HomeMy WebLinkAbout20031201_699.pdfDECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:LISA NORDSTROM
DATE:NOVEMBER 25, 2003
RE:IN THE MATTER OF IDAHO POWER COMPANY'S APPLICATION FOR
APPROVAL OF AN AGREEMENT WITH THE AMALGAMATED SUGAR
COMPANY, LLC FOR THE SALE AND PURCHASE OF SURPLUS
ELECTRIC ENERGY. CASE NO. IPC-03-10.
On September 2, 2003, Idaho Power Company (Idaho Power, Company) filed an
Application requesting an Order that approves an Agreement for Sale and Purchase of Surplus
Energy (Agreement) between the Company and the Amalgamated Sugar Company, LLC
(TASCa). The Company filed an amended Application on November 10, 2003 that
incorporated the original Application by reference and replaced the original Agreement attached
as Exhibit 1 with a modified Agreement. The Company asked the Commission to declare that all
payments for energy purchases made under this Agreement be allowed as prudently incurred
expenses for ratemaking purposes.
BACKGROUND
Idaho Power provides electric service to TASCa's refined sugar production facility
in Nampa, Idaho under Schedule 19 to supplement the TASCO's own on-site electric generation.
During periods where it generates electricity in excess of its needs, TASCa sells its excess
generation to Idaho Power.
The Commission has approved the sale and purchase of surplus energy between
Idaho Power and TASCa in the past. In Order No. 27885 issued in Case No. IPC-98-15 on
January 22, 1999, the Commission approved an agreement for the sale and purchase of surplus
electric energy from TASCa at market-based prices. The Commission approved modification of
this contract in Order No. 28865 issued in Case No. IPC-01-26 on September 28 , 2001 , to
DECISION MEMORANDUM
increase the maximum surplus electric energy that T ASCO was permitted to deliver to Idaho
Power to 8.5 MW and extend the contract's expiration date to September 1 , 2003.
THE AGREEMENT
Although the parties wish this arrangement to continue, the Application indicated
that the previous contract did not adequately address the future electrical requirements of Idaho
Power or TASCa.Both Idaho Power and TASCa believe this new Agreement addresses
current regulations and operating issues to their satisfaction. Electric energy to be sold under the
new Agreement is non-firm energy and will only be available when TASCO's Nampa facility
does not consume the electric energy and/or when TASCO elects to generate in excess of its
energy consumption. Under the new Agreement:
The purchase price for the energy is set at 85% of the Avoided Energy
Cost as defined within Idaho Power s IPUC Schedule 86.
The term of the Agreement is 5 years with automatic annual renewals.
Following the initial 5-year term, either party may terminate the
Agreement with 6 months prior written notice.
The interconnection equipment and point of delivery terms specified in the
2001 amended contract will continue.
Although the Agreement states its effective date as September 1, 2003 for purposes
of a smooth transition, the Agreement provides that it will not become effective until the
Commission approves the Agreement and declares that all surplus energy payments made under
the Agreement shall be allowed as prudently incurred expenses for ratemaking purposes.
The only portion of the Agreement that has changed since the original Application
was filed on September 2, 2003 is the Surplus Energy Purchase Price term found in Section
2. As this section appears in the amended November 10 Application, if Idaho Power requests
and TASCa agrees to provide continuous energy at a designated MW level for set length
time, the Adjusted Surplus Energy Price for that energy will be less than or equal to the Surplus
Energy Price set forth in the Agreement. This provision will not bind Idaho Power if the
Company determines the continuing operation of its electrical system is in jeopardy or access to
alternative energy resources is not physically possible. In the event the parties agree to an
Adjusted Surplus Energy Price, Idaho Power will advise the Commission of the agreed upon
pnce.
DECISION MEMORANDUM
STAFF RECOMMENDATION
Staff recommends that the Commission process this case by Modified Procedure and
establish a 21-day comment period.
COMMISSION DECISION
Does the Commission wish to process this case pursuant to Modified Procedure as
recommended by Staff?
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Lisa Nordstrom
M:IPCEO310
DECISION MEMORANDUM