HomeMy WebLinkAbout20111230Answer, Motion.pdfLISA D. NORDSTROM (ISB No. 5733)
JASON B. WILLIAMS (ISB No. 8718)
Idaho Power Company
1221 West Idaho Street (83702)
P.O. Box 70
Boise, Idaho 83707
Telephone: (208) 388-5104
Facsimile: (208) 388-6936
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Attorneys for Idaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
HOKU MATERIALS, INC.,
Complainant,
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CASE NO. IPC-E-11-28
ANSWER, MOTION TO DISMISS,
AND MOTION TO SET
TERMINATION DATE
v.
IDAHO POWER COMPANY,
Respondent.
COMES NOW, Idaho Power Company ("Idaho Powet' or "Company") and
hereby answers the Complaint Contesting Termination of Service ("Complaint") filed by
Hoku Materials, Inc. ("Hoku") and respectfully moves the Idaho Public Utilities
Commission ("Commission") to dismiss the Complaint and/or set a date as soon as
possible by which Idaho Power may terminate electrical service to Hoku. In light of the
potential, imminent financial harm to Idaho Power and its customers, Idaho Power
hereby files these Motions and requests expeditious substantive relief pursuant to RP
256.
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 1
i. ANSWER
1 . Idaho Power admits that Hoku is a special contract customer of Idaho
Power, but denies that the parties' relationship is pursuant to that certain Amended and
Restated Electric Service Agreement ("AESA"). Idaho Power admits that "Exhibit A" to
the Complaint is a true and correct copy of the AESA between Hoku and Idaho Power
dated June 19, 2009. Idaho Power affirmatively asserts that the relationship between
Idaho Power and Hoku is governed by the AESA, Commission Order Nos. 30748,
30869, and 31005, Idaho Powets Tariff Schedule 32 approved by the Commission, as
well as other Commission rules and regulations.
2. Idaho Power admits that "Exhibit B" to the Complaint is Idaho Powets
invoice to Hoku for electric service in the month of November 2011. Idaho Power
admits that Hoku's actual energy consumption during November 2011 was 46,167
kilowatt-hours of energy and 215 kilowatts of demand, with a power factor adjusted
demand of 220 kilowatts. Idaho Power denies the allegation that Hoku's actual energy
consumption in the month of December 2011 wil be approximately the same as in
November 2011. Idaho Power admits that the remainder of charges on the November
2011 invoice are contractual minimum payments required by the AESA because Hoku
does not currently consume the contractual amount energy. Idaho Power has
insufficient information to know whether Hoku is contemplating the filing of an action at
the Commission to contest the required contract minimum adjustments and therefore
denies such allegation.
3. Idaho Power admits that Hoku has made a deposit with Idaho Power in
the amount of Four Million Dollars ($4,000,000) at the Company's request, but
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 2
affirmatively asserts it is not the full deposit amount required to be paid by Hoku. Idaho
Power denies that Hoku has any claims or defenses for refusing to pay the November
invoice or any other invoices. Idaho Power denies all other allegations made in
paragraph 3 of the Complaint.
4. Idaho Power has insuffcient knowledge of all of the allegations made in
paragraph 4 of the Complaint and therefore denies each and every allegation made
therein.
5. Idaho Power has insufficient knowledge related to the allegations made in
the first two sentences of paragraph 5 of the Complaint and therefore denies the first
two sentences of paragraph 5 of the Complaint. Idaho Power admits that prior to the
issuance of the Company's Notice of Termination, representatives of Hoku advised
representatives of Idaho Power that current cash flow shortage was such that payment
of the November invoice may not occur until January 2012. At no time did Idaho Power
consent to Hoku making late payments or postponing the termination of service to
Hoku. Idaho Power admits that it issued Hoku an Initial Notice of Termination on
December 22,2011 (attached hereto as "Attachment 1" and incorporated by reference),
and a Final Notice of Termination of Service on December 27,2011 (attached hereto as
"Attachment 2" and incorporated by reference), pursuant to Commission Rules 602 and
603.
