20090529Motion to Delay Start Date.pdf

eslDA~PORQÐ
An IDACORP Company
BARTON L. KLINE
Lead Counsel
May 28,2009
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
Special Contract to Supply Power to Hoku Materials, Inc.
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Motion to Delay Start Date in the above matter.ve(ï~
Barton L. Kline
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Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. 10 83702
BARTON L. KLINE (ISB No. 1526)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-388-6936
bklinecæidahopower.com
Inordstromcæidahopower.com
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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 MA TIER OF IDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF A SPECIAL CONTRACT
TO SUPPLY POWER TO HOKU
MATERIALS, INC.
)
) CASE NO. I PC-E-08-21
)
) MOTION TO DELAY START DATE
)
)
Idaho Power Company ("Idaho Power" or "Company"), in accordance with RP
056, hereby moves the Commission for an Order authorizing a delay in the
commencement of the Energy Sales Agreement ("ESA") dated September 17, 2009,
between Idaho Power and Hoku Materials, Inc. ("Hoku"). This Motion is based on the
following:
i. Background
1. On October 24, 2008, Idaho Power filed an Application with the
Commission seeking approval of a special contract, as described in Idaho Power's
MOTION TO DELAY START DATE-1
Schedule 19, to supply electrical power to Hoku. The ESA is a four year contract that
begins on June 1, 2009, and concludes on May 31, 2013. On March 16, 2009, the
Commission issued Order No. 30748 in this case approving the Company's ESA with
Hoku "with an effective date of June 1, 2009." (Order No. 30748, p. 5.) As noted in
Order No. 30748, the ESA requires Hoku to "take-or-pay" for a certain amount of energy
from Idaho Power every month (Order No. 30748, p. 2.) The ESA also provides for a
monthly Contract Demand Charge based on Hoku's scheduled load requirements
during the term of the ESA.
II. Request for Delay of Start Date
2. Hoku has advised the Company that the global credit market crisis and
other factors that impact Hoku and its customers are forcing Hoku to revise its plant
startup schedule. This change in schedule will reduce the amount of demand and
energy it wil need the Company to provide during 2009. On April 28, 2009, Hoku
provided the Company with updated load information in accordance with the provisions
of the Section 5.7 of the ESA. Hoku has also requested several other cost-mitigation
adjustments to the ESA based on its substantially reduced 2009 demand and energy
requirements.
3. Idaho Power has reviewed Hoku's request for a delay in the ESA start
date and for mitigation of the minimum payment requirements of the ESA and is willng
to provide Hoku with some pricing and operational flexibility during 2009 in return for a
commitment by Hoku that preserves the four year term of the ESA and provides
offsetting benefits to Idaho Power and its customers.
MOTION TO DELAY START DATE - 2
II. Changes to ESA
4. Hoku has requested that the start date of the ESA be delayed until
December 1, 2009. During the period of June 1, 2009, through November 30, 2009,
Hoku has requested that it be allowed to receive service as a Schedule 19T customer.
This delay in the start date would mean that the minimum energy purchase and contract
demand provisions of the ESA would not apply to service provided to Hoku from June 1,
2009, through November 30,2009. To provide planning certainty to Idaho Power during
the critical summer period of 2009, Hoku has agreed to limit its demand to no more than
5 MWs through July 2009, 10 MWs during August 2009, and 25 MWs thereafter through
November 2009. Hoku wil also coordinate with Idaho Power to schedule the times and
dates when it wil impose any large loads associated with its production equipment
testing that occur in the period June through August 2009. The ending date of the ESA
wil be extended through November 30, 2013.
5. As further consideration for a delay in the ESA start date and pricing relief,
Hoku has agreed to reduce its contract demand levels during the summer of 2012 to 43
MWs during the period of June 16 through August 15 and 67 MWs from August 16
through September 15 (similar to the contract demand schedule for the summers of
2010 and 2011). Finally, Hoku has agreed to the addition of Schedule 91, Energy
Effciency Rider charges, to its First Block energy prices beginning December 1, 2011.
iv. Proposed Procedure for Approval
6. To memorialize the agreed upon delay in the start date and the above-
described pricing and operating charges to the ESA, Idaho Power and Hoku have
MOTION TO DELAY START DATE - 3
entered into a letter agreement dated May 27, 2009, a copy of which is enclosed as
Attachment NO.1 to this Motion.
7. Because Idaho Power and Hoku only reached agreement on the terms
and conditions described in the letter agreement on May 27, 2009, the parties have not
had time to draft a formal amendment to the ESA. As noted in the last paragraph of the
letter agreement, it is Idaho Power and Hoku's intent to draft a formal amendment to the
ESA that will incorporate the provisions of the letter agreement. The parties wil file the
amendment to the ESA with the Commission as soon as possible.
8. Based on the foregoing, Idaho Power respectfully requests that the
Commission issue an interim Order approving a delay in the start date of the ESA until
December 1, 2009. As soon as the revised ESA has been completed and executed by
Idaho Power and Hoku, the Company wil file the revised ESA for the Commission's
final review and approvaL.
