20230921Final_Order_No_35929.pdf

ORDER NO. 35929 1
Office of the Secretary
Service Date
September 21, 2023
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF IDAHO POWER
COMPANY’S APPLICATION FOR
APPROVAL OF A SPECIAL CONTRACT
UNDER TARIFF SCHEDULE 34 TO
PROVIDE ELECTRIC SERVICE TO LAMB
WESTON, INC.

)
)
)
)
)
)
)
CASE NO. IPC-E-23-18

ORDER NO. 35929

On May 23, 2023, Idaho Power Company (“Company”) applied (“Application”)1 to the
Idaho Public Utilities Commission (“Commission”) for an Order approving a special contract
(“Special Contract”) under Schedule 34 between the Company and Lamb Weston, Inc. (“Lamb
Weston”) (the Company and Lamb Weston referred to collectively as “the Parties”).
On June 23, 2023, the Commission issued a Notice of Application and Notice of Modified
Procedure and set deadlines for public and Commission Staff (“Staff”) comments and the
Company’s reply. Order No. 35822. Staff filed comments to which the Company replied. No other
comments were received. With this Order, we approve the Special Contract between the Company
and Lamb Weston.
BACKGROUND
On or about August 25, 2022, the Company informed Lamb Weston that service under
Schedule 19 would no longer be possible once the power consumption for Lamb Weston’s
manufacturing facility located in American Falls, Idaho (“Facility”) exceeded 20,000 kilowatts
(“kW”). At that time, Lamb Weston informed the Company that it expected to exceed 20,000 kW
as soon as July of 2023.2
THE APPLICATION
The Parties have agreed to adjust the amount of power required by Lamb Weston’s contract
(on a monthly basis) based upon Lamb Weston’s continued need.3 Lamb Weston plans to expand
the Facility. This expansion is expected to increase its power consumption by approximately

1 The Company filed an errata to its Application on July 14, 2023, to correct a billing demand calculation error.
2 Should Lamb Weston consume more than 20,000 kW before a final order is issued in this case, the Company stated
that it would continue to provide Lamb Weston with power under Schedule 19’s rates unless otherwise directed by
the Commission.
3 The Company stated that each special contract is tailored to the consumer. To accomplish this, the Company reviews
total usage, time of consumption, capability of the system’s connections, and several other factors.
ORDER NO. 35929 2
14,000 kW. Accordingly, despite an anticipated annual peak of 32,000 kW for Lamb Weston’s
steady state of production, Lamb Weston requested an initial Contract Demand level of 34,000
kW beginning in March 2024.
Proposed Schedule 34 would service Lamb Weston under Schedule 19 rates for the first
20,000 kW of energy that Lamb Weston consumes (“Block 1”). The price for electricity consumed
beyond 20,000 kW (“Block 2”) would be based on the capacity cost per kW and priced at a
marginal cost-based rate. Accordingly, Block 2 energy under the proposed Schedule 34 would be
0.058694 per kW hour effective through May 31, 2024.
The Company proposed an initial power factor adjustment for capacity up to 20,000 kW at
a 90% power factor and a 95% power factor for usage above 20,000 kW. The Company proposed
this proposed initial power factor run through April 2024.
The Company proposed to include all costs of supplying power to Block 1 and Block 2 in
the Power Cost Adjustment (“PCA”) and revenues from Block 2 would be treated as a surplus sale
and an offset to power supply costs. The Company represented this PCA treatment is similar to
the approach authorized when the Hoku special contract was served under two blocks, one priced
at embedded rates and one at marginal cost-based rates, and Schedule 20, which has all energy
priced on a marginal basis.
The Parties negotiated a provision whereby the marginal energy price could be updated
annually, and the Company would also be able to reevaluate the compensation for Block 2 energy
after the proposed Special Contract has been in place for five years.
STAFF COMMENTS
Staff believed that it was reasonable for the Commission to approve the Special Contract
and Schedule 34 as requested by the Company. Staff specifically noted that the proposed changes
should protect the Company and other customers from costs caused by Lamb Weston.
a. Special Contract Provisions
Staff stated that the proposed Special Contract is like other special contracts that have been
approved by the Commission. Lamb Weston’s annual contract demand will increase to 34,000 kW
in March, 2024. Once the Parties’ contract is effectuated, Lamb Weston must provide the Company
ORDER NO. 35929 3
with approximately six months’ notice if it plans to increase its demand and approximately4 three
months’ notice for a decrease in demand. Staff also stated that the Parties have come to a
reasonable agreement on how Lamb Weston will compensate the Company for any upgrades that
may be needed to address Lamb Weston’s increased demand.
b. Pricing Structure and Charges
Staff stated that the methods for determining charges reflect the cost of service (“COS”)
and embedded costs. Staff’s review of this data focused on the five factors described below:
i. Overall Pricing Structure
Staff explained that, under the proposed Special Contract, Block 1 energy will be provided
as normal under Schedule 19. Staff noted that the price for Block 2 energy is based upon the COS
and embedded capacity and that the two-block structure is similar to other special contracts.
ii. Block 2 Energy Charge
Staff noted that the price for Block 2 energy is not time-differentiated. While the Company
did consider time differentiated pricing for Block 2 energy, Staff believed that time-differentiated
pricing is unnecessary in this case because 1) the largest portion of Lamb Weston’s usage is in
Block 1—which is already time-differentiated; 2) the Company can determine if time-
differentiated rates should be added if the contract is modified; and 3) Staff believed that the total
charges for 2023 and 2025 will be similar whether Block 2 energy is time-differentiated charges
or not.
iii. Block 2 Energy Update and Evaluation
Staff noted that the Company proposed submitting an update to the price of Block 2 energy
each June 1st. This was paired with a provision for reevaluating the source and basis of Block 2
energy every five years. While not trued up to actuals every year, Staff stated that the annual update
allows for cost flexibility based on the previous five-year model—which in turn bears similarities
to other programs and contracts previously approved by the Commission. Staff believed that both
proposals are reasonable and allow the charge for Block 2 energy to be sufficiently tailored to
prevailing costs.

