2001326_jh.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RANDY LOBB
DON HOWELL
LOU ANN WESTERFIELD
BILL EASTLAKE
TERRI CARLOCK
DAVID SHCUNKE
BEVERLY BARKER
RON LAW
GENE FADNESS
TONYA CLARK
WORKING FILE

FROM: JOHN HAMMOND

DATE: MARCH 26, 2001

RE: REQUESTS BY IRRIGATION CUSTOMERS TO BE ALLOWED INTO IDAHO POWER’S IRRIGATION BUY-BACK PROGRAM - CASE NO. IPC-E-01-3.

On March 14, 2001, the Commission issued Interlocutory Order No. 28676 granting Idaho Power Company’s Request for Commission authorization to accept bids from its irrigation customers in order to implement its Irrigation Buy-Back Program (“Program”). Subsequently, three petitions from irrigation customers have been filed that all request that the Commission issue an order which would allow them to participate in Idaho Power’s Program.
REQUESTS
1. Randy Hipwell, Idaho Power irrigation customer from Grandview, Idaho
On March 16, 2001, Randy Hipwell filed a petition to be included in Idaho Power’s Program. Mr. Hipwell states that he did not submit a bid to participate in the Program because he was out of town when Idaho Power held its meetings with irrigators and thus did not have full knowledge of the requirements to participate in the Program. Mr. Hipwell now wishes to participate in the Program and has attached a bid with his Petition which offers Idaho Power the option of buying a projected 414,985 kWh from him at 15¢ per kWh.
2. Paul Porter, Idaho Power irrigation customer from Melba, Idaho
On March 21, 2001, Paul Porter filed a Petition requesting the Commission to include his offer in Idaho Power’s Program. Mr. Porter states that although his power consumption is approximately 79,000 kWh for an irrigation season there is no compelling reason why he should not be included in this Program when the electric power supply is so tight. It is not clear from Mr. Porter’s filing whether he submitted a bid to Idaho Power Company prior to February 28, 2001.
3. Double Eagle, Inc., an Idaho Power irrigation customer from Burley, Idaho.
On March 26, 2001, Double Eagle, Inc. (“Double Eagle”) faxed a copy of its Petition for Clarification to the Commission. Double Eagle seeks clarification as to whether Commission Order No. 28676 compels Idaho Power to accept its bid to participate in the Program.
Double Eagle, Inc. states that it submitted timely offers to Idaho Power to reduce its electrical energy consumption. See Attachment to Petition. Double Eagle states that its offers complied with all requirements of Commission Order No. 28647. Furthermore, Double Eagle states that its offers complied with all provisions of Idaho Power’s Request for Proposal, with the exception that it did not have any historical average kWh consumption for the previous five years as required by Idaho Power. Double Eagle states that the ground in its bid was in the CRP program from 1991 through year 2000, and therefore did not have a metered service point during the preceding five years.
On March 19, 2001, Idaho Power denied the offers submitted by Double Eagle, Inc. on the grounds “there has been no energy consumption at the metered service points associated with this offer during the previous five years. As a result, your offer does not meet the criteria necessary for acceptance in Idaho Power Company’s Irrigation Buy Back Program.” See Exhibit D attached to Petition.
In support of its bids to Idaho Power Double Eagle states it can establish that it has farmed the real property in its bids for several years prior to 1991 and that the average electrical consumption on this property during this time was 2,028,880 kWh per year. Furthermore, Double Eagle asserts that it fully intended to farm this property during the 2001 crop year and has made down payments on irrigation equipment in preparation therefor. Accordingly, Double Eagle requests that the Commission clarify whether Interlocutory Order No. 28676 provides that Idaho Power is to accept Double Eagle’s bid to participate in this Program.
STAFF ANALYSIS
In its Order the Commission viewed the bidding process as a price discovery mechanism and, as previously stated, directed the Company to accept bids at 15¢/kWh from all willing participants who submitted bids by the February 28 deadline. No provision was made for those irrigation customers who failed to submit bids by the deadline contained in Idaho Power’s RFP or whose bids were rejected for reasons other than submitting a bid over 15¢ per kWh.
Staff does not find that the Petitions submitted by Mr. Hipwell and Mr. Porter present circumstances that would excuse their failure to submit their bids to Idaho Power by February 28, 2001. In addition, it appears that Mr. Porter could not offer at least a 100,000 kWh load reduction as required by Idaho Power to participate in this Program. Accordingly, Staff believes these Petitions should be denied.
Staff also believes that Double Eagle’s Petition for Clarification should be denied as well. According to its Petition, Double Eagle’s last consumption of energy on the land in its bid occurred prior to 1991. Staff believes that the intent of Idaho Power’s RFP was clear that to participate an irrigation customer must have five years of historical average kWh usage during the five years immediately previous to 2001. If this history did not exist Idaho Power in its RFP stated that in its sole discretion it will determine whether to use available data to establish energy reduction amounts. By rejecting Double Eagle’s bid the Company is exercising that discretion. Accordingly, Staff believes this bid should be denied.
STAFF RECOMMENDATION
Staff recommends that Petitions from Idaho Power irrigation customers Randy Hipwell and Paul Porter both requesting to be included in Idaho Power’s Irrigation Buy-Back Program be denied.
Staff further recommends that Double Eagle’s Petition for Clarification should be denied.

__________________________
John R. Hammond

M:ipce013_jh2
DECISION MEMORANDUM 3