Net power supply costs are fuel and purchased power expenses offset by the financial benefits of selling wholesale electricity off-system.

Through the annual Power Cost Adjustment (PCA), regulated by the Idaho Public Utilities Commission, Idaho Power can expect to recover approximately 90 percent of net power supply costs above the level included in the company’s base rates. The PCA recovery includes both a forecast and deferrals that are subject to the regulatory process. Recovery of amounts above forecast do not occur until the subsequent PCA year.

In other words, the benefits of a snow year that was better than forecast do not show up in customers’ rates until the PCA is adjusted on the June 1 following that snowy winter.

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2. Why do you sell electricity out of state? Most of the electricity Idaho Power generates is consumed by our customers who live in Idaho or eastern Oregon. In fact, Idaho Power must also buy power from the regional market to meet its customers’ needs. In an average year, those purchases equal about 10 to 12 percent of the company’s energy supply.

As electricity is generated, it must be used and cannot be stored or saved. However, there are times when we generate surplus electricity that we sell off-system to other utilities. If we can sell surplus electricity out of state, it is good for our customers. Here’s why:

When our power supply costs exceed a certain level those costs are passed on annually to our customers in Idaho through a regulatory mechanism called the Power Cost Adjustment or PCA. For example: In drought years when we have to purchase power from other utilities or generate more power with our coal-fired plants our power supply costs go up.

For simplicity’s sake, let’s say our costs go up $2 million dollars in a calendar year. That $2 million is added to our normal costs of supplying power to customers. However, if during that same year we sell $1 million worth of surplus power to other utilities, then that $1 million is applied directly to those costs and reduces our total power supply costs by $1 million. That’s the amount that then goes into the calculation of the Power Cost Adjustment which directly affects rates.

Bottom line: Out-of-state surplus sales of electricity are calculated to directly benefit our customers.

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3. Some say you sell water out of state. Do you? We don’t sell water. We use the water in the Snake River to generate electricity at our hydroelectric plants. The plants do not consume water or cause emissions. All the water remains in the river and proceeds downstream to the Columbia River and finally to the Pacific Ocean. It is to Idaho Power’s and our customers’ benefit to keep water in the Snake River and its tributaries where we have power plants.

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4. Why don’t you just breach the dams and use wind? The company’s existing hydroelectric power plants are valuable to both customers and shareholders and the energy they provide to southern Idaho and eastern Oregon is critical to the regional economy. The company is investing millions of dollars to preserve these low-cost, emission-free assets through its federal relicensing program.

Wind generation is beginning to assume a more significant role in the resource mix for Idaho Power. One of the challenges of integrating wind resources into the existing generation mix is its intermittent nature. As wind increases or decreases, other Idaho Power generating plants must be able to increase or decrease output to compensate and support the need to maintain a constant match between generation and customer usage.

The company’s hydroelectric power plants can provide that flexibility within limits. However, doing so will increase the cost of supplying power to all of Idaho Power’s customers. Since our hydro plants are key to integrating wind, it is important that the company maintain the operating flexibility its hydroelectric plants provide.

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5. What does Idaho Power think of Idaho Governor C.L. "Butch" Otter’s idea to build more dams? While the company is planning to upgrade Shoshone Falls Power Plant and has a program for replacing existing turbines to increase efficiency, it’s unlikely that Idaho Power will build any new hydroelectric power plants because nearly all of the available sites have been used, and opposition to the construction of new hydro plants make new developments unlikely.