20250815Direct Michael Eldred - Surrebuttal.pdf

RECEIVED
August 15, 2025
IDAHO PUBLIC
BEFORE THE UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR ) CASE NO. IPC-E-24-44
APPROVAL OF A SPECIAL )
CONTRACT AND TARIFF )
SCHEDULE 28 TO PROVIDE )
ELECTRIC SERVICE TO MICRON )
IDAHO SEMICONDUCTOR )
MANUFACTURING (TRITON) LLC )
SURREBUTTAL TESTIMONY OF MICHAEL ELDRED
IDAHO PUBLIC UTILITIES COMMISSION
AUGUST 15, 2025

1 Q. Please state your name and business address for
2 the record.
3 A. My name is Michael Eldred. My business address
4 is 11331 W. Chinden Blvd. , Building 8, Suite 201-A, Boise,
5 Idaho 83714 .
6 Q. By whom are you employed and in what capacity?
7 A. I am employed by the Idaho Public Utilities
8 Commission ("Commission") as a Utilities Analyst II in the
9 Utilities Division.
10 Q. Are you the same Michael Eldred who submitted
11 direct testimony in this proceeding on behalf of Commission
12 Staff?
13 A. Yes .
14 Q. What is the purpose of your surrebuttal testimony
15 in this proceeding?
16 A. The purpose of my surrebuttal testimony is to
17 address specific positions and recommendations included in
18 rebuttal testimony submitted by intervenors . These
19 positions and recommendations include : (1) The potential
20 reduction in average embedded cost; (2) The extension of
21 the take-or-pay provision and the Micron memory
22 manufacturing fabrication complex ("Micron FAB") load not
23 materializing; and (3) the clarification of my demand
24 pricing positions .
25 Q. Does the fact you do not address every issue
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) l
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1 raised in the direct or rebuttal testimony mean that you
2 agree with other parties' testimony on those issues?
3 A. No . It means I chose not to address all those
4 issues . It should not be read as an endorsement of, or
5 agreement with, any unaddressed issues .
6 Q. How is your testimony structured?
7 A. My testimony is subdivided into the following
8 sections :
9 I . Potential Reduction in Average Embedded Cost
10 II . Extension of Take-or-Pay Provisions
11 III . Clarification of my Demand Pricing Positions
12 I . Potential Reduction in Average Embedded Cost
13 Q. Please explain your concern with the potential
14 reduction in average embedded energy cost discussed in
15 Micron witness Gorman' s rebuttal testimony on pages 6-7 .
16 A. On pages 6-7 of Gorman' s rebuttal testimony, it
17 states :
18 All of these new capacity resource additions will help
19 to reduce the Company' s average embedded energy cost,
but may not alter its marginal energy costs . Hence, as
20 long as Micron pays marginal energy rates rather than
a portion of embedded system energy rates, Micron will
21 pay the fixed capacity cost for these resources but
will not receive the benefit of the lower energy costs
22 associated them. This pricing structure will result in
energy pricing benefits to non-special contract
23 customers . This can result in a reduction in costs to
24 the non-special contract customers, while Micron
overpays . This outcome exceeds the stated objective of
25 ensuring "No Harm" to existing customers .
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1 I agree there is potential for a reduction in
2 embedded energy costs but there is also a potential for an
3 increase in embedded energy costs . This is the speculative
4 nature of trying to forecast future energy costs and is the
5 primary reason I recommended in my direct testimony a
6 requirement for Commission approval and justification
7 before transitioning away from marginal cost-based energy
8 charges . The Company should be required to evaluate and
9 provide justification that moving from a marginal cost
10 basis to an embedded cost will not harm other customers
11 after the Micron FAB' s scheduled ramp period.
12 II . Extension of the Take-or-Pay Provision
13 Q. Please explain your concern with Gorman' s
14 recommendation to not extend the take-or-pay provision in
15 the Special Contract .
16 A. On pages 9-10 of Gorman' s rebuttal testimony, it
17 states :
18 The ESA as proposed in the Company' s Application
19 Provides robust customer protections including the
take or pay minimum monthly billing demand
20 requirement . IPC states that the ESA includes
"stringent terms intended to limit Micron' s ability to
21 request changes to [contract demand] levels" and
"robust customer protections" including "the strongest
22 customer protections the Company has ever implemented
for a special contract . " Extending the take or pay
23 provisions by five years as proposed by Mr. Eldred is
24 unnecessary to protect other customers and could
result in discriminatory treatment by subjecting
25 Micron to terms and conditions that the Commission did
not require for other recent special contracts . The
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 3
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Commission should approve the take or pay provision in
1 the proposed contract .
