Following discussions with Idaho PUC staff, Idaho Power has asked commissioners to reduce the two components of its fixed-cost adjustment mechanism (FCA) for new residential and small general service customers starting in 2022.
While the FCA is meant to discourage Idaho Power from avoiding spending on energy efficiency and demand-side management, the current mechanism also captures energy reductions caused by external factors such as economic downturns, according to the company's application [IPC-E-21-39].
The application's proposed changes are identical to those suggested by IPUC staff during the docket dealing with Idaho Power's 2020 FCA [IPC-E-21-03]. In the commission's final order approving that adjustment, it directed Idaho Power to apply for changes to the tracker before it filed the next adjustment request.
At the time, the utility argued against the need for altering the FCA's fixed cost per customer (FCC) charge and fixed cost per energy (FCE) rate. Instead, it argued that changes should be addressed in rate design changes. (Its current application maintains that is the better long-term solution and the FCA modifications are a short-term fix.)
IPUC staff argued in the earlier docket that the tracker captures energy reductions not attributable to energy-efficiency and DSM spending by the company, such as economic cycles, updated building codes and customer response to higher prices. Over time, FCA deferred balances will grow out of proportion to actual investments, according to staff comments.
In its Nov. 10 application for the current docket, the company proposes applying IPUC staff's suggested changes to new customers beginning Jan. 1. The proposal includes lowering the FCC for new residential customers from $650.63 to $360.57 and for small general service customers from $317.72 to $256.29.
The current charges are calculated by dividing the utility's fixed cost components for each customer class by the average number of customers. The lower charges are calculated with a similar formula, but they exclude generation- and transmission-related fixed costs, according to the application.
The proposed changes to the FCE rates also exclude generation- and transmission-related fixed costs. The application requests lowering the rate from 5.2 cents/kWh to 2.5 cents for residential customers, and from 6.9 cents/kWh to 4.9 cents for small general service customers.
If approved, the company and IPUC staff agree the changes should remain in place until at least 2025, after which the FCA can be formally reviewed, according to the application.