20081027Application.pdf

esIDA~PORtI
BARTON L. KLINE
Lead Counsel
An IDACORP Company
October 24, 2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-21
IN THE MA ITER OF IDAHO POWER COMPANY'S APPLICA TlON FOR
APPROVAL OF A SPECIAL CONTRACT TO SUPPL Y POWER TO HOKU
. MATERIALS, INC.
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of Idaho Powets
Application in the above matter.
In addition, enclosed are an original and eight (8) copies ofthe testimony of John R.
Gale which is being submitted in support of Idaho Power's enclosed filing. One copy of Mr.
Gale's testimony has been designated as the "Reporter's Copy." In addition, a disk
containing a Word version of the above testimony has been provided for the Reporter and
has been marked accordingly.
I. would appreciate it if you would return a stamped copy of this letter for my file in
the enclosed stamped, self-addressed envelope.
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. ID 83702
BARTON L. KLINE, ISB #1526
LISA D. NORDSTROM, ISB #5733
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
bklinecæidahopower.com
Inordstrom(§idahopower.com
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200B OCT 24 PH 4: 58
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF A SPECIAL CONTRACT
TO SUPPLY POWER TO HOKU
MATERIALS, INC.
)
) CASE NO. IPC-E-08-21
)
) APPLICATION
)
)
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company") and, in
accordance with RP 052, hereby requests that the Idaho Public Utilities Commission
("Commission") issue its Order approving a special contract for electric service between
Idaho Power and Hoku Materials, Inc. ("Hoku"). Idaho Power and Hoku are hereinafter
referred to singly as "Part" and collectively as "Parties." This Application is based on
the following:
APPLICATION -1
1. Background.
Hoku is currently constructing a polysilicon production facilty ("Hoku Facility") in
Pocatello, Idaho. The electrical demand at the Hoku Facility wil exceed 25,000 kW.
Idaho Powets rate Schedule 19, Large Power Service, provides that customers whose
electrical demand exceeds 25,000 kW must make special contract arrangements with
the Company. Idaho Power and Hoku have negotiated an energy sales agreement
which complies with the requirements of a special contract under Idaho Power's
Commission approved Tariff No. 101. A copy of the Hoku energy sales agreement
("ESA") and Rate Schedule 32, which contains the proposed rates for Hoku's service
under the ESA, are enclosed with this Application as Attachment No.1.
2. In conjunction with the ESA, Idaho Power and Hoku have also entered
into an agreement under which Hoku has agreed to fund and Idaho Power has agreed
to construct the interconnection facilities necessary to provide service to the Hoku
Facility ("Construction Agreement". Because the Construction Agreement is not a
special contract under Idaho Power's rate schedules, the Company is not seeking
approval of the Construction Agreement. However, for the Commission's convenience
in reviewing the ESA, a copy of the Construction Agreement is enclosed as Attachment
NO.2.
3. In conjunction with this Application, Idaho Power has filed the direct
testimony of John R. Gale. Mr. Gale's testimony provides additional detail regarding the
rates and terms of the ESA and presents evidence to support the Company's position
that Commission approval of the ESA would be in the public interest.
APPLICATION - 2
4. Contract Provisions.
For the most part, the ESA is similar to other special contracts Idaho Power has
signed with large customers. The material provisions of the ESA which are unique to
the ESA are summarized here and addressed in greater detail in Mr. Gale's testimony in
support of the ESA.
(a) Term.
The term of the ESA commences on June 1, 2009, and concludes on May
31, 2013. After June 1, 2013, either Part can terminate the ESA on one-year's prior
written notice. If the effective date of a termination occurs before a replacement special
contract between the Parties can be negotiated and placed into effect, then Hoku's
energy and demand rates wil be the Schedule 19-T rates until a replacement contract is
approved.
(b) Contract Demand.
To accommodate Hoku's schedule for gradually increasing its production
at the Hoku Facility and to allow Idaho Power adequate time to secure new resources,
the Parties have agreed that Hoku's scheduled demand wil vary by season. Section
6.1.1 of the ESA sets out the scheduled contract demands during the summer and non-
summer periods during the term of the ESA. The maximum demand during the four-
year term of the ESA is 82 MW.
Section 6.1.1 also contains an acknowledgment by Hoku that Idaho Power
is in the process of expanding its system capacity and the Company's obligation to
serve Hoku's scheduled contract demand during the summer load period of 2012 is
contingent on the timely completion of major transmission and generation projects.
APPLICATION - 3
(c) Rate Blocks.
Hoku's contract demand and energy is broken into two blocks for pricing
purposes. The first block demand charge is priced to be reflective of system access
costs - firm transmission and ancilary services. The first block of energy is priced at a
level equivalent to Idaho Power's current Commission-approved avoided cost rates.
Charges for the second block (25 MW) are based on the Company's
approved Schedule 19- T rate.
Under this two-block pricing arrangement, energy is sold to Hoku at a rate
that contains both embedded and marginal cost components, thereby reducing upward
rate pressure on existing customers due to the addition of the ESA. Mr. Gale's
testimony, filed with this Application, further explains the rationale underlying the two-
block rate structure.
Both the demand components and the first block of energy impose take-
or-pay requirements on Hoku. However, Idaho Power has agreed that Hoku may
request a release of all or part of its first block energy purchase commitment. If Hoku
makes such a request, Idaho Power wil make a commercially reasonable effort to
absorb or resell the released energy and provide a credit to Hoku. The amount of the
credit wil depend on the period of time for which it has notice of Hoku's request and the
Company's ability to manage any supply commitments to serve Hoku's load.
