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HomeMy WebLinkAbout20090120_2458.pdfDECISION MEMORANDUM TO:COMMISSIONER REDFORD COMMISSIONER SMITH COMMISSIONER KEMPTON COMMISSION SECRETARY LEGAL WORKING FILE FROM:KEITH HESSING DATE:JANUARY 14 2009 RE:CASE NO. IPC-09-01, TEMPORARY AMENDMENT TO THE MICRON ESA On January 12 2009, Idaho Power Company filed an Application with the Commission requesting approval of a temporary amendment to its Electric Service Agreement with Micron Technologies, Inc. The proposed amendment includes Schedule 26A that is a new schedule. It is proposed that Schedule 26A be effective January 2009 through June 30, 2009. Schedule 26A removes the Monthly Contract Demand Charge but increases the Monthly Billing Demand Charge and the Base Monthly Energy Charge such that the proposed rate changes calculate to be revenue neutral. Idaho Power Company requests that the Application be processed under Modified Procedure. Micron is in the process of restructuring and has requested the change to facilitate that process. The rate changes have been agreed to by both Idaho Power and Micron. Unless other rates are approved by the Commission, Schedule 26A will expire June 30, 2009, and Schedule 26 rates will again be effective on July , 2009. Idaho Power s Application is attached. STAFF RECOMMENDATION I have reviewed Idaho Power s Application and believe that it should be approved without further process. Only Micron and Idaho Power are directly affected by the proposal and they agree on the proposed modifications. i:udmemos/decision memorandum - IPC Micron Schedule 26A DECISION MEMORANDUM JANUARY 14 2009 BARTON L. KLINE, ISB #1526 LISA D. NORDSTROM, ISB #5733 Idaho Power Company O. Box 70 Boise , Idaho 83707 Telephone: 208-388-2682 Facsimile: 208-338-6936 bkl ine(Ci). iqa hopower. com nordstrorn(Ci). idahopower. com n=r1- 2009 JAH 12 PM 4: 56 IDAHO HJJ:. !:, UTILITIES CCi"l~i~!SS!C;:' Attorneys for Idaho Power Company . " Street Address for Express Mail 1221 West Idaho Street Boise, Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FORA TEMPORARY AMENDMENT TO THE ENERGY SALES AGREEMENT WITH MICRON TECHNOLOGY, INC. ) CASE NO. IPC-09- APPLICATION Idaho Power Company ("Idaho Power" or "the Company ), in accordance with Idaho Code 9 61-524 and RP 52, hereby respectfully makes application to the Idaho Public Utilities Commission ("IPUC" or "the Commission ) for an Order approving a temporary amendment to the Electric Service Agreement ("ESA") between Micron Technology, Inc. ("Micron ) and Idaho Power and a revised Schedule 26 containing modified rates and charges for service to Micron. The Application is based on the following: APPLICATION - 1 BACKGROUND Idaho Power and Micron are signatories to a Commission-approved ESA dated September 1 , 1995 , under which Micron purchases electric energy and demand from Idaho Power for its Boise facility. Because Micron s demand exceeds 25 000 kW the ESAis a special contract under the Company s rate Schedule19. Micron is in the process of restructuring its operations at its Boise facility. Micron estimates that this restructuring will' take approximately six months. The ESA contains a monthly Contract Demand Charge, which may ' reduce Micron s flexibility in managing its electric consumption during the restructuring period.Idaho Power is amenable to adjusting the ESA Contract Demand Charge to accommodate Micron restructuring so long as the revenue requirement received from Micron is unaffected based upon -current authorized base rates effective June 1 , 2008 , under the billing determinants presented in IPC-08-10. To accomplish the above-described mutual goals, Idaho Power and Micron have entered into a letter agreement which makes several changes to the rates terms, and charges in the ESA. The letter agreement is enclosed with this Application as Attachment No.In the letter agreement, the parties agree that the monthly Contract Demand Charge will be , set at $0.00 per kW of Contract Demand rather than the existing $1.83 per kW of scheduled Contract Demand. The