2 I am not persuaded by Gorman' s statements that
3 the take-or-pay provision should not be extended by 5
4 years . I believe the "strongest customer protections the
5 Company has ever implemented" is required along with
6 additional protections because this is the largest single
7 load the Company has proposed to bring on the system during
8 a time when the Company has near term capacity deficits and
9 requiring the Company to make large investments in new
10 capacity resources .
11 When determining my recommendation for a 5-year
12 extension of the take-or-pay provision, I reviewed how
13 other states have handled new large load customers and some
14 states include minimum contract lengths of ten years or
15 longer. l 2 My recommendation for extending the take-or-pay
16 provision by 5 years along with the proposed take-or-pay
17 provision during the scheduled ramp period is conservative
18 compared to some other states . In addition, my
19
20 1 Oregon House Bill No. 3536 requires a large energy use facility (20 MW
or more) to enter into a contract of electricity service for a duration
21 of 10 years or longer and pay a minimum amount or percentage based on
the customers projected electricity usage for the duration of the
22 contract.
z Kentucky Power Company's Industrial General Service Tariff approved by
23 the Kentucky Public Service Commission requires commercial and
industrial customers that add 150 MW or more to enter into a contract
for an initial period of 20 years and the customer' s monthly billing
24 demand shall in no event be less than 900 of the greater of (a) the
customer's on-peak contract capacity or (b) the customer's highest
25 previously established monthly billing demand during the past 11 months
or (c) the customer's maximum demand created during the billing month.
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1 recommendation allows the Company to verify that the Micron
2 FAB has reached a steady-state load that will provide
3 continued recovery of the incremental resources required to
4 serve them. I believe my recommendation for a 5-year
5 extension of the take-or-pay provision is the minimum
6 requirement for the extension because it provides a
7 reasonable balance on the length of the extension term and
8 provides a way to start reducing it, if it can be shown the
9 Micron FAB is providing adequate recovery.
10 Q. How do you respond to Gorman' s assertion that if
11 the Company' s projected load growth in several customer
12 classes and other large load additions occurs, then the
13 loss of the Micron Load will not result in stranded
14 production investment . Gorman, Di-Reb at 10 .
15 A. The Company is in the process of planning for and
16 is currently resourcing all projected load growth that the
17 Company has included in its Integrated Resource Plan.
18 These resources require several years of lead time to
19 implement and investments are being made to ensure the
20 Company can reliably meet all of its load obligations,
21 including the resources needed to meet Micron' s loads . And
22 because the Company has been chasing growth in demand since
23 2020 and is projected to continue to do so for the next
24 several years, if Micron' s loads do not materialize as
25 planned, it would be highly unlikely there would be
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 5
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1 sufficient demand from other customers to mitigate or
2 eliminate stranded assets .
3 For Gorman' s contention to be true, I believe
4 there would have to be a significant unforeseen increase in
5 load growth in other customer classes that the Company has
6 neglected to plan for, in order to offset the stranded
7 investment due to the magnitude of Micron' s load. I
8 believe it is speculative to count on that type of load
9 growth to occur. By removing the take-or-pay provisions
10 too soon, the risk of stranded investment would no longer
11 be Micron' s, but would be borne by other customers instead.
12 Q. How do you respond to Gorman' s assertion that if
13 the Company has production capacity in excess of the amount
14 needed to serve retail customers, the Company has the
15 ability to enter into wholesale contracts . Gorman, Di-Reb
16 at 10 .
17 A. First, the Company is not in the business of being
18 a merchant wholesaler of electricity. It is in the
19 business of reliably meeting the load of its native load
20 customers within its service territory and doing so while
21 minimizing cost to those customers . The Company' s primary
22 purpose in selling excess energy into wholesale markets is
23 to more fully utilize its capacity sized to meet native
24 customer load and to offset net power cost to its
25 customers .
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 6
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1 The memory chip markets that Micron operates in
2 have historically been highly cyclical and increase the
3 risk of the Micron FAB load not materializing as planned.
4 Given the size of Micron' s load, and if these loads do not
5 materialize, the Company could potentially become a much
6 larger player in the wholesale market . Because of the
7 volatility inherent in the wholesale electricity market, I
8 believe this would transfer an unreasonable amount of risk
9 from Micron to the Company' s other customers by requiring
10 the Company to rely on the market to recover its capital
11 investments without the take-or-pay provisions . As
12 discussed in my direct testimony, one of the main reasons
13 for recommending the extension of the take-or-pay
14 provisions by five years is to help mitigate the risk of
15 the Micron FAB load not materializing as planned and the
16 other factors discussed by Gorman do little to mitigate
17 this risk.
