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The Idaho Public Utilities Commission has allowed Idaho Power Co. to terminate an "industrial efficiency" conservation program designed to promote the installation of energy efficient equipment by both industrial and large commercial users through the use of grants awarded by the utility.

The commission found that the way to implement such goals is changing in light of electric industry restructuring, while declaring its continuing support for utility investment in conservation and renewable-based resources.

Under the program, Idaho Power made grant payments to cover part of the cost of installing the energy efficient equipment and recovered the grant costs from ratepayers over an extended period of time. The utility alleged several of its largest customers had suggested that it discontinue such demand-side management programs because they "simply add to deferred costs and increase the cost of power over time."

In addition, the utility noted that the deferred funds are classified as regulatory asset and would be included in the category of "potentially stranded assets" if deregulation of the generation function of regulated utilities were to occur. The utility also said that changes in the marketplace had lessened the need for the program as several of the technologies funded through the grants were now commonly used by a wide range of customers, including efficient lighting measures, variable speed drives and more efficient refrigeration technologies.

In approving the proposal to discontinue the program the commission acknowledged that the state's utilities will face the "challenges of at least partial deregulation and competing in a more open market with other providers including utilities and independent power producers." It agreed with the utility that it faces some degree of risk that DSM program investments might not be recovered if deregulation occurs and some of its customers leave the system. The commission concluded that the utility is correct in its assertion that, "This is not an opportune time for it to be creating regulatory assets of this nature." Re Idaho Power Co., Case No. IPC-E-96-22, Order 26753, Jan. 13, 1997 (Idaho P.U.C).

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