monthly Billing Demand Charge and the monthly Energy Charge will be increased so that Idaho Power can obtain the same revenue from Micron as it would have received with the monthly Contract Demand Charge. APPLICATION - 2 With the changes to the Special Contract and Schedule 26 set out in the letter agreement , Micron receives the contract flexibility it needs and Idaho Power obtains the same revenues from Micron that it would have otherwise received consistent with paragraph 2 of this Application. Also enclosed as Attachment No.is a revised Schedule 26 which reflects the rates and charges described in the ESA. The enclosed Schedule 26 has been denominated as Schedule 26A to differentiate it from the Schedule 26 the Company is currently seeking in the pending general rate case. Attachment No. includes a Schedule 26A in legislative format showing the proposed rate changes. Also enclosed as Attachment No.is a spreadsheet showing the derivation of the rate changes proposed in this filing. Micron is immediately commencing the restructuring of its operations and therefore Idaho Power respectfully requests that the Commission expedite its review of this Application. Idaho Power believes that a hearing is not necessary to consider the issues presented herein and respectfully requests that this Application be processed under modified procedure; i.e., by written submissions rather than by hearing. RP 201 et seq. , however, the Commission determines that a technical hearing is required, the Company stands ready to present its testimony and support the Application in such hearing. It would be extremely helpful to Micron if the Commission could see fit to make the rate change set out in Schedule 26A effective January 1 , 2009. Idaho Power is authorized to advise the Commission that Micron and the Staff of the Commission APPLICATION - 3 have reviewed this Application and concur with the proposed changes, including the Company s request that the rate change be made effective January 1 , 2009. II. COMMUNICATIONS AND SERVICE OF PLEADINGS Communication and service of pleadings with reference to this Application should be sent to the following: Barton L. Kline Lisa D. Nordstrom Idaho Power Company O. Box 70 Boise , Idaho 83707 bkline(Ci).idahopower.com In ordstrom (ci). idahopower. com John R. Gale Vice President, Regulatory Affairs Idaho Power Company. O. Box 70 Boise, Idaho 83707 rqale(Ci).idahopower.com Rick Malmgren Micron Technology, Inc. 8000 Federal Way O. Box 6 Boise , Idaho 83707-0006 remalmqren(Ci).micron.com III. REQUEST FOR RELIEF 10.Idaho Power respectfully requests that the Commission issue its Order: (1) approving Attachment No., the letter agreement to temporarily amend Micron s ESA and (2) approving the rates and charges set out in the enclosed Schedule 26A to be in effect during the term of Attachment No. DATED at Boise , Idaho, this J 2:of January 2009. Barton L. Kline Attorney for Idaho Power Company APPLICATION - 4 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-O9- IDAHO POWER COMPANY lETTER AGREEMENT ATTACHMENT NO. " ,"" """", . ., - '.', " .' """'" "" ., ,'" . ,, . , .., IDAHO POWER ~ ., .""'". .' .' -'., ... '" '" " ..' """ ..". - "... "'" ". ... .. ".. .........." '., , An JDACORP Company . ":..:,. ..- .::. "'::'::.'~::"::'::' :.: ,,, :.. '' ,.. ..: ..:.., ":""::". "":'::";~":::"":"::...." ,' .. JOHN R. GALE VIce President Regulatory MfaIIS ". ... :..': ,: .:.., . ...., ".' .'-' ", " '", ,::".:.: ,. .... .-.. . ":...