20100201_2837.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
CO MMISSI 0 NER RED FO RD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:KEITH HESSING
DATE:JANUARY 29, 2010
RE:LETTER AG REEMENT BETWEEN IDAHO POWER COMPANY AND
HOKU MATERIALS, INC.
On November 24 2009, Idaho Power Company delivered a Letter Agreement with cover
letter to the Commission. The Agreement is between Idaho Power Company and Hoku
Materials, Inc. In the Agreement, Idaho Power agrees to temporarily waive the minimum billed
energy charge in the Hoku special contract. The temporary waiver would begin December 1
2009 and remain in effect until the month when the contract load factor first exceeds 70% of the
total contract demand, or March 31 2011 which ever comes first.
The Hoku Special Contract was approved by the Commission on July 24, 2009, by Order
No. 30869. The Commission later approved a delay in the contract start date from July l , 2009
to December 2009. The reasons for the requested waiver of the minimum billed energy charge
are related to the current business environment and are discussed in more detail in the
confidential Letter Agreement.
ST AFF ANALYSIS
The Staff views the Company s filing as being similar to a Tariff Advice and, therefore
is treating it similarly. Idaho Power Company is requesting the waiver of a rate in an approved
contract.
The Staff has reviewed the waiver from the perspective of Idaho Power s other
customers. Hoku is contributing all of the fixed delivery costs associated with supplying power
to its project. If Hoku does not take minimum service under the contract, Idaho Power may have
DECISION MEMORANDUM - 1 -JANUARY 29, 2010
to unwind positions that are a little long in two of sixteen months in the waiver period.
Unwinding the long positions could prove to be a net cost or benefit to other customers as the
cost or benefit flows through the PCA. Because the long positions are relatively small, Staff
believes the impact on other customers will be insignificant.
STAFF RECOMMENDATION
The Staff recommends that the Commission approve the Letter Agreement. The
unwinding costs are unknown but estimated to be small or non-existant. The waiver will benefit
Hoku and should assist them as they work to bring their facility into production.
COMMISSION DECISION
Does the Commission approve the Letter Agreement?
udmemoslIdaho Power Hoku Agreement January 2010
DECISION MEMORANDUM - 2 -JANUARY 29, 2010