20120725Comment.pdf

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RECE!VF, Micron Technology, Inc.
P.O. Box. 6 2012 JUL 214 PH t: IfQ 8000 S. Federal Way, MS 1-507
Boise, Idaho 83706-0006

fOAHO P1.LLft Tel: [phone] L'TIUTIES L0MMISSlON Fax: [phone]
July 24, 2012
Via Hand Delivery
Jean D. Jewell, Commission Secretary
Commissioners of the
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Public Comments by Micron Technology, Inc. regarding Public Utility
Regulatory Polices Act of 1978 ("PURPA") Contracts -- Case No. GNR-E-11-03.
Dear Commissioners:
Micron Technology, Inc. ("Micron") respectfully submits these public comments to
express its concern regarding the impact of PURPA contracts on Micron's electric costs and in
specific support of proposals by Idaho Power Company ("Idaho Power") and the Commission
Staff which Micron believes would reduce the impact on Micron's electric bills.
Micron manufactures semiconductor memory products using processes that require
extensive energy use. Micron's corporate headquarters are located in Boise, Idaho. Micron also
owns and operates a manufacturing facility in Nampa, Idaho and a consumer products division in
Meridian. Idaho Power is Micron's electric energy supplier in Idaho, and Micron is Idaho
Power's largest customer. Since an unusually large amount of PURPA development has taken
place in Idaho Power's service territory, related PURPA costs have significantly impacted
Micron's electric rates.
The current PURPA system in Idaho has resulted in high payments to qualifying facilities
("QFs"), corresponding increased charges to consumers, and the development of more QF
energy than Idaho utilities (or consumers) can readily absorb. As Idaho Power has explained in
recent filings, it currently has 119 QF projects under contract. The numerous QF projects
sometimes force Idaho Power to replace its less-expensive baseload resources with higher-cost
QF resources. Since consumers pay 100% of costs associated with PURPA resources, while the
rate base associated with baseload resources remain in electric rates, consumers bear the entire
brunt of the higher costs.
July 23, 2012
Jean D. Jewell,
Commission Secretary
Page 2
Idaho Power indicates that most of its customers can expect to experience large bill
increases directly related to PURPA power in the coming years. In its most recent Idaho rate
filing, IPC-E-12-17, Idaho Power predicted that Micron alone will experience increases of 9.39%
- approximately $1.5 million - through the 2012-2013 Power Cost Adjustment, mostly due to
expenses associated with PURPA costs. Idaho Power projects that the cost of reimbursing QF
projects will increase to $186 million by 2016. Furthermore, 27 additional PURPA projects are
now seeking contracts with Idaho Power. Given the rate hikes anticipated by Idaho Power from
PURPA contracts, Micron believes that the Commission's decision to address QF contracts in
GNR-E-1 1-03 is both timely and necessary.
Idaho Power and Commission Staff have endorsed several reasonable changes to the
PURPA contract system that, if implemented, should go far to keep PURPA rate increases
manageable for Micron and other Idaho electricity consumers in the coming years:
• Size of QFs: As Idaho Power explains, it makes sense to apply published avoided cost
rates only to small QFs, those of 100 kW or less, since published rates for the small QFs
are less amenable to updates. Regular updates help ensure that consumers will not pay
more for QF energy than for non-QF counterparts. The cap would allow use of the IRP
methodology for most PURPA contracts, which may more closely track the actual value
of each QF resource.
• Curtailment: Allowing curtailment for efficiency and economic reasons, as Idaho Power
and Commission Staff have recommended, would allow Idaho Power to use less-
expensive baseload resources instead of expensive QF power during periods of low
demand. The resulting cost saving could significantly reduce customer bills.
• Methodology: Idaho Power has found a mismatch between the prices obtained by the
SAR methodology and its actual avoided costs. It argues that the IRP methodology better
allows adjustments based on the type of QF resource, allows the tracking of avoided costs
in small increments that reflect a utility's actual avoided costs, and allows more regular
updates. Idaho Power's proposals appear to be a sound method of tracking actual
avoided costs. As Commission Staff has recognized, Idaho Power's proposed IRP
methodology would be an improvement on current IRP methodologies.
• Reduced Payments During Deficit Periods: Capacity and energy payments should be
reduced when utilities do not need capacity and energy. This would help protect
consumers from paying extra for energy that can only be resold or for capacity that
utilities and consumers cannot use.
• Queuing Process: A queuing process for incorporating each QF into subsequent avoided
cost calculations makes sense, as that would allow Idaho Power (and customer) payments
to reflect the true avoided costs associated with each subsequent PURPA project.
July 23, 2012
Jean D. Jewell,
Commission Secretary
Page 3
In sum, Micron supports recommendations by Idaho Power and the Commission Staff in
GNR-E-1 1-03, which could keep QF development and associated rate impacts to Micron at
reasonable levels and potentially save Idaho Power's retail electric consumers many millions of
dollars.
Please do not hesitate to contact me at [phone] with any questions.
Very best regards,
(c(
Richard E almgren
Senior As istant Gen a! Counsel
cc: Commissioner Paul Kjellander, President
Commissioner Mack A. Redford
Commissioner Marsha H. Smith