20100917Decision 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: SEPTEMBER 9, 2010

SUBJECT: CASE NO. IPC-E-10-23 (Idaho Power)
PROPOSAL TO REDUCE ELIGIBILITY THRESHOLD FOR
LARGE LOAD CUSTOMERS

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 kW to 20,000 kW of aggregate load. Under the Company’s proposal
service at levels exceeding 20,000 kW will require special contract arrangements. The Company
requests that the tariff modifications become effective on or before January 1, 2011.
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.

DECISION MEMORANDUM 2
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
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 of Idaho 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-E-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
DECISION MEMORANDUM 3
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
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.
COMMISSION DECISION
Idaho Power and Commission Staff recommend that the Company’s Application in
Case No. IPC-E-10-23 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 concur with the recommended procedure?

Scott Woodbury
Deputy Attorney General

bls/M:IPC-E-10-23_sw