20040223Summary memorandum.pdf

SUMMARY MEMORANDUM
TO:/COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
FROM:LISA NORDSTROM
DATE:FEBRUARY 23, 2004
SUBJECT:CASE NO. IPC-01-
SUMMARY OF SETTLEMENT ISSUES
WHAT WAS SETTLED
Because the transactions between Idaho Power and IE span multiple years, involve
thousands of transactions, and because the issues involve multiple contested claims, the Parties
have agreed on a single global settlement amount as a compromise of the Parties' respective
contested claims. The settlement is intended to resolve all outstanding compensation issues
including, but not limited to, the following:
a. All issues arising out of FERC's informal , non-public investigation that
was resolved in May 2000 by Stipulation and Consent Agreement in
Docket No. IN03-000.
b. All issues arising out of the IPUC-approved Electricity Supply and
Management Agreement between Idaho Power and IE.
c. All compensation issues relating to transactions involving IE's use of the
Idaho Power transmission system, and - any ancillary services or
scheduling services or other services received by IE from Idaho Power
from March 2001 through December 2002. These services specifically
iricluded but are not limited to transmission, wheeling, flips, arbitrage
transactions, parking and lending, operating reserves, spinning reserves
and load following requirements.
d. All issues relating to IE' s operations which utilized former Idaho Power
employees, Idaho Power "good will " Idaho Power credit, and other
Idaho Power assets through 2002 when IE wound down operations.
e. Idaho Power s trading practices (including hedging, use ofMid-C or Palo
Verde pricing indexes, and use of the weighted average pricing
SUMMARY MEMORANDUM
methodology for real-time transactions) from March 1 , 2001 until IE
ceased operating on August 1 , 2002.
f. Pricing of real-time transactions for the month of July 2002 using the
weighted average methodology or the high-low methodology between
Idaho Power and IE.
g. Recovery of IE- Tri State transmission costs paid while servicing the
contract.
h. Sharing of FERC Settlement amounts associated with contract
transactions between Idaho Power and IE that were not properly filed
with FERc.
Any additional settlement amounts associated with services provided by
Idaho Power to IE with the Truckee-Donner contract, the Montana Power
load following agreement, and the Tri-State contract for periods not
included in the FERC settlement.
Continuance of the $2 000 000 annual revenue credit for IE management
contract benefits approved in Case No. IPC- E-00-, Order No. 28596.
The parties also agree there currently is not and there will be no customer
responsibility for IE contract buyouts and litigation of contracts associated with any non-
operating transactions, including but not limited to Grays Harbor and Overton.
The Parties acknowledge that there are several proceedings currently pending before
the FERC and in the courts in which certain California and Pacific Northwest entities have
alleged that IE and Idaho Power dba IE, together with numerous other entities, engaged in
wholesale market activities that increased the cost of wholesale energy in California and the
Pacific Northwest and violated the anti-trust laws. The Parties agree that if, in these proceedings
the FERC or a court of competent jurisdiction ultimately issues a fmal unappealable ruling that
Idaho Power or IE should receive any payment( s) or are directed to pay Idaho retail jurisdictional
customers some amount, payment of those amounts to customers are neither precluded nor
required by this settlement.
The Parties also agree that this agreement is not intended to settle any inter-affiliate
expense allocation issues in Idaho Power s pending general rate case, No. IPC-03-13.
SUMMARY MEMORANDUM
DOLLARS INVOLVED
The settlement amount consists of $5 826 186.02 benefits on a system basis that are
currently being passed through to Idaho Power s customers in the 2003-2004 PCA. Idaho
customers are currently receiving benefits of $4 457 032.30 in the 2003-2004 PCA.
additional $5.5 million will be flowed through to Idaho customers by continuing the $167 000
per month credit in the PCA from April 1, 2003 through December 2005 . This credit will
continue to be a separate line item in the PCA calculation with 100% of the benefit going to
Idaho customers. Idaho customers have already received or will receive a total of $9,957,032.
from the total system settlement amount of$12 296 774.26.
Parties Who Participated: Idaho Power Company, Commission Staff, Industrial
Customers ofIdaho Power, AARP, the Idaho Retailers Association, the Idaho Irrigation Pumpers
Association, J. R. Simplot Company, Micron Technology Inc., and Advanced Energy Strategies
Inc.
Who Signed It: Idaho Power Company, Commission Staff, Industrial Customers of
Idaho Power, J.R. Simplot Company, and Micron Technology.
'7/
Q1.rI.2.
Lisa NordstrollL.
M:IPCEOl16 settlement summary
SUMMARY MEMORANDUM