5. Procurement of Additional Power.
As previously noted, Idaho Power may not be able to provide all of the power
Hoku would like to take during the summer period. If Hoku desires to take additional
power during the summer, paragraph 5.6 of the ESA obligates Idaho Power to make
APPLICATION - 4
commercially reasonable efforts to obtain proposals to supply Hoku's additional energy
request. If power is available, any additional purchases and delivery are subject to
Idaho Power's ability to deliver the power to Hoku and Hoku's acceptance of the price
and terms of the proposals. Hoku is responsible for the full cost of these purchases and
any associated transmission and ancilary service expense to transport such purchase
to the Hoku Facility. Hoku can expand its first block contract demand up 175,000 kWs,
but its ability to expand its first block contract demand is dependent on the availability of
adequate capacity in Idaho Power's facilities to provide and deliver the additional power.
6. Rate Schedule 32.
Attached to the ESA is a proposed Schedule 32 which sets out the rates and
charges under the ESA. These rates and charges are subject to the continuing
jurisdiction of the Commission and can be revised by the Commission in an order,
supported by substantial evidence, that such a rate change or revision is just,
reasonable, suffcient, non-preferential, and non-discriminatory. The proposed effective
date of Schedule 32 is June 1, 2009, to coincide with the commencement of the ESA.
7. PCA Treatment of ESA Expenses and Revenues.
For PCA purposes, Idaho Power proposes to treat first block revenues and
expenses as if they were wholesale purchases and sales, thereby removing them from
PCA treatment. Mr. Gale's testimony explains why this PCA treatment is reasonable
and consistent with PCA principles previously approved by the Commission.
8. The ESA wil only become effective upon the approval by the Commission
of all terms and provisions without change or condition.
APPLICATION - 5
9. Communications regarding this Application should be sent to:
Barton L. Kline
Lisa D. Nordstrom
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
bkline(§idahopower.com
Inordstrom(§idahopower.com
Scott Paul
VP Business Development &
General Counsel
Hoku Scientific, Inc.
1075 Opakapaka Street
Kapolei, Hawaii 96707-1887
spaul(§hokusci.com
John R. Gale
Vice President, Regulatory Affairs
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
rgale(§idahopower.com
NOW, THEREFORE, Idaho Power hereby requests that the Commission issue
i
i
its Order: (1) approving the ESA without ch~nge or condition; and (2) approving the
rates and charges set out in Schedule 32 to bel effective on and after June 1, 2009; and
i
i
(3) approving the PCA treatment of first block rievenues and expenses as set out in Mr.
Gale's testimony.
DATED this 24th day of October 2008.
~.Barton L. KlineiAttornèy for Idaho Power Company
APPLICATION - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of October 2008 I served a true and
correct copy of the APPLICATION upon the following named parties by the method
indicated below, and addressed to the following:
Scott Paul
VP Business Development &
General Counsel
Hoku Scientific, Inc.
1075 Opakapaka Street
Kapolei, Hawaii 96707-1887
Hand Delivered
~ U.S. Mail
Overnight Mail
FAX
Email spaul(§hokusci.com
~~
Barton L. Kline
APPLICATION -7
Idaho Public Utilties Commission
Offce of the Secretary
RECEIVED
BEFORE THE OCT 242008
Boise, Idaho
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-21
IDAHO POWER COMPANY
ATTACHMENT NO.1
Idaho PubfiC Uti'ites COITH'nisstcn
Of m th Sooret.ary .RECEIVED .
OCT 2. 20
ELECTRIC SERVICE AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
HOKU MATERIALS, INC
Bois, Idaho
THIS AGREEMENT FOR ELECTRIC SERVICE is executed on9/17/2008 by HOKU MATERIALS, INC, a Delaware Corporation ("Hoku") and
IDAHO POWER COMPANY, an Idaho Corporation ("Idaho Powet'). In consideration of
the mutual covenants hereinafter set forth, the parties hereby agree as follows:
SECTION 1 - SPECIAL CONTRACT
1.1 This Agreement is a Special Contract as descnbed in Idaho
Power's Schedule 19.
SECTION 2 - DEFINITIONS
When used in this Agreement:
2.1. "Commission" shall mean the Idaho Public Utilties Commission or
its successor agency.
2.2. "Construction Agreement" shall mean that certain Agreement for
Construction of Hoku Electric Substation and Associated Facilties dated as of
December 28,2007, by and between Hoku and Idaho Power, as such may be amended
from time to time.
2.3. "Contract Load Factor" shall mean 90 percent for purposes of
establishing the energy blocks for monthly billng.
2.4. "Embedded Date" shall mean June 1, 2013.
2.5. "Embedded Rate" shall mean the demand and energy rates
detailed in the Company's then-effective Schedule 19T.
2.6. "Excess Demand" shall mean the average kilowatts supplied
during the coincident 15-consecutive-minute period of maximum use each day, adjusted
for Power Factor, which exceeds the Total Contract Demand.
2.7. "Excess Energy" shall mean any kilowatt-hours of energy supplied
to the Hoku Facilty during the monthly billng period as measured by the metering
equipment located at the Points of Delivery that exceeds the sum of the First Block
Energy and the Second Block Energy.
2.8. "First Block Contract Demand" shall mean the monthly number of
kilowatts Idaho Power has agreed to make available to the Hoku Facilty in accordance
with the Scheduled Contract Demand in Section 6.
2.9. "First Block Energy" shall mean the kilowatt-hours determined by
multiplying the First Block Contract Demand by the number of hours in the biling period
multiplied by the Contract Load Factor.
1
2.10. "Hoku Facilty" shall mean the Hoku Polysilcon Production
complex located on One Hoku Way, Pocatello, Idaho.
2.11. "Interconnection Facilities" shall mean all facilties which are
reasonably required by Prudent Electrical Practices and the National Electric Safety
Code to interconnect and deliver electrical power and energy to the Hoku Facilty,
including, but not limited to, transmission facilties, substation facilties and metering
equipment.
2.12. "Minimum Biled Energy" shall mean the number of kilowatt-hours
determined by multiplying 50% of the Total Contract Demand for the billng month by the
number of hours in the biling month at the Contract Load Factor.
2.13. "Points of Delivery" shall mean the locations specified in
paragraph 5.2 where the electrical facilties owned by Hoku are interconnected to the
electrical facilties owned by Idaho Power and where power and energy are delivered by
Idaho Power for the purpose of providing electrical service for the operations of the Hoku
Facilty.
