08082001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
BILL EASTLAKE
TONYA CLARK
DON HOWELL
LYNN ANDERSON
DAVE SCHUNKE
RICK STERLING
RANDY LOBB
GENE FADNESS
WORKING FILE
FROM:
DATE:
AUGUST 8, 2001 RE: CASE NO. IPC-E-01-26 (Idaho Power)
AGREEMENT FOR SALE AND PURCHASE OF SURPLUS ENERGY— First Amendment
IDAHO POWER/AMALGAMATED SUGAR (TASCO)

On October 31, 1998, Idaho Power and The Amalgamated Sugar Company LLC (TASCO) entered into an agreement for the sale and purchase of surplus energy (the “Surplus Energy Agreement”) under which Idaho Power currently purchases surplus electric energy up to 2 MW from TASCO at market-based prices. Reference Case No. IPC-E-98-15, Order No. 27885.
On July 25, 2001, Idaho Power Company filed an Application with the Commission requesting approval of a First Amendment (Amendment) to the Idaho Power/TASCO Surplus Energy Agreement. As represented in the Application, TASCO has decided to install additional generating capacity at its Nampa plant. In addition to the approximately 2 MW of generating capacity that currently exists, TASCO intends to add an additional 8 MW of capacity which will bring the total generating capacity at the Nampa plant to 10 MW. Under the Amendment dated July 23, 2001, Idaho Power agrees to purchase the additional surplus energy generated by TASCO at prices that are less than market-based non-firm energy prices. The Amendment provides a September 1, 2003 termination date for the Surplus Energy Agreement.
Pursuant to the Amendment, the electric energy to be sold under the Surplus Energy Agreement is non-firm energy and will be only available when TASCO does not consume the electric energy in the Nampa plant. The purchase price for the energy provided by TASCO is separated into two blocks. The first block is energy attributable to the first two (2) MW of energy and is priced at the same level as previously approved by the Commission in Order No. 27885. The second block is energy attributable to the next eight (8) MW of capacity installed by TASCO and is priced at a percentage discount from the monthly average non-firm Dow Jones Mid-Columbia index price. During the period from August 1, 2001 through September 30, 2001, the price for the second block energy will be equal to 90% of the monthly weighted average non-firm Dow Jones Mid-Columbia index prices during the period. From January 1, 2002 through September 1, 2003, second block energy will be priced at 85% of the monthly weighted average non-firm Dow Jones Mid-Columbia index price.
Under the terms of the Amendment, until Idaho Power has completed necessary engineering studies, purchases from the Nampa plant will be physically and contractually limited to 8.5 MW. If additional interconnection facilities are required to allow parallel operation between TASCO and Idaho Power at the 10 MW level, TASCO will be obligated to reimburse Idaho Power for those costs prior to the additional generation being accepted by Idaho Power.
Pursuant to the Amendment, the revisions of the Surplus Energy Agreement will not become finally effective until the Commission has approved the Amendment and declares that all payments for surplus under the Surplus Energy Agreement as amended shall be allowed as prudently incurred expenses for ratemaking purposes. Idaho Power requests that the Application be processed pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
Commission Decision
Staff recommends that the Company’s Application be processed pursuant to Modified Procedure. Although an August 1 effective date for additional surplus energy is reflected in the Application, the price of natural gas is such that TASCO has no immediate plans to provide additional generation. Standard Modified Procedure comports with the requirements of both Idaho Power and TASCO. Does the Commission find the proposed procedure to be acceptable?

vld/M:IPC-E-01-26_sw

DECISION MEMORANDUM 1