6. For each allegation made in the Complaint not specifically addressed
above, Idaho Power hereby denies each and every allegation not specifically addressed
above.
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 3
II. MOTION TO DISMISS AND MOTION TO SET TERMINATION DATE
A. Statement of Facts
7. Hoku and Idaho Power entered into an Electric Service Agreement
("ESA") on September 17, 2008. The Commission approved the ESA by Order dated
March 16,2009 (Order No. 30748). The effective date of the original ESA was for Idaho
Power to begin providing service to Hoku on June 1, 2009, and conclude on May 31,
2013. On May 28, 2009, and at the request of Hoku, Idaho Power submitted a Motion
for a Commission Order authorizing a delay in the commencement of the ESA with
Hoku until December 1, 2009. Idaho Power and Hoku subsequently submitted the
AESA for Commission approval. By Order dated July 24, 2009, the Commission
approved the request to delay the ESA's effective date as well as the AESA, noting that
the AESA and the delay of the effective date on which Hoku would begin receiving
energy from Idaho Power would "not unduly prejudice Idaho Powets other customers."
Order No. 30869 at 4 (emphasis in original).
8. On November 24, 2009, Idaho Power advised the Commission of a
confidential Letter Agreement that the Company entered into with Hoku which
temporarily waived Hoku's minimum biled energy charge beginning December 1, 2009,
until such time when the "contract load factor first exceeds 70% of the total contract
demand or March 31, 2011, whichever occurs earliest." Order No. 31005 at 4. The
Commission granted the request to temporarily waive the minimum biled energy charge
for Hoku, noting "Idaho Powets wilingness to again accommodate Hoku's concerns by
delaying the full implementation of the ESA as Hoku attempts to establish a firm footing
amidst the current adverse business climate." Order No. 31005 at 5. The Commission
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 4
cautioned, however, that the temporary waiver did not "eclipse the Commission's
statutory duty to ensure that Idaho Power's rates and charges are fair, just and
reasonable." ¡d. Specifically, the Commission stated that it "must verify that the costs
associated with the delayed implementation of the ESA are borne primarily by the
contract parties and not Idaho Powets remaining customer base." ¡d.
9. On June 15, 2011, Idaho Power submitted a letter to Hoku (attached
hereto as "Attachment 3" and incorporated by reference) explaining the Company's
policy with regard to Customer deposits and requested that $4 millon of Hoku's total
$5.8 millon deposit be paid immediately with the additional $1.8 milion deposit to be
paid by Hoku by no later than December 31, 2011. At Hoku's request, Idaho Power
agreed to delay the date to March 2, 2012, by which Hoku had to pay such additional
$1.8 millon deposit so long as Hoku remained current on payments to Idaho Power
pursuant to the AESA. See letter dated December 20, 2011 from Idaho Power's
Warren Kline to Joe Miler attached hereto as "Attachment 4" and incorporated by
reference.
10. Idaho Power issued Hoku an invoice in early December in the amount of
approximately $1.9 millon for services provided to it for November 2011. Payment was
due on December 21 st, which Idaho Power did not receive. On December 22, Idaho
Power sent Hoku an Initial Notice of Termination per the Commission's Utility Customer
Relations Rules 602 and 603 ("Initial Notice"), indicating that service to the Hoku facilty
would be terminated on the morning of Thursday, December 29th. On December 27th,
Idaho Power sent Hoku a Final Notice of Termination ("Final Notice") indicating that
consistent with the Company's disconnection practices during the holidays, Hoku's
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 5
energy service would not be terminated until Tuesday, January 3, 2012, unless past-
due payment was received. On December 29, 2011, Hoku filed the Complaint against
Idaho Power at the Commission.