2.14. "Power Factor" shall mean the percentage obtained by dividing
the maximum demand recorded in kW by the corresponding kilovolt-ampere (kVa)
demand established by Hoku.
2.15. "Prudent Electrical Practices" shall mean those practices, methods
and equipment that are commonly and ordinarily used in electrical engineering and utilty
operation to operate electrical equipment and deliver electric power and energy with
safety, dependabilty, effciency and economy.
2.16. "Schedule 19" shall mean the Company's then effective Idaho
Retail Tariff Schedule 19T.
2.17. "Schedule 32" shall mean the Hoku tariff schedule of rates and
charges or its successor schedules.
2.18. "Scheduled Contract Demand" is defined in Section 6.1.1 below.
2.19. "Second Block Contract Demand" shall mean 25,000 kilowatts.
2.20. "Second Block Energy" shall mean the total kilowatt-hours
supplied to the Hoku Facility during the monthly biling period as measured by the
metering equipment located at the Points of Delivery less the First Block Energy. but no
greater than 25,000 kilowatts multiplied by the number of hours in the billng period
multiplied by the Contract Load Factor.
2.21. "Total Contract Demand" shall mean the sum of the First Block
Contract Demand and the Second Block Contract Demand as specified in Section 6, and
as such may be modified pursuant to Section 6.2 below.
2.22. 'Transformer Losses" shall mean energy losses resulting when a
transformer changes the voltage level of alternating current electricity. Transformer
losses wil be accounted for in the initial metering installation.
SECTION 3 - TERM OF AGREEMENT
3.1 This Agreement shall become effective as provided in paragraph
15.1 and remain in effect through the Embedded Date and wil be automatically renewed
2
thereafter until either Hoku or Idaho Power terminates this Agreement as provided in
paragraph 4.1.
3.2 It is the intention of the parties that following the Embedded Date,
the parties shall enter into a new Special Contract whereby Hoku shall pay energy and
demand rates that are equal to the lesser of the then-applicable Schedule 19 rate or the
average of the contract rates in Idaho Powets then-effective other "Special Contracts".
These Special Contract rates wil remain in effect on an interim basis until the next final
Commission order in a general rate case proceeding.
3.3 Service under this Agreement wil commence June 1, 2009.
SECTION 4 - TERMINATION
4.1 Notice of Termination: After the Embedded Date, either party to
this Agreement shall have the right to terminate this Agreement by delivering written
notice of termination to the other party. The effective date of termination wil be specified
in the termination notice, but such effective date cannot be earlier than 12 months after
the date of the delivery of the notice of termination. If both parties give notice of
termination, the earliest effective date wil prevaiL. If the effective date of a termination
occurs before the new Special Contract is effective between the Parties as described in
Section 3.1 above, then the applicable energy and demand rates shall be the Embedded
Rate.
SECTION 5 - SERVICES TO BE PROVIDED
5.1 Supply Obligation: In accordance with Prudent Electrical Practices
and the provisions of this Agreement, Idaho Power wil furnish Hoku's total requirements
for electric power and energy at the Hoku Facilty. Hoku wil not resell any portion of the
power and energy furnished under this Agreement.
5.2 Points of Delivery: Electric power and energy shall be delivered by
Idaho Power at each point generally described as the load side terminals of the
substation transformer 13.8 kilovolt disconnect switches at the Hoku Facilty.
5.3 Adjustment for Transformer Losses: Metering on the load side of
the substation transformers wil be adjusted for Transformer Losses.
5.4 Description of Electric Service: Idaho Power shall supply three-
phase, 60 hz alternating current at nominal 13,800 volts, with a maximum steady state
variation of plus or minus five percent (5%) under normal system conditions. Consistent
with Prudent Electrical Practices, Idaho Power wil operate within the capabilty of its
existing system to minimize voltage level fluctuations, the normal frequency variation to
be within plus or minus 0.05 hz on a 60 hz base.
5.5 Available Capacity: Idaho Power wil make power available to
Hoku in an amount equal to the kilowatts of Total Contract Demand shown in Section
6.1.1.
5.6 Request for Proposals: During the initial term of the agreement, at
Hoku's request, Idaho Power wil use commercially reasonable efforts to obtain
proposals to supply power to meet Hoku's summer loads not served by Idaho Power.
Idaho Power wil customize such supply request to match Hoku's requirements. These
additional purchases are subject to Idaho Power's abilty to deliver the power to Hoku
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and Hoku's acceptance of the price and terms of the proposals. Hoku is responsible for
the full costs of these purchases and any associated transmission and ancilary service
expense to transport such purchases to the Hoku Facility.
5.7 Release of First Block Energy: With adequate notice and the
written consent of Idaho Power, Hoku may request a release of all or part of its First
Block Energy purchase commitment in return for credit on its First Block Energy Charge.
The value of the credit wil be determined by mutual agreement and wil take into
consideration the timing of the notice and Idaho Power's abilty to manage any supply
commitments made on Hoku's behalf.
SECTION 6 - CONTRACT DEMAND
6.1 Contract Demand Provisions prior to the Embedded Date: The
following provisions apply during the period of time from June 1, 2009 to the Embedded
Date, while Hoku is changing its load at the Hoku Facility.
