Sunday, December 12, 2010

President's Editorial

Power Rate Increase Unjustified
by Frank Priestley, Idaho Farm Bureau President

A proposed rate increase that would jump power bills in Eastern Idaho by an average of 13.7 percent is ill-timed and unwarranted.

Rocky Mountain Power, a subsidiary of PacifiCorp, serves nearly 70,000 Idaho customers and was purchased by Berkshire Hathaway in 2006. The company controls significant electricity generation and transmission capabilities in Utah, Wyoming, Idaho, Montana, Arizona and other western states. Berkshire Hathaway chairman and CEO, Warren Buffet, is the third wealthiest man on the planet, according to Forbes Magazine.

Idaho’s economy is experiencing the longest, deepest, most pervasive recession in more than 70 years. Our state has lost 15,000 jobs and hundreds of businesses have closed. Our remaining employers are critical and a power rate increase, which would hit manufacturing industries hardest, is likely to slow the region’s economic recovery.

Southeast Idaho’s manufacturing sector could see power costs rise from 15.9 to 19.6 percent. Some of those businesses would theoretically be able to pass the increased cost along to their customers. Others will not. Farmers who pump irrigation water could see a 9.6 percent increase but are likely to get hit harder than that if they have contracts to supply food processing companies with raw products.

Homeowners are facing increases in the 8 percent range. If this attack on Idaho businesses and families is approved by the Idaho Public Utilities Commission, the impact will be felt throughout the region. In addition, Idaho Governor Butch Otter has promoted Idaho as an attractive place for new businesses to locate. If this increase goes through in full it could tip the scales against businesses relocating to Idaho.

To justify the increase Rocky Mountain Power cites demands of growth and the cost of new renewable energy generation as reasons. Yet both of these arguments lack technical merit. First, the company has had to recently lower its power load projections and scale back plans for growth due to the downtrodden economy. All of Rocky Mountain Power’s renewable generation is already subscribed to by requirements of neighboring states. Idaho does not yet have a renewable power portfolio requirement. This raises the question of whether Idaho residents are being asked to subsidize our neighboring states.

Rocky Mountain’s rate proposal assumes it should receive a 10.6 percent “rate of return” for its shareholders. In our opinion that is just too much to ask of Idaho families during a recession. And in addition, Rocky Mountain’s rates are already high compared to other power suppliers in Idaho. No other utility is proposing increases anywhere near this level and in fact, Idaho Power recently announced a 6.3 percent reduction in rates.

An increase of this magnitude will put a severe strain on thousands of Idaho families and businesses. We strongly encourage the Idaho Public Utilities Commission to send Rocky Mountain Power back to the drawing board to come up with a plan that doesn’t harm families, increase the cost of living and force businesses to close their doors.

The IPUC will hold public hearings on the rate proposal on December 14 in Shelley and Rexburg, December 15 in Grace and Preston, and by telephone conference on December 20. For more information follow this link:

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