IDAHO FALLS, Idaho: Idaho Falls Power’s (IFP) new rate structure calls for the residential electric rate to effectively drop from 6.25 cents per kilowatt-hour used to 5.35 cents/kWh when a proposed Power Cost Adjustment (PCA) is factored into the equation – less than half the average electric rate in the US.
This decrease will be offset somewhat by an increase in the monthly customer service charge, from $10 to $15, to better capture “fixed costs” associated with keeping the city’s electric system ready when customers flip the switch.
At today’s work session, City Council authorized the staff to prepare the rates for the fee resolution that will be adopted as part of the budget. The average residential customer will see approximately a 6 percent reduction on their electric bill, from $72.50 to $68.50, although customer who use less than 300 kWh per month will see a slight increase.
The changes will be outlined at three open house meetings on Wednesday (Aug. 12) at IFP headquarters, 140 S. Capital Ave.
The meetings will be held at 10 a.m., 2 p.m. and 8 p.m. Each will feature a presentation by Assistant General Manager Bear Prairie explaining how the utility sets its rates and explaining the proposal that went before the Council today.
The move to lower rates comes in the wake of a rate increase from the Bonneville Power Administration, the federal non-profit agency from which IFP buys most of its power.
Power purchases from BPA are the largest expenditure in IFP’s budget, roughly 41 percent of the budgeted expenses for the upcoming fiscal year. BPA’s rate increase will increase those expenses by approximately $2 million annually.
IFP is capable of absorbing those costs, though, because of a number of factors, most notably the retirement of the 30-year bonds used to construct three of the city’s four dams.
“Idaho Falls continues to benefit from the leadership of those who pursued development of our power plants more than 30 years ago. There was overwhelming community support for these facilities when the bonds were passed in 1978 and 1984. We will now start to see a return on those investments in the form of lower electric consumptive rates,” states Idaho Falls Power’s General Manager, Jackie Flowers. “Given all the upward pressure on electric rates, we are very fortunate to be decreasing rates. It really is unheard of in today’s environment.”
While the residential electric consumptive rate will drop to 5.78 cents per kilowatt-hour, the implementation of a power cost adjustment will fluctuate annually in order to more transparently pass along power supply costs. With the PCA, the residential rate for the coming fiscal year would drop to 5.35 cents/kWh.
The PCA will be a new line item on the bill and will be adjusted annually to reflect the previous year’s power supply costs. In good water years, the PCA may lead to a reduction in electric bills. In bad water years, the PCA may lead to an increase in electric bills.
As mentioned, this proposed decrease would be offset by an increase in the monthly customer service charge, from $10 to $15, to better capture “fixed costs” associated with keeping the city’s electric system ready to serve should the customer decide to flip the switch. The cost of service model used to develop the proposed rate plan actually calls for the monthly customer service charge to be $18.
About Idaho Falls: Situated along the Snake River at the western edge of the world famous Rocky Mountains, Idaho Falls has all the features of big city living, but still embraces a small town charm. Our skyline consists of the majestic Teton Mountain Range, and in our backyard is the world’s most famous park – Yellowstone. As the regional center for healthcare, shopping, and entertainment, Idaho Falls is attractive to small and large businesses alike and consistently finds itself listed in the top ten rankings of many prestigious magazines, newspapers and professional community research publications. Learn more at http://www.idahofallsidaho.gov/.