6.1.1 Scheduled Contract Demand: Hoku agrees to contract for, and
Idaho Power agrees to provide power made available to the Hoku Facility in the
following amounts expressed in kilowatts (the "Scheduled Contract Demand"):
First Block Second BlockTime Contract Contract Total Contract
Period Demand Demand Demand
6/1/2009 - 9/15/2009............18,000 25,000 43,000
9/16/2009-12/31/2009........57,000 25,000 82,000
1/1/2010- 6/15/2010............57,000 25,000 82,000
6/16/2010- 8/15/2010..........18,000 25,000 43,000
8/16/2010- 9/15/2010..........42,000 25,000 67,000
9/16/2010-12/31/2010 .......57,000 25,000 82,000
1/1/2011- 6/15/2011............57,000 25,000 82,000
6/16/2011- 8/15/2011..........18,000 25,000 43,000
8/16/2011- 9/15/2011..........42,000 25,000 67,000
9/16/2011- 12/31/2011 .......57,000 25,000 82,000
1/1/2012 - 6/15/2012............57,000 25,000 82,000
6/16/2012 - 8/15/2012..........57,000 25,000 82,000
8/16/2012- 9/15/2012..........57,000 25,000 82,000
9/16/2012 - 12/31/2012 .......57,000 25,000 82,000
1/1/2013 - 5/31/2013............57,000 25,000 82,000
Hoku acknowledges that Idaho Power is in the process of expanding its system capacity
and the Company's ability to provide the amount of power shown above for the summer
load period from 6/16/2012 to 9/15/2012 is contingent on the timely completion of major
4
transmission and generation projects. Hoku agrees that if there are delays in the
completions of these projects, the amount of power to be made available to Hoku from
6/16/2012 to 9/15/2012 may be reduced to match the summer load in the previous year.
6.2 Contract Demand Provisions after Initial Expansion: After the
Embedded Date, Hoku has the option to increase or decrease its Total Contract
Demand level as follows:
6.2.1 Increases to Total Contract Demand: Under the terms of this
Agreement, Hoku may increase the Total Contract Demand above 82,000 kilowatts by
increasing the First Block Contract Demand in increments of 1,000 to 10,000 kilowatts
per year up to a Total Contract Demand of 175,000 kilowatts. Hoku wil notify Idaho
Power in writing of the additional capacity requirements at least one year in advance.
The new Total Contract Demand wil be in effect for a minimum of one year. Increases
to Total Contract Demand are subject to the availabilty of adequate capacity in Idaho
Powets facilties to provide the requested service.
6.2.2 Decreases to Total Contract Demand: After the Embedded Date,
Hoku may decrease the Total Contract Demand by reducing the First Block Contract
Demand in decrements of 1,000 kilowatts. Total Contract Demand may not be
decreased below 25,000 kilowatts. Hoku wil notify Idaho Power in writing of the
decrease in capacity requirements at least one year in advance. The new Total Contract
Demand wil be in effect for a minimum of one year.
6.3 Excess Demand: Prior to the Embedded Date, and subject to
Section 6.2.1 above, the availabilty of power in excess of the Total Contract Demand is
not guaranteed, and if the average kilowatts supplied at the Hoku Facilty during the 15-
consecutive-minute period of maximum use each day, adjusted for power factor,
exceeds the Total Contract Demand, Idaho Power may curtail service to the Hoku
Facilty. Idaho Power reserves the right to install, at any time, at Hoku's expense, any
device necessary to protect Idaho Power's system from damage which may be caused
by the taking of Excess Demand. Hoku wil be responsible for any damages to Idaho
Powets system or damages to third parties resulting from the taking of Excess Demand.
Hoku agrees to use its best reasonable efforts to monitor its electric loads and to advise
Idaho Power as soon as possible of the potential for Excess Demand at the Hoku
Facilty. Excess Demand wil be subject to the Daily Excess Demand Charge and the
Monthly Excess Demand Charge specified in Schedule 32.
6.4 Proration: Bilings during months that contain a change in the
Scheduled Contract Demand wil be prorated.
SECTION 7 - FACILITIES FOR DELIVERY TO HOKU FACILITY
7.1 Additional Facilties: The parties acknowledge that they have
separately entered into the Construction Agreement, pursuant to which Hoku is paying
Idaho Power to construct the Interconnection Facilties necessary to provide the Total
Contract Demand under this Agreement. Idaho Power represents and warrants to Hoku
that none of the charges set forth in Schedule 32 include any cost reimbursement or
adjustment that is already being paid by Hoku pursuant to the Construction Agreement,
and that such Interconnection Facilties are suffcient to supply the Scheduled Contract
Demand. To the extent that additional transmission and/or substation Interconnection
Facilties are required to provide additional service pursuant to Section 6.2.1 above,
5
special arrangements wil be made in a separate Agreement between Hoku and Idaho
Power.
7.2 Operation and Maintenance: Idaho Power wil operate and
maintain Interconnection Facilties necessary to provide service to the Hoku Facilty.
Such Interconnection Facilties include Interconnection Facilties paid for by Hoku,
including those paid for by Hoku pursuant to the Construction Agreement. Idaho Power
shall operate and maintain such Interconnection Facilities in accordance with Prudent
Electrical Practices.
SECTION 8 - CHARGES TO BE PAID BY HOKU TO IDAHO POWER
8.1 Rates and Charges: The rates and charges for electrical power,
energy and other services provided by Idaho Power to the Hoku Facilty are identified by
component in Schedule 32. The total amount to be paid by Hoku for electric service to
the Hoku Facilty wil be the sum of the components identified on Schedule 32.
8.2 Power Factor: When the Hoku Facilty's Power Factor is less than
95 percent during the 15-consecutive-minute period of maximum use for the monthly
biling period, Idaho Power wil determine the Total Biling Demand by multiplying the
metered demand in kilowatts by 0.95 and dividing that product by the Power Factor.
8.3 Biling and Metering Provisions: Idaho Power wil install and
maintain suitable metering equipment for each Point of Delivery so that coincident
demand and energy consumption can be determined for the biling period.
8.4 First Block Contract Demand Charge: The First Block Contract
Demand Charge is fixed and is not subject to change through the Embedded Date. After
the Embedded Date, the Contract Demand Charge is subject to change and revision by
order of the Commission. After the Embedded Date, Idaho Power wil advocate for
Commission acceptance of the ratemaking treatment for the Special Contract described
in Section 3.2 above.
