20140609Simplot Petition for Reconsideration.pdf

Peter J. Richardson ISB # 3195
Gregory M. Adams ISB # 7454
zuCHARDSON ADAMS, PLLC
515 N. 27th Street
Boise, Idatro 83702
Telephone: [phone]
Fax: [phone]
peter@richardsonadams. com
gre g@richardsonadams. com
Attomeys for the J. R. Simplot Company
IN THE MATTER OF TDAHO POWER
COMPANY'S APPLICATION FOR
APPROVAL OF SPECIAL CONTRACT
BETWEEN IDAHO POWER COMPANY
AND J. R. SIMPLOT COMPANY
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.IPC.E-13-23
J. R. SIMPLOT COMPANY'S
PETITION FOR RECONS IDERATTON
I. INTRODUCTION AND SUMMARY
Pursuant to Rule of Procedure ("RP") 331 of the Idaho Public Utilities Commission
("Commission" or "IPUC"), J.R. Simplot Company ("Simplot") hereby respectfully requests
reconsideration of the Commission's Order No. 33038. In this case, Simplot asked for the same
treatment as other existing customers on Idaho Power Company's ("ldaho Power" or the
"Company") system - (1) a rate approximating what other special contract customers currently
pay, and (2) liability and indemnification provisions identical to those applicable to other
existing customers and consistent with the IPUC orders and extant tdaho law. Idaho Power's
proposed special contract contained less favorable terms for Simplot on both scores. The
Commission denied Idaho Power's Application and proposed special contract. Instead of setting
a rate and terms for Simplot's special contract, however, the Commission ordered Simplot to
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE I
continue negotiating with Idaho Power. Through this Petition, Simplot seeks reconsideration of
the Commission's determination that Idaho law allows Idaho Power to condition electric service
on a limitation of liability for ldaho Power's breach of a legal duty and the Commission's
direction that Simplot must negotiate a rate and a monetary cap on ldaho Power's liability.
II. PROCEDURAL AND FACTUAL BACKGROUND
This matter regards the appropriate terms for a special contract for electrical service at
Simplot's new food processing facility in Caldwell, Idaho, referred to as the "Idaho Project."
Because Simplot anticipated that the ldaho Project's electrical demand will exceed the Schedule
19 tariff s eligibility threshold of 20 megawatts ("MW"), Simplot requested that ldaho Power
provide a special contract for service to the new facility. Despite engaging in extensive
negotiations, Idaho Power and Simplot were unable to agree on limitation of liability language in
a special contract.
Idaho Power therefore filed its proposed special contract which contained Idaho Power's
proposed limitation of liability language. In addition to a standard mutual indemnification clause
to which Simplot did not object in Section I1.1, Idaho Power's Application proposed the
following broad waiver of its liability in Sections I I .2, ll.3 and I 1.4 of the special contract:
11.2. EACH PARTY EXPRESSLY AGREES THAT NEITHER
PARTY NOR ITS AFFILIATES WILL UNDER ANY CIRCUMSTANCES
BE LIABLE UNDER ANY THEORY OF RECOVERY, WHETHER
BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND
STRICT LIABILTTY), UNDER WARRANTY, OR OTHERWISE, FOR:
ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSS
OR DAMAGE OR PUNITIVE DAMAGES WHATSOEVER; LOSS OF
PROFITS OR REVENUE; LOSS OF USE OF MATERIAL OR
EQUIPMENT; OR INCREASED COSTS OF CAPITAL AND FUEL
COST; PROVIDED, HOWEVER, THAT NOTHING IN THIS
PARAGRAPH 1I.2 SHALL BE CONSTRUED TO LIMIT SIMPLOT'S
PAYMENT OBLIGATIONS TO IDAHO POWER.
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE 2
1 1.3. EACH PARTY AGREES UNDER NO CIRCUMSTANCES
SHALL THE TOTAL AGGREGATE CLAIMS AGAINST AND LTABILITY
OF THE OTHER PARTY FOR DIRECT DAMAGES, UNDER ANY THEORY
OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT
(INCLUDING NEGLIGENCE AND STRICT LTABILITY), OR OTHERWISE,
EXCEED ONE HUNDRED FIFTY PERCENT (150%) OF THE TOTAL
CHARGES PAID BY SIMPLOT TO IDAHO POWER UNDER THIS
CONTRACT UNDER ANY GIVEN CALENDAR YEAR; PROVTDED,
HOWEVER, THAT THIS LIMITATION OF LIABTLITY SHALL NOT LIMIT
SIMPLOT'S PAYMENT OBLIGATIONS TO TDAHO POWER UNDER THIS
AGREEMENT.
11.4, EXCEPT AS PROVIDED IN THIS AGREEMENT, IDAHO
POWER MAKES NO WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING WTTHOUT LTMITATION, THOSE OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO THE WORK AND SERVICES PROVIDED
HEREUNDER.
Idaho Power 's Application at Attachment l, p. 7 . Idaho Power also included with its
Application a rate for the special contract that was higher than the rates [daho Power had
previously proposed to Simplot during negotiations. See Simplot's Comments at2 (March 28,
2014) (noting that the rate in the Company's December filing is 4.243 llkwh, or 7.8o/o higher
than the 3.937 p/kWh rate discussed in negotiations in the fall of 2013).
Through an Answer, Comments, and Reply Comments, Simplot requested that the
Commission approve a special contract with rates similar to those provided to other special
contract customers and without Idaho Power's proposed Sections 11.2,11.3, and 11.4. Simplot's
Answer at l-2,1 I (Feb. 5,2014); Simplot Reply Comments at 12-13 (April ll,20l4).
Commission Staff filed comments supporting a rate for Simplot similar to that currently provided
to other special contract customers, but took no position on the limitation of liability clauses.
Idaho Power argued in support of its broad liability waiver and its higher rate than that provided
to other special contract customers.
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE 3
In Order No. 33038 ("Order"), the Commission first determined:
Contrary to Simplot's assertions, limitations of liability are not, per se, illegal and
unenforceable in utility contracts. By the same token, "no regulated monopoly can
contract away its duty to serve the public interest or the state's right to enforce that
obligation."
Order at 8 (quoting Bunker Hill Co. v. Washington Water Power Co.,98Idaho 249,253,561
P.2d39r,39s (1977)).
The Order then rejected tdaho Power's broad exculpatory clauses exempting ldaho
Power's liability, but instructed Simplot to negotiate an appropriate monetary level for Idaho
Power's liability for non-willful breaches of a legal duty. The Order concluded as follows:
Exempting a public utility from the consequences of negligent conduct when the
utility is charged with a public duty is not reasonable. Idaho Power cannot
abrogate its general duty to exercise reasonable care in operating its system to
avoid unreasonable risks of harm to its customers. However, we find that limitins
the liability of a utility to a reasonable, agreed-upon valuation for damages
recoverable by a non-willful breach of duty is fair, just and reasonable.
