961223.docx

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO  83720-0074
[phone]
Street Address for Express Mail:
472 W WASHINGTON
BOISE ID  83702-5983
Attorney for the Commission Staff
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.
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CASE NO. IPC-E-96-23
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and submits the following comments.
On November 14, 1996, Micron Technology, Inc. and Idaho Power Company filed a joint application with this Commission requesting approval of an amendment to the existing
Commission-approved Electric Service Agreement between Micron and Idaho Power and the associated Rate Schedule 26.  Several sections of the original agreement have been amended and a new section has been added.
Amended Sections 6.1.2, 6.2 and 6.2.2 preserve Micron’s right to expand its load to 100,000 kW while limiting its Minimum Billing Demand to 25,000 kW.  The original contract ratcheted Minimum Billing Demand to 100,000 kW starting January 1, 1997.  In order to offset a portion of
the revenue Idaho Power would lose as a result of reducing the minimum billing demand, Idaho Power and Micron have agreed to increase the monthly demand charge from $5.82 per kW to $6.25 per kW.
Amended Section 7.2 clarifies that the monthly interconnection operation and maintenance charge is applicable to the substation portion of the Interconnection Facilities.  Item 8 in the joint application states the parties' intent to continue to negotiate appropriate operation and maintenance charges for the substation that has been partly contributed by Micron.
Amended Section 7.3 provides for a $70,000 payment from Micron to Idaho Power on December 1, 1998.  This money will be used for equipment to correct the power factor of the Micron load.  The original contract language in Section 7.3 required Micron to make two $35,000 payments to Idaho Power on July 1, 1996 and January 1, 1997.  These payments have not and will not be made.  Due to slower than anticipated growth in the Micron load, the corrective measures will not be needed until December 1, 1998.
Section 16 is a new section that gives Idaho Power the first right of refusal in the event of deregulation in the electric industry.  Within the conditions specified in the agreement, Idaho Power would have the opportunity to meet or beat any offer made by an alternate provider.
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 ratemaking 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 (ITC) 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 ITC 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 RECOMMENDATION
Staff has reviewed the joint Micron - Idaho Power filing and recommends approval as filed with the exception of the effective date.  Staff recommends that the effective date be the date of Commission approval.
DATED  at Boise, Idaho, this            day of December 1996.
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Scott Woodbury
Deputy Attorney General
______________________________________
Keith Hessing
Staff Engineer
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