Posted: Thursday, January 06, 2011 12:00 PM
Farmers fear higher prices for power, fertilizer; processors may trim payments
By DAVE WILKINS
Electricity users in southeastern Idaho were greeted with a not-so-happy beginning to the new year as power rates increased Jan. 1.
The Idaho Public Utilities Commission on Dec. 27 approved an average base rate hike of 6.78 percent for Rocky Mountain Power Co.
It could have been much higher. The rate hike is about half what Rocky Mountain Power originally sought. The company in May requested rate hikes averaging 13.7 percent.
The commission approved the smaller rate increase after hearing strong concerns from area residents, irrigators, manufacturers and the Idaho Farm Bureau Federation.
"We're somewhat relieved that (Rocky Mountain Power) didn't get the full increase they were asking for, but they're likely to be back next year asking for the rest," said John Thompson, information director for the Idaho Farm Bureau Federation.
Rocky Mountain Power is a division of PacifiCorp, a regional utility whose service area includes six Western states. The company was purchased by Berkshire Hathaway, the conglomerate run by investor Warren Buffett, in 2006.
Rocky Mountain Power has nearly 70,000 customers in Idaho.
"This is the worst our economy has been for more than 70 years," Thompson said. "We're concerned about the impact that rate increases could have on families and irrigators."
Irrigators will pay 2.9 percent more under the plan approved by the utility commission. Residential users will pay 5.5 percent more. Commercial and industrial power users will see rate hikes ranging from 4.5 percent to 9.6 percent.
The increases could be a double whammy for farmers, Thompson said.
Not only will they pay higher rates as farm operators and irrigators, but they could be indirectly affected by industrial power rate hikes.
For example, food companies that make dehydrated potatoes may be tempted to cut grower contracts to make up for tighter profit margins resulting from higher power rates.
The steepest rate increases -- 9.6 percent and 9.4 percent -- will be paid by Monsanto and Agrium Inc., both of which operate phosphate mining operations near Soda Springs.
If fertilizer prices increase as a result, farmers will feel the pinch, Thompson said.
Rocky Mountain Power had originally sought rate increases of nearly 20 percent for the phosphate operations.
Monsanto's elemental phosphorus plant at Soda Springs is Rocky Mountain Power's largest customer. It consumes an average of about 1.4 million megawatts of electricity at an annual cost of more than $42 million, company representatives said in written filings with the utility commission.
The plant's power demand is about the same as residential power demand in Kansas City.
Issues related to the contract between Rocky Mountain Power and Monsanto will be further examined over the next two months, the utility commission said. A technical hearing is scheduled for Feb. 1.
The commission has yet to decide how much Monsanto should be paid for allowing Rocky Mountain to interrupt service during certain times of the year. That decision will be announced sometime in February after the hearing.
The combined rate hikes approved by the commission will increase Rocky Mountain's annual revenues by about $13.75 million. The utility had hoped for rate hikes that would boost its annual revenue by $24.9 million.