We further find that any limitations of liability regarding intentional tortious
conduct or gross negligence are contrary to the public interest and, as such, are
unfair and unreasonable.
Order at I I (underline in original). Thus, the Order concluded ldaho Power can require Simplot
to agree to a predetermined monetary level of Idaho Power's liability for non-willful conduct.
However, while the Order appeared to conclude that Idaho Power cannot exempt its liability
under any legal theory, the Order did not specifically address whether Idaho Power's proposed
Section I 1.2 improperly sought to exempt Idaho Power from any liability for consequential or
indirect damages that would otherwise be available under contract or tort law.
The Order also provided further guidance regarding the appropriate rate. Specifically, the
Order determined that Simplot's special contract rates should be based on Idaho Power's most
recent cost of service study. Order at 12.
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATTON
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Yet the Order did not set the terms for the disputed special contract. lnstead, it stated:
"we grant Idaho Power's request to reexamine and renegotiate the terms of its special contract
with Simplot." Order at 1 l. The Order therefore requires Simplot to reach agreement with Idaho
Power on a limitation of liability prior to receiving a special contract rate for the new facility.
III. LEGAL STANDARI)
IPUC RP 331.01 provides, "Petitions for reconsideration must set forth specifically the
ground or grounds why the petitioner contends that the order or any issue decided in the order is
unreasonable, unlawful, erroneous, or not in conformity with the law, and a statement of the
nature and quantity of evidence or argument the petition will offer if reconsideration is gtanted."
See also I.C. $ 6l-626.
ry. GROUNDS FOR RECONSIDERATION
This Petition seeks reconsideration of the Order's determination that ldaho Power may
condition utility service on a customer's agreement to a limitation on ldaho Power's liability for
breach of a legal duty. For the reasons set forth below, this aspect of the Order misconstrues
Idaho law and lacks evidentiary support in the record before the Commission. Additionally,
instead of requiring further negotiations, Simplot maintains the Commission should have
approved the special contract with an appropriate rate based on the record before it and without
Idaho Power's liability limitations by requiring deletion of Sections 11.2, I1.3, and 1 1.4 of tdaho
Power's proposed special contract. At a minimum on reconsideration, the Commission should
clarify the Order by expressly stating that Idaho Power may not require exemptions from liability
for all consequential damages, indirect damages and lost profits, as it proposed in its Section
I1.2. Simplot provides argument supporting reconsideration below, and if reconsideration is
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE 5
granted, will provide any further evidence or argument that the Commission may request.
A. The Order Is Not in Conformity with Law Because it Misconstrued Idaho Law to
Conclude that Idaho Power May Limit Its Liability.
As noted above, the Order was based on the conclusion that tdaho Power may condition
electric service on a customeros agreement to limit ldaho Power's liability, and after the
customer agrees to such a limitation, the limitation is enforceable. These conclusions are
contrary to well-established Idaho law.
The Idaho Supreme Court has expressly ruled that a public servant, such as a utility, may
not contractually limit its liability. Strong v. Western Union Telegraph Co., 18 tdaho 389, 109 P.
910 (1910), off'd on reh g 18 ldaho 409,109P.917 (1910); Mclntoshv. Oregon R. & Nav. Co.,
l7 Idaho 100, 109, 105 P. 66,69 (1909). In Strong,just as in this case, the public servant, a
telegraph company, sought to limit its liability for delay or mistakes in the transmission of
messages to the sum paid for sending the message. 18 Idaho at399,109 P. at 913. The Idaho
Supreme Court held this limitation on liability invalid. Id. , 18 Idaho at 404, I 09 P. at 9 I 5. The
same rule applies here. Idaho Power sought to limit its liability to the sum of 150% of the
contract's annual revenue, but under Strong such a limitation would be invalid even if Simplot
signed the contract.
Although the decisionin Strong is dated, it remains good law. Strong was issued prior to
the initial enactment of Idaho's utility code, [.C. $$ 6l-l0l et seq., which created the IPUC in
1913. However, in Idaho, "changes in the common law by the adoption of a statute may not be
presumed, nor may such changes be accomplished by legislation of doubtful implication."
Industrial Indem. Co. v. Columbia Basin Steel & Iron Inc.,93 Idaho 719,723,471 P.2d 574, 578
(1970). Unless the utility code expressly provided the IPUC with the authority to limit the
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
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liability of utilities, the common law ftom Strong remains unchanged. And no Idatro statute is
contrary to the holding in Strong that a public servant like tdaho Power cannot limit its liability.
In fact, since S/rong, ldaho courts have consistently stated that express agreements
exempting one party from liability for negligence are not valid in the case where a public duty is
involved, such as the duty of a public utility company. See Morrison v. Northwest Nazarene
University,l52 ldaho 660,661,273 P.3d 1253,1254 (2012); Jesse v. Lindsay,l49 Idaho 70,75,
233P.3d1,6(2008); Leev.SunValleyCo., 107ldaho976,978,695P.2d361,363 (198a);
Steiner Corp. v. Amer. Dist. Telegraph,106Idaho 787,791,683 P.2d 435,439 (198a); Rawlings
v. Layne & Bowler Pump Co.,93 Idaho 496, 500, 465 P .2d 107 , I I I (1970). In Lee, the Court
even named utilities and common carriers as "obvious examples of parties owing a public duty"
and which are thus unable to be contractually exempted from liability for negligence. Lee, 107
Idaho at 978, 695 P.2d at 363.
In addition to a long line of ldaho Supreme Court decisions, the ldaho legislature has
expressly imposed upon Idaho Power the duty to provide adequate service, and provided a
private right of action against Idaho Power for harm caused by abdication of that duty.
Specifically, Idaho Code Section 61-302 states:
Every public utility shall fumish, provide and maintain such service,
instrumentalities, equipment and facilities as shall promote the safety, health,
comfort and convenience of its patrons, employees and the public, and as shall be
in all respects adequate, efficient, just and reasonable.
Idaho Code Section6l-702 further provides:
ln case any public utility shall do, cause to be done or permit to be done, any act,
matter or thing prohibited, forbidden or declared to be unlawful, or shall omit to
do any act, matter or thing required to be done, either by the constitution, any law
of this state, or any order or decision of the commission, according to the terms of
this act, such public utility shall be liable to the persons or corporations affected
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
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therebyfor all loss, damaqes or injury caused thereby or resulting therefrom. An
action to recover such loss, damage or injury may be brought in any court of
competent jurisdiction by any corporation or person.
(emphasis added).
The statutes require that the utility be liable for all loss, damages or injury caused by the
utility's failure to provide adequate service. The Idaho Supreme Court has interpreted these two
statutory provisions as imposing a duty similar to that imposed by common law negligence. See
C.C. Anderson Stores Co. v. Boise lf/ater Corp.,84 Idaho 355,361-62,372P.2d752 (1962).
The statutes unambiguously state that if the utility fails to provide adequate and reliable service,
the utility is liable for all damages to customers; the statutes do not provide that the utility's
liability for damages may be contractually capped at a certain monetary level or that the utility
may eliminate availability of indirect or consequential damages.
Instead of relying upon Strong and I.C. 5 6l-702, the Order relies on Restatement of
Contracts $ 575(2). According to the Order, 'Numerous state, circuit and federal courts,
including Idaho, use the Restatement of Contracrs as a starting point in an analysis of whether an
exculpatory clause or limitation on liability will be deemed valid." Order at 9. From this, the
Order relies on Section 575(2) of the Restatemenf, which provides: "A bargain by a common
carrier or other person charged with a duty of public service limiting to a reasonable agreed
voluation the amount of damages recoverable for injury to property by a non-willful breach of
duty is lawful." Id. (emphasis added).
Reliance on the Restatemen in this circumstance is erroneous. First, Section 575(2) of
the Restatement is relevant only after the customer agrees to a predetermined valuation of a
limitation of liability. Simplot has not agreed to limit liability for damages it might incur due to
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J.R. SIMPLOT CO.'S PETITTON FOR RECONSIDERATION
PAGE 8
a breach of a legal duty in negligence or contract law. Second, Section 575(2) of the
Restatemenl is directly contrary to the holding in Strong and I.C. $ 6l-702. Additionally, no
Idaho decisions have adopted Sections 574 or 575 regarding enforceability of exculpatory
clauses. The Idaho Supreme Court cited those sections in Rowlings, 93 Idaho at 499-500,465
P .2d at 1 1 0- I 1 I , but it did not adopt those sections of the Restatemenf. Instead, it relied on those
sections and other authorities to hold that "express agreements exempting one of the parties for
negligence are to be sustained except where: (1) one party is at an obvious disadvantage in
bargaining power; (2) a public duty is involved (public utility companies, common carriers)." 1d
The Rawlings case did not address the question of whether a party owing a public duty can
require a limit to its liability as a condition of service.r
The Order also relies on an intermediate appellate decision from Oregon, to conclude
"[c]ourts are virtually unanimous that provisions limiting a public utility's liability are valid so
long as they do not purport to grant immunity or limit liability for gross negligence." Order at l0
(quoting Garrison v. Pacific Northwest Bell,45 Or. App. 523,531,608 P.2d 1206,1214 (1980)).
However, the Order's reliance on an intermediate appellate case from Oregon fails to grapple
with the clear rule in Strong and I.C. $ 6l-702. Idaho law controls here. In any event, the courts
are not "virhrally unanimous" ard, in fact, many states, like Idaho, have long held that a utility
I The only other time Sections 574 and 575 of the Restatement have been cited in an ldaho decision
is in the dissent in the Lee case. ,See Lee, 107 Idaho at 982, 695 P.2d at 367 (Bistline, J., dissenting).
Idaho appellate courts have expressly declined to follow certain other sections of the Restatement of
Contracts. See Fazzio v. Mason,l50 ldaho 591,596,249 P.3d 390, 395 (201 l) (declining to follow rule
on impossibility of perforrnance set forth in Restatement (First) of Contracts $ 368 (1932\); Lewis v.
Fletcher, I 0 I Idaho 530, 532, 617 P .2d 834, 836 ( I 980) ("The Restatement of Contracts takes the
minority position that an option in writing and signed by the offeror which recites consideration is
binding notwithstanding the fact that no such consideration was given or expected. . . . However, we
choose to adhere to the majority position."); Dennett v. Kuenzli, 1 30 Idaho 2l , 28, 936 P .2d 219, 226 (CL
App. 1997) (noting the divergence between Idaho common law and the Restatement (Second) of
Contracts $ 153(a) ( l98l ) on the applicability of the unilateral mistake doctrine).
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
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may not limit its liability. See Indianapolis l(ater Co. v. Schoenemann, 107 20 N.E.2d 671,677
(Ind. App. 1939) ("Public Service Commission cannot relieve a utility from liability under the
law of negligence as it exists in lndiana, by any rule it may adopt"); see also 27A Am. Jur. 2d
Energt 5 222 (2003); see also K.A. Drechsler, Annotation, Validity of Contractual Provision by
One Other Than Caruier or Employerfor Exemptionfrom Liability, or Indemnification, for
Consequences of Own Negligence, 175 A.L.R. 8, 39-40 (1948).
The Order is erroneous because it is contrary to Strong and I.C. $ 6l-702. In fact, the
Order fails to even cite or discuss these controlling authorities.
B. The Order Is Not in Conformity with Law Because It Expands the Commission's
Authority.
The Order relies on the Commission's'Just and reasonable" standard of review and its
authority to set service adequacy requirements, citing I.C. $$ 6l-302, -507, -520, as a basis for
requiring Simplot to agree to a limit on ldaho Power's liability as a condition of service. Order
at 8-9. According to the Order, the legislature created broad standards to allow the Commission
to engage in 'Judicial interpretation on a case by case basis, considering the particular
circumstances" of each situation. Order at 9 (quoting Powers v. Canyon County,l0S Idaho 967,
972,703 P.2d 1342,1347 (1985). These aspects of the Order misconstrue Idaho law.
First, Powers was not an IPUC case. It was a constitutional challenge to a statute
granting indigent benefits with an allegedly overbroad standard. See Powers, 108 Idaho at972,
703 P.2d at 1347. The language quoted is mere dicta, which cited the IPUC statute to provide an
example of a broadly written standard. Powers is inapplicable to this case.
The Idaho Supreme Court has held that the IPUC has no authority other than that granted
to it by the legislatwe. Idaho State Homebuilders v. Washington Water Power,l07 ldaho 418,
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
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690P.2d 353 (1984). A public service commission has no inherent power; its powers and
jurisdiction derive in entirety from enabling statutes creating it, and nothing is presumed in favor
of its jurisdiction. U.S. v. Utah Power & Light Co.,98ldaho 665,667,570P.2d 1353, 1355
(1977). Thus, the question is whether any provision in the utility code grants the IPUC authority
to ignore Strong, and require a customer to agree to a contract with a utility that limits the
utility's liability.
