20101124Reply Comments.pdf

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esIDA~POR(I
LISA D. NORDSTROM
Lead Counsel
InordstromtBidahopower.com
An IDACORP Company
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November 24, 2010
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-10-23
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY
FOR AUTHORITY TO MODIFY SPECIAL CONTRACT ELIGIBILITY BY
REDUCING THE UPPER LIMIT OF POWER REQUIREMENTS FOR
LARGE LOAD CUSTOMERS
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Reply Comments in the above matter.
Very truly yours,
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Enclosures
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
LISA D. NORDSTROM (ISB No. 5733)
DONOVAN E. WALKER (ISB No. 5921)
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
Inordstromcæidahopower.com
dwalkercæidahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO MODIFY SPECIAL
CONTRACT ELIGIBILITY BY REDUCING
THE UPPER LIMIT OF POWER
REQUIREMENTS FOR LARGE LOAD
CUSTOMERS.
)
) CASE NO. IPC-E-10-23
)
) IDAHO POWER COMPANY'S
) REPLY COMMENTS
)
)
)
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company"), and in
response to Comments of the Industrial Customers of Idaho Power ("ICIP") filed in this
docket, submits the following Reply Comments.
I. BACKGROUND -IDAHO POWER APPLICATION
On August 26, 2010, the Company filed an Application with the Idaho Public
Utilties Commission ("Commission") for an Order authorizing the reduction of the upper
limit for Large Power Service under Schedule 19, Agricultural Irrigation Service under
Schedule 24, and point of delivery service requirements in Rule C (Service and
Limitations) from 25,000 kilowatts ("kW') to 20,000 kW of aggregate load. Under the
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
Company's proposal, service at levels exceeding 20,000 kW would require special
contract arrangements. The Company requested that the tariff modifications become
effective on or before January 1, 2011.
Schedule 19, Large Power Service, is currently available and mandatory for
customers who register a meter demand of 1,000 kW or more per biling period for 3 or
more billng periods during the most recent 12 consecutive months, up to a maximum
demand of 25,000 kW. Schedule 24, Agricultural Irrigation Service, is applicable to
agricultural use customers operating water pumping or water delivery systems used to
irrigate agricultural crops or pasturage for loads up to 25,000 kW. A customer is not
eligible for Schedule 19 or Schedule 24 service if its aggregate power requirement at
one or more points of delivery on the same premises exceeds 25,000 kW. Point of
delivery service requirements in Rule C state that a special contract is required when an
aggregate power requirement exceeds 25,000 kW.
The Company, with its Application, proposed to reduce the 25,000 kW eligibilty
limit to 20,000 kW for Schedules 19 and 24 and Rule C. Idaho Power filed its request in
response to the continued high interest from potential large industrial load customers to
take service from Idaho Power and an identified need to address responsible planning
and development on the part of the Company. At a time when the abilty of Idaho
Powets generation and transmission system to serve new load is constrained, the size
and operating characteristics of potential large loads can be very expensive to serve.
By lowering the size limit, the Company can address service to growing or new load
within a special contract, allowing for specific cost-of-service information as well as the
unique operating characteristics of customers of this size to be considered and captured
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
within the terms of the contractual agreement. Special contracts can provide some
protection to the Company's customers from unintended system impacts that large
loads may impose because of their size and their time, nature, and pattern of use.
The proposed change wil not affect any current Schedule 19 or 24 customers.
The Company has approximately one hundred ten (110) Schedule 19, Large Power
Service, customers in its Idaho service territory. The Company currently has four
special contract customers: (1) Micron Technology, Inc.; (2) the United States
Department of Energy's Idaho National Laboratory; (3) the JR Simplot Company; and
(4) Hoku Materials, Inc. These four customers range in size from 30 to 85 megawatts of
load.
The Idaho Conservation League ("ICL"), Staff, and ICIP all filed comments in this
docket. The ICL supports Idaho Powets request and urges the Commission to approve
the Application. The Staff recommends that the Company's request to reduce the
minimum load requirement for a special contract from 25,000 kW to 20,000 kW be
approved as filed. ICIP did not oppose the Company's proposal to require a special
contract for new large loads, but requests that the Commission require the Company to
include a grandfathering provision such that the upper limit for existing Schedule 19
customers wil remain at 25,000 kW. These Reply Comments are in response to ICIP's
Comments, specifically its request for a grandfathering provision for existing Schedule
19 customers.
