20101207final_order_no_32132.pdf

Office of the Secretary
Service Date
December 7, 2010
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-IO-
) ORDER NO. 32132
On August 26, 2010, Idaho Power Company (Idaho Power; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) for an Order authorizing
reducing 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 Company
proposal, service at levels exceeding 20 000 kW of aggregate power at one or more points of
delivery on the same premises will require special contract arrangements. The Company
requests that the tariff modifications become effective on or before January 1 , 2011. The
Commission in this Order approves the Company s Application.
BACKGROUND
Schedule 19, Large Power Service, is currently available and mandatory for
customers who register a meter demand of 1 000 kW or more per billing period for 3 or more
consecutive billing 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.
APPLICATION
The Company, with this Application, proposes to reduce the 25 000 kW eligibility
limit to 20 000 kW for Schedules 19 and 24 and Rule C. Idaho Power has filed this request in
response to the continued high interest from potential large industrial load customers to take
ORDER NO. 32132
servIce from Idaho Power and responsible planning and development on the part of the
Company, which has a lack of capacity and other constraints on its system. At a time when the
ability ofldaho Power s generation and transmission system to serve new load is constrained, the
size and operating characteristics of potential large loads, the Company contends, can be very
expensive to serve. In recent years, excess capacity has diminished to the point that new large
loads will often drive the need to add new generation and/or new transmission. 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 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.
Idaho Power represents that the proposed change will not affect any current Schedule
19 or 24 customers of Idaho Power. The Company currently has approximately one hundred ten
(110) Schedule 19, Large Power Service, customers in its Idaho service territory. The Company
also 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 MWs of load. Currently,
the Company has approximately 75 potential new customers system-wide with loads greater than
1 MW and one potentially at 240 MW that have expressed interest in obtaining service from
Idaho Power. Of the larger ones, a single customer with a load of about 60 MW appears likely at
this time to require service.
The most recent special contract, Hoku Materials, Inc., approved by the Commission
on March 16 2009, by Order No. 30748 in Case No. IPC-08-21 was developed with several
regulatory goals for large load service in mind. These goals, as stated in Company witness Ric
Gale s testimony in the aforementioned case, strive to meet the Company s obligation to serve
large load customers in its service territory while protecting the Company and its many other
retail customers from adverse system impacts that new large loads could impose in an
environment when system capacity is limited and/or constrained. These goals are to: (1) provide
requested service consistent with system capability and the reliability needs of existing
customers; (2) provide options to the customer when the Company is unable to provide service
ORDER NO. 32132
as requested; (3) mitigate the rate impact on existing customers by developing a rate structure
that includes a marginal price component for an initial term of the service agreement; (4) require
upfront contributions to capital expenditures associated with facilities that specifically serve the
large load customer; and (5) provide a means to quantify known and measurable amounts of
additional load for Integrated Resource Planning. The Company s request in this case, it states
better enables it to manage the impacts of potential new large loads on its system in satisfaction
of these goals. The Company s Application is supported and accompanied by the prefiled
testimony of Michael Youngblood, Manager of Rate Design in the Regulatory Affairs
Department.
On September 23, 2010, the Commission issued a Notice of Application and
Modified Procedure in Case No. IPC-10-23. The deadline for filing written comments was
November 12 , 2010. Comments were filed by Commission Staff, the intervenor, Industrial
Customers of Idaho Power and the Idaho Conservation League. Reply comments were filed by
Idaho Power on November 24 2010. The comments can be summarized as follows:
Idaho Conservation League
Idaho Conservation League supports the Company s Application and recommends
approval. ICL identifies four important considerations that it believes the Company should
consider in negotiating large load contracts and that the Commission should examine in
apprOVIng same.
Industrial Customers of Idaho Power (ICIP)
While not opposing the Company s Application, ICIP recommends that the
Commission require the Company to include a grandfathering provision in the Company
revised Schedule 19 tariff such that the upper limit for existing Schedule 19 customers will
remain at 25 000 kW. ICIP contends that it is unfair and discriminatory to require a special
contract for existing Schedule 19 customers who incrementally increase their load (by for
example 4 000 kW) to reach the Company-proposed 20 000 kW cap, but to allow a new
customer with a 4 000 kW load to have the option of taking service under the Schedule 19 tariff
or a special contract.