8.5 First Block Energy Charge: The First Block Energy Charge and
Excess Energy Charge are fixed and are not subject to change through the Embedded
Date. After the Embedded Date, the Energy Charge and Excess Energy Charge are
subject to change and revision by order of the Commission. After the Embedded Date,
Idaho Power wil advocate for Commission acceptance of the ratemaking treatment for
the Special Contract described in Section 3.2 above.
8.6 Second Block Charges: The Second Block Contract Demand
Charge and the Second Block Energy Charge wil increase or decrease uniformly with
any base rate change authorized by the Commission that is applicable to Idaho Power's
Tariff Schedule 19T through the Embedded Date. After the Embedded Date, the
Second Block Contract Demand Charge and the Second Block Energy Charge are
subject to change and revision by order of the Commission.
8.7 Power Cost Adjustment: The Power Cost Adjustment (PCA) fate
as defined under Idaho Power's Tariff Schedule 55 wil be applied to the Second Block
Energy only. The PCA rate wil not apply to the First Block Energy or to Excess Energy.
8.8 Conservation Program Funding Charge: The Conservation
Program Funding Charge as specified in Idaho Power's Tariff Schedule 91 for Schedule
19 wil be applied to the sum of the Second Block Charges, Excess Demand Charges,
and Excess Energy Charges.
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8.9 Minimum Energy Charges: Each month Hoku wil be biled for the
actual metered kilowatt-hours of energy, but no less than the Minimum Biled Energy
amount defined in Section 2.12.
SECTION 9 - PAYMENT OF BILLS/SETTLEMENTS
9.1 Billing Data: Hoku shall pay Idaho Power for all services provided
under this Agreement. Invoices for payment for electric services shall be prepared and
submitted to Hoku monthly. All invoices or bils shall contain such data as may be
reasonably required to substantiate the biling.
9.2 Payment Procedure: All bils or accounts for electric service owed
by Hoku to Idaho Power hereunder shall be due and payable within fifteen (15) days
following Hoku's receipt of a bil. Payment wil be made by electronic transfer of funds.
Idaho Power wil provide Hoku with current ABA routing numbers and other necessary
instructions to faciltate the electronic transfer of funds.
SECTION 10 - ACCESS TO PREMISES
10.1 During the term of this Agreement, and for a reasonable period
following termination, Idaho Power shall have access to the Hoku Facilty premises at all
times for the purposes of reading meters, making installations, repairing and removing
Interconnection Facilties and Idaho Power equipment and for other proper purposes
hereunder.
SECTION 11 - ASSIGNMENT
11.1 This Agreement shall be binding upon the heirs, legal and
personal representatives, successors and assigns of the parties hereto.
SECTION 12 - LIABILITY
12.1 Each part agrees to protect, defend, indemnify and hold
harmless the other party, its officers, directors, and employees against and from any and
all liabilty, suits, loss, damage, claims, actions, costs, and expenses of any nature,
including court costs and attorney's fees, even if such suits or claims are completely
groundless, as a result of injury to or death of any person or destruction, loss or damage
to propert arising in any way in connection with, or related to, this Agreement, but only
to the extent such injury to or death of any person or destruction, loss or damage to
property is not due to the negligence or other breach of legal duty of such other party;
provided; however, that each party shall be solely responsible for claims of and payment
to its employees for injuries occurring in connection with their employment or arising out
of any workman's compensation law.
12.2 Limitation of Liabilty: Neither party shall, in any event, be liable to
the other for any special, incidental, exemplary, punitive or consequential damages such
as, but not limited to, lost profits, revenue or good wil, or interest, whether such loss is
based on contract, warranty, negligence, strict liabilty or otherwise.
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SECTION 13 - MODIFICATIONS OF CONTRACT
13.1 This Agreement may not be modified except by writing, duly
signed by both parties hereto.
SECTION 14 - COMMISSION JURISDICTION
14.1 This Agreement and the respective rights and obligations of the
parties hereunder, shall be subject to (1) Idaho Power's General Rules and Regulations
as now or hereafter in effect and on file with the Commission and (2) to the jurisdiction
and regulatory authority of the Commission and the laws of the State of Idaho.
14.2 The terms, conditions, and rates set forth in this Agreement and
Schedule 32 are subject to the continuing jurisdiction of the Commission. The rates
under this Agreement are subject to change and revision by order of the Commission
upon a finding, supported by substantial competent evidence, that such rate change or
revision is just, fair, reasonable, sufficient, nonpreferential, and nondiscriminatory. It is
the parties' intention by such provision that the rate making standards to be used in
making any revisions or changes in rates, and the judicial review of any revisions or
changes in rates, wil be the same standards that are applicable to Idaho intrastate tariff
rates.
SECTION 15 - COMMISSION APPROVAL
15.1 This Agreement shall become effective upon the approval by the
Commission of all terms and provisions hereof without change or condition.
8
IDAHO POWER COMPANYBY e"\ß~
ITS ~::;JJ:""C:f\J;~
HOKU MATERIALS, INC.
BY
ITS
9
IDAHO POWER COMPANY
BY
ITS
HO~ERIALS. INC.
BY ;z ¿g k--
ITS CEO
9
Idaho Power Company
I.P.U.C. No. 28, Tariff No. 101 Original Sheet No. 32-1
SCHEDULE 32
IDAHO POWER COMPANY
ELECTRIC SERVICE RATE
FOR HOKU MATERIALS, INC.
POCATELLO, IDAHO
ELECTRIC SERVICE AGREEMENT DATED SEPTEMBER 17, 2008
APPLICABI L1TY
This schedule is applicable to service to Hoku Materials, Inc. (Hoku) served by Idaho Power
Company under the terms of an Electric Service Agreement (ESA) dated September 17, 2008.
MONTHLY CHARGE
The Monthly Charge is the sum of the following charges and may also include applicable
charges for Schedule 55 (Power Cost Adjustment), Schedule 91 (Energy Effciency Rider), and
Schedule 95 (Adjustment for Municipal Franchise Fees).
