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Darrel Anderson: Power Charger

Darrell Anderson-1Idaho Power President and CEO Darrel Anderson. Photo by Pete Grady.

Darrell Anderson-1
Idaho Power President and CEO Darrel Anderson. Photo by Pete Grady.

“Power” has many definitions – nearly 20, according to Merriam-Webster. Consequently, it’s not surprising that when you think “Idaho Power,” it can mean many things.

But with great power comes great responsibility, and nobody is more aware of that than president and CEO Darrel Anderson.

Electric Power

The most obvious meaning of “power” for Idaho Power is electricity. The company, celebrating its centennial this year, was formed in the early part of the 20th century by the consolidation of about 50 independent power companies in southern Idaho.

“This business is very capital-intensive,” Anderson says, requiring equipment such as power lines and power plants – currently $6 billion in capital assets. “If you’ve got 50 companies trying to do this, you’ve got competing lines running down the same street.” Consequently, many companies ran into financial difficulties, so first they consolidated into five, and then in 1915/1916 came together as Idaho Power.

Today, Idaho Power covers 24,000 square miles. “All the way east to Pocatello, Blackfoot, and Salmon, west all the way to west of Ontario, and north to Riggins,” Anderson explains. Altogether, it amounts to 520,000 customers, or more than a million people.

Anderson was the second financial person to run Idaho Power, the first being his mentor J. LaMont Keen. With degrees in accounting and finance, Anderson worked for Deloitte & Touche for about 15 years, and in the process got to know Idaho Power by being its auditor. After Anderson worked briefly at the Sisters of Saint Mary of Oregon as CFO, Keen offered him a job as one of four controllers. As Keen rose through the ranks, Anderson followed – all the way up to CEO, after Keen retired in 2014.

That means, though, that Anderson isn’t a technical person. But he says it hasn’t been an issue. “In public accounting, you get exposed to a lot of industries and have to pick up what they do very quickly,” he says. “You may not know the intimate details, but you need to know what they do and how they go about doing it. Do I know all the laws of physics? I know enough to be dangerous. Do I know how electricity flows, can I quote you the formula? Nope.” What’s most important is surrounding himself with “really smart people,” he says.

Idaho residents enjoy some of the lowest-cost power in the nation. That’s thanks to water. “The big driver to our price structure continues to be the 17 hydro projects along the Snake River,” which typically provides more than half of the power Idaho uses in a year, Anderson says. “That forms the basis for low-cost power and gives the region a competitive advantage,” because power plants using other technologies, such as gas, cost the same to build and run here as anyplace else.

The source of the electricity is actually what Anderson considers the company’s biggest challenge. “We are moving through an evolution, from a public policy perspective, of climate change and the impacts of carbon,” he says. “Utilities are right in the crosshairs from a lot of folks if you’re carbon emitters. And we are – we have coal plants, we have gas plants.”

So Anderson is faced with the difficult balancing act of transitioning from carbon sources while still maintaining low energy costs. “We are moving to what I call a ‘carbon-light’ environment,” he says. “It’s not zero, because that’s not feasible. The challenge we have is it took us 40 years to get here. Back in the 1970s, coal was the greatest thing – good, cheap, and plentiful. So now, 40 years later, we’re saying it’s not that great an idea, so how do we transition out of this to not bankrupt our customers?”

While some would like Idaho Power to take a bigger role in renewable energy sources such as solar and wind, that’s tough. “Storing electricity today in the quantities you need isn’t feasible, and cost-prohibitive,” Anderson says. “We have what I would argue is the best storage device today: Brownlee Reservoir, because you can store the water, run it through turbines when you need it, and start and stop it without having significant impact on the equipment. With gas and coal, it’s harder to do that.”

It’s a testament to how well Anderson threads that needle that organizations that butted heads with Idaho Power in the past on this issue feel they can work better with it now. “It’s no coincidence that Idaho Power began its long transition away from coal and began listening instead to its own shareholders and customers at about the same time Mr. Anderson assumed the company’s leadership,” says Ken Miller, energy program director for the Snake River Alliance, a clean energy advocacy group. “He is presiding over the most important evolution of one of the most important companies in the history of our state. This is a corporation that, until just a few years ago, was dug into a path toward a completely unsustainable energy future and business model. Is Idaho Power getting off coal as quickly as it needs to? Not fast enough for us, but turning around a century-old corporation like this one doesn’t happen overnight.”

Economic Power

And that leads to another role for the company – as the economic engine for the state. As a regulated monopoly, Idaho Power sees its rates set by the Public Utilities Commission, which allows the company to earn up to a regulated rate of return, typically around 9 or 10 percent. “It doesn’t guarantee you get to earn it, but you can strive to earn a certain rate,” Anderson says.

Idaho Power’s last general rate case filing was in 2012. “Customers would be surprised by how much we spend trying to keep costs down rather than going for a price increase,” Anderson says. “Anytime we raise the price, it’s going to have an impact on our customers, on families, on businesses, and it impacts the economy. It takes money out of the economy that could be used for other things.”

That’s particularly true when it comes to attracting new businesses and growing existing ones. “We have companies that are here because of low power prices,” Anderson says. “If all of a sudden I escalate those prices, that’s going to have an impact, and they may go somewhere else. The ripple effect has a bigger impact.”

Anderson notes that, while many utility companies aren’t seeing growth, Idaho Power is growing at 2 percent per year. “For a utility, that’s a pretty good number,” he says.

