Attch54_IPCE013_O.N.28676.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO ACQUIRE REDUCTIONS IN ELECTRICAL DEMAND AND ASSOCIATED CONSUMPTION OF ELECTRICAL ENERGY FROM IRRIGATION CUSTOMERS. )
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CASE NO. IPC-E-01-3

INTERLOCUTORY ORDER
NO. 28676
On February 7, 2001, Idaho Power Company filed an Application seeking permission to initiate an Irrigation Buy-Back Program (“Program”) designed to reduce electric consumption during the 2001 growing season. In addition, the Program is intended to reduce the amount of off-system purchases of power. Current volatility in the regional power market and projected below normal streamflows have pushed the market price of power to unprecedented levels. Idaho Power contends that this Program may allow it to cost-effectively reduce its total purchase power expense during 2001, thereby benefiting all of the Company’s customers.
A preliminary hearing was held on this Application on February 14, 2001, after which the Commission issued Order No. 28647 allowing Idaho Power to solicit competitive bids from irrigation customers desiring to participate in the Program. The Commission reserved final approval until receiving further information on the Program and its merits. On March 13, 2001, the Commission held a public hearing to review whether Idaho Power’s Program should proceed. At this hearing the Commission received evidence from four intervenors and several members of the public. After careful analysis and review of the entire record in this case the Commission issues this Interlocutory Order approving Idaho Power’s request to accept bids from its irrigation customers to implement its Irrigation Buy-Back Program.
In order to expedite implementation of the Program before the irrigation and spring planting season begins, the Commission finds that it is appropriate to issue this Interlocutory Order approving Idaho Power’s Irrigation Buy-Back Program so that the Company can give timely notice to irrigation customers whose bids they will accept prior to March 15, 2001, as required by the Company’s Request for Proposals. The Commission will issue a subsequent final order in this case detailing our findings. The final order will be issued as soon as possible. This is an interlocutory order, not a final order of the Commission.
IDAHO POWER’S PROGRAM
Idaho Power intends to make this Program available to irrigation customers who take service under Schedule 24 and who commit to reduce their electric consumption by a minimum of 100,000 kWh during the 2001 growing season. Idaho Power estimates that approximately 1,700 irrigation customers have historically consumed energy in amounts greater than the 100,000 kWh and would qualify for participation in this Program. To solicit participation in this Program Idaho Power issued a Request for Proposals (“RFP”) to eligible irrigation customers asking for competitive offers to reduce energy consumption during the 2001 growing season in exchange for compensation from the Company.
DISCUSSION AND FINDINGS
The Commission finds that this Program will serve the public interest by providing positive benefits for all Idaho Power’s customers. Furthermore, allowing Idaho Power to pay irrigators for energy reductions rather than purchasing power on the wholesale market will have a positive impact on the economy in general by retaining those dollars in the state of Idaho. Accordingly, based on the oral and written record in this proceeding the Commission approves Idaho Power’s Irrigation Buy-Back Program as a temporary voluntary program that will end at the conclusion of 2001.
The Commission further finds that the bidding process used in this case has acted as an effective mechanism to discern the price at which kilowatt hours (“kWh”) should be purchased from irrigation customers. The Commission finds that the proposed maximum bid price of 15¢ per kWh is reasonable based on the market conditions that exist today and are likely to exist during the period of time this Program will be in effect. In an effort to further conserve electricity through this Program the Commission finds that Idaho Power shall allow all irrigation customers who submitted an unaccepted higher bid the opportunity to participate in this Program at the 15¢ per kWh level. Furthermore, the Commission finds that Idaho Power shall allow all successful bids from irrigation customers under the maximum price to receive 15¢ per kWh unless the irrigation customer chooses to remain at the original, successful bid.
The Commission further finds that the revenue impacts of this Program may be treated as a purchased power expense in the Company’s Power Cost Adjustment (“PCA”) mechanism. The Commission also finds that Idaho Power and the parties shall develop and present a proposal to the Commission recommending a procedure to calculate the amount of revenue impact that should be passed through the Company’s PCA mechanism.
The Commission finds that the Company shall pay interest at a rate of 6% on the 25% of the monthly payments to be held back until the Program ends in November. However, the Commission further finds that Idaho Power shall allow any participating irrigation customer to defer receipt of Program payments to 2002. The Commission further finds that any irrigation customer electing to postpone payment in this manner shall not be eligible to receive interest.
The Commission approves the penalty for failure to supply at least 95% of the offered energy reduction by the bidder of an amount equal to 200% of the bid price. The Commission also approves Idaho Power’s proposal to pay irrigation customers who participate in the Program for energy reductions up to 105% of the offered energy reduction.
The Commission finds that Idaho Power shall allow irrigation customers taking irrigation service under Tariff Schedules 7 and 9 the opportunity to participate in this Program or others offered by Idaho Power for which they are eligible.
The Commission finds that it does not have jurisdiction to value water that may remain in the waterways as a result of this Program. Furthermore, because this Program is designed only to buy energy any consideration of the value of water is outside the scope of the Commission’s decision.
The Commission further finds that the Company shall have a duty to report to the Commission regarding the operation of the Program and its results in the coming months. The Commission’s subsequent final order will outline these reporting requirements.
Finally, the Commission wishes to recognize the diligent and professional manner of Idaho Power Company and its customers during the consideration and valuable implementation of this creative and promising Program. Without that assistance it would have been impossible for the Commission to render a decision in this case in such an expedited manner.
INTERLOCUTORY ORDER
IT IS HEREBY ORDERED that Idaho Power’s Request for Authority to Accept Bids is approved and the Company shall implement its Irrigation Buy-Back Program.
IT IS FURTHER ORDERED that Idaho Power’s Irrigation Buy-Back Program is a temporary voluntary program for 2001.
IT IS FURTHER ORDERED that 15¢ per kWh is a reasonable amount for energy purchases in this program.
IT IS FURTHER ORDERED that Idaho Power shall allow any irrigation customer with a bid that was accepted at a price below 15¢ per kWh to receive 15¢ per kWh.
IT IS FURTHER ORDERED that the revenue impacts of this Program may be treated as a purchased power expense in the Power Cost Adjustment. The Commission also finds that Idaho Power and the parties shall develop and present a proposal to the Commission recommending a procedure to calculate the appropriate amount of revenue impact that should be passed through the Company’s Power Cost Adjustment mechanism.
IT IS FURTHER ORDERED that the penalty for failure to supply at least 95% of the offered energy reduction by the bidder shall be an amount equal to 200% of the bid price. Idaho Power’s proposal to pay participating irrigation customers for energy reductions in an amount up to 105% of the offered energy reduction is approved.
IT IS FURTHER ORDERED that Idaho Power shall allow irrigation customers who take irrigation service under Tariff Schedules 7 & 9 the opportunity to participate in this Program or other conservation programs offered by Idaho Power for which they are eligible.
IT IS FURTHER ORDERED that Idaho Power Company shall report to the Commission regarding the operation of the Program and its results in the coming months.
IT IS FURTHER ORDERED that this is an interlocutory order in Case No. IPC-E-01-3 and as such is not appealable.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of March 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:ipce013_jh3

ORDER NO. 28676 3

Office of the Secretary
Service Date
March 14, 2001