FIRST BLOCK MONTHLY CHARGES
First Block Contract Demand Charge
$2.35 per kW times the First Block Contract Demand
First Block Energy Charge
6.166 cents per kWh times the First Block Energy (subject to the Minimum Billed Energy
amount specified in the ESA)
SECOND BLOCK MONTHLY CHARGES
Second Block Contract Demand Charge
$3.77 per kW times the Second Block Contract Demand
Second Block Energy Charge
2.3769 ce nts per kWh times the Second Block Energy (subject to Minimum Biled
Energy amount specified in the ESA)
EXCESS DEMAND CHARGES
Daily Excess Demand Charge
$0.50 per each kW of Excess Demand per day
Monthly Excess Demand Charge
$5.00 per kW for the highest Excess Demand recorded during the biling period
EXCESS ENERGY CHARGE
7.708 cents per kWh of Excess Energy
IDAHO
Issued Per Order No.
Effective - June 1, 2009
Issued by IDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, Idaho
BEFORE THE
Idaho Public Uti¡t¡GS Comni¡s~¡O(1
Office of the SecretaryRECEIVED
OCT 242008
Boise, Idaho
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-08-21
IDAHO POWER COMPANY
ATTACHMENT NO.2
Idaho Public Commission
Office of the SecretaryRECEIVED
OCT 242008
AMENDED & RESTATED AGREEMENT
FOR CONSTRUCTION OF HOKU ELECTRIC SUBSTATION
AND ASSOCIATED FACILITIES
Boise, Idaho
THIS AMENDED & RESTATED AGREEMENT for the construction of Hoku
electric substation and associated facilities (the "Agreement" is entered into as of the
17th day of September , 2008 by and between HOKU
MATERIALS, INC., One Hoku Way, Pocatello, Idaho 83204 ("Hoku") and IDAHO
POWER COMPANY, P.O. Box 70, Boise, Idaho 83707 ("Idaho Powet' or "IPCO").
Hoku and IPCO may also be referred to hereinafter individually as "Part" or collectively
as the "Parties".
RECITALS
A. Hoku is developing a manufacturing plant to produce polysilicon, a key
material used in the production of solar cells and integrated circuits. The construction of
an electric substation and associated transmission facilities is required to allow IPCO to
supply electric capacity and energy to Hoku's manufacturing complex located at One
Hoku Way in Pocatello, Idaho ("Hoku Facility"). Hoku has requested that the substation
and associated facilities be sized to allow IPCO to provide electric service to the Hoku
Facility in an amount up to 82 Megawatts ("MW') of demand.
B. Hoku and IPCO are parties to that certain Agreement for Construction of
Hoku Electric Substation and Associated Facilities dated December 28, 2007 (the "Prior
Agreement'. This Agreement shall amend and restate in its entirety, the Prior
Agreement.
C. Because the Hoku Facility wil be located in an area where Idaho Power
does not have existing facilties of adequate capacity, delivery of power to the Hoku
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SaltLke-350258.1 0038360-00001
Facilty site will require the construction of (1) approximately six (6) miles of 138,000 volt
overhead transmission line to interconnect with Idaho Power's existing transmission
system, (2) a new 138,000-13,800 volt electric substation at the Hoku Facilty to supply
up to 82 MWs with two 67 MVA transformers, and (3) additional equipment and facilties
at IPCO's existing substations. These facilties are sometimes hereinafter collectively
referred to as the "Requested Facilities" and are described in greater detail in Exhibit 1
to this Agreement. This Agreement is not subject to or governed by Rule H, Idaho
Power's tariff governing line installations, including any revisions to that rule, or any
successor rules or schedules.
D. Idaho Power wil construct the Requested Facilities in accordance with the
terms and provisions of this Agreement.
E. Pursuant to the Prior Agreement, HOKU has paid Idaho Power the sum of
$7,402,000, the receipt of which is hereby acknowledged by Idaho Power. An
outstanding balance of $3,701,000 is presently owed under the prior Agreement and is
hereby acknowledged by Hoku. This outstanding amount is included in the payments
listed in Section 2.1. below.
NOW, THEREFORE, in consideration of the mutual obligations and undertkings
set forth herein, and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, Hoku and Idaho Power agree as follows:
AGREEMENTS
1 . Construction of Requested Facilities Without duplicating any of the work
performed pursuant to the Prior Agreement, and in furtherance thereof:
1.1 Idaho Power wil construct the Requested Facilities to provide for
the delivery of power (capacity) at a point generally described as the load side terminals
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SaltLke-350258.1 0038360-00001
of the substation transformer 13.8 kilovolt ("kV") disconnect switches at the Hoku
Facility (the "Delivery Point").
1.2 Idaho Power wil use commercially reasonable efforts to provide up
to 20 MW of transmission service from the Alameda Substation by May 18, 2009.
Requested facilties, including the second transmission line from the Don Substation,
wil be constructed and ready to serve up to 43 MW of demand by July 19, 2009. Idaho
Power will use commercially reasonable efforts to complete final construction of the
Requested Facilities by August 19, 2009. However, Hoku recognizes that Idaho
Power's ability to complete the Requested Facilties on or before that date is subject to
the receipt of the payments and performance under the contract from Hoku as
described herein, Idaho Power's abilty to obtain required labor, materials and
equipment, timely receipt of satisfactory easements and rights of way, and timely receipt
of governmental regulatory authorizations.
1.3 If Idaho Power fails to meet the completion deadline described
above, and such failure is not excused as provided in Section 1.2, the Parties agree that
Hoku may submit the matter to the Idaho Public Utilities Commission ("Commission") for
appropriate relief, and pending final resolution, Hoku's obligation to make further
payments pursuant to the terms of this Agreement shall be suspended.
2. Project Cost
2.1 Excluding amounts previously paid for design and engineering
expenses, and including the amounts paid pursuant to the Prior Agreement, the total
cost for the construction of the Requested Facilities is estimated to be $16,542,000.
