20090709Supplemental Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 6864
RECEIVED
2009 JUl -9 PH 2: 31
DU'1! \('IDf,HO · .. ¡t¡l:¡.'r.(C;"1~;
UTILITIES CO¡i~f.1l0..1\~"
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 A SPECIAL CONTRACT TO SUPPLY)
ELECTRICAL POWER TO HOKU )MATERIALS, INC. )
)
CASE NO. IPC-E-08-21
SUPPLEMENTAL COMMENTS
OF THE COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and though its Attorney of
Record, Neil Price, Deputy Attorney General, in response to Idaho Power Company's Motion to
Delay Sta Date of the Hoku Energy Sales Agreement ("ESA" or "Agreement" or "Special
Contract") and for approval of an Amended and Restated ESA, submits the following comments.
BACKGROUND
On October 24, 2008, Idaho Power Company ("Idaho Power" or "Company") fied an
Application with the Commission seeking approval of an ESA to supply electrical power to
Hoku Materials, Inc. ("Hoku"). On March 16,2009, the Commission issued Order No. 30748
approving the Agreement. As stated in the Agreement the ESA sta date is June 1, 2009 and the
ESA is to be effective through May 31, 2013. Under the terms of the approved ESA, contract
demand is to vary between 42 MW and 82 MW. The lower contract demand periods are during
Idaho Power's peak demand sumer months. Reduced contract demand during summer periods
through 2011 allows Idaho Power to build or otherwse obtain transmission and/or generation to
SUPPLEMENTAL STAFF COMMENTS 1 JULY 9, 2009
supply Hoku' s 2012 contract demand of 82 MW year around. For pricing puroses the ESA is
divided into two blocks. The first pricing block, called Block 2, includes all Hoku usage up to
25 MW. This block is priced at Schedule 19T embedded cost rates. The second pricing block,
called Block 1, includes all monthly usage above 25 MW and is priced at avoided cost rates.
On May 28, 2009, Idaho Power Company filed a "Motion to Delay Star Date" of the
ESA. The filing included a letter agreement signed by Idaho Power and Hoku representatives.
The fiing promised a revised Agreement to follow. On June 22, 2009, an "Amended and
Restated" ESA was filed with the Commission. The revised ESA provides for varing amounts
of contract demand over the contract term but does not exceed the 82 MW approved in the prior
ESA. See Section 6.1.1 of the revised ESA which is attached. The revised ESA also delays the
sta date until December 1, 2009, and provides for the application of Schedule 91, Energy
Efficiency Rider, to Hoku's First Block charges beginning December 1,2011.
STAFF ANALYSIS
Given the state of the national economy, the Staff understands why a delay in the contract
sta date may benefit Hoku. Idaho Power Company agreed to the delayed sta date and other
contract modifications. Apparently those two paries expect benefits from the delayed start date
and the new ESA. Staffs concern centers on the impact to Idaho Power's other customers.
Changes in the ESA may substatially affect the Company's power supply costs and the
Company's Power Cost Adjustment (PCA) mechanism and, thus, other customers. The Staffhas
reviewed the filing, met with Company representatives and reviewed impacts to the Company's
Operating Plan due to the delayed start date. The Operating Plan showed that in a couple of
instances advanced purchases were made due to the inclusion of the Hoku load in the plan. The
Company first included the June 2009 Hoku load in its operating plan in September of 2008.
Unwinding those purchases, when necessary, created different revenue streams that led to profits
and losses. The Company demonstrated that the profits and losses approximately netted to zero.
The Staff s review found no disadvantage to other customers caused by the delayed star date or
other contract changes.
RECOMMENDATIONS
The Staffs review of changes included in the new Hoku ESA found no har to any
affected pary. The application of the Energy Efficiency Rider to Hoku first Block sales
SUPPLEMENTAL STAFF COMMENTS 2 JULY 9, 2009
beginning December 1, 2011 benefits customers. Therefore, the Staff recommends that the
Company's Motion to Delay the ESA star date be approved and that the new ESA between
Hoku and the Company be approved.
Respectfully submitted this ~ day of July 2009.
"-~~~
Néil Price
Deputy Attorney General
Technical Staff: Keith Hessing
i:umisc:commentslipce08.21npkh supplemental comments
SUPPLEMENTAL STAFF COMMENTS 3 JULY 9, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9TH DAY OF JULY 2009, SERVED
THE FOREGOING SUPPLEMENTAL COMMENTS OF THE COMMISSION
STAFF, IN CASE NO. IPC-E-08-21, BY MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
BARTON L KLINE
LISA D NORDSTROM
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: bkline(iidahopower.com
lnordstrom(iidahopower.com
JOHN R GALE
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rgale(iidahopower.com
SCOTT PAUL
VP BUSINESS DEVELOPMENT &
GENERAL COUNSEL
HOKU SCIENTIFIC INC
1288 ALA MOANA BLVD STE 216
HONOLULU HI 96814-4233
E-MAIL: spaul(ihokusci.com
00~SECRETARY ~
CERTIFICATE OF SERVICE