20070116_1801.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JANUARY 11,2007
SUBJECT:CASE NO. IPC-06-29 (Idaho Power)
AGREEMENT FOR SALE AND PURCHASE OF SURPLUS ENERGY
IDAHO POWER! AMALGAMA TED SUGAR (T ASCO)
On November 21 , 2006 , Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of an
Agreement for Sale and Purchase of Surplus Energy (Agreement) between Idaho Power and
Amalgamated Sugar Company LLC (T ASCO) under which Idaho Power agrees to purchase surplus
electric energy up to 3 MW from T ASCO's refined sugar production facility in Twin Falls at prices
that are less than market-based non-firm energy prices.
The submitted Agreement dated November 20, 2006 replaces a prior Agreement, dated
August 11 2001. The prior surplus energy agreement was approved by the Commission in Order No.
28910 dated December 6, 2001. The prior agreement was for a five-year term that expired in August
2006. The initial term of the new Agreement is for one contract year. The Agreement renews
automatically from year to year unless terminated pursuant to contractual notice requirements.
As reflected in the Application, Idaho Power states that negotiation of the Agreement and
execution of the Agreement by T ASCO predated Order No. 30179 issued by the Commission in Case
No. IPC-06-, the Company s Application for authority to institute a uniform Schedule 72
interconnection agreement. Therefore , the Agreement, the Company states, does not include the
modifications approved in that Order.
Idaho Power under the Agreement will purchase up to 3 MW of surplus electric energy
generated by the electric generating equipment located at T ASCO Twin Falls plant. The energy
purchased will be surplus energy not otherwise consumed by T ASCO at the Twin Falls plant. Electric
DECISION MEMORANDUM
energy to be sold under the Agreement is non-firm energy and will only be available if T ASCO does
not consume the electric energy in the Twin Falls plant. The surplus energy to be purchased from
T ASCO is priced at 85% of the monthly weighted average non-firm Dow Jones Mid-Columbia Index
Price. Setting the purchase price at a discount from market price, Idaho Power contends, assures that
when the Company needs the energy, the price will always be more attractive than buying from the
market. When it does not need the power, Idaho Power should be able to resell the energy at the
higher wholesale market price.
Idaho Power requests that the Agreement be approved without change or condition and
requests a Commission determination that all payments for purchases of energy incurred under the
Agreement be allowed as prudently incurred expenses for ratemaking purposes.Should the
Commission approve the Agreement, Idaho Power intends to consider the effective date of the
Agreement to be November 20 2006.
On December 19, 2006, the Commission issued a Notice of Application and Modified
Procedure in Case No. IPC-06-29. The deadline for filing written comments was January 10 2007.
The Commission Staff was the only party to file comments. Staff recommends that the Agreement
between Idaho Power and the Amalgamated Sugar Company for its Twin Falls plant be approved.
Staff believes that the Agreement will help Idaho Power meet expected loads while reducing the
Company s reliance on purchases at full market price, thus minimizing power supply costs. Staff
believes that the prices agreed to are attractive to Idaho Power and its ratepayers. Customers will
benefit from the Agreement by Idaho Power offsetting higher purchase power costs or reselling power
it does not need.
COMMISSION DECISION
Idaho Power requests approval of an Agreement for Sale and Purchase of Surplus Energy
between Idaho Power and Amalgamated Sugar Company. The Agreement replaces a five-year
contract which expired in August 2006. The new Agreement changes the term from five years to
annual renewal. No other substantive changes were made. Staff recommends that the Agreement be
approved.Does the Commission continue to find Modified Procedure appropriate?Does the
Commission find it reasonable to approve the Agreement?
Scott D. Woodbury
bls/M:IPC-O6-29 sw2
DECISION MEMORANDUM