20100115Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 12, 2010

SUBJECT: CASE NO. IPC-E-09-35 (Idaho Power)
MICRON TECHNOLOGY
SPECIAL CONTRACT/REPLACEMENT AGREEMENT

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 a 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 expire
on December 31, 2009. On January 1, 2010, service to Micron reverts back to the Current
Agreement and Schedule 26, which has been updated throughout the year to reflect Commission-
authorized rate changes.
DECISION MEMORANDUM 2
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 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 and the Current
Agreement are as follows:
a. The 85,000 kW Contract Demand in the Current 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 will
not be paying for capacity it does not need. Replacement Agreement ¶ 6.1.

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.a.

c. In the Replacement Agreement, Micron is permitted to increase its Contract
Demand in 1,000 kW increments on three month’s 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.a.
DECISION MEMORANDUM 3

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.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 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 as 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 Schedule 26.
COMMISSION DECISION
Idaho Power in Case No. IPC-E-09-35 submits for approval a Replacement Agreement
with Micron Technology and amended tariff Schedule 26 setting forth the special contract charges
for Micron. Staff recommends that the Company’s Application be processed pursuant to Modified
Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of
Procedure, IDAPA 31.01.01.201-204. Does the Commission find Staff’s recommended procedure
acceptable?

Scott Woodbury
Deputy Attorney General

bls/M:IPC-E-09-35_sw