The Public Utility Commission of Oregon approved an agreement decreasing Idaho Power Co.'s residential customer rates to reflect federal tax reform benefits, mitigating what would have been a rate increase associated with the utility's planned early cessation of operations at two coal plants.
The agreement, signed by Idaho Power, the PUC staff and the Citizens' Utility Board, will also lessen the impact of rate increases for all other customer classes, according to a June 1 news release.
Idaho Power is adjusting Oregon customer rates to reflect annual tax reform benefits of $1.48 million, effective June 1. For residential customers, the adjustment will result in a 2.56% rate decrease. Additionally, the annual power cost update and power cost adjustment mechanism will result in another 4.94% decrease for residential customers. These decreases are partially offset by revenue increases associated with Idaho Power's plans to cease operations early at two coal-fired plants, resulting in an overall 3.27% decrease to residential rates.
The two-unit, coal-fired North Valmy Station is located near Winnemucca, Nev. Idaho Power owns 50% of the plant, representing nameplate generating capacity of 284 MW. The remaining 50% is held by Berkshire Hathaway Energy subsidiary NV Energy Inc.
Idaho Power is seeking to cease operations at Valmy unit 1 by 2019 and unit 2 by 2025, although the plan is not yet final. NV Energy, however, is looking at operating unit 1 until at least 2025. Both companies are working on a definitive agreement to finalize a process for Idaho Power to exit the power plant.
In an updated filing, Idaho Power said its exit from Valmy unit 1 would increase its revenue requirement to $2.5 million. The PUC approved this increase, representing an approximately 4.5% increase to Idaho Power's annual revenue requirement.
"Staff determined that Idaho Power's decision to accelerate the end-of-life for Valmy represents the lease cost and least risk planning as found in its 2017 IRP," according to the May 30 PUC order. "The decision to cease coal-fired operations at Valmy six years earlier results in an estimated net present value savings of roughly $33 million for customers."
Parties to the rate settlement agreement found that Oregon customers would benefit from timing the amortization of tax benefits until May 31, 2019, because it would mitigate rate recovery for the accelerated depreciation of Valmy unit 1.
The adjustments also include the rate increase for the early cessation of coal-fired operation at the Boardman plant in Morrow County, Ore. Small general service, large general service, large power and irrigation customers will see an overall rate increase with all the approved adjustments. (Oregon PUC Docket Nos. UE 345 and UM 1928)
Idaho Power, a subsidiary of IDACORP Inc., also recently received approval from the Idaho Public Utilities Commission for a tax benefit settlement.
