20100211Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR APPROVAL )
OF A REPLACEMENT SPECIAL CONTRACT )
WITH MICRON TECHNOLOGY, INC. )
)
)
CASE NO. IPC-E-09-35
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilties Commission (Commission), by
and through its attorney of record, Scott Woodbury, Deputy Attorney General, and in response
to the Notice of Application, Notice of Modified Procedure and Notice ofComment/rotest
Deadline issued on January 22, 2010 in Case No. IPC-E-09-35, submits the following comments.
BACKGROUND
On December 31, 2009, Idaho Power Company (Idaho Power; Company) fied 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.
Idaho Power's current approved tariff Schedule 19 (Large Power Service) provides that
electric service to customers with loads greater than 25 MW wil be provided pursuant to a
STAFF COMMENTS 1 FEBRUARY 11,2010
special contract. Idaho Power and Micron have operated under a special contract, the Current
Agreement, since August 31, 1995. Since the Curent 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 Curent 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 Curent Agreement obligates Idaho Power to provide Micron up to 140,000 kW of
contract demand. Micron's curent 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
flexibilty to increase or decrease its contract demand to respond more quickly to changes in
market conditions. Idaho Power is willng to provide Micron with additional operational
flexibilty 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 wil be available to Micron.
In recognition of the fact that the Curent 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, Attachment 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 and the Curent
Agreement are as follows:
a. The 85,000 kW Contract Demand in the Curent Agreement is reduced to
60,000 kW in the Replacement Agreement. This change is an operating
benefit to Idaho Power and an economic benefit to Micron in that Micron
STAFF COMMENTS 2 FEBRUARY 11,2010
wil not be paying for capacity it does not need. Replacement Agreement
ii 6.1.
b. The total maximum 140,000 kW Contract Demand in the Curent
Agreement is reduced to 120,000 kW in the Replacement Agreement.
This reduced maximum capacity obligation is a planing benefit to Idaho
Power, yet provides Micron some headroom generally equivalent to the
substation capacity at the curent site. Replacement Agreement ii 6.2.a.
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 wil be in effect for a
minimum of six months rather than the one -year term in the Current
Agreement. In the Replacement Agreement, Micron canot increase its
total Contract Demand more than 10,000 kW in any six-month period.
Replacement Agreement ii 6.2.a.
d. In the Replacement Agreement, decreases to Contract Demand require
three months' prior written notice and the new decreased contract demand
wil be in effect for a minimum of six months. Replacement Agreement ii
6.2.b.
Changes to Schedule 26
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-E-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 Biling Demand Charge has been increased to $8.48 per kW from
$7.84 per kW.
. The Energy Charge remains the same as under the curent 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.
STAFF COMMENTS 3 FEBRUARY 11, 2010
STAFF RECOMMENDATION
The Staff has reviewed the new Special Contract (Replacement Agreement) between
Idaho Power Company and Micron and recommends Commission approval. It is common
knowledge that Micron's core business has changed and that Micron is pursuing new business
opportunities. It is reasonable to believe that Micron's electrical requirements also have
changed. The proposed contract changes are revenue neutral and include benefits for both
Micron and Idaho Power. The Staff proposes that revised Schedule 26 be effective upon
Commission approval.
Respectfully submitted this
rh
/ i day of February 2010.
c4~~
Scott Woodbur
Deputy Attorney General
Technical Staff: Keith Hessing
i:umisc:commentsipce09.35swkh comments
STAFF COMMENTS 4 FEBRUARY 11,2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 11TH DAY OF FEBRUARY 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. IPC-E-09-35, 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, VICE PRESIDENT
REGULATORY AFFAIRS
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
E-MAIL: rgle(iidahopower.com
RICK MALMGREN
MICRON TECHNOLOGY, INC.
8000 FEDERAL WAY
PO BOX 6
BOISE,ID 83707-0006
E-MAIL: remalmgren(imicron.com
'~~
SECRETÃ
CERTIFICATE OF SERVICE