20040817Comments.pdf

SCOT! WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
Idaho Public Utilities Commission
Office of the SecretaryRECEIVED
AUG 1 3 2004
Boise, Idaho
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR APPROVAL
OF AN AGREEMENT FOR ELECTRIC
SERVICE BETWEEN IDAHO POWER
COMPANY AND THE J.R. SIMPLOT COMPANY.
CASE NO. IPC-O4-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of
Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on July
2004 submits the following comments.
BACKGROUND
On July 2, 2004, Idaho Power Company (Idaho Power; Company) filed an Application
with the Idaho Public Utilities Commission (Commission) for approval of an Agreement for
Electric Service between Idaho Power and the J.R. Simp lot Company (Simplot) dated June 29 , 2004
(the 2004 Agreement).
STAFF COMMENTS AUGUST 13 , 2004
STAFF REVIEW
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. 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 a date on
which the Commission approves a new service agreement between the parties.
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 6.
of the 2004 Agreement permits Simplot to increase the monthly Demand to a maximum of38 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 first establishing the charges utilizing the 2003 normalized test
year revenues and usage for Simplot from Case No. IPC-03-13 and by adjusting the charges on a
STAFF COMMENTS AUGUST 13 2004
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 1.7% 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
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.
STAFF CONCLUSIONS AND RECOMMENDATIONS
Staff has reviewed the proposed Agreement and associated Schedule 29 and recommends
approval. Staff believes that approval of the 2004 Agreement is in the public interest. Schedule 29
rates have been revised to include a Contract Demand Charge. The proposed tariff rates are revenue
neutral; that is, they produce the same annual revenue as recently approved by the Commission in
the Idaho Power Company general rate case, Case No. IPC-03-13. Staff also recommends that
the proposed Agreement and Schedule 29 become effective on the date of Commission approval.
Respectfully submitted this
/3
PI day of August 2004.
Scott Woo bury
Deputy Attorney General
Technical Staff: Keith Hessing
i:umisc/comments/ipcO4.17swkh
STAFF COMMENTS AUGUST 13 2004
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 13TH DAY OF AUGUST 2004
SERVED THE FOREGOING COMMENTS OF THE COMMISSION ST AFF, IN
CASE NO. IPC-04-, BY MAILING A COpy THEREOF POSTAGE PREPAID, TO
THE FOLLOWING:
BARTON L KLINE
MONICA MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
JOHN R GALE
VP - REGULATORY AFFAIRS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
DA VID HA WK
JR SIMPLOT COMPANY
PO BOX 27
BOISE ID 83707
SCOTT PASLEY
JR SIMPLOT COMPANY
PO BOX 27
BOISE ID 83707
SEC
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CERTIFICATE OF SERVICE