Commission Staff
Staff recommends that the Company s Application be approved. Staff notes that
Avista Utilities requires a special contract when a customer s load exceeds 25 000 kVa, which is
ORDER NO. 32132
000 kW at 100% power factor. Rocky Mountain Power requires a special contract when a
customer s load exceeds 15 000 kW three times in a six month period. Staff contends that Idaho
Power s request to reduce the load level above which a special service contract is required, from
000 kW to 20 000 kW, remains comparable to the special contract service levels approved for
other Idaho electric utilities. Staff notes further that the Company s proposal will not impact any
existing Schedule 19, Schedule 24 or special contract customers and is consistent with the Hoku
special contract previously approved by the Commission.
Idaho Power Reply Comments
Idaho Power opposes the ICIP'grandfathering recommendation for existing
Schedule 19 customers. ICIP erroneously states, the Company contends, that a 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, the Company states. An industrial customer with 4 000 kW of
load can only take service under Schedule 19, and the Company has the obligation to serve that
customer under the provisions of the tariff. Despite ICIP's argument and representations to the
contrary, large customers whose aggregate loads may have incrementally grown to be larger than
000 kW, Idaho Power contends, can have significant impact on the Company s ability to
manage and serve that load. The Company s proposal is that the utility 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 and treatment for a customer from 1 000 kW to 20 000 kW.
The Company opposes the recommendation of ICIP because it believes
grandfathering as proposed may be in violation of Idaho Code ~ 61-315, Discrimination and
Preference Prohibited. If the Commission were to adopt grandfathering as ICIP suggests, Idaho
Power contends that then some customers within Schedule 19 would be treated differently than
other customers within the same tariff by a provision for growth and expansion beyond a limit
that is not the same for all. Citing Idaho State Homebuilders v. Washington Water Power 107
Idaho 415 690 P.2d 350 (1984). In that case, the Idaho Supreme Court identified cost of service
quantity of electricity used, differences and conditions of service, or the time, nature and pattern
of use as appropriate justifications for setting different rates and charges for customers. ICIP'
grandfathering recommendation, the Company contends, would also be extremely difficult to
administer.
ORDER NO. 32132
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPC-
10-, including the Application (with supporting testimony and exhibits), the comments of
the Industrial Customers of Idaho Power, the Idaho Conservation League and Commission Staff
and the reply comments of Idaho Power. Based on our review of the filings in this case, we find
that we have an adequate record to render a decision and further find it reasonable to do so
without further notice or procedure. IDAP A 31.01.01.204.
Submitted for Commission consideration in this case is Idaho Power s Application to
reduce the load level above which a special service contract is required from 25 000 kW to
000 kW of aggregate load. The Application affects Company tariff Schedules 19 and 24 and
Rule C (Service and Limitations). As represented by the Company, the proposed change will not
affect any current Schedule 19 or 24 customers.
We find that no party submitting comments opposes the Application. ICIP, however
recommends that existing Schedule 19 customers retain the grandfathered right to increase their
service levels beyond 20 000 kW to 25 000 kW without special contract requirement. As
represented by Idaho Power and agreed to by Staff, we find that a large customer whose
aggregate electric load exceeds 20 000 kW can have a significant impact on the Company
ability to manage or serve that load. We find ICIP's grandfathering proposal for existing
Schedule 19 customers and related rationale advanced in support of said proposal to be
unpersuasive. Idaho Code ~ 61-315.
Idaho Power represents and we recognize that the ability of the utility s generation
and transmission system to serve large load customers is constrained.We find that the
Company s proposal will enable it to better manage the impacts of potential new large loads on
its system. The Commission thus finds the Company s proposal to reduce the minimum load
requirement for electric service pursuant to a negotiated special contract based on a customer
unique circumstances to be reasonable and in the public interest.We accordingly find it
reasonable to approve the Company s Application for an effective date of January 1 2011.
CONCLUSIONS OF LAW
The Commission has jurisdiction over the issues raised in Case No. IPC-10-23 and
over Idaho Power Company, an electric utility, pursuant to the authority granted in Title 61
ORDER NO. 32132
Idaho Code (including 61-502 61-503 , and 61-315), and the Commission s Rules of Procedure
IDAPA 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above IT IS
HEREBY ORDERED that Idaho Power s Application in Case No. IPC-10-23 is approved.
The Company is to file revised compliance tariffs (Schedule 19, Large Power Service; Schedule
, Agricultural Irrigation Service; and Rule C, Service and Limitations) for an effective date of
January 1 2011.
IT IS FURTHER ORDERED that the request of the Industrial Customers of Idaho
Power for grandfathered treatment of existing Schedule 19 customers is denied.
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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of December 2010.
D. KEMPTO , P SIDENT
l!~,
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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D. Jewel
Commission Secretary
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ORDER NO. 32132