B. Motion to Dismiss
11. The Complaint fails to allege any dispute or controversy between the
parties. The only allegation of wrong-doing is an unsupported allegation in the
Complaint that "Hoku is contemplating the filing of an action at the Commission to
contest the required contractual minimum adjustments." Complaint at 2. Hoku has not,
however, filed such an action, and its mere contemplation of challenging the provisions
of the AESA that if freely negotiated with Idaho Power is not grounds for a complaint
against Idaho Power. As evidenced in the recitation of the Statement of Facts above,
Idaho Power has gone out of its way to accommodate Hoku, including modifying the
original ESA, delaying the implementation of the AESA, and bifurcating the time when
Hoku would have to make deposits. More importantly, Idaho Power has fulfiled all of its
obligations under the AESA, and the Complaint fails to allege any fact demonstrating
Idaho Power has failed to fulfil its contractual obligations under the AESA.
12. The fact of the matter is Hoku has missed a payment it owes to Idaho
Power and has failed to provide Idaho Power with any assurance that such a payment
will be forthcoming. Idaho Power, pursuant to the Commission's Utility Customer
Relations Rules, has sent Hoku the required notices that it seeks to terminate electrical
service to Hoku because of its failure to pay its invoice. See Attachments 1 and 2.
Under the Commission's rules, the Company cannot terminate service to a customer so
long as a pending complaint exists against the Company and "so long as the customer
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 6
continues to pay all amounts not in dispute, including current utility bils." Utilty
Customer Relations Rule 402.2.
13. It is Idaho Powets firm belief that Hoku has filed the Complaint as a
means of forestallng disconnection so that it can continue to receive service from Idaho
Power without paying for such service even though no real controversy exists between
the parties. More specifically, Hoku has failed to allege in the Complaint that it is
disputing amounts that it owes to Idaho Power. Thus, Idaho Power has a strong
argument that because Hoku has failed to properly dispute an amount it owes the
Company, Idaho Power has the authority under the Commission's Utility Customer
Relations Rules to terminate service as Hoku has failed to make payments on amounts
not in dispute. Moreover, since the Complaint fails to allege any material facts in
dispute or controversy between the parties, the Commission should dismiss the
Complaint and allow the Company to proceed immediately with terminating service to
Hoku.
c. Motion to Set Termination Date
14. The Complaint implies that Idaho Power can be held harmless by Hoku's
failure to pay its November 2011 invoice because the Company can apply Hoku's $4
millon deposit to cover the approximately $1.9 millon amount due in the November
2011 invoice. As an initial matter, customer deposits, including Hoku's deposit, are
governed by the Company's Rule L tariff. Specifically, Rule L states that the Company
wil retain customer deposits for a minimum of twelve calendar months unti such time
as the customer establishes good credit. There is no provision in Rule L whereby
customers can request to use its deposit to pay monthly charges, as suggested by Hoku
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 7
in its Complaint. Notably, Idaho Power clearly explained the Company's policy and
Rule L provisions relating to deposits both in conversations with representatives of Hoku
as well as the June 15, 2011, letter. See Attachment 3.
15. Idaho Power was very accommodating to Hoku in requesting a deposit
pursuant to Rule L. Specifically, the Company agreed to allow Hoku to pay its required
$5.8 milion deposit in two tranches-a $4 milion initial deposit and a $1.8 million
supplemental deposit, with the supplemental deposit being due no later than December
31,2011. In yet another effort to accommodate Hoku, Idaho Power agreed to delay the
requirement that Hoku make the required $1.8 milion additional deposit payment unti
March 2, 2012, so long as Hoku remained current on all of its monthly invoices. See
Attachment 4. As explained in the letter, that offer to extend the payment deadline was
conditioned upon Hoku remaining current on its invoices, and because Hoku is no
longer current on paying its invoices, the offer to extend the date by which the
supplemental deposit payment to March 2, 2012, is no longer valid. Accordingly, the
remaining $1.8 million deposit amount is due to Idaho Power by December 31, 2011.
Pursuant to Utility Customer Relations Rule 602.02, Idaho Power has the authority to
terminate service in the event it does not receive the required $1.8 millon deposit
payment by December 31,2011.
16. That said, even if the Company were to agree to Hoku's suggestion that
the Company can apply a portion of the $4 milion deposit to cover its November 2011
invoice, the total $4 million deposit would quickly dwindle to nothing within the first few
days of January 2012. The Company has continued to provide service to Hoku
throughout the month of December, but has not had any assurances from Hoku that it
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 8
wil pay its December 2011 invoice. Based upon the best information available to it as
of the date of this pleading, Idaho Power anticipates that Hoku's December 2011
invoice will be more than $2 milion. When the November and December invoices are
added together (Le. $1.9 million for November and $2 millon for December), that leaves
only about $100,000 of the original $4 milion deposit remaining. In addition, the
Company has received no assurances from Hoku that it wil make its required $1.8
million deposit payment by December 31, 2011. Indeed, Hoku's refusal to pay its
November 2011 invoice is strong evidence that Hoku wil fail to pay the required
additional $1.8 million deposit by the end of 2011.
17. Put differently, Hoku's current power bil with the Company runs
approximately $65,000 per day. As described above, all but $100,000 of Hoku's original
$4 milion deposit would be used if applied to Hoku's November and December
invoices. The remaining $100,000 of Hoku's original $4 millon deposit would disappear
within the first few days of January 2012. The Company wil be adversely impacted
because it will experience a revenue shortall by being forced to provide service to a
very large customer without receiving any payment for such services, negatively
impacting the Company's financial position, which could translate into lower earnings.
One outcome of such a scenario would be that the Company would be required to
accelerate additional accumulated deferred investment tax credits ("ITCs") which the
Commission authorized in Order No. 32424. Conversely, the Company's revenue
shortalls as a result of Hoku's failure to pay could potentially jeopardize customers'
abilty to share in the Company's earnings pursuant to that same Commission Order.
Thus, Idaho Power and its customers wil experience imminent and immediate harm (by
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 9
a detriment of approximately $65,000 per day) by Hoku's failure to pay its invoices and
if the Company is required to continue to provide it service.
18. In addition, and as explained above, Hoku has failed to allege any material
fact, controversy, or dispute related to the services it receives from Idaho Power. The
Commission's typical formal complaint process may take months to complete. Idaho
Power has concerns that if the Commission allows the Hoku Complaint to run the usual
course at the Commission, Hoku could potentially become millons of dollars delinquent
in amounts its owes to Idaho Power.1 To protect both the Company's interests as well
as the interests of its customers, Idaho Power respectully requests that the
Commission set a specific date (and that such date be as soon as possible) by which
Idaho Power can terminate service to Hoku. Idaho Power further requests that such an
order provide that Hoku can avoid having its service terminated if, prior to such
termination date, Hoku brings current all outstanding amounts it owes to the Company
as well as immediately provides Idaho Power the additional required $1.8 millon
deposit.
19. As required by RP 256.02, Idaho Power contacted counsel for Hoku by
telephone and sent a copy of this pleading via electronic maiL.
NOW, THEREFORE, Idaho Power respectfully requests as follows:
1) That the Commission dismiss the Complaint for failng to allege a dispute or
controversy;
2) That the Commission issue an Order setting a date as soon as possible by
which Idaho Power may terminate electrical service to Hoku;
1 As explained above, Hoku's daily bil is currently approximately $65,000 per day which, over a period of
months, wil add up to potentially millons of dollars.
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 10
3) That the Commission require Hoku to immediately pay Idaho Power for all
amounts past due plus all amounts necessary to fulfil Hoku's required $5.8
milion deposit amount; and
4) That the Commission grant the relief requested in this pleading on fewer than
fourteen (14) days notice pursuant to RP 256.
Respectfully submitted this 30th day of December 2011.