None of the provisions of the utility code cited by the Order state that the IPUC may limit
a utility's liability under any theory of recovery. The ldaho legislature enacted the utility code in
1913 against the backdrop of the Strong decision that a utility may not contractually limit its
liability. And the utility code unambiguously provides that utilities are liable for all damages
associated with their failure to provide adequate and reliable service. See I.C. $$ 6l-302, 6l-
702; see a/so IPUC Order No. 17499 at 51 (requiring removal of back-pay and liability
limitations from Idaho Power's tariffs after finding that the Commission should not approve
provisions differing from the general laws of contract and tort), affirmed on reconsideration by
IPUC Order No. 17620 at l5-16. Idaho law therefore provides no authority for the Commission
to impose a limitation on Idaho Power's liability to Simplot.
C. The Order Is Erroneous and Not in Conformity with Law Because It Reversed the
Burden of Proof and Made Erroneous Factual Findings.
The Order states, "We do not find evidence that the terms were imposed on Simplot or
that any obvious disadvantage in bargaining power existed." Order at 10. The Order later relies
on this finding to conclude the parties should return to the bargaining table to determine for
themselves the proper level at which to cap Idaho Power's potential damages.
The Order erroneously reverses the burden of proof. Idaho Power bears the burden of
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proof in a rate proceeding where it proposes to impose a new exculpatory clause on Simplot. See
Boise l|/ater Corp. v. Idaho Pub. Util. Comm.,97 ldaho 832, 835, 555 P.2d 163,166 (1976);
Application of Pacific Telephone & Telegraph Co.,62 Idaho 568,574,113 P.2d 798, 800 (1940).
Yet the Order reverses the burden and requires Simplot to prove it was disadvantaged. By the
Order's own declaration of the new rule for exculpatory clauses, the default position is that a
limitation of liability is not allowed. See also In re Advice Letter No. 89-05 of Contel of the West,
Inc.,LPUC Case No. Con-T-89-2, Order No. 22812 (1989) (utility must prove it has a need to
limit liability). Even if a limitation on liability could be lawfully imposed over the customer's
objection, the utility has the evidentiary burden to demonstrate that a limitation of liability is
necessary. It is not the customer's burden to prove it was in an unfair bargaining position.
Moreover, the Order reaches an eroneous factual finding that Simplot is not
disadvantaged in negotiations with Idaho Power. The Order ignores the "obvious" disadvantage
that Simplot explained in its comments. The customer (no matter how large or sophisticated) is
in a disadvantaged bargaining position because if the customer wants to use electricity in Idaho
Power's service territory, it must buy that electricity from Idaho Power. With no other potential
sellers, the buyer has no leverage. Idaho Power's final offer is effectively a take-it-or-leave
proposition.
In fact, Idaho law presumes the customer is at a disadvantage and requires no proof of
such a disadvantage. The Idaho Supreme Court has held that an exculpatory clause is invalid if
the party seeking exemption owes the other party a public duty, such as a duty to provide utility
service, or (not "and") the other party is at an obvious disadvantage in bargaining power.
Morrison, I 52 Idaho at 661 , 273 P .3d at 1254. The customer must only prove the fact that it was
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dealing with a party that has a public duty. The limitation on liability is invalid by law because
Idaho Power owes a public duty to provide adequate and reliable utility service and to
compensatecustomersforalldamagesthatresultfromafailuretodoso. SeeI.C.$$61-302,61-
702.
D. The Order Is Erroneous Because It Is Not Supported by Substantial Evidence.
The Order relies on In re Advice Letter No. 89-05 of Contel of the West, Inc.,IPUC Case
No. Con-T-89-2, Order No. 22812 (1989), to conclude that the Commission can limit liability
after reviewing "the factual underpinnings for the claim liability should be waived." Order at 10.
The Commission's 1989 Contel decision cannot ovemrle Strong and I.C. S 6l-702. However,
even if the Commission's 1989 Contel order could ovemrle tdaho law, ldaho Power failed to
meet the test set forth in Contel. In other words, even if a limitation on liability could be
larnfirlly imposed over the customer's objection, the utility has the evidentiary burden to
demonstrate that a limitation of liability is necessary. The Order and Idaho Power's filings
pointed to no instances where any ldaho utility had met the evidentiary burden set forth in
Contel. And Idaho Power failed to meet that burden here.
Idaho Power cited no facts or evidence demonstrating that Idaho Power would be unable
to provide utility service without limiting its liability, as requiredby Contel. Idaho Power
provided no evidence that the cost of service to Simplot would increase without the limitation on
Idaho Power's liability. Idaho Power presented no evidence of a costly insurance policy it must
obtain to continue providing utility service without a limitation on liability clause. Nor did Idaho
Power present any evidence that its cost of capital will increase if it is forbidden from capping its
potential damages for a breach of a legal duty. The Order cites a case where the Idaho Supreme
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PAGE I3
Court required the IPUC to allow a railroad to limit services in a rural location. See In re
Application of Union Pac. Railroad Co. ,64 Idaho 529, 134 P .2d 599 ( I 943). That case presents
the exception to the general rule that the utility must provide the public services as specified in
the statutes. Unlike in that case, however, Idaho Power presented no evidence supporting its
claim that it needs to lower the level of its service below that established by statute and limit its
potential liability. The record lacks substantial evidence supporting the Order.
E. The Order Violates ldaho Law By Subjecting Simplot to Unjustilied Discrimination.
The Order allows Idaho Power to impose differential treatment for Simplot with regard
limitations on liability. Idaho law provides:
No public utility shall, as to rates, charges, service, facilities 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
utility shall establish or maintain any unreasonable difference as to rates, charges,
service, facilities 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.
r.c.$ 6l-31s.
Aside from Simplot's ldaho Project, Simplot is aware of no other customers that have
been requiredto agree to limitations of liability to obtain utility service. For the Commission's
reference, Simplot has attached Idaho Power's Commission-approved Rules A and J as Exhibit 1
to this Petition. Rule J indicates that Idaho Power is not liable for occurrences beyond its control
or necessary to maintain system integrity, which is consistent with general tort or contract law
principles. It expressly states: "The provisions of this rule do not affect anyone's rights in tort."
Rule A indicates that all Rules, including Rule J, apply to Idaho Power and every customer,
unless the service schedule is to the contrary. Schedule 19 and the other standard service
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
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schedules are not to the contrary.
Exhibit 2 to this Petition is the Micron special contract and the Commission Order
approving the contract. That contract contains a standard indemnification provision in Section
l2,btt does not contain the monetary cap limiting liability as adopted by the Order in this case.
This demonstrates that even without the right to a tariffrate, an ldaho Power special contract
customer obtained special contract rates without a limitation on liability. While Idaho Power
pointed to other special contracts containing broad limitations on liability, none of those
customers objected. This is the first case where such a limitation is imposed over the customer's
objection.
The record is devoid of any basis to conclude that Simplot - as opposed to other
customers with no limitation of liability - will impose a higher cost of service without a liability
limitation. Without any such record, the Order is discriminatory in violation of Idaho law.
F. The Order Is Unreasonable Because It Failed to Resolve the Case.
When the utility's proposed rate or condition is found unreasonable (as the Commission
concluded here), "the commission shall determine the just, reasonable or sufficient rates, fares,
tolls, rentals, charges, classifications, rules, regulations, practices or contracts to be thereafter
observed and in force and shall fix the same by order . . . ." I.C. $ 61-502. But the Order here
did not set the just rates and terms. Instead, it instructed the parties to resume negotiating.
The negotiations will be particularly hampered by an ambiguity in the Order. While the
Order appeared to conclude that Idaho Power cannot exempt its liability for damages under any
legal theory, the Order did not specifically state that Idaho Power's proposed Section I 1.2
improperly sought to exempt Idaho Power from any liability for consequential and indirect
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J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE I5
damages, including lost profits, arising under a contractual theory. Indirect and consequential
damages, such as lost profits, would be the bulk of damages in an unexpected power outage, and
if any customer were to agree to a monetary cap on damages these types of damages should
reasonably be available subject to the cap. However, because the Order did not directly address
the issue, Simplot fears that Idaho Power will construe the Order to permit it to impose complete
exemptions from all contractual theories of recovery for consequential damages and lost profits,
as it proposed in its Section 11.2. At a minimum, the Commission should clarify this issue on
reconsideration.
However, without any evidence supplied by the party possessing the burden of proof, the
Commission should have approved the contract without Idaho Power's proposed liability
language (Sections 11.2, 11.3, and I I .4.), and determined an appropriate rate set by the
Commission based on the evidence before it. The failure to do so places Simplot in the unfair
position of needing to negotiate a limit to liability with incomplete guidance on the
Commission's views.
V. CONCLUSION
Simplot respectfully requests that the Commission grant this Petition for Reconsideration,
and approve a special contract for the Idaho Project with base rates and liability limitation
provisions that do not discriminate against Simplot. With regard to the base rates, Simplot
maintains the Commission should set an appropriate rate based on the record before it and the
guidance it provided in the Order. Additionally, Simplot respectfully requests that the
Commission approve the special contract without Idaho Power's liability limitations by requiring
deletion of Sections 11.2, I1.3, and I 1.4 of Idaho Power's proposed special contract. At a
IPC-E-13-23
J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE I6
minimum on reconsideration, the Commission should clariff the Order by expressly stating that
Idaho Power may not require exemptions from liability for all contractual theories of recovery
for consequential damages and lost profits, as it proposed in its Section I1.2.
RESPECTFULLY SUBMITTED this 9fr day of June 2014.
Of Auorneys for J. R. Simplot Company
rPC-E-13-23
J.R. SIMPLOT CO.'S PETITION FOR RECONSIDERATION
PAGE I7
HARDSON ADAMS, PLLC
(rsB # 3les)
Gregory M. Adams (ISB # 7454)
CERTIFICATE OF' SERVICE
I HEREBY CERTIFY that on the 9th day of June,20l4, a true and correct copy
of the within and foregoing PETITION FOR RECONSIDERATION BY THE J. R
SIMPLOT COMPAIYY IN CASE NO. IPC-E-13-23 was served in the manner shown
to:
Jean D. Jewell, Secretary
Idatro Public Utilities Commission
472West Washington
Boise,Idaho 83702
i eanj ewell@puc. idaho. gov
Lisa D Nordstrom
Jennifer M Reinhardt-Tessner
Idaho Power Company
PO Box 70
Boise, Idaho 83707 -0070
lnordstrom@ idahopower. com
i reinhardt@ idatropower. com
X Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
X Hand Delivery
_U.S. Mail, postage pre-paid
_ Facsimile
X Electronic Mail
,,*.oQ*d-fis
Nina Curtis
ldaho Power Company
|.P.U.C No 29 Tariff No 101
IDAHO PUBLIC UTUNES COMMISSION
OrioinalSheet No A-1 Approved
Feb.29,2fl)8
Effectivr
March 1,2008
RULE A
INTRODUCTION
Per O.N. 30508
Jean D. JewellSecretary
These Rules and Regulations are a part of the Tariff of ldaho Power Company and apply to the
Company and every Customer to whom service is supplied; provided, that in case of conflict between
these Rules and Regulations and the provisions of any schedule of this Tariff, the provisions of such
schedule will govern as to service supplied thereunder.
IDAHO
lssued per Order No. 30508
Effective - March 1, 2008
lssued by IDAHO PO\ /ER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, lD
;
ldaho Power Company
l.P.U.C. No 29. Tariff No. 101
IDAHO PUBLIC UNUNES COMMISSION
OrioinalSheet No. J-1
Approved
Feb.29,2fl)8
Effective
March 1,2008
RULE J
CONTINUITY. CURTAILMENT AND
INTERRUPTION OF ELECTRIC
SERVICE
Per O.N. 30508
Jean D. Jeruell Secretary
1. Electric Service is inherently subject to occasional intenuption, suspension, curtailment,
and fluctuation. The Company will have no liability to its Customers or any other persons for any
interruption, suspension, curtailment, or fluctuation in service or for any loss or damage caused thereby if
such interruption, suspension, curtailment, or fluctuation results from any of the following:
Causes beyond the Company's reasonable control including, but not limited to,
fire, flood, drought, winds, acts of the elements, court orders, insurrections or riots, generation
failures, lack of sufficient generating capacity, breakdowns of or damage to facilities of the
Company or of third parties, acts of God or public enemy, strikes or other labor disputes, civil,
military or governmental authority, electrical disturbances originating on or transmitted through
electrical systems with which the Company's system is interconnected, and acts or omissions of
third parties;
b. Repair, maintenance, improvement, renewal or replacement work on the
Company's electrical system, which work in the sole judgment of the Company is necessary or
prudent; to the extent practicable work shall be done at such time as will minimize inconvenience
to the Customer and, whenever practicable, the Customer shall be given reasonable notice of
such work;
c. Actions taken by the Company, which in its sole judgment are necessary or
prudent to protect the performance, integrity, reliability or stability of the Company's electrical
system or any electrical system with which it is inter+onnected, which actions may occur
automatically or manually.
Load curtailment and interruption carried out in compliance with an order by governmental
authority shall follow the Company's plan entitled "Load Curtailment and lnterruption Procedure", as filed
with and approved by the Commission.
The provisions of this rule do not affect any persons rights in tort.
IDAHO
lssued per Order No. 30508
Effective - March 1, 2008
lssued by IDAHO PO\A/ER COMPANY
John R. Gale, Vice President, Regulatory Affairs
1221 West ldaho Street, Boise, lD
Office ofthe Secretary
Service Date
February 12,2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPAIYY'S APPLICATION FOR
APPROVAL OF A REPLACEMENT
SPECIAL CONTRACT WITH MICRON
TECTINOLOGY. INC.
On December 31, 2009, Idalro Power Company (Idatro 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 t}re "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
Idatro Power's curent 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 ldaho
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, Idatro Power has been serving Miuon under an 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 26,4, expired on December 31, 2009. On January l, 2010, service to Micron reverted
back to the Current Agreement and Schedule 26, which has been updated throughout the year to
reflect Commission-authorized rate changes.
The Current Agreement obligates Idaho Power to provide Micron up to 140,000 kW
of contact demand. Micron's current contract demand is 85,000 kW. Micron has requested that
its contact 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
)) cAsE NO. rPC-E-09-3s
)) ORDER NO. s1006
)
ORDERNO. 31006
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 Miuon's increasing or
decreasing amounts of contract demand and reduction in the total contact 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 Replacernent 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 Attachm ent 2.
Swrunary of Revisions to CurrentAgreement
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
fl 6.1.
b. The total marimum 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 tf 6.2.a
c. In the Replacement Agreement, Micron is permitted to increase its
Contract Demand in 1,000 kW increments on three months' 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-ye.u term in the Current
Agreement. tn 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.
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 !l
6.2.b.
ORDER NO. 31006
Changes to Schedule 26
The changes to rates incorporated in Schedule 26 arc designed to recover the same
average cents-per-kilowatt-hour as authorized by the Commission in Case No. IPC-E-09-08.
. The Contact 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.
o The Monthly O&M provision has been removed because 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 its proposed amendment to tariffSchedule 26.
On January 22,2010, the Commission issued a Notice of Application and Modified
Procedure in Case No. IPC-E-09-35. The deadline for filing written comments was February 11,
2010. Commission Staff was the only party to file comments. Staff recommends that the
Replacement Agreement and related changes to Schedule 26 rates and charges be approved for
the effective date of the Commission's Order.
COMNTISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. IPC-
E-09-35 including the new special contact between Idaho Power and Micron Technology, Inc.
dated December 29, 2009 (Replacement Agreement) and the related amended Schedule 26
Electric Service Rate tariff. We have also reviewed the comments and recommendations of
Commission Staff. Based on our review of the record in this case, we continue to find it
reasonable to process the Company's Application under the Commission's Rules for Modified
Procedure. IDAPA 31.01.01.204.
We find that the Replacement Agreement incorporates changes required by Micron's
changed business and operating requirements. We find that the electric load requirements of
ORDERNO.31006
Micron continue to exceed 25 MW and trigger the necessity of a special contract. We find that
the submitted Replacement Agreement is a negotiated special contract between Idaho Power and
Micron that sets forth mutually beneficial and reciprocal commitments. We find the
Replacement Agreement contract terms, conditions and related Schedule 26 rates and charges to
be fair, just and reasonable. Ptusuant to Replacement Agreement fl 15, the effective date of this
contact (and rates and charges) is the date of Commission approval, i.e., the date of this Order.
CONCLUSIONS OX'LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
an electric utility, and the Application filed in Case No. IPC-E-09-35 pursuant to Title 61 of the
Idatro Code and the Commission's Rules of Procedure,IDAPA 31.01.01.000 et seq.
ORDER
ln consideration of the foregoing and as more particular described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the December 29, 2009,
Replacement Agreement between ldaho Power Company and Micron Technology, Inc. and
approves the related amended rates and charges set forth in Schedule 26 for an effective date of
February 12,2010.
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 ldaho Code $ 6l-626.
ORDER NO. 31006
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /?r^
day ofFebruary 2010.
ATTEST:
MARSHA H. SMITH, COMMISSIONER
oRDER NO. 31006
BETWEEItI
IDAHO POWER COMPATiIY
AND
TIIGRON TEGHNOLOGY, INC,
THIS AGREEMENT FOR ELECTRIC SERVICE is executed on December 29th,
2009, by MICRON TECHNOLOGY, lNC., a Delaware Corporation ("M!CRON") and
IDAHO POWER COMPANY, on ldaho Corporation ("IDAHO FOWEff). ln
oonsidenaticn of the rnutual ovenants herclnafter set furth, the parties hercby agree as
follows:
SECNON I . PRIORAGREEMENT
1.'1. This Agreement replaces the August 31, 1995, Agreement for Elecfic
Service between Micron and ldaho Power induding any amendmentrs and extensions of
that agnremerfl
SEGTION 2 - DEFINITIONS
2.1. "Commlssion' shall mean the ldaho Public utilities Commission or its
succeseor agency.
2.2. 'Contac{ Demand" shall mean the monthly schedule of kilowatts ldaho
Pourer has agreed to make avallable to the Micron Facility. (See Seoffon 6.)
2.3. 'Billing Demand'shall mean the kilowatts urpplied to the Micron Facility
during the coincident 1S-consecutive-minute period of maximum use during the monthly
billing period, adjusted for powerfactor, as measured bythe metering equipment located
at the Points of Deltuery.
2.4. 'Excess Demand" shall rnsan Billing Demand ln excess of the Contract
Demand.
2.5. "lnterconnection FaciliUes' shall rnean all faciliUe rr,hich are reasonably
requircd by Prudent Electrical Ptactices and the National Electic Safety Code to
interconnest and deliver electricalpourerand energyto the Micron Facility, indudlng, but
not lirnited b, tmnsmlssion facilities, substietion facilities and metering equipment.
2.6. 'Micron Facilitf shall moan the Mbron manufactrring complex located at
8000 South Federal Way, Boise, ldaho.
2.7. "Points of Delit/enf shall mean the locations specified in paragnaph 6.2
where the elecfical facilities orned by Micron are interconnec'ted b the electricalfacilities
owned by ldaho Powerand where porerand energy are delivered by ldaho Powerforthe
purpose of providing elec'trical servioe for the operations of the Micron Facility.
2.8. 'Prudent Elecbical Practioes shall mean those pradices, nrethods, and
equipment that are comnnnly and ordinarily used in eleclrical engineering and utility
operction to operate electrical equipment and dellver eleclric povuer and energy with
safety, dependability, effciency and economy.
2.9. "Sctredule 26" shall mean the Micron tadff schedule of rates and cfrarges or
its successor schedules.
SECTION 3 - TERII OF AGREEMENT
3.1. This Agreement shall remain in effiect until either Micron or ldaho Power
terminates this Agreement as provided in paragraph 4.1.
SEGTION 4 - TERHINATION
4.1. Notice of Termination. Elther pafi to this Agreement shall have the right
Page2
to terminate this Agreernent by deliveriqg written notioe of termination to the ofier party.
The effiecftue date of termination will be specified in the termination notice but sucfi
effiecthrc date cannot be earlierthanl2 rnonths afterthe date of the deliveryof the notice
of terminatbn, if both parties give notice of terminatlon, the earliest efiective date will
prevail.
