20030225Griswold Exhibits 9-11.pdf

Case No. PAC-E-01-16
Exhibit No. 9
Witness: Bruce Griswold
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
PACIFICORP
____________________________________________
Exhibit Accompanying Rebuttal Testimony of Bruce Griswold
August, 2002
Case No. PAC-E-01-16
Exhibit No. 9 (BWG-R1)
Witness: Bruce W. Griswold
825 N.E. Multnomah
Portland, Or 97232
[phone]
November 5, 2001
Dennis Hansen, Commissioner
Paul Kjellander, Commissioner
Marsha Smith, Commissioner
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83720-0074
RE: October 25, 2001 Meeting on Monsanto Negotiations
Dear Commissioners:
This letter is a follow-up to our meeting on Thursday October 25, 2001 with you and your staff regarding our
negotiation with Monsanto. First I would like to thank you for taking the time from your schedule to review the
current negotiations with Monsanto. Our intent was to provide you background, perspective on the negotiations and
the issues so that as we finalize our negotiations and bring forward our agreements, you and your staff would have a
more complete understanding of the approach on which to make a decision. The basic premise we are working
against is to develop a contractual arrangement with Monsanto that compensates PacifiCorp for its cost of service to
Monsanto and also recognizes the value Monsanto can provide to PacifiCorp’s system through its unique plant
operation for such products as operating reserves and curtailment. The structure we are in the process of negotiating
will separate this arrangement into at least two agreements, a special contract for delivering electric service to
Monsanto at the cost of providing that service and a second agreement for the value that Monsanto provides to our
electrical system. The special contract for electric service will be situs and consider Monsanto as a firm retail
customer. Our intent is to align the terms of all the agreements such that Monsanto achieves the lowest net energy
cost over that term.
In December 2000, we provided formal notification per the existing contract that the contract would terminate on
December 31, 2001. In the first quarter of 2001, the current negotiating teams were put in place and the teams
began meeting on a regular basis in Salt Lake City as of April 2001. Over the past seven months we have met with
Monsanto monthly plus arranged several sub-meetings addressing specific power supply issues. We have openly
shared our cost of service model and assumptions with Monsanto and their consultants, in fact, agreeing on changing
several assumptions that have reduced the initial estimate of the cost of service by over ten percent.
As you can see from our meeting, your discussions with Monsanto, and the questions posed by you and your staff,
that there are a number of outstanding issues that require agreement in the coming weeks. PacifiCorp is negotiating
in good faith with Monsanto and every effort is being made to reach an amenable agreement. We will continue to
keep you apprised of our progress and would welcome any guidance you feel is appropriate over the coming weeks.
Thank you again for your time and comments. If you have any questions, please call me at 503-813-5716.
Sincerely,
Frank Mitchell
Vice President, Commercial
Case No. PAC-E-01-16
Exhibit No. 10
Witness: Bruce Griswold
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
PACIFICORP
____________________________________________
Exhibit Accompanying Rebuttal Testimony of Bruce Griswold
August, 2002
Monsanto Draft Terms for Electric Service
Case No. PAC-E-01-16
Exhibit No. 10 (BWG-R2), Page 1 of 5
Witness: Bruce W. Griswold
Monsanto
Proposed Electric Service
2002 - 2006
Electric service to Monsanto for the entire facility includes:
Electric service agreement (the “ESA”) for the elemental phosphorous manufacturing plant (the
‘Plant”) in Soda Springs, Idaho effective September 1, 2002 and terminating December 31, 2006.
Price components for the electric service to the Plant are cost of service demand and energy
components. The ESA will be retail load situs to Idaho jurisdiction.
Interruptible agreement (the “Interruptible Agreement”) for the Plant pays Monsanto monthly
payