HomeMy WebLinkAbout26757.docx(text box: 1)BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR APPROVAL OF AN AMENDMENT TO THE SPECIAL CONTRACT FOR SERVICE TO MICRON TECHNOLOGY, INC.
)
)
)
)
)
)
CASE NO. IPC-E-96-23
ORDER NO. 26757
On November 14, 1996 Idaho Power Company (Idaho Power; Company) and Micron Technology, Inc. (Micron) filed a joint Application with the Idaho Public Utilities Commission (Commission) requesting approval of an amendment to an underlying August 31, 1995 agreement for electric service between Micron and Idaho Power (Agreement).
The underlying Agreement between Idaho Power and Micron was approved by the Commission in Case No. IPC-E-95-14, Order No. 26238. Under the Agreement, Idaho Power agrees to furnish Micron’s total requirements for electric power and energy. As reflected in the Commission’s Order No. 26238, the Schedule 26-Micron tariff included an immediate increase in scheduled monthly contract demand to 50 MW from the previous 40 MW. It further provided for increases in 10 MW increments while Micron expanded its load to a monthly contract demand of 100 MW by January 1997. (Agreement ¶¶ 6.1, 6.1.1) Under the terms of the Agreement, Micron was permitted to increase its contract demand in increments of 10 MW up to a total contract demand of 140 MW or could similarly decrease its contract demand to zero. (Agreement ¶ 6.2.1)
The underlying Agreement contained a scheduled increase in contract capacity up to the 100 MW level along with contract demand charges and minimum monthly bill provisions. As set forth in the present Application, it has now become apparent that due to a slow-down in the semi-conductor market, Micron’s need for power will not grow at the rate originally anticipated. Under current conditions the contract demand and minimum monthly billing demand exceed Micron’s actual billing demand by over 35%, and this will soon increase to over 50%. Micron desires to retain the ability to expand to 100 MW, but views the increase in the minimum monthly billing demand as excessive.
After negotiations, Idaho Power and Micron agreed to lower the minimum monthly billing demand to 25 MW (Agreement ¶¶ 6.1.2, 6.2.2) and to increase the monthly billing demand charge by $0.43 per kW per month, i.e. to $6.25 per kW. See revised tariff Schedule 26-Micron. (Attached) Other administrative changes were made to the Agreement, including a new Section 16 Right of First Refusal in the event of deregulation. The applicants further agreed that all of the changes and amendments to the Agreement and revised tariff Schedule 26 will be effective as of September 1, 1996.
The applicants requested that the Application be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-.204.
A Notice of Application and Modified Procedure was issued by the Commission on December 4, 1996. The deadline for filing comments was December 27, 1996. Commission Staff was the only party to file comments. Staff recommends approval of the proposed amendment as filed with the exception of the effective date. Regarding the effective date, Staff states the following:
Idaho Power and Micron have proposed an effective date of September 1, 1996. The application was filed with the Commission on November 14, 1996. Barring substantial justification, Commission approved effective dates are normally 30 days or more after the filing date. Under traditional rate making circumstances regulators may not care if Idaho Power agrees to amend a contract in such a way that Idaho Power receives less revenue. The presumption would be that Idaho Power would not have entered into such a contract unless it received some offsetting benefit. However, in the current regulatory climate, the Commission and other ratepayers have a very direct interest in Company decisions that reduce revenue. When the Company’s Return on Equity falls below 11.5% the Company is authorized to amortize additional accumulated investment tax credits (IT) and when the return exceeds 11.75%, excess earnings are shared 50/50 between shareholders and ratepayers. A very rough estimate of the foregone revenue that results from the proposed amendment in calendar year 1996 is $400,000. The effective date of the proposed contract amendment and tariff change directly impact Idaho Power’s 1996 earnings and, therefore, the potential amount of excess IT amortization or sharing with ratepayers. Staff does not oppose the contract amendment and tariff change but Staff does believe that to reach back in time two and one-half months before the proposed changes are even filed with the Commission to establish an effective date is inappropriate. Staff believes a more appropriate, consistent and fair effective date is the date that the Commission approves the application, assuming it is approved.
Staff recommends that the effective date be the date of Commission approval.
On January 3, 1997, Idaho Power and Micron filed a Joint Response to Staff Comments regarding the implementation date of the proposed amendment. The applicants contend that the proposed revised rate changes were agreed to prior to September 1, 1996. The applicants distinguish this filing from the revision of a filed tariff rate and advocate a September 1, 1996 effective date because it was the day closest to the start of the next billing period after they had agreed to the revised rates.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. IPC-E-96-23. Regarding the proposed amendment and change in rates, we find they should be approved. The demand increases previously anticipated have not materialized and Micron should not be held to those forecasts. We find that the effective date of the revisions should be November 14, 1996, the date of the filing. Despite the applicants’ agreement regarding rates prior to September 1, 1996, negotiations on the proposed amendment terms continued. The Application in this case was subsequently filed on November 14, 1996. We find the date of filing to be a reasonable effective date. We find the proposed and submitted changes to the underlying Agreement and the resultant rates as reflected in Idaho Power Company electric service rate Schedule 26 for Micron Technology, Inc. (as amended) to be fair, just and reasonable.
The Commission continues to find that the issues presented by the Company’s Application in Case No. IPC-E-96-23 are appropriate for processing under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and Idaho Power Company, an electric utility, pursuant to the authority and power granted to the Commission under Title 61 of the Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED that the proposed and submitted amendment to the underlying Idaho Power-Micron August 31, 1995, electric service Agreement and the related tariff Schedule No. 26 be approved for an effective date of November 14, 1996.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this day of January 1997.
RALPH NELSON, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
Myrna J. Walters
Commission Secretary
vld/O:IPC-E-96-23.sw
COMMENTS AND ANNOTATIONS
Text Box 1:
TEXT BOXES
Office of the Secretary
Service Date
January 9, 1997