Idaho Power Company Business Information, Profile, and History

History of Idaho Power Company

Providing power to southern Idaho for much of the twentieth century, Idaho Power Company propelled the progress of the territory and grew to become one of the leading utility companies in the United States. With 17 hydroelectric plants, part-ownership in three coal-fired generating plants, and a diesel-fired power facility, Idaho Power served more than 330,000 customers in a 20,000 square-mile service area, which consisted of southern Idaho, northern Nevada, and eastern Oregon.

Idaho Power Company was created as a regional utility company in 1915. Idaho Power was an amalgamation of the smaller local utilities that served Idaho's residential, industrial, and business customers. At one point there were 50 of these small predecessor power companies in Idaho, the oldest of which dated back to 1887. Shortly before the formation of Idaho Power these 50 were combined into five companies. On May 6, 1915, Idaho Power was incorporated and assumed ownership of the electric systems of Idaho-Oregon Light & Power Company, Idaho Railway, Light & Power Company, Idaho Power & Light Company, Southern Idaho Water Power Company, and Great Shoshone & Twin Falls Water Power Company. Fourteen months later, on August 1, 1916, Idaho Power commenced operations. Idaho Power's first year of operations brought $1.1 million in revenues and $558,000 in net earnings.

When Idaho Power began, hydroelectricity was a novel type of power that was particularly well suited for the Snake River, the largest river in Idaho Power's territory. Befitting its name, the Snake River cut a meandering 400-mile path through Idaho Power's territory, flowing from the corner of the Washington-Oregon border, then twisting into Wyoming, and dropping 2,500 feet during its circuitous route through Idaho.

With the companies Idaho Power had purchased upon incorporation, Idaho Power had acquired five hydroelectric developments along the Snake River and two additional plants along two of the Snake River's tributaries, the Malad and the Payette Rivers. In addition to these generating facilities the company leased two hydroelectric plants, giving it roughly 39,000 horsepower of generating capacity with which to feed through the company's 933 miles of transmission lines that linked together 57 substations. With this superstructure, Idaho Power served an estimated 150,000 people. The increase in the population in Idaho Power's territory would largely determine the company's growth throughout the century.

Even though Idaho Power operated as a monopoly in its territory, Idaho Power did not function without competitors. Idaho Power's business was dependent on nature and Idaho state's growth. Throughout its history, Idaho Power would fall victim to the whims of nature, an ungovernable reality of operating as a hydroelectric utility. Unusually dry weather drove costs up and decreased the utilities' ability to make power. Dry weather meant less snow on the mountain peaks of eastern Idaho and western Wyoming, less water run-off into the Snake River, and less hydroelectric energy produced at a greater cost. Nearly as uncontrollable as the weather was the growth of Idaho. Although any type of business inherently depends on the growth and economic vitality of its community, Idaho Power's dependence ran much deeper, Idaho's growth represented the chief dictate directing the company's growth. Idaho Power thus played the dual role of utility company and promoter of the quality of life in Idaho.

As the population of Idaho Power's territory grew, the company needed to generate more power. Idaho Power increased its generating capacity for the first three decades after its incorporation mainly by acquiring other utilities. Idaho Power acquired Thousands Springs Power Company in 1917. In 1928, the company acquired the utility operating property of Vale Power Company and Murtaugh Light & Power Company, the Salmon River Power & Light Company in 1935, the Nevada Power Company the following year, the Idaho properties of West Coast Power Company in 1944, the Jordan Valley Electric Cooperative in 1945, the Long Valley Power Cooperative in 1946, and the Malheur Cooperative Electric Association in 1949. As the company slowed its rate of acquisitions in 1950, Idaho Power's revenues had reached $14.7 million. Idaho Power recorded that it generated 1.5 billion kilowatt hours that year.

Perhaps more important to the long-term vitality of the company was that the growth recorded did not come at the expense of efficiency. Idaho Power employed two fewer people in 1968 than in 1950 (1,195 compared to 1,197), yet by the late 1960s the company conducted 4.5 times more business than in 1950. In the late 1960s Idaho Power brought in nearly $70 million in revenue and generated seven billion kilowatt hours. This enviable record of growth was aided by larger generating units and the beginning of plant automation, but one factor that greatly contributed to Idaho Power's substantial leap in power generation between 1950 and 1968 was an enormous construction project undertaken by the utility.