4.2. Terminatbn Charqes. lf this Agreement is terminated, Micron shall
reimburse ldaho Porver for ldaho Powe/s coste associatod wth the termination
("Termination Charges'). Termination Charges shall be limited to the net book value
(original cost less depreciation) of the lnterconnec'tion Facilities (and as amended by
mufual agreements of the parties, which Agreement will not be unreasonably withhoH)
paid for by ldaho Power plus the actral @st of the removal and transport to stonage of
surplus lnteronnection Facilities, if any, less a qedit, brany resklualvalue of the surplus
lnterconnection Facilities. Termination Charges will not be assessed br unrecovered
investment costs of lnterconnection Facilities paH for by Micron. There shall also be
deducted from the Termination Chargee: (1) any valid claims hereunder $'hich either
Micron or ldaho Power may have against the other; and (2) any oedits due under the
terms of this Agreement and not othenrise recovered by or cr€dited to Micron or ldaho
Power. Subsequent to giving or receiving a termination notice as described in paragraph
4.1, ldaho Power will invoice Micron for any Termination Charges. Termination Charges
shall be due and payable within ffieen (15) darc of Micron's receipt of the invoice.
SEGTION 5 - SERVICES TO BE PROVIDED
5.1. Supoly Obliqation. ln accordance with Prudent Elec'trical Pnac{ices and the
provisions of this Agreement ldaho Power will fumish Micron's total requircments for
Page 3
elecfric potver and energy at the Micron Facillty. Micron $,ill not rasell any portion of the
power and enegy fumiehed under this Agreement.
5.2. Points of Delivery. Elec'tric pourer and energy shall be delivercd by ldaho
Porer to the Micron Fadlity at the 12,5@ rolt transfiormer busses at ldaho Powe/s
Micron and DMIvI substations.
5.3. Descriotlon of Elec'trfu; Service. ldaho Power shall supply three-phase, 60
HZ altemating alnent at nominal 12,500 votts, wtth a maximum steady state variaton of
plus or minus fre percent (5 percent) under normal system conditions. Consistent with
Prudent Elecfical Pnadices, ldaho Porer will openate wtthin the capabi!fi of its existing
syetem to minimize voltage lerd flucttations, the normalfrequencyvadation to be within
plus or minus 0.05 HZ on a 60 HZ base.
SECTION O - CONTRACT DEMAND
6.1. Contnact Demand. Mlcron agrees to contad for and ldaho Power agrees
to provide powerto the Micron Facility: 60,0(X) kilowatts of Contrac't Demand.
6.2. Changes to Confract Dernand. Micron has the optbn to increase or
decrease its Conbact Demand level as follows:
a. lncreases to Conhac{ Demand. Underthe terms of this Agreement,
Micron may inoease the Contract Demand above the 60,000 kilowatts of Contract
Demand, in even increments of 1,000 kiloratts up to a total maximum Contrad Demand
of 120,000 kiloratts. Micron will notifu ldaho Power in writing of its desire to increase its
Contrac{ Demand at least three months in advance of the first day of the montr it desires
the additional capacig to be made available, The new Contract Demand will be in efiect
for a minimum of six months. Micron cannot increase its btal Confract Demand more
than 10,000 kilowatts in any six month pedod.
b. Decreases b Conhact Demand. Mlcron may deoease the
Contract Demand in even incrernents of 1,000 kilowatts up to the full amount of ib
then+r.rnent Contract Demand. Micron will notifo ldaho Power in writing that itdesires to
decrease its Contract Demand at least three months in advance of the first day of the
month in which it desires its decreased Conhact Demand to be efiectve. The new
Contract Demand will be in effect for a minimum of six months.
6.2.2. Mlnlmum Monthlv Billino Demand. The Minimum Monthly
Billing Demand will be 25,000 kilowatts. lf, in any two successive months, Billing
Demand is tess than 25,000 kilowatts, the parties agree to enter into gmd faith
negotiations to revise paragraph 6.2 ard its subparagnaphs.
6.2.3. Exess Demand. The availability of power in excess d the
Contract Demand is not guaranteed, and if Billing Demand at the Micron Facility exceeds
the Contnact Demand, ldaho Power may crrtail service to the Micron Facility. ldaho
Porer reserves the right to instal!, at any time, at Micrcn's expense, any device
necessaryto protect ldaho Porrye/s system fuom damagewhich may be caused by Billing
Demand at the Micron Facility exceeding the Contract Demand. Micron will be
responsible for any damages to ldaho Powe/s system or damages to third parties
resulting from Billing Demand at the Micron Facility exceeding the Contract Demand.
Micron agrees to use its best reasonable efforts to monitor iE elecfic loads and to advise
ldaho Power as soon as possible of the potential br Billing Demands at the Micron
Pago 5
Facility to exceed the Contlact Demand. Billing Demands in excess of the Contact
Demand will be subjed to the Daily Exoess Demand Charge specified in Schedule 26.
SEGTION 7 - FAqLMES FOR DELIVERY TO tf,IGRON FAGILITY
7.1. Additional Facilities. To the extent that additional transmission and/or
substiation lnterconnection Facilities are required to provide the requested seMoe,
specialarxangennnts will be made in a separate Agreement between Mbron and ldaho
Power. lf disfribution hcilites are required to supplythe desired service, those facilities
will be provided underfie terms and conditircns of Rule H of ldaho Pofle/s General Rules
and Regulations.
7.2. Ooenation and Maintenance. ldaho Pqrer will operate and maintrain
lntermnnec{ion Facilities neessary to provide servie to the Micron Facility. Such
lnteroonnedion Facilities include lnterconnection Facilities paid fur by Micron. Micron
will pay ldaho Porrer a monthly operatbn and maintenanoe charge equal to a percentage
of the total oost of the substation portion of the lnterconnection Facilities including
substation hcilities pail for by Mioon. The percentage amount is specified in Scfiedule
26.
.SECTION 8 - CHARGES TO BE PAID BY MIGRON TO IDAHO POWER
8.1. Rates and Charoes. The rates and charges for elec{rical power, energy
and other service provided by ldaho Power to the Micron Facility will be identifted by
cornponent in Schedule 26. The total amount to be paiJ by Micron for electric service to
the Micron Facility will be the surn of the components identified on Schedule 26.
8.2. Power Factor. When the Micron Facility's adjusted power factor is less
than 95 percent during the 15-consecutive-minute period of maximum use for the monthly
Page 6
billing poriod, ldaho Power will adjust the Billing Demand by muttiplying the metercd
demand in kilorvatts by 0.95 and dividing that product bythe adjusted powerfactor. The
reactfue component of the adJusted power factor is oomprised of the reac'tive load plus the
1fi112.5 kV transfornrcr reacfive losses reduced by the amount of reactlve conec'tbn
paH for by Micron.