Hoku's payments to IPCO constitute a Contribution In Aid of Construction ("CIAC") and
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SaltLake-350258.1 0038360-00001
include a tax gross-up of thirty-one percent (31%) to cover IPCO's resulting income tax
liability. Hoku shall pay IPCO in the amounts and at the times specified below:
September 30,2008
October 15, 2008
November 15, 2008
December 15, 2008
$3,000,000
$2,000,000
$2,000,000
$2,140,000
At the completion of the project, Idaho Power wil provide a true-up of the actual
work order costs to the $16,542,000 estimate. Idaho Power wil provide Hoku a report
that will reflect actual dollars charged to the project by labor, materials, purchased
services, overheads, and other expenses. Idaho Power wil refund to Hoku any over
collected amounts; any amounts under collected will be invoiced to Hoku with the refund
or payment to be made to Idaho Power within 30 days from the true-up date. In the
event of significant scheduling changes, the payment milestones will be delayed or
accelerated accordingly. The total estimated cost of the Requested Facilities does not
include costs associated with use of any temporary substations, transmission or
distribution facilities that may be necessary to provide Hoku with temporary
demonstration power prior to the expected August 19, 2009, completion date. The cost
of such temporary facilities wil be invoiced to and paid by Hoku separately from this
Agreement and has no impact on the performance of either party under this Agreement.
2.2 If Hoku fails to pay an amount due on or before the payment
milestone date specified in Section 2.1, any obligation of Idaho Power to further perform
under this Agreement wil be suspended pending receipt of such payment. If, after
Idaho Power's delivery to Hoku of notice that such payment has not been received,
Hoku fails to make such payment within ten (10) days of Idaho Power sending such
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SaltLake-350258,1 0038360-00001
notice, Idaho Power may, in its sole discretion, terminate this Agreement. Hoku
acknowledges that any delay in payment is likely to result in a schedule delay pursuant
to Section 1.2 of this Agreement. If this Agreement is terminated by Idaho Power
pursuant to this Section 2.2, Idaho Power shall refund to Hoku any portion of Hoku's
previous payments that Idaho Power has not encumbered, including any amounts that
may be refunded to Idaho Power upon cancellation by Idaho Power of its third party
contracts, for work orders for design, labor, materials and supplies, permitting costs and
other expenditures for the Requested Facilities, and IPCO shall use reasonable efforts
to avoid or mitigate such costs.
2.3 Hoku's payments under this Agreement shall not provide or give
Hoku any ownership rights or interest in the Requested Facilities. Ownership of the
Requested Facilties and new Hoku Substation shall remain with IPCO.
3. Capacity Entitlement
3.1 Once construction of the Requested Facilties is complete, Idaho
Power will have installed facilities and equipment suffcient to provide Hoku with 82 MW
of electrical capacity measured at the Delivery Point to serve loads at the Hoku Facilty.
For five (5) years following the completion of construction, Idaho Power agrees not to
serve additional customers from the two (2) substation transformers installed or utilize
the two (2) vacant transformer spaces pursuant to this Agreement without the prior
written consent of Hoku. However, if at the conclusion of the five (5)-year period
following the completion of construction, total loads at the Hoku Facility are less than 82
MW, Hoku's entitlement to capacity at the Delivery Point wil be limited to the amount of
contract demand established in the Electric Service Agreement referenced in Section 6
that is currently being negotiated between the Parties. Relinquishment of any portion of
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SaltLake-350258.1 0038360-00001
Hoku's capacity entitlement, as discussed above, does not entitle Hoku to any refund of
the CIAC or any other payments specified in Section 2.1. Idaho Power wil send a letter
to Hoku specifying the date when construction of the Requested Facilities has been
completed and notifying Hoku that the five (5)-year time period described above has
commenced.
4. Ownership Operation and Maintenance
4.1 Idaho Power wil own, operate and maintain the Requested
Facilities constructed pursuant to this Agreement. Hoku recognizes that the Requested
Facilities will become part of Idaho Power's integrated electrical transmission and
distribution system and wil be used by Idaho Power to provide electric service to other
existing, and future, customers.
5. Rights of Way and/or Easements
5.1 Hoku and IPCO agree to work in good faith to acquire the rights to
access and use the real propert determined by IPCO to be reasonably required for
locating, constructing, operating and maintaining the Requested Facilties. Idaho Power
recognizes that Hoku does not own the land on which the Hoku facility wil be located
(the "Land"), but holds a long-term ground lease under which the City of Pocatello is the
lessor. In the event IPCO purchases or otherwise acquires additional real property
rights it deems necessary consistent with prudent utility practices to access and use the
Requested Facilties, Hoku shall fully reimburse ipca for amounts spent by IPCO to
purchase or otherwise acquire such necessary real property interest. All such
easements and rights of way will be in a form reasonably acceptable to Idaho Power.
Idaho Power wil be responsible for obtaining any and all other permits, rights-of-way,
and/or regulatory approvals required by public agencies for performance of this
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SaltLake-350258.1 0038360-00001
Agreement and for payment of any and all permit fees and/or taxes required for or
associated with such permits, rights-of-way, and regulatory approvals.
5.2 IPCO will make a good faith effort to coordinate construction,
operation and maintenance schedules with Hoku so that such activities wil not
unreasonably interfere with Hoku's access, ingress and egress to the Hoku
manufacturing complex.
6. Refunds.
6.1 The Parties are concurrently negotiating an ELECTRIC SERVICE
AGREEMENT ("ESA") to govern the rates and terms of IPCO's provision of electric
service to Hoku. The ESA shall be subject to the approval of the Commission and the
respective rights and obligations of the Parties hereunder shall be subject to the
continuing jurisdiction and regulatory authority of said Commission. In the event an
ESA cannot be reached that is satisfactory to the Parties and receives regulatory
approval from the Commission, or if Hoku notifies IPCO that it no longer wishes to
proceed with the construction of the Requested Facilities for any other reason, IPCO will
refund only the amounts received that exceed the cost of constructing the Requested
Facilities then completed or committed to date as described in Section 2.2, and IPCO
shall use reasonable efforts to avoid or mitigate such costs.