II. COMPANY'S RESPONSE TO ICIP'S COMMENTS
Idaho Power opposes the implementation of any grandfathering provision as
suggested by ICIP. ICIP suggests that the impact on the Company's system and its
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
ability to provide service is the same for a Schedule 19 customer who may grow beyond
20,000 kW by adding an additional 4,000 kW to its operations, and a new customer with
a 4,000 kW load taking service under a Schedule 19 tariff. ICIP erroneously states that
the new customer with 4,000 kW of load has the option of taking service under either a
Schedule 19 tariff or a special contract. That is not true. An industrial customer with
4,000 kW of loan can only take service under Schedule 19, and the Company has the
obligation to serve that customer under the provisions of the tariff. The Company is not
at liberty to suggest any treatment or provision for that customer that may be different
from all the other Schedule 19 customers. However, ICIP is attempting to have the
Commission focus on the 4,000 kW of incremental load, not the entire load of the
existing Schedule 19 customer. The fact is that a large customer whose aggregate load
may have grown to be larger than 20,000 kW can have a significant impact on the
Company's abilty to manage and serve that load. The Company's proposal is that it be
given the opportunity to address the impacts of that large load through the provisions of
a negotiated special contract rather than being required to serve that load under the
constraints of a tariff, which would not allow any differentiation in treatment for a
customer from 1,000 kW to 20,000 kW. ICIP recommends grandfathering 110 existing
Schedule 19 customers at 25,000 kW, which would exacerbate the problem.
While ICIP's recommendation to grandfather existing Schedule 19 customers at
25,000 kW would be extremely diffcult to administer, the primary reason Idaho Power
opposes the recommendation for grandfathering is because it may not be legaL. The
statutory framework within which the Commission is authorized to set rates is found in
Title 61, Chapters 3 and 5 of the Idaho Code. The Idaho Legislature specifically
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
authorizes the Public Utilties Commission in Idaho Code §§ 61-502 and -503 to
determine just and reasonable rates, charges, classifications, rules, regulations,
practices or contracts for utility service in Idaho. This authority is limited by Idaho Code
§ 61-315, which provides:
Discrimination and preference prohibited. No public
utilty shall, as to rates, charges, service, facilties or in any
other respect, make or grant any preference or advantage to
any corporation or person or subject any corporation or
person to any prejudice or disadvantage. No public utilty
shall establish or maintain any unreasonable difference as to
rates, charges, service, facilties or in any other respect,
either as between localities or as between classes of
service. The commission shall have the power to determine
any question of fact arising under this section.
The Idaho Supreme Court interpreted this statute in the Idaho State
Homebuilders v. Washington Water Power, 107 Idaho 415, 690 P.2d 350 (1984), and
identified cost-of-service, quantity of electricity used, differences in conditions of service,
or the time, nature, and pattern of use as appropriate justifications for setting different
rates and charges for customers. If the Commission would adopt grandfathering as
ICIP suggests, then some customers within Schedule 19 would be treated differently
than other customers within the same tarif by a provision for growth and expansion
beyond a limit that is not the same for alL.
II. CONCLUSION
The Company contends that by reducing the upper power requirement limit of
large load customers from 25,000 kW to 20,000 kW, the Company can help mitigate the
rate impact of potential new large load customers on existing customers by requiring
them to make special contract arrangements with the Company. The Company can
more accurately price the new load based on its unique characteristics, more accurately
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
assigning the costs of servicing the new large load. Under a special contract, the
parties can negotiate a price that reflects a blend of marginal and embedded costs, or
the flexibilty to offer the large load customer pass through access to market rates,
depending on resources required to serve the new load. Parties could agree to allow
the Company to shape the load or service requirements in response to resource
limitations or transmission constraints during system peaks. The Industrial Customers
of Idaho Power do not oppose the Company's proposal for new large load customers,
but maintain that existing customers who grow beyond the same large load level of
20,000 kW should be treated differently by allowing these existing customers to grow
beyond 25,000 kW before a special contract is required. For the reasons stated above,
Idaho Power maintains this would be discriminatory treatment and would not be legal
under Idaho Code.
Idaho Power respectfully requests that the Commission issue an Order
authorizing reduction of the upper limit for Large Power Service under Schedule 19,
Agricultural Irrigation Service under Schedule 24, and point of delivery service
requirements in Rule C (Service and Limitations) from 25,000 kW to 20,000 kW of
aggregate load, and that the tariff modifications become effective on or before January
1,2011.
DATED at Boise, Idaho, this 24th day of November 2010.
.W~f
LISA D. NORDSTROM
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 24th day of November 2010 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated be1ow, and addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilties Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho
Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON & O'LEARY, PLLC
515 North 2¡th Street
P.O. Box 7218
Boise, Idaho 83702
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Idaho Conservation League
Benjamin Otto
710 North 6th Street
P.O. Box 844
Boise, Idaho 83701
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IDAHO POWER COMPANY'S REPLY COMMENTS - 7