20040719Decison Memo.pdf

..,
DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMIm
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL STAFF
FROM:SCOTT WOODBURY
DATE:JULY , 2004
RE:CASE NO. IPC-04-17 (Idaho Power)
ELECTRIC SERVICE AGREEMENT-
R. SIMPLOT COMPANY (pocatello)
On July 2, 2004, Idaho Power Company (Idaho Power; Company) filed an
Application wi~h the Idaho Public Utilities Commission (Commission) for approval of an
Agreement for Electric Service between Idaho Power and the J.R. Simplot Company (Simplot)
dated June 29, 2004 (the 2004 Agreement).
Simplot operates a plant for the production of fertilizer near Pocatello, Idaho (the
Pocatello facility). Pursuant to an Agreement for Supply of Power and Energy between Idaho
Power and Simp lot dated August 27, 1973 (the 1973 Agreement), Idaho Power supplies electric
service to Simplot's Pocatello facility in accordance with the rates and charges set out in tariff
Schedule 29 and its successor schedules.. Since the 1973 Agreement was last renewed, Idaho
Power has revised and updated its contracts for special contract customers like Simplot. In
accordance with ~ 1.1 of the 1973 Agreement, Idaho Power timely notified Simplot in writing of
the Company s intent to terminate the 1973 Agreement effective June 30, 2004.
Pursuant to Commission Order No. 29535 dated June 28, 2004, the termination date
of the 1973 Agreement, as amended, was extended to the earlier of either August 29, 2004 or to a
date on which the Commission approves a new service agreement between the parties.
2004 Agreement
Under the terms of the 2004 Agreement, Idaho Power agrees to furnish, and Simplot
agrees to purchase, 25 000 kilowatts of electric power and energy on a monthly basis. Section
DECISION MEMORANDUM
1 of the 2004 Agreement permits Simplot to increase the monthly Demand to a maximum of
000 kilowatts upon one year prior written notice to the Company. (Under the 1973
Agreement, Idaho Power agreed to supply and Simplot agreed to purchase up to 38 000
kilowatts). The Minimum Billing Demand is the Contract Demand less 5 000 kilowatts. The
availability of power in excess of the Contract Demand is not guaranteed, and if Billing Demand
at the Simplot Facility exceeds the Contract Demand, Idaho Power may curtail service to the
Simplot facility.
Idaho Power states that the 2004 Agreement is similar to the Company s special
contract with Micron Technology. Reference Order No. 26238, November 20, 1995. The
unique provisions of the 2004 Agreement are described below.
Section 8.1 of the 2004 Agreement establishes that the rates and charges for electrical
power, energy and other services provided by the Company to the Pocatello facility will be
determined in accordance with the sum of the components of electric tariff Schedule 29 and its
successor schedules. The monthly charges under the 1973 Agreement include a Demand
Charge, an Energy Charge and a Facility Charge. The monthly charges under the 2004
Agreement include the same three charges plus a contract Demand Charge. The individual
component charges for the 2004 Agreement were derived by flI'st establishing the charges
utilizing the 2003 normalized test year revenues and us~ge for Simplot from Case No. IPC-03-
13 and by adjusting the charges on a uniform percentage basis to derive the revenue requirement
authorized for Simplot by Commission Order No. 29505 in Case No. IPC-03-13. Reference
Worksheets, App. Att. 3.
All transmission and distribution facilities necessary for the delivery of power and
energy to the Pocatello facility are installed, owned and operated by Idaho Power. Section 7 of
the 2004 Agreement permits the parties to enter into separate agreements to provide any
additional transmission and/or substation facilities that may be required to provide electric
service to the Pocatello facility. Section 7.2 of the 2004 Agreement sets forth the monthly
Facilities Charge that Simplot agrees to pay for the use of the Company s distribution facilities.
Under the 2004 Agreement, the monthly Facilities Charge remains unchanged at 1.70/0 per
month.
If approved by the Commission, the 2004 Agreement would remain in effect for five
years, through June 30, 2009, and would automatically renew thereafter until either party to the
DECISION MEMORANDUM
2004 Agreement terminates that Agreement in accordance with the Agreement terms and
provisions. The effective date of any termination cannot be less than 12 months after the date of
delivery of the termination notice.
COMMISSION DECISION
Staff recommends that the Company s Application in Case No. IPC-04-17 be
processed pursuant to Modified Procedure, Le., by written submission rather than hearing.
Reference Commission Rilles of Procedure, IDAPA 31.01.01.201-204. Does the Commission
agree with the Staff recommended procedure?
Scott Woodbury
Vld/M:IPCEO417 sw
DECISION MEMORANDUM