4 Specifically, Lamb Weston must provide the Company with six months’ notice from the first day of the month that
an increase in demand would take place. Lamb Weston would also need to provide and three months’ notice from the
first day of the month that a decrease would take place.
ORDER NO. 35929 4
iv. Block 2 Demand Charges
Staff outlined the process by which Block 2 Demand Charges were calculated generally.
Staff specifically noted that the Company found an error in the calculation for the Monthly
Contract Demand Charge, but this error was corrected in the July 14, 2023, errata to the
Application.5 Staff agreed that the Block 2 Demand Charges were appropriate and reasonable.
v. Power Factor Adjustment
Staff reviewed and explained the details of the proposed Initial Power Factor Adjustment.
Staff believed that it is reasonable because it included a limited period and contained provisions
allowing for power factor adjustment using a similar process as other Schedule 19 customers.
c. Accounting Treatment
Staff recommended approval of the Special Contract as well as the Company’s proposed
PCA treatment. Staff believed that the Special Contract prudently allowed for Lamb Weston’s
increased demand while remaining consistent with previous Commission decisions. Staff outlined
how various portions of the Special Contract would be treated from an accounting standpoint and
noted that the structure of the Special Contract would protect both the Company and its customers
from price fluctuations in power costs.
d. Staff’s Recommendations
Staff recommended that the Commission do the following:
1. Approve the Special Contract provided as Attachment 1 of the Application;
2. Approve the proposed annual update to the marginal energy price effective
June 1;
3. Approve the proposed Schedule 34 tariff provided as Attachment 2 of the
Application with the modification to replace Original Sheet No. 34-4 included
with Attachment 2 with the Original Sheet No. 34-4 included in the Errata to
Application provided as Revised Attachment 2; and
4. Approve the proposed PCA accounting treatment.

Staff Comments at 8.
COMPANY REPLY COMMENTS
The Company generally agreed with Staff’s analysis but provided clarification on two
points. First, the Company noted that the Special Contract was executed on May 5, 2023, and is
only binding if all the terms are approved by the Commission without changes or conditions.

5 The Company’s Reply Comments explained that the error discussed by Staff was related to the Block 2 Monthly
Charge—not the Contract Demand Charge.
ORDER NO. 35929 5
Second, the Company explained that the calculation error discussed by Staff was related to the
Block 2 Monthly Charge rather than the Contract Demand Charge.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission is empowered to investigate rates, charges, rules, regulations, practices, and
contracts of public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provision of law, and to fix the same by order. Idaho Code
§§ 61-502 and 61-503.
The Commission has reviewed the record in this case. The Special Contract allows Lamb
Weston to purchase power from the Company at reasonable rates and does not pass costs on to
other customer classes. These rates have been calculated using the same method used in special
contracts approved in prior Commission orders. This is true of the rates for both Block 1 and Block
2 energy. The Commission is convinced an annual June 1 update and the five-year reevaluation of
the basis of Block 2 energy will keep the Parties’ Special Contract narrowly tailored while
remaining within the parameters set by the Commission. The Commission believes the changes
proposed in Schedule 34, as found in Attachment 2 of the Company’s Reply Comments, are
reasonable. The Commission also finds that the accounting treatment in the proposed PCA is
reasonable. The Commission approves the Special Contract as updated by the Company.
ORDER
IT IS HEREBY ORDERED that the Special Contract and proposed Tariff Schedule 34 are
approved.
IT IS FURTHER ORDERED that the Company’s proposal to include all costs of supplying
power to Lamb Weston in Block 1 and Block 2 in the PCA and to treat revenues from Block 2 as
a surplus sale and an offset to power supply costs is approved.
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 about any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration. Idaho Code § 61-626.
///

ORDER NO. 35929 6
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 21st day of
September 2023.

__________________________________________
ERIC ANDERSON, PRESIDENT

__________________________________________
JOHN R. HAMMOND JR., COMMISSIONER

__________________________________________
EDWARD LODGE, COMMISSIONER

ATTEST:

__________________________________
Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\IPC-E-23-18_LW\orders\IPCE2318_Final_md.docx