20100212final_order_no_31006.pdf

Office of the Secretary
Service Date
February 12 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMP ANY'S APPLICATION FOR
APPROV AL OF A REPLACEMENT
SPECIAL CONTRACT WITH MICRON
TECHNOLOGY, INC.
CASE NO. IPC-09-
ORDER NO. 31006
On December 31 , 2009, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) requesting approval of a
new special contract between Idaho Power and Micron Technology, Inc. (Micron) dated
December 29, 2009 (Replacement Agreement). The Replacement Agreement is intended to
replace the "current special contract" or Electric Service Agreement (ESA) between Idaho Power
and Micron which has been in effect since August 31 , 1995 (Current Agreement), as amended.
BACKGROUND
Idaho Power s current approved tariff Schedule 19 (Large Power Service) provides
that electric service to customers with loads greater than 25 MW will be provided pursuant to a
special contract. Idaho Power and Micron have operated under a special contract, the Current
Agreement, since August 31 , 1995. Since the Current Agreement between Micron and Idaho
Power was initially approved by the Commission in 1995 , there have been a number of
amendments and extensions of the Current Agreement.
Beginning January 1 , 2009, Idaho Power has been serving Micron under an Interim
Bridge Agreement and under Schedule 26A, while Micron was undergoing significant
restructuring of its operations. Order Nos. 30721 , 30871. Both the Bridge Agreement and
Schedule 26A expired on December 31 2009. On January 1 2010, service to Micron reverted
back to the Current Agreement and Schedule 26, which has been updated throughout the year to
reflect Commission-authorized rate changes.
The Current Agreement obligates Idaho Power to provide Micron up to 140 000 kW
of contract demand. Micron s current contract demand is 85 000 kW. Micron has requested that
its contract demand be reduced to 60 000 kW. Micron has also requested that it be given
additional flexibility to increase or decrease its contract demand to respond more quickly to
changes in market conditions. Idaho Power is willing to provide Micron with additional
ORDER NO. 31006
operational flexibility and to reduce its contract demand but it needs reciprocal commitments
from Micron to give it time to adjust its resource levels to respond to Micron s increasing or
decreasing amounts of contract demand and reduction in the total contract demand that will be
available to Micron.
In recognition of the fact that the Current Agreement has previously been amended
several times and the fact that the parties have negotiated and agreed on several new items and
conditions that they find to be mutually beneficial, Idaho Power and Micron have entered into
the Replacement Agreement. Application, Atch. 1.
Schedule 26 is the tariff that contains the rates and charges to be paid by Micron. A
new Schedule 26 reflecting the provisions of the Replacement Agreement is included with the
Application as Attachment 2.
Summary of Revisions to Current Agreement
The principal differences between the Replacement Agreement
Agreement are as follows:
a. The 85 000 kW Contract Demand in the Current Agreement is reduced to
000 kW in the Replacement Agreement. This change is an operating
benefit to Idaho Power and an economic benefit to Micron in that Micron
will not be paying for capacity it does not need. Replacement Agreement
~ 6.
and the Current
b. The total maximum 140 000 kW Contract Demand in the Current
Agreement is reduced to 120 000 kW in the Replacement Agreement.
This reduced maximum capacity obligation is a planning benefit to Idaho
Power, yet provides Micron some headroom generally equivalent to the
substation capacity at the current site. Replacement Agreement ~ 6.2.
c. In the Replacement Agreement, Micron is permitted to increase its
Contract Demand in 1 000 kW increments on three months' notice rather
than the one-year notice provided in the Current Agreement. In the
Replacement Agreement, any new Contract Demand will be in effect for a
minimum of six months rather than the one-year term in the Current
Agreement. In the Replacement Agreement, Micron cannot increase its
total Contract Demand more than 10 000 kW in any six-month period.
Replacement Agreement ~ 6.2.
d. In the Replacement Agreement, decreases to Contract Demand require
three months' prior written notice and the new decreased contract demand
will be in effect for a minimum of six months. Replacement Agreement
6.2.
ORDER NO. 31006
Changes to Schedule
The changes to rates incorporated in Schedule 26 are designed to recover the same
average cents-per-kilowatt-hour as authorized by the Commission in Case No. IPC-09-08.
The Contract Demand Charge has been lowered from the current $1.94 per
kW to $1.30 per kW.
The Scheduled Monthly Contract Demand provision and the initial
implementation of the daily excess demand charge have been removed and
covered in the Replacement Agreement.
The Billing Demand Charge has been increased to $8.48 per kW from
$7.48 per kW.
The Energy Charge remains the same as under the current tariff.
The Monthly O&M provision has been removed because it has not been
applicable for a number of years. These costs have since been captured in
other rate charges.
Idaho Power requests that the Commission issue an Order approving the Replacement
Agreement and the rates and charges set out in its proposed amendment to tariff Schedule 26.
On January 22, 2010, the Commission issued a Notice of Application and Modified
Procedure in Case No. IPC-09-35. The deadline for filing written comments was February 11
2010. Commission Staff was the only party to file comments. Staff recommends that the
Replacement Agreement and related changes to Schedule 26 rates and charges be approved for
the effective date of the Commission s Order.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPC-
09-35 including the new special contract between Idaho Power and Micron Technology, Inc.
dated December 29, 2009 (Replacement Agreement) and the related amended Schedule 26
Electric Service Rate tariff. We have also reviewed the comments and recommendations of
Commission Staff. Based on our review of the record in this case, we continue to find it
reasonable to process the Company s Application under the Commission s Rules for Modified
Procedure. IDAP A 31.01.01.204.
We find that the Replacement Agreement incorporates changes required by Micron
changed business and operating requirements. We find that the electric load requirements of
ORDER NO. 31006
Micron continue to exceed 25 MW and trigger the necessity of a special contract. We find that
the submitted Replacement Agreement is a negotiated special contract between Idaho Power and
Micron that sets forth mutually beneficial and reciprocal commitments. We find the
Replacement Agreement contract terms, conditions and related Schedule 26 rates and charges to
be fair, just and reasonable. Pursuant to Replacement Agreement ~ 15, the effective date of this
contract (and rates and charges) is the date of Commission approval, i., the date of this Order.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility, and the Application filed in Case No. IPC-09-35 pursuant to Title 61 of the
Idaho Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particular described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the December 29, 2009
Replacement Agreement between Idaho Power Company and Micron Technology, Inc. and
approves the related amended rates and charges set forth in Schedule 26 for an effective date of
February 12 2010.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 31006
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this I;) rh.
day of February 2010.
ATTEST:
Commission Secretary
bIs/O:1PC-09-35 _sw2
ORDER NO. 31006
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MARSHA H. SMITH, COMMISSIONER