The focus on economics is particularly important these days because consumers have more options, even though Idaho Power is a monopoly. “Customers do have choices,” Anderson points out. “They can choose to use more or less energy. A business person has a choice to expand the business or not. Companies have the choice whether to locate here or not. We can play a role in some of those preferences.”

Consequently, Anderson is working to help make Idaho Power more responsive to its customers. One way is through collecting usage data with the company’s new smart meters. By analyzing that data, the company can make pricing and business decisions that are intended to get customers to behave in a particular way. For example, by implementing time-of-day pricing, Idaho Power could encourage consumers to use power at off-peak times, such as by running dishwashers and washing machines at night, by lowering prices at those times. He admits, though, it’s easier to develop incentives when people are paying 30 cents per kilowatt hour, as in California, than with the 9 cents they pay in Idaho. “It’s a big step for us,” Anderson says. “Can we change behavior? We’re going to find out.”

Political Power

While Anderson doesn’t talk about it much, some of the other power that he and Idaho Power hold is the ability to influence politicians. His letters of recommendation for this award, for example, included one from Idaho Lt. Gov. Brad Little. “One of the positions for which I appreciate him most is as a partner in economic development, a champion for bringing new businesses to our state and helping existing businesses expand,” Little writes.

With $1 billion in revenues and 2000 employees, the company is one of the largest in Idaho. That carries some weight. “We look at it very judiciously,” Anderson says. “What’s important for us is to ensure that the policies that get adopted, the laws that get passed, aren’t necessarily going to have a negative impact on what we’re trying to do.”

Water, for example, is critically important, not because Idaho Power actually consumes the water per se but because it’s needed to power the turbines, Anderson says. Keep in mind that the 1982 Swan Falls Idaho Supreme Court decision, which gave Idaho Power rights to more water above its dam than it had originally, paved the way for the recent Snake River Basin Adjudication, political writer Randy Stapilus wrote in 2009. For its part, the Snake River Basin Adjudication was praised by the late Supreme Court Justice Antonin Scalia in 2014, who complimented Idaho for being the first state to complete its water adjudication.

“If you look back over the years, one of the things that has been contentious is defense of our water rights,” Anderson says. “It’s important that as those issues come up, that is one thing we have to stand behind.” Water is important to agriculture, recreation, and consumption, as well as to power generation, he continues. “You can’t live without water. For Idaho to continue to grow and expand, water’s going to be very important for that. Will there be battles in the future over water? I hope not, but I wouldn’t be surprised.”

Philanthropic Power, Community Leader

Anderson considers his responsibility to extend to philanthropy as well. As a veteran of grade school magazine and candy bar fundraisers himself, he’s sympathetic to groups and individuals working to raise funds. “I remember being that person on the other side asking for someone to buy stuff,” he says. “I remember the ‘no’s. They weren’t much fun. If people are doing it, I’m going to buy what they’re selling.”

Organizations that Anderson has supported include the Women’s and Children’s Alliance, where he serves as president of the board of directors, as well as muscular dystrophy events and the Albertina Kerr centers for the disabled when he worked in Portland. “You work with folks with different challenges, it puts life in perspective,” he says. “Some of the things you’re dealing with every day aren’t very important.”

“Under his guidance, we took on and successfully completed a $1.8 million capital campaign,” says Beatrice Black, executive director for the WCA and herself a 2013 CEO of Influence.  “Having a champion like Darrel has helped raise awareness of the issues we deal with in a way that would not have been possible without his passionate support and candor.”

Anderson’s philosophy on philanthropy extends to the company as well, though he makes it clear that Idaho ratepayers aren’t funding it. “Any of our charitable giving is below the line,” he says. “Customers don’t pay for it. Stockholders pay for it.”

And that philanthropy goes down to the community level. “Big or small, we have people in all these communities,” Anderson notes. “People look to our employees to help out. There’s time, talent, and treasure. If you’ve got any of those things, it’s important that people do that. There’s a lot of need out there today. Everyone can give something, even if it’s an hour of your time.”

One of Anderson’s credos at Idaho Power is “safety,” and that goes beyond the utility itself. He spearheaded a community initiative called “Just Drive” last year to bring attention to the safety risks of distracted driving caused by people using cell phones. Under the initiative, executives and government officials sign a “Just Drive” pledge, and implement an attentive driving policy for their companies or civic organizations. “We are beginning our second year of this valuable effort and are seeing an increased awareness of the issues around distracted driving,” he says.

Anderson credits his wife Lori for much of his success. “I subscribe to the notion that you need a strong foundation at home to be successful,” he says. “If it’s rocky at home and it gets challenging at work, your life becomes really difficult. No matter what’s going on here, the fact that I’ve got that strong foundation at home is very valuable and I feel really lucky. People have told me along the way that it gets lonely at the top – it can be, but that’s why a supportive spouse is amazingly important.” Married for 27 years, the couple has two grown children, 24 and 22. “She stayed home to raise our kids,” Anderson says. “If she hadn’t decided to do that, it would have put a lot more stress and strain on me.”

At this point, Anderson, who just turned 58, has been with Idaho Power for 20 years. What’s next? “This might be my last official job,” he muses, though he might work with nonprofits or teach in a college. “Twenty years here puts a lot of miles on you. You only have so many miles on you. There comes a point in time when you have to decide, do you work to live or live to work? I’m focused on working to live.”

About Sharon Fisher