18 III . Clarification of my Demand Pricing Positions
19 Q. Do you agree with Dr. Kaufman' s assertion that
20 your positions on demand-charge pricing are inconsistent .
21 Kaufman, Re at 5, lines 5-11 .
22 A. No . I believe my position that an embedded cost
23 allocation is a reasonable approach for determining demand
24 charges is entirely consistent with my concern that unequal
25 load growth that drives in higher cost resources can
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 7
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1 increase the average system embedded cost on a per kW basis
2 and can affect customer cost allocation unequally. There
3 are two reasons why these two positions are consistent .
4 First, I have been consistent in my position,
5 that the appropriate time to evaluate the cost allocation
6 is in a general rate case . Evaluating cost allocation in a
7 general rate case allows a wholistic evaluation of all
8 customer classes loads and the costs included for recovery
9 at that time without having to evaluate a customer class in
10 isolation with outdated information or rely on a long-term
11 forecast, both of which can introduce error in the fair
12 allocation of costs .
13 Second, the allocation of those costs should
14 depend on how those embedded costs are allocated and should
15 be based on the principle that the cost causer should pay
16 the cost . A fair allocation, which again should be
17 determined in a general rate case, needs to consider the
18 cost of resources Micron is driving into the system due to
19 the size of its incremental load compared to the cost of
20 resources driven by the growth of the Company' s other
21 customer classes . For example, instead of an allocation of
22 embedded cost based on each classes' load share, the load
23 share could be weighted based on the amount of incremental
24 growth in each class .
25 Q. Does this conclude your testimony in this
CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 8
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I proceeding?
2 A. Yes, it does .
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CASE NO. IPC-E-24-44 ELDRED, M. (Sur-Reb) 9
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 15TH DAY OF AUGUST 2025, SERVED THE
FOREGOING SURREBUTTAL TESTIMONY OF MICHAEL ELDRED, IN CASE NO.
IPC-E-24-44, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
MEGAN GOICOECHEA ALLEN CONNIE ASCHENBRENNER
DONOVAN E.WALKER GRANT ANDERSON
IDAHO POWER COMPANY IDAHO POWER COMPANY
PO BOX 70 PO BOX 70
BOISE ID 83707-0070 BOISE ID 83707-0070
E-MAIL:mgoicoecheaallen(i�idahopower.com E-MAIL: caschenbrennerpidahopower.com
dwalker(&idahopower.com gandersonAidahopower.com
dockets(i�idahopower.com
Micron Micron
AUSTIN RUESCHHOFF AUSTIN W JENSEN
THORVALD A NELSON KRISTINE A.K.ROACH
HOLLAND&HART LLP HOLLAND&HART LLP
555 17TH ST STE 3200 555 17TH ST STE 3200
DENVER CO 80202 DENVER CO 80202
E-MAIL: [e-mail] EMAIL: awjensenghollandhart.com
[e-mail] [e-mail]
aclee(&hollandhart.com
Idaho Irrigation Pumpers Ass'n, Inc. Idaho Irrigation Pumpers Assn,Inc.
Eric L.Olsen Lance Kaufman,Ph.D.
Echo Hawk&Olsen,PLLC 2623 NW Bluebell Place
P.O.Box 6119 Corvallis,OR 97330
505 Pershing Ave., Ste. 100 E-MAIL: lance@ae isg insi h
Pocatello,ID 83205
E-MAIL: elogechohawk.com
Industrial Customers of Idaho Power Industrial Customers of Idaho Power
Peter J.Richardson Dr.Don Reading
Richardson Adams,PLLC 280 S. Silverwood Way
515 N.27r1'St. Eagle,ID 83716
Boise,ID 83702 E-MAIL: dreadingga,mindspring.com
E-MAIL: peterArichardsonadams.com
Clean Energy Opportunities for Idaho Clean Energy Opportunities for Idaho
Kelsey Jae Courtney White
920 N.Clover Dr. Mike Heckler
Boise,ID 83703 Clean Energy Opportunities for Idaho
E-MAIL: [e-mail] 3778 Plantation River Dr., Ste. 102
Boise,ID 83703
E-MAIL:
courtney(_cleanenergyopportunities.com
mike(i�cleanenerayopportunities.com
PATRICIA JORDAN
CERTIFICATE OF SERVICE