20090116Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:KEITH HESSING
DATE:JANUARY 14 2009
RE:CASE NO. IPC-09-01, TEMPORARY AMENDMENT TO THE MICRON
ESA
On January 12 2009, Idaho Power Company filed an Application with the Commission requesting
approval of a temporary amendment to its Electric Service Agreement with Micron Technologies, Inc. The
proposed amendment includes Schedule 26A that is a new schedule. It is proposed that Schedule 26A be
effective January 2009 through June 30, 2009. Schedule 26A removes the Monthly Contract Demand
Charge but increases the Monthly Billing Demand Charge and the Base Monthly Energy Charge such that
the proposed rate changes calculate to be revenue neutral. Idaho Power Company requests that the
Application be processed under Modified Procedure.
Micron is in the process of restructuring and has requested the change to facilitate that process. The
rate changes have been agreed to by both Idaho Power and Micron. Unless other rates are approved by the
Commission, Schedule 26A will expire June 30, 2009, and Schedule 26 rates will again be effective on July
, 2009. Idaho Power s Application is attached.
STAFF RECOMMENDATION
I have reviewed Idaho Power s Application and believe that it should be approved without further
process. Only Micron and Idaho Power are directly affected by the proposal and they agree on the
proposed modifications.
i:udmemos/decision memorandum - IPC Micron Schedule 26A
DECISION MEMORANDUM JANUARY 14 2009
BARTON L. KLINE, ISB #1526
LISA D. NORDSTROM, ISB #5733
Idaho Power Company
O. Box 70
Boise , Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
bkl ine(Ci). iqa hopower. com
nordstrorn(Ci). idahopower. com
n=r1-
2009 JAH 12 PM 4: 56
IDAHO HJJ:.
!:,
UTILITIES CCi"l~i~!SS!C;:'
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 THE APPLICATION
OF IDAHO POWER COMPANY FORA
TEMPORARY AMENDMENT TO THE
ENERGY SALES AGREEMENT WITH
MICRON TECHNOLOGY, INC.
) CASE NO. IPC-09-
APPLICATION
Idaho Power Company ("Idaho Power" or "the Company ), in accordance with
Idaho Code 9 61-524 and RP 52, hereby respectfully makes application to the Idaho
Public Utilities Commission ("IPUC" or "the Commission ) for an Order approving a
temporary amendment to the Electric Service Agreement ("ESA") between Micron
Technology, Inc. ("Micron ) and Idaho Power and a revised Schedule 26 containing
modified rates and charges for service to Micron. The Application is based on the
following:
APPLICATION - 1
BACKGROUND
Idaho Power and Micron are signatories to a Commission-approved ESA
dated September 1 , 1995 , under which Micron purchases electric energy and demand
from Idaho Power for its Boise facility. Because Micron s demand exceeds 25 000 kW
the ESAis a special contract under the Company s rate Schedule19.
Micron is in the process of restructuring its operations at its Boise facility.
Micron estimates that this restructuring will' take approximately six months. The ESA
contains a monthly Contract Demand Charge, which may ' reduce Micron s flexibility in
managing its electric consumption during the restructuring period.Idaho Power is
amenable to adjusting the ESA Contract Demand Charge to accommodate Micron
restructuring so long as the revenue requirement received from Micron is unaffected
based upon -current authorized base rates effective June 1 , 2008 , under the billing
determinants presented in IPC-08-10.
To accomplish the above-described mutual goals, Idaho Power and
Micron have entered into a letter agreement which makes several changes to the rates
terms, and charges in the ESA. The letter agreement is enclosed with this Application
as Attachment No.In the letter agreement, the parties agree that the monthly
Contract Demand Charge will be , set at $0.00 per kW of Contract Demand rather than
the existing $1.83 per kW of scheduled Contract Demand. The monthly Billing Demand
Charge and the monthly Energy Charge will be increased so that Idaho Power can
obtain the same revenue from Micron as it would have received with the monthly
Contract Demand Charge.