'\,J~i?S? ~ "-
Attorney for Idaho Power Company
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 30th day of December 2011 I served a true and
correct copy of the within and foregoing ANSWER, MOTION TO DISMSS, AND
MOTION TO SET TERMINATION DATE upon the following named parties by the
method indicated below, and addressed to the following:
Commission Staff
Donald L. Howell, II
Deputy Attorneys General
Idaho Public Utilties Commission
472 West Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email Don.Howell(ãpuc.idaho.gov
Hoku Materials, Inc.
Dean J. Miler
McDEVITT & MILLER LLP
420 East Bannock (83702)
P.O. Box 2564
Boise, Idaho 83701
Hand Delivered
--U.S. Mail
_ Overnight Mail
FAX
-- Email joe(ãmcdevitt-miler.com
heather(amcdevitt -miller. com
\~ú/~:S~J~illams
ANSWER, MOTION TO DISMISS, AND MOTION TO SET TERMINATION DATE - 12
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-28
IDAHO POWER COMPANY
ATTACHMENT 1
1SIDA~PO~
An IOACORP Company
December 22,2011
Hoku Materals, Inc.
Att: Austin Webb
One HokuWay
Pocatello,ID 83204
Subject: Intial Notice of Terination
Dear Mr. Webb:
Your November Energy Serces Agreement invoice D 1111 002 in the amount of $1 ,895,656.26
was due Wednesday, December 21st. As ofthe morning of December 22nd, payment has not
been received. Per IPUC's Utility Customer Relations Rule 602, failure to pay an undisputed
bil is grounds for terination of serice. As a result of your past due payment, Hoku' s energy
servce wil be terinated on the morning of Thursday, December 29th unless payment is
received prior to 5 p.m. Mountain Time on Wednesday, December 28th.
An informal or formal complaint concerng this terination may be filed with the Commission.
Service will not be terinated prior to the resolution of a fied complaint.
Regards,
Aubrae Sloan
Finance Team Leader
cc: Dan Minor
Waren Kline
Mike Youngblood
Sam Golay
Idaho Public Utilties Commission
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-28
IDAHO POWER COMPANY
ATTACHMENT 2
1SIDA~PO~
An IOACORP Company
December 27, 2011
Roku Materials, Inc.
Att: Austin Webb
One RokuWay
Pocatello, ID 83204
Subject: Final Notice of Termination
Dear Mr. Webb:
Your November Energy Services Agreement invoice D 1111 002 in the amount of $1,895,656.26
was due Wednesday, Deceber 21, 2011. As of the morning of December 27, 2011, Idaho
Power Company has not received payment of this past-due amount. Per IPUC's Utilty
Customer Relations Rule 602, failure to pay an undisputed bil is grounds for terination of
service. Consistent with Idaho Power's disconnection practices durng the holidays, Roku's
energy servce wil be terminated on Tuesday, Januar 3,2012, uness prior payment is received.
An informal or formal complaint concerning this termnation may be filed with the Commission.
Service wil not be termnated prior to the resolution of a filed complaint. Please note that if
servce is terminated and you wish to reconnect, a reconnection fee will be assessed, for each
service connection, and all past-due amounts must be paid in full plus interest.
Regards,A~~
Aubrae Sloan
Finance Team Leader
cc: Dan Minor
Waren Kline
Mike Youngblood
Sam Golay
Idaho Public Utilities Commission
r00074525.DOC; 1 J
1221 W. Idaho St. (83702)
P.O. Box 70
Boise. 10 83707
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-28
IDAHO POWER COMPANY
ATTACHMENT 3
B_~IDAHO POWER COMPAN
p,o BOX70
BOISE, IDAHO 83707
An IOACORP Company
June 15,2011
Hoku Materials, Inc.