Though Idaho Power mainly had increased its generating capacity through acquisition before 1950, it had also constructed some new facilities. In Twin Falls in 1935, Idaho Power built a 10-megawatt plant. In 1955, however, Idaho Power embarked on the largest and most ambitious construction project of the company's history. Construction of the Hells Canyon Development would last 12 years, add three dams and plants to Idaho Power's growing superstructure, and dramatically increase its generating capacity. Located on a nearly inaccessible 40-mile stretch of the Snake River, Hells Canyon, the deepest gorge in North America, towered as high as a mile on either side of the river. The canyon's depth created myriad engineering and logistical problems for work crews attempting to harness the river's power. When the last dam was completed in 1967, however, the reward was well worth the labor. The addition of the Brownlee, Oxbow, and Hells Canyon dams quadrupled Idaho Power's generating capacity, raising it to 1.5 million kilowatts and prepared the utility to handle increased electrical demand in the future.

Initially, Idaho Power sold Utah Power & Light Company, a neighboring utility, the surplus energy generated by the Hells Canyon Development. Demand for electricity soon increased within Idaho Power's service territory, however, and the utility used all the power it generated. The demand for more power within Idaho Power's territory came with the increasing popularity of electric energy. During the construction of the Hells Canyon Development projects, new home builders installed electric heat apparatuses into their structures. In 1962, 17 percent of all new homes in Idaho Power's service area were outfitted with electric heat. As all three Hells Canyon dams operated to meet the utility's demand in 1968, nearly 54 percent of new homes contained electric heating systems. Demand for electricity was increasing in the late 1960s; 82 percent of all new apartment units installed electric heat, more than 60 percent of all new schools were installing electric heat, and two new college campuses were completely outfitted with electric heat. Idaho Power's management sought additional sources of power to meet increasing demand.

In addition to the increasing demand for household electricity, Idaho Power had to meet the increasing demand for industrial power. For years the mainstay industries in Idaho were potato farming, lumbering, and phosphate rock mining, but in the 1970s a new industry emerged in Idaho, attracted in large part by the relatively inexpensive hydroelectric power provided by Idaho Power. This new type of industrial customer was the electronics industry, lured by hydroelectric power rates that averaged roughly a third of those incurred by electronics manufacturers based in California's Silicon Valley.

As demand for Idaho Power's services grew so did its revenues. From 1965 to 1975, the utility's revenues more than doubled, rising from $52 million to more than $100 million, while per share profits increased 83 percent. In addition, by 1975, the company had paid a dividend every year since 1917. Complementing this solid financial performance, Idaho Power had added to its generating capacity in 1974 by opening the first of three large coal-fired generating plants. Two more would be opened before the end of the decade, in addition to a new generating plant at the company's American Falls development in 1978 and the installation of a fifth hydro unit at Brownlee Dam two years later.

Nevertheless, the late 1970s would be primarily remembered as one of the most difficult times in the utility's history. A drought in 1977 brought with it the worst water conditions on record. As a result, Idaho Power, almost entirely dependent on adequate water supply to generate its power, incurred serious damages. The utility was forced to ask its customers to curtail usage and to replace its hydro power with expensive thermal power. By the following year, however, thanks to the return of water to the region, the company had rebounded well. In 1978, Idaho Power connected 11,140 new residential customers, the largest yearly gain in the company's history, and per share earnings climbed 35 percent.

As Idaho Power entered the 1990s, another severe drought negatively affected the company's financial performance. The drought lingered on throughout the early 1990s, compounding the debilitative effects of a concurrent nationwide recession that stifled Idaho's economic growth. The company's business and industrial customers, hurt from the poor economic conditions, curtailed usage. Idaho Power's financial performance languished as a result. Both the drought and the recession began to ebb by 1993 and Idaho Power recorded a resurgence, a 41 percent increase in the utility's net income from 1992 to 1993. Adding greatly to the optimism pervading the utility's management was the economic revival of Idaho Power's industrial customers, particularly the utility's electronics customers such as Hewlett-Packard, Micron Technology, Zilog, and American Microsystems.

As Idaho Power and its customers noted the improvements in the economy, Idaho Power gained license to protect itself against future power production cost fluctuations. In 1993 the Idaho Public Utilities Commission approved Idaho Power's request for a power cost adjustment (PCA), enabling the utility to adjust its power rates annually to reflect changes in power supply costs. By implementing this mechanism Idaho Power mitigated to a great extent its dependence on favorable water conditions, since a PCA allowed the utility to raise power rates when hydroelectric production declined and power costs rose.

The approval of Idaho Power's PCA fueled the company's optimism for the future, enabling Idaho Power's management to more accurately plot the company's future course. As the utility entered the mid-1990s, Idaho's population was expected to increase nearly 50 percent during the next 20 years. In addition, the future promised to bring more deregulation and with it a more competitive environment for Idaho Power. As one of the country's lowest cost producers of electricity, Idaho Power stood well-positioned as it entered the late 1990s.

Principal Subsidiaries: Idaho Energy Resources Co.; Idaho Utility Products Co.; IDACORP, INC.; Ida-West Energy Company.