8.3. Billino and Meterino Provisions. Billing Demand atthe Micron Facilityshall
be determined on a 15 minute coincidental basis and shall be billed acoordingty. ldaho
Power will install and maintain suitable metering equipment for each Point of Delivery so
that coincident Billing Dernand and energy consumptbn can be detennlned forthe billing
period.
SEGTION 9. PAYiTIENT OF BILLS,SETTLEIIENTS
9.1. Billinq Data. Micron shallpay ldaho Powerforallservices provided under
this Agrcement. lnvoices for payment for electric seMces shall be preparcd aM
submitted to Micron monthly. All lnvoices or bills shall contain such datra as may be
reasonably required to substantiata the billing, induding statemenb of the meter reading
at the beginning and end of the billing period, meter constants, and consumption during
the billlng period.
9.2. Payment Procedure. All bills or amunts for electric service owned by
Micron to ldaho Porer hereunder shall be due and payable within fifteen (15) days
following Micron's receipt of a bill. Paymentwill be made by elec&onictransferof funds.
ldaho Power will provide Micron with annent ABA outing numberc and other nece$ary
instructions b fucilitate the elestronic transfer of funds.
PageT
SEGTION TO - AGCESS TO PREMISES
10.1. During he term of tris Agreement, and for a reasonable perird bllodng
termination, ldaho Porer shall have aooess to the Micron Facility premises at all
reasonable times with proper notice to Micron for the puryosss of reading meters, making
installations, repairing and ramoMng lnterconnecflon Facilites and ldaho Power
equipment and for other proper purposes heraunder.
SECTION lt - ASSIGNHENT
11.1. This Agreement shall bo blrding upon the heirs, legal and personal
representatlves, successors and assigns of the parti* hereto.
SEGTK'N 12 - LIABILITY
12.1. Each party agrees to protect, defend, indemniil and hold harmless the
other party, its offtcers, dit€ctors, and employees against and frorn any and all liabilfi,
suits, loss, damage, claims, actions, @sts, and expenses of any nature, induding court
costs and attomey's fees, even if such suib or daims are conrpletely grcundless, as a
result of injury to or death of any person or destruction, loss or damage to property arising
in any way in connection wi0t, or related to, this Agreement, but only to the extent such
injury to or death of any person or destruction, loss or damage to propefi is not due to the
negligence or other breach of legal duty of such other party; provided, horever, that each
party shall be solely responsible for claims of and payment to its employees for injuries
occuning in connection with their employment or arising out of any workman's
compensation !aw.
SECTION 13 - MODIFICATIONS OF GONTRACT
13.1. This Agreement may not be rnodified except by writing, duly signed by both
Page I
parties hereto.
sEcTpN 14 - OommlssloN JUR|SDICTION
'14.1. This Agreernent and the respective nghtB and oHigations of the parties
hereunder, shall be subjec{ to (1) ldaho Powefs General Rules and Regulations as nort
or hereafter in effiect and on file with the CommiEsion and (2) to the jufisdiction and
regulatory authority of the Commission and the laws of the State d ldaho.
14.2. The rates set turth in this Agreernent and Schedule 26 are subject b the
continuing Jurisdktion of the ldaho Public l.Jtilities Commission. The mtes under this
Agreement are subject to cfiange and revision by order of the Commission upon a ffndlng,
supported by substantial competent evidence, that such rate cfiange or revisbn is just,
falr, reasonable, sufiicient, non-preferential, and nondiscriminabry. lt is the parties'
intentbn by such provision that the rate maklng standards to be used in making any
revisions or changes in rates, and the judicial review of any revisions or changes in nates,
will be the same standards that are applicable to ldaho intrastate tariff rates.
SEGTION 15 - GOiIMISSION APPROVAL
15.1. This Agrcement shall be@me effec'tive upon the approval by the
Commission of all terms and provisions hereof without changp or condition.
SECTION 16 - RIGHT OF FIRST REFUSAL
16.1. lt is the parties' intent b provide ldaho Power with a Right of First Refusal
applicable to Micron's purchase(s) of power and energy for the Micron Facility bllowing
the expiration or termination of the Electric SeMce Agreement. Acoordingly, if Micron
receives a legally enforceable proposal or proposals from a third party or parties offering
to sellto Micron power and energy for the Micron Facility (the 'Offer(s)"), wtrictr sale(s)
Page I
u,ould @mmence after termination of the Eledric Service Agreernent Micron will provide
ldaho Power, b the extent permitted by law, with the following:
16.'1.1. A opy of suctr third-party or parties Offie(s) including the rates
and a descriptbn of the rnaterialterms and conditions upon which such sale(s) vtould be
made; and
',6.1.2. Documentatbn dernonstrating to ldaho Powe/s reasonable
satisfac'tion that the thlrd-paff saller or sellers making the O,ffe(s) are authorized under
state and federal law b sell porver and energy to the Micron Facility and
16.1.3. Docurnentration demonstrating to ldaho Powe/s reasonable
satisfac{ion that the potentia! thid-pafi seller or sellers making the Offe(s) have the
ability to deliver pover either b the Micrcn Facility or to ldaho Power for delivery to the
Mlcron Facility; and
16.1.4. Certfication by Micron that it desires to purcfiase electric power
and energy from sucfi third-party sellerorsellers in accordance wtth the rates, terms and
conditions specified in the Offe(s).
16.2. Upon receipt of the above-described materials from Micron, ldaho Power
will have sixty (60) days ln which to notiff Micron in writing whether or not it is willing to
meet or better all of the rnateria! terms and conditions of the Offe(s) proposed by such
third-party seller or sellers. lf the Electic Service Agreement is still in effec{ and ldaho
Power does not agree to meet or better such third-partt's or parties' Offeft), at ldaho
Powe/s option, the Electric SeMce Agreementwill be (1) amended to allow ldaho Power
to serve the portion of Micron's load not served in accordance with the Offe(s) for the
remaining term of the Electric Service Agreement, or (2) terminated in amordance with
Page 10
paragraph 4.1 of the Electric Servlce Agreement.
16.3. The parties agree that the Right of First Refusal set forth hereinabove is not
perpetral, but may be exercised by ldaho Poflsruntil Micron has reeived Offe(s), atone
time or another, and whether or not such Offe(s) have been met or bettered by ldaho
Power, for an aggregate total amount of power and energy equal to at least 18,000
kilowatts. The parties furthEr agroe that if Micron presents the third-partys or parties'
Ofie(s) to ldaho Power after termination of the Electric Servioe Agreement, the Right of
First Refusal shall survive such terminatlon.
IDAHO POWER COTIPAT{Y
TIICRON TEGHNOLOGY, INC.
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