DATED this 28th day of May 2009.
~~
BARTON L. KLINE
Attorney for Idaho Power Company
MOTION TO DELAY START DATE - 4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 28th day of May 2009 I served a true and correct
copy of the MOTION TO DELAY START DATE upon the following named parties by the
method indicated below, and addressed to the following:
Commission Staff
Neil Price
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Scott Paul
Chief Operating Offcer & General
Counsel
Hoku Materials, Inc.
One HokuWay
Pocatello, Idaho 83204
MOTION TO DELAY START DATE - 5
-l Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-l Email NeiI.Pricecæpuc.idaho.gov
Hand Delivered
-lU.S. Mail
_ Overnight Mail
FAX
-l Email spaulcæhokuscLcom
~Barton L. Kline
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-21
IDAHO POWER COMPANY
ATTACHMENT NO.1
H'IWPO.
An ID copany
JOHNR.GAL
Viee Predent
Regulatory Afrs
May 27,2009
Scott B. Pau
Chief Opetig Ofce & Geer Coun
Hoku Mateals, Inc.
OneHokuWay
Poco, Ida 83204
Re: Postnement of Sta Date for Electrc Serce Agrement
De Scott
Th you for your lett of Apn28, 200, wluch provides updated loa inomaton and
reque cern rate mitigation under the Elecc Servce Agreeent ("ESA") betee Hoku
Materials ("Hokuj an Ida Powe Compay ("Idaho Powe''). At a minium, Idao Powe
wil consider your Apri '28, 2009, lett and upte load inrmaton as noticaon undesection 5.7 of th ESA an wil mitiga ener chages according to Secon 5.7 and SectQn
2.12. Ths acton ca be taken uner the cunt ESA provisions and does not requi Idao
Public Utilities Commsion ("IPUCj apprva. Ida, Power's actace of the new loa
scule will prvide substially reuced engy chges dur 2009 to reec Hoku's
substatialy reucd energ consumption compar to th originaly contrte amounts.
Besides th corictal abilty to mitigate en charges unde th ESA, your letter also
reuets matrial chaes to the ESA Hoku requests Schedule 19T rate trtmen though 2009,a waver of Mium Energy rereents, an a wave (or rectug) of the Contrt
Deman. We have thought th reuest thugh frm mutiple perpectves - apprved contr
prvisions, cost impacts to Hoku) rate impact to customer and our sys energy baance
durg th contrt te. Contrt ches wil require IPUC approva and, in light of the
curt ESA schedule, should be brought to th Commsson's atttion prior to June 1.
Inorm communcations since April 28 have tred to advance a soluton that bace
Hoku's nee for flexibilty, the integrit of the origin contrct tenn, .and impacts to our
Compay and custmer. Since we have a recently IPUC-aproved ESA in plac Idao Power's
first prefernce is to work with the provisions of th ESA to the fules ext possible. Th
origial te wa intened to provide a four-yea bridge for a new lare load to migrte frm a
P.O. Box 70 (807)
1221 W.ldaho 5t.
Bois. ID 83
Scott B. Pau
May27,2009
Page 2
hybrid magi cost rate stctu to embeed cost prices. For a number of rens, Idaho
Powe wa reluctt to provide the degree of mitigation reueted by Hoku.
Subsequently, you stated tht 2009 operat flexbilty wa of utmost importce to
Hoku and counte that Hoku would be amenle to live by the origi ter of the ESA for
th fu four yea if the star da for the contct could begi on Decebe 1, 2009, intead of
June 1,2009. You have asked for ta seice thugh November 30, 2009. You incaed tht
you ar willing to comm to tag no more th 5 MW of power thug July 2009, 10 MWdurg August 2009, and 2S MW thugh November 2009. You also indicate a willngnes to
coordat with Idaho Power for th tig of any mate equipment tesg that would occur
frm June though Augut 2009.
Aft muc cosideon, Ida Powe is willg to accept Hoku's coun proposa
subjec to Hoku's accetace of the followig addtiona prvisons: (1) Hoku agrs to the
operatig commtments stted in the prous pah, (2) Hoku ag to reucg th
Contrt Dem levels durg the suer 0(2012 to 43 MW frm June 16 thgh Augut 15
and 67 MW frm Augu 16 th Septebe is (silar to Contr Dema Schedule for
the sumer 0(2010 and 2011), and (3) Hoku ag to the applicaon of Scheule 91, EnergyEffciency Rider, to its Fir Block ches begig Deber 1,2011.
If you ar in agrent, pleae indicate by signg below. Upon your sign, Idao
Powe will mae an imdi application to the Idaho Public Utilities Cossion reque a
delay in th st dat of the ESA and notig the Cossion of a revi ESA to be filed
subsequeny tht inrpora th prvisions of ths letter agrent.
Cordialy,
frtRYU
JRO:csb
REWE AN ACCEPTE BY:
HOKU MATES, INC.BY:~
TI. CEO
DATE: 5/27/2009