APPLICATION - 2
With the changes to the Special Contract and Schedule 26 set out in the
letter agreement , Micron receives the contract flexibility it needs and Idaho Power
obtains the same revenues from Micron that it would have otherwise received
consistent with paragraph 2 of this Application.
Also enclosed as Attachment No.is a revised Schedule 26 which
reflects the rates and charges described in the ESA. The enclosed Schedule 26 has
been denominated as Schedule 26A to differentiate it from the Schedule 26 the
Company is currently seeking in the pending general rate case. Attachment No.
includes a Schedule 26A in legislative format showing the proposed rate changes.
Also enclosed as Attachment No.is a spreadsheet showing the
derivation of the rate changes proposed in this filing.
Micron is immediately commencing the restructuring of its operations and
therefore Idaho Power respectfully requests that the Commission expedite its review of
this Application. Idaho Power believes that a hearing is not necessary to consider the
issues presented herein and respectfully requests that this Application be processed
under modified procedure; i.e., by written submissions rather than by hearing. RP 201
et seq. , however, the Commission determines that a technical hearing is required, the
Company stands ready to present its testimony and support the Application in such
hearing.
It would be extremely helpful to Micron if the Commission could see fit to
make the rate change set out in Schedule 26A effective January 1 , 2009. Idaho Power
is authorized to advise the Commission that Micron and the Staff of the Commission
APPLICATION - 3
have reviewed this Application and concur with the proposed changes, including the
Company s request that the rate change be made effective January 1 , 2009.
II. COMMUNICATIONS AND SERVICE OF PLEADINGS
Communication and service of pleadings with reference to this Application
should be sent to the following:
Barton L. Kline
Lisa D. Nordstrom
Idaho Power Company
O. Box 70
Boise , Idaho 83707
bkline(Ci).idahopower.com
In ordstrom (ci). idahopower. com
John R. Gale
Vice President, Regulatory Affairs
Idaho Power Company.
O. Box 70
Boise, Idaho 83707
rqale(Ci).idahopower.com
Rick Malmgren
Micron Technology, Inc.
8000 Federal Way
O. Box 6
Boise , Idaho 83707-0006
remalmqren(Ci).micron.com
III. REQUEST FOR RELIEF
10.Idaho Power respectfully requests that the Commission issue its Order: (1)
approving Attachment No., the letter agreement to temporarily amend Micron s ESA
and (2) approving the rates and charges set out in the enclosed Schedule 26A to be in
effect during the term of Attachment No.
DATED at Boise , Idaho, this J 2:of January 2009.
Barton L. Kline
Attorney for Idaho Power Company
APPLICATION - 4
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O9-
IDAHO POWER COMPANY
lETTER AGREEMENT
ATTACHMENT NO.
" ,"" """", . ., - '.', " .' """'" "" ., ,'" . ,, . , ..,
IDAHO
POWER ~
., .""'". .' .' -'., ... '" '" " ..' """ ..". - "... "'" ". ... .. ".. .........." '., ,
An JDACORP Company
. ":..:,. ..- .::. "'::'::.'~::"::'::' :.: ,,, :.. '' ,.. ..: ..:.., ":""::". "":'::";~":::"":"::...." ,' ..
JOHN R. GALE
VIce President
Regulatory MfaIIS
". ... :..': ,: .:.., . ...., ".' .'-' ", " '", ,::".:.: ,. .... .-.. . ":...- "" .: . ""'" '' " '. .
January 9, 2009
Dale Eldridge
Director of Facilities
Micron Technology, Inc.
8000 Federal Way
O. Box 6
Boise, Idaho 83707-0006
Re:Agreement to Temporarily Sus.,end the Application of the Contract Demand ChargeUnder the September 1, 1995, Electric Service Agreement between
Micron Technology, Inc., and Idaho Power Company
Dear Mr. Eldridge:
Representatives of our two companies have been discussing Micron Technology, Inc.'sMicron) request for a temporary suspension of the Contract Demand Charge under the above-referenced Bectric Service Agreement '"ESA"). Micron is in the process of restructuring its operations atits Boise facility and the temporary suspension would provide Micron with needed flexibility to undertake
it's restructuring. Idaho Power Is willing to accommodate Micron s request In a manner that is revenueneutral for Idaho Power.
