20060120Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:JANUARY 12,2006
SUBJECT: CASE NO. IPC-05-37 (Idaho Power)
ST ANDBY SERVICE AGREEMENT - AMALGAMATED SUGAR COMPANY
On December 9, 2005 , Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
Standby Service Agreement (Agreement) between Idaho Power and Amalgamated Sugar Company
(TASCO) dated December 2005 under which Idaho Power will supply standby electric service to
TASCO.
Idaho Power provides electric service to TASCO's refined sugar production facilities at
Nampa, Paul and Twin Falls, Idaho under Idaho Power s Schedule 19 and to TASCO's refined sugar
production facility at Nyssa, Oregon under Idaho Power s Oregon Schedule 19. T ASCO owns and
operates electric generation facilities at these refined sugar production facilities and utilizes
electricity generated from those facilities to supply a portion of its electric load. Idaho Power
service under Schedule 19 supplements the energy obtained from TASCO's on-site generation.
T ASCO currently purchases standby service from Idaho Power under an Agreement for
Supply of Standby Service between Idaho Power and T ASCO (the 1998 Standby Agreement) dated
April 6, 1998 to backup TASCO's on-site generation. The 1998 Standby Agreement was amended
by Letter Agreement dated September 27, 2004. The submitted Agreement will replace the 1998
Standby Agreement, as modified by the Letter Agreement.
Changes in TASCO's operation ofthe Nyssa, Oregon facility have reduced the amount of
supplemental energy required by T ASCO from Idaho Power to operate the production facility.
According to the service eligibility provisions of Schedule 19, T ASCO's Nyssa facility will no longer
DECISION MEMORANDUM
be eligible for service under Schedule 19 beginning in January 2006. The terms of the 1998 Standby
Agreement, as modified by the Letter Agreement, specify that the 1998 Standby Agreement and
Schedule 31 shall automatically be cancelled upon a transfer of service for any of the four (4)
T ASCO facilities from Schedule 19 to any other Idaho Power general service schedule or special
contract.
T ASCO has requested that Idaho Power continue to provide standby service for the
Nampa, Paul and Twin Falls, Idaho refined sugar production facilities. T ASCO has requested that
standby service no longer be provided to the Nyssa, Oregon facility.
The Agreement submitted in this case contains the same servIce provIsIOns and
requirements as the 1998 Standby Service Agreement (as modified) with the exception that the total
amount of standby generation available to T ASCO during the fall and winter months has been
reduced from 000 kW to 000 kW to accommodate TASCO'current standby service
requirements.In addition, minor language revisions have been made to remove references to
TASCO's Nyssa facility. TASCO will continue to pay the standby charges specified in tariff
Schedule 31. In addition, T ASCO will continue to pay all costs of supplying, installing, operating
and maintaining standby facilities to allow Idaho Power to supply standby service to the T ASCO
facilities. Idaho Power believes that the Agreement takes into account the unique operating
characteristics of TASCO's refined sugar production facilities, is beneficial to Idaho Power s other
existing customers, and is in the public interest. Idaho Power requests that the Commission issue its
Order approving the December 7, 2005 Standby Service Agreement.
STAFF ANALYSIS
Staff has reviewed the new Agreement for Supply of Standby Electric Service between
Idaho Power Company and the Amalgamated Sugar Company, LLC dated December 7 , 2005. The
new Agreement was compared to the 1998 Standby Agreement it is replacing and the, Letter
Agreement modifying that 1998 agreement, to identify significant changes. As stated by the
Company in its Application, differences in the agreements are restricted to those necessary to
accommodate the change in scope and quantity of supply brought about by elimination of one of the
four plants included in the modified 1998 Standby Agreement. The agreements are nearly identical
except for the reduction in the amount of standby power by 000 kW from 000 to 000 kW. This
change reflects the fact that Amalgamated is now requesting standby power service at only three
DECISION MEMORANDUM
facilities rather than four facilities, as was the case for the old contract.The facility where
Amalgamated no longer requires standby power service is their Nyssa, Oregon plant.
There are a few other minor differences, the most notable of which is the addition in the
new Agreement of reference to supporting documents pertaining to the three facilities included in the
new Agreement. Those referenced documents are: (1) Idaho Power Company Uniform Service
Agreement; and (2) Distribution Facilities Investment Report. The latest versions of both of these
documents were also reviewed and no significant changes have been made to those documents for
this contract.
The new Agreement continues to reference tariff Schedule 19, Large Power Service and
Schedule 31 , Idaho Power Company Agreement For Supply Of Electric Service for Amalgamated
Sugar Company - Contract dated April 6, 1998. The only change proposed to those tariffs by the
Company is to delete the phrase "Contract Dated April 6, 1998" from Schedule 31. That change has
been requested in the form of Tariff Advice No. 05-10.
STAFF RECOMMENDA nON
Based on its review of the current and proposed Standby Service Agreements and
referenced documents, Staff believes the proposed changes in the Agreement appropriately reflect
those required to accommodate Idaho Power s providing standby power service to the three
Amalgamated plants. Staff recommends approval of the December 7, 2005 Amalgamated Standby
Service Agreement as requested by Idaho Power without further notice or procedure.
COMMISSION DECISION
Idaho Power requests approval of a replacement Standby Service Agreement with
Amalgamated Sugar (T ASCO). The new Agreement reflects a continuation of standby service for
TASCO's Nampa, Paul and Twin Falls, Idaho facilities, and elimination of standby service to
TASCO's Nyssa, Oregon facility. No change in rates is proposed. Staff recommends that the
Agreement be approved without further notice or procedure. Does the Commission find it reasonable
to approve the Agreement as recommended by Staff?
Scott D. Woodbury
bls/M:IPC-O5-37 sw
DECISION MEMORANDUM