- "" .: . ""'" '' " '. . January 9, 2009 Dale Eldridge Director of Facilities Micron Technology, Inc. 8000 Federal Way O. Box 6 Boise, Idaho 83707-0006 Re:Agreement to Temporarily Sus.,end the Application of the Contract Demand ChargeUnder the September 1, 1995, Electric Service Agreement between Micron Technology, Inc., and Idaho Power Company Dear Mr. Eldridge: Representatives of our two companies have been discussing Micron Technology, Inc.'sMicron) request for a temporary suspension of the Contract Demand Charge under the above-referenced Bectric Service Agreement '"ESA"). Micron is in the process of restructuring its operations atits Boise facility and the temporary suspension would provide Micron with needed flexibility to undertake it's restructuring. Idaho Power Is willing to accommodate Micron s request In a manner that is revenueneutral for Idaho Power. Based on these understandings, Idaho Power and Micron have reached the followingagreements: The term of this agreement will run from January 1 , 2009, through June 30,2009.2. The revised charges that will implement this agreement are set out in the proposed ScI'1edule26A, which is attached as Exhibit No.1. These charges aresummarized as. follows:a. Monthly Contract Demand Charge of $0.00 per kW of Contract Demand whic!llsset at 85 000 kW. Monthly Billing Demand Charge of $8.16 per kW of Billing Demand.c. Daily Excess Demand Charge of $0.226 per kW of demand /hat exceeds the Contract Demand of 85.000 kw. Base Monthly Energy Charge of $.016628 per kWh. 3. , During the six month term of this agreement, unless the parties agree otherwise , the Commission specifically orders a different rate design, anyp8se rate revenuerequirement changes authorized by the Commission that are applicable to Micron will be recovered from Micron by adjusting Micron s Billing Demand Charge and Energy Charge. REVIEWEO MTI Legal7!~ 4. Charges set out in Schedule 55 (Power Cost Adjustment), Schedule 91 (Energy EfficiencyRider), and Schedule 95 (Adjustment for Municipal Franchise Fees) will not bechanged by this agreement and will continue to apply in accordance with applicableCommission Orders.5. Prior to the end of the term of this agreement, Micron shall, subject to IdahoPower's reasonaQle approvaJ, designate the Contract Demand which shall be effectiveunder the ESA on July 1. 2009. The terms of the ESA shall otherwise remain unchangedexcept with respect to revisions-to the ESA mutually agreed upon between the parties.6. Unless specifically modified by this agreement, all other tenns and, conditions ofthe ESA remain in effect, including the application of the Daily Excess Demand Charge for demand in excess of 85,000 kW. 7. This agreement Is subject to the review and approval of the Commission. IdahoPower will file this agreement and the proposed Schedule 26A, which is attached hereto as Exhibit No.1, with the Commission. Idaho Power will request expedfted review andrequest that the Commission make the rate changes set out in Schedule 26A effective as of January 1 , 2009. If you concur that the foregoing accurately sets forth the agreement of the parties, please indicate your concurrence by signing all three copies of this letter and returning two fully executed copies to me.Idaho Power will file the original with the Commission. JRG:mka REVIEWED AND ACCEPTED BY: January 2009 ' EXHIBIT NO. Idaho Power Company First Re'lised Sheet No 26 1 CElHeels IP.C. No. 29, Tariff No. 101 Original Sheet No. 26A- SCHEDULE 2 IDAHO POWER COMPANY ELECTRIC SERVICE RATE FOR MICRON TECHNOLOGY, INC BOISE. IDAHO SPECIAL CONTRACT DATED SEPTEMBER 1,1995 MONrHL Y CHARGE The Monthly Charge is the swn of the following charges, and may also include charges as set forth in Schedule 55 (power Cost Adjustment), Schedule 91 (Energy Efficiency Rider), and Scbedule95 (Adjustment for Municipal Franchise Fees). Monthly Contract Demand Charge per kW of Scheduled Contract Demand Scheduled Monthly Contract Demand The Scheduled Monthly Contract Demand is 0 - 140,000 kW as per the contract with one year written notification. Monthly Billing Demand Chare:e $1;4G8.per kW of Billing Demand but not less than Scheduled Minimum Monthly Billing Demand. Minimum Monthly Billing Demand The Minimum Monthly Billing Demand will be 25,000 kilowatts. Daily Excess Demand Charge $0.226 per each kW over the ~ontract Demand. The Daily Excess Demand Charge is applicable beginning January 1997 or once the Contract Demand reaches 100 000 kW, which ever comes flTSt Monthly Energy Charge~1.6628t per kWh Monthly 0 & M Charges Zero percent oftota! cost of Substation Facilities. IDAHO Issued by IDAHO POWER COMPANY Issued per