Based on these understandings, Idaho Power and Micron have reached the followingagreements:
The term of this agreement will run from January 1 , 2009, through June 30,2009.2. The revised charges that will implement this agreement are set out in the
proposed ScI'1edule26A, which is attached as Exhibit No.1. These charges aresummarized as. follows:a. Monthly Contract Demand Charge of $0.00 per kW of Contract Demand whic!llsset at 85 000 kW.
Monthly Billing Demand Charge of $8.16 per kW of Billing Demand.c. Daily Excess Demand Charge of $0.226 per kW of demand /hat exceeds the
Contract Demand of 85.000 kw.
Base Monthly Energy Charge of $.016628 per kWh.
3. , During the six month term of this agreement, unless the parties agree otherwise
, the Commission specifically orders a different rate design, anyp8se rate revenuerequirement changes authorized by the Commission that are applicable to Micron will be
recovered from Micron by adjusting Micron s Billing Demand Charge and Energy Charge.
REVIEWEO
MTI Legal7!~
4. Charges set out in Schedule 55 (Power Cost Adjustment), Schedule 91 (Energy
EfficiencyRider), and Schedule 95 (Adjustment for Municipal Franchise Fees) will not bechanged by this agreement and will continue to apply in accordance with applicableCommission Orders.5. Prior to the end of the term of this agreement, Micron shall, subject to IdahoPower's reasonaQle approvaJ, designate the Contract Demand which shall be effectiveunder the ESA on July 1. 2009. The terms of the ESA shall otherwise remain unchangedexcept with respect to revisions-to the ESA mutually agreed upon between the parties.6. Unless specifically modified by this agreement, all other tenns and, conditions ofthe ESA remain in effect, including the application of the Daily Excess Demand Charge
for demand in excess of 85,000 kW.
7. This agreement Is subject to the review and approval of the Commission. IdahoPower will file this agreement and the proposed Schedule 26A, which is attached hereto
as Exhibit No.1, with the Commission. Idaho Power will request expedfted review andrequest that the Commission make the rate changes set out in Schedule 26A effective as
of January 1 , 2009.
If you concur that the foregoing accurately sets forth the agreement of the parties, please indicate
your concurrence by signing all three copies of this letter and returning two fully executed copies to me.Idaho Power will file the original with the Commission.
JRG:mka
REVIEWED AND ACCEPTED BY:
January 2009 '
EXHIBIT NO.
Idaho Power Company First Re'lised Sheet No 26 1
CElHeels
IP.C. No. 29, Tariff No. 101 Original Sheet No. 26A-
SCHEDULE 2
IDAHO POWER COMPANY
ELECTRIC SERVICE RATE
FOR
MICRON TECHNOLOGY, INC
BOISE. IDAHO
SPECIAL CONTRACT DATED SEPTEMBER 1,1995
MONrHL Y CHARGE
The Monthly Charge is the swn of the following charges, and may also include charges
as set forth in Schedule 55 (power Cost Adjustment), Schedule 91 (Energy Efficiency Rider),
and Scbedule95 (Adjustment for Municipal Franchise Fees).
Monthly Contract Demand Charge
per kW of Scheduled Contract Demand
Scheduled Monthly Contract Demand
The Scheduled Monthly Contract Demand is 0 - 140,000 kW as per the contract with one
year written notification.
Monthly Billing Demand Chare:e
$1;4G8.per kW of Billing Demand but not less than Scheduled Minimum Monthly
Billing Demand.
Minimum Monthly Billing Demand
The Minimum Monthly Billing Demand will be 25,000 kilowatts.
Daily Excess Demand Charge
$0.226 per each kW over the ~ontract Demand.
The Daily Excess Demand Charge is applicable beginning January 1997 or once the
Contract Demand reaches 100 000 kW, which ever comes flTSt
Monthly Energy Charge~1.6628t per kWh
Monthly 0 & M Charges
Zero percent oftota! cost of Substation Facilities.