1\tt. Mr. Scott Paul
One Hoku Way
Pocatello, il 83204
Dear Mr. Paul,
Durg the past two weeks we have discussed Hoku Materials, Inc.'s (Hoku) deposit requirements
pursuant to Rule L of Idaho Power Company's (IPC) tarff and the .Aended and Restated Electric
Serice 1\greement between Idaho Power Company and Hoku Materals, Inc. (Electrc Servce
1\greement). Without relinquishing any rights that IPC may have accrued under the applicable tarff,
the Electric Serice Agreement, or applicable law, ths letter supplements my earlier letter to Hoku of
Octobe 27, 2009.
1\s previously stated, as par of any new large special contract customer's application for service, IPC
performs a credit evaluation to deterine eligibility for unsecured crdit. Based on that evaluation,
Hoku wil be required to provide a cash deposit or other security acceptable to Idao Power Company
(IPC). Examples of other security are a letter of credit (form, substance and provider must be
acceptable to IPC) or a guarnty, acceptable to IPC, by another person or entity which meets IPC's
creditworthiness stadads.
According to Rule L ofIPC's tarff, the amount of the deposit shall not exceed two times the
applicant's actual or estimated highest monthly bil. In review of Hoku' s anticipated bíls for its first
year of operations and acknowledging that there wil be a rap up in its opertions, a cash deposit or
other acceptable securty in the amount of $4,000,000 is requied at this time with a supplemental
deposit in the amount of$1,800,000 required on December 31, 2011. The deposit may be applied or
utilized by Idaho Power in any manner permitted by Rule L. Each deposit wil be held for a
minimum of twelve months, at which time IPC wil perform a credit evaluation. If the credit
evaluation determnes Hoku is eligible for unsecured credit, the applicable deposit plus interest wil
be refunded. Otherwise, each deposit wíl be retained and a credit evaluation will be performed every
twelve months until Hoku is eligible for unsecured credit. Interest wil accre on each deposit at the
rate established anually by the Idaho Public Utilities Commission. Curently, the interst rate for
customer depsits is 1 %.
lt~Warren Kline
Vice President, Customer Operations
C: Dan Minor, Executive Vice President, Operations, Dave Joerger, Easter Regional Manager,
Maggie Brilz, Customer Service Manager, Sam Golay, Major Customer Representative, Idaho Power
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-11-28
IDAHO POWER COMPANY
ATTACHMENT 4
~IDA~PO.
An IOACORP company
WARREN KLINE
Vice President, Customer Operatons
WKlinediidahopower.com
December 20, 2011
VIA U.S. MAil AND E-MAil
joe(âmcdevitt-miller.com
Dean J. Miler
McDEVITT & MILLER LLP
420 East Bannock
P.O. Box 2564
Boise, Idaho 83701
Re: Hoku Materials Deposit Required for Electnc Service
Dear Joe:
Idaho Power Company ("Idaho Power") has received your letter dated December
16, 2011, requesting that the due date of Hoku Materials' ("Hoku") second deposit
installment be extended by approximately sixty (60) days until March 2, 2012. Based
upon the representations made in your letter, Idaho Power agrees to this extension
conditioned as follows:
1. Hoku remains current on payments owed under Hoku's Amended
and Restated Energy Service Agreement ("ESA") (including the
$1,895,656.26 due December 21, 2011, for service rendered in
November 2011); and
2. If it appears Hoku will energize the reactors before March 2, 2012,
Hoku wil so notify Idaho Power and pay the $1,800,000 second
deposit installment in advance. of energization.
The forgoing extension of the second deposit installment represents the full
extent to which Idaho Power can accommodate Hoku. If Hoku does not satisfy both
conditions as set forth above, Idaho Power wil take action to terminate service.
õi::~
Warren Kline
WK:csb
cc: Lisa Nordstrom, Lead Counsel, Idaho Power Company (via e-mail)
Scott Paul, CEO, Hoku Corporation (via U.S. Mail and e-mail)
1221 W.ldaho St. (83702)
P.O. Box 70
Boise, 10 83707