Qr.def' Nos. 30556, 30559 ami 3Q563John R. Gale, Vice President, Regulatory Affairs Effective J1:H1e 1, 2Qgg 1221 West Idaho Street, Boise, ill BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-O9- IDAHO POWER COMPANY SCHEDULE 26A ATTACHMENT NO. . Idaho Power Company I.P.C. No. 29 Tariff No.1 01 Oriainal Sheet No. 26A- SCHEDULE 26A IDAHO POWER COMPANY ELECTRIC SERVICE RATE FOR MICRON TECHNOLOGY. INC BOISE. IDAHO SPECIAL CONTRACT DATED SEPTEMBER 1,1995 MONTHLY CHARGE The Monthly Charge is the sum of the following charges, and may also include charges as set forth in Schedule 55 (Power CostAdjustment), Schedule 91 (Energy Efficiency Rider), and Schedule 95 (Adjustment for Municipal Franchise Fees). Monthlv Contract Demand Charae $0.00 per kW of Scheduled Contract Demand Scheduled Monthlv Contract Demand The Scheduled Monthly Contract Demand is 0 - 140 000 kW as per the contract with one year written notification. Monthlv Billina Demand Charae $8.16 per kW of Billing Der(land but not less than Scheduled Minimum Monthly Billing Demand. Minimum Monthlv Billina Demand The Minimum Monthly Billing Demand will be 25 000 kilowatts. Dailv Excess Demand Charae $0.226 per each kW over the Contract Demand. The Daily Excess Demand Charge is applicable beginning January 1997 or once the Contract Demand reaches 100 000 kW, whichever comes first. Monthlv Enerav Charae 6628~ per kWh Monthlv 0 & M Charaes Zero percent of total cost of Substation Facilities. IDAHO Issued Effective - Issued by IDAHO POWER COMPANY John R. Gale , Vice President, Regulatory Affairs 1221 West Idaho Street, Boise, 10 Idaho Power Company First Revised Sheet No. 26 Cancel~ Oriqinal Sheet No. 26A-LP.C. No. 29 Tariff No.1 01 SCHEDULE 26~ IDAHO POWER COMPANY ELECTRIC SERVICE RATE FOR MICRON TECHNOLOGY. INC BOISE. IDAHO SPECIAL CONTRACT DATED SEPTEMBER 1. 1995 MONTHLY CHARGE The Monthly Charge is the sum of the following charges, and may also include charges as set forth in Schedule 55 (Power Cost Adjustment), Schedule 91 (Energy Efficiency Rider), and Schedule 95 (Adjustment for Municipal Franchise Fees). Monthlv Contract Demand Charqe~O.per kW of Scheduled Contract Demand Scheduled Monthlv Contract Demand The Scheduled Monthly Contract Demand is 0 - 140 000 kW as per the contract with one year written notification. Monthlv Billinq Demand Charqe $+-AQ8.per kW of Billing Demand but not less than Scheduled Minimum Monthly Billing Demand. Minimum Monthlv Billinq Demand The Minimum Monthly Billing Demand will be 25 000 kilowatts. Dailv Excess Demand Charqe $0.226 per each kW over the ContractOemand. The Daily Excess Demand Charge is applicable beginning January 1997 or once the Contract Demand reaches 100 000 kW, whichever comes first. Monthlv Enerqv Charqe 506B1.6628~ per kWh Monthlv 0 & M CharQes Zero percent of total cost of Substation Facilities. IDAHO Issued per Order Nos. 30556 , 30559 ~1nd 30563 Effective June 1 , 2008 Issued by lDAHO POWER COMPANY John R. Gale, Vice President, Regulatory Affairs 1221 West Idaho Street, Boise, 10 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-O9- IDAHO POWER COMPANY SPREADSHEET - DERIVATION OF RATE CHANGES ATTACHMENT NO. Id a h o P o w e r C o m p a n y Re c a l c u l a t i o n o f M i c r o n s C u r r e n t B a s e R a t e s St a t e o f I d a h o No r m a l i z e d 1 2 - Mo n t h s E n d i n g D e c e m b e r 3 1 , 20 0 8 Re v e n u e N e u t r a l Mi c r o n Sc h e d u l e 2 6 A (1 ) (2 ) (3 ) (4 ) 06 / 0 1 / 0 8 06 / 0 1 / 0 8 Pr o p o s e d Li n e Ba s e Ba s e Ba s e De s c r i ti o n Us e Ra t e Re v e n u e Ra t e Bi l l e d k W 1. 0 1 8 , 14 0 . $7 . 4 0 $7 , 53 4 , 23 6 $8 . Ex c e s s D e m a n d 22 6 26 0 Bi l l e d k W h 70 3 . 4 0 4 , 64 0 01 5 0 6 8 10 , 59 8 , 90 1 01 6 6 2 2 Co n t r a c t k W 02 0 , 00 0 1. 8 3 86 6 , 60 0 To t a l S c h e d u l e Bi l l i n g $1 9 , 99 9 . 7 3 7 No t e : Bi l l i n g D e t e r m i n a n t s f r o m G e n e r a l R a t e C a s e N o . I P C - 08 - 1 0 (5 ) Pr o p o s e d Ba s e Re v e n u e 30 8 , 02 2 11 . 6 9 1 . 9 9 2 $2 0 , 00 0 , 01 4 EX H I B I T N O .