IDAHO Issued by IDAHO POWER COMPANY
Issued per Qr.def' Nos. 30556, 30559 ami 3Q563John R. Gale, Vice President, Regulatory Affairs
Effective J1:H1e 1, 2Qgg 1221 West Idaho Street, Boise, ill
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O9-
IDAHO POWER COMPANY
SCHEDULE 26A
ATTACHMENT NO.
. Idaho Power Company
I.P.C. No. 29 Tariff No.1 01 Oriainal Sheet No. 26A-
SCHEDULE 26A
IDAHO POWER COMPANY
ELECTRIC SERVICE RATE
FOR
MICRON TECHNOLOGY. INC
BOISE. IDAHO
SPECIAL CONTRACT DATED SEPTEMBER 1,1995
MONTHLY CHARGE
The Monthly Charge is the sum of the following charges, and may also include charges as set
forth in Schedule 55 (Power CostAdjustment), Schedule 91 (Energy Efficiency Rider), and Schedule 95
(Adjustment for Municipal Franchise Fees).
Monthlv Contract Demand Charae
$0.00 per kW of Scheduled Contract Demand
Scheduled Monthlv Contract Demand
The Scheduled Monthly Contract Demand is 0 - 140 000 kW as per the contract with one year
written notification.
Monthlv Billina Demand Charae
$8.16 per kW of Billing Der(land but not less than Scheduled Minimum Monthly Billing Demand.
Minimum Monthlv Billina Demand
The Minimum Monthly Billing Demand will be 25 000 kilowatts.
Dailv Excess Demand Charae
$0.226 per each kW over the Contract Demand.
The Daily Excess Demand Charge is applicable beginning January 1997 or once the Contract
Demand reaches 100 000 kW, whichever comes first.
Monthlv Enerav Charae
6628~ per kWh
Monthlv 0 & M Charaes
Zero percent of total cost of Substation Facilities.
IDAHO
Issued
Effective -
Issued by IDAHO POWER COMPANY
John R. Gale , Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, 10
Idaho Power Company First Revised Sheet No. 26
Cancel~
Oriqinal Sheet No. 26A-LP.C. No. 29 Tariff No.1 01
SCHEDULE 26~
IDAHO POWER COMPANY
ELECTRIC SERVICE RATE
FOR
MICRON TECHNOLOGY. INC
BOISE. IDAHO
SPECIAL CONTRACT DATED SEPTEMBER 1. 1995
MONTHLY CHARGE
The Monthly Charge is the sum of the following charges, and may also include charges as set
forth in Schedule 55 (Power Cost Adjustment), Schedule 91 (Energy Efficiency Rider), and Schedule 95
(Adjustment for Municipal Franchise Fees).
Monthlv Contract Demand Charqe~O.per kW of Scheduled Contract Demand
Scheduled Monthlv Contract Demand
The Scheduled Monthly Contract Demand is 0 - 140 000 kW as per the contract with one year
written notification.
Monthlv Billinq Demand Charqe
$+-AQ8.per kW of Billing Demand but not less than Scheduled Minimum Monthly Billing
Demand.
Minimum Monthlv Billinq Demand
The Minimum Monthly Billing Demand will be 25 000 kilowatts.
Dailv Excess Demand Charqe
$0.226 per each kW over the ContractOemand.
The Daily Excess Demand Charge is applicable beginning January 1997 or once the Contract
Demand reaches 100 000 kW, whichever comes first.
Monthlv Enerqv Charqe
506B1.6628~ per kWh
Monthlv 0 & M CharQes
Zero percent of total cost of Substation Facilities.
IDAHO
Issued per Order Nos. 30556 , 30559 ~1nd 30563
Effective June 1 , 2008
Issued by lDAHO POWER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West Idaho Street, Boise, 10
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O9-
IDAHO POWER COMPANY
SPREADSHEET - DERIVATION OF RATE
CHANGES
ATTACHMENT NO.
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