7. Additional Provisions
7.1 Liability. Each Party wil indemnify and hold harmless the other
Party from and against loss, damage or liability, exclusive of costs and attorney's fees,
resulting from claims asserted by third persons against either or both Parties to this
Agreement on account of injury or death to persons or damage or destruction of
property occurring on such (indemnifying) Part's side of the aforesaid Delivery Point,
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SaltLake-350258. i 0038360-000 I
unless such injury or damage shall have resulted from the sole negligence of the other
Party; provided, however, that each Party shall be solely responsible for claims of and
payment to its employees for injuries occurring in connection with their employment or
arising out of any worker's compensation laws.
7.2 Limitation on Liabilty. NEITHER PARTY SHALL, IN ANY EVENT,
BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT LIMITED TO,
LOST PROFITS, REVENUE OR GOOD WILL, OR INTEREST, WHETHER SUCH
LOSS IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY
OR OTHERWISE.
7.3 Waivers. Any waiver at any time by either Party of any right with
respect to any matter arising under this Agreement, or any failure to give notice
provided hereunder, shall not be deemed to be a waiver with respect to any subsequent
matter, nor as the establishment of or consent to any practice under this Agreement or
an interpretation of any term or provision hereof.
7.4 Regulatory Authority. This Agreement is subject to valid laws and
to the regulatory authority and orders, rules and regulations of the Commission and
such other administrative bodies having jurisdiction, as well as Idaho Power Company's
Rules and Regulations as now or may be hereafter modified and approved by the
Commission.
7.5 Choice of Law and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of Idaho, and venue for any
court proceeding arising out of this Agreement shall be in Boise, Idaho.
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SaltLake-350258.1 0038360-00001
7.6 Dispute Resolution. Prior to commencement of any suit, claim or
other cause of action in any court proceeding, Hoku and IPCO agree to undertake good
faith efforts to resolve such differences through negotiations between senior business
representatives of each company. In the event of a dispute arising under this
Agreement that cannot be resolved through negotiation, the prevailng party shall be
entitled to reimbursement from the non-prevailing party for all reasonable costs and
expenses, including reasonable attorney's fees incurred by the prevailing party in the
formal resolution of the dispute.
7.7 Modifications and Counterparts. This Agreement sets forth the
entire understanding and agreement of Hoku and IPCO with regard to the construction
of the Requested Facilities. This Agreement may only be amended or modified by a
writing signed by the duly authorized representatives of both parties. This Agreement
may be executed in counterparts, each of which, taken together, shall constitute one
and the same Agreement.
7.8 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and shall
be given to the intended recipient at the address specified below:
If to IPCO, to:Dan Minor
Senior Vice President, Delivery
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
With a copy to:Thomas Saldin
General Counsel
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
and
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SaltLake-350258.1 0038360-00001
If to Hoku, to:Karl Taft
CTO
Hoku Materials, Inc.
One Hoku Way
Pocatello, Idaho 83204
With a copy to:Dustin Shindo
CEO
Hoku Scientific, Inc.
1075 Opakapaka Street
Kapolei, Hawaii 96707-1887
8. Commission ApprovaL. This Agreement and the respective rights and
obligations of the Parties hereunder shall be subject to the continuing jurisdiction and
regulatory authority of the Commission.
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective
as of the day and year first above written.
HOKU MATERIALS, INC.
By:#&i
Title: CEO
IDAHO POWER COMPANY
By:
Title:
Page 10
SaltLake-350258.1 0038360-00001
If to Hoku, to:Karl Taft
CTO
Hoku Materials, Inc.
One Hoku Way
Pocatello, Idaho 83204
With a copy to:Dustin Shindo
CEO
Hoku Scientific, Inc.
1075 Opakapaka Street
Kapolei, Hawaii 96707-1887
8. Commission Approval. This Agreement and the respective rights and
obligations of the Parties hereunder shall be subject to the continuing jurisdiction and
regulatory authority of the Commission.
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective
as of the day and year first above written.
HOKU MATERIALS, INC.
By:
Title:
IDAHO POWER COMPANY
By: (b~\ ß ~
Title:~~\)"L\J ~ \)~ Q(i\ ~ ,ûJ ~\.~
Page 10
SaltLake-350258.l 0038360-00001
EXHIBIT 1
HOKU REQUESTED FACILITIES
New 138-13.8 kV Substation to be located at Hoku Facilty
· 2 - 138kV Line Terminals with relay protection
· 2 - 36/67MVA, 138-13.8kV, LTC substation power transformers
· 4 - 138kV circuit breakers and diagonal ring bus configuration rated for service
up to 150 MWs and space for two additional transformers
· 2 - 13.8kV 3000 amp metered bus points of delivery
· Control enclosure for equipment protective relays and station battery
· Approx 1 + acre yard size (site and access provided by Hoku)
Don Substation
· Install 1 new 138kV Transmission Line Terminal with circuit breaker and
protective relays with 1272 bus conductor for the transmission line to the new
substation located at the Hoku Facility.
Alameda Substation
· Install 1 new 138kV Transmission Line Terminal with protective relays with 795
bus conductor for the transmission line to the new substation located at the Hoku
Facilty.
· Add 1 - 138kV circuit breaker and line relay protection to existing Alameda Tap
Transmission Line.
Transmission Lines
· Construct approx 3-mile 138kV single pole transmission line with 1272 aluminum
conductor from Don Substation to new substation located at the Hoku Facility.
· Construct approx 3-mile 138kV single pole transmission line with 795 aluminum
conductor from Alameda Substation to new substation located at the Hoku
Facility.
Kinport Substation
· Install protective relay for redundant Kinport-Alameda-Hoku 138kV transmission
source.
Terry Substation
· Install protective relay for redundant Terry-Alameda-Hoku 138kV transmission
source.
Pocatello Service Building
· Install protective relay communications equipment for redundant
Kinport-iAlameda- Terry 138kV transmission source.
EXHIBIT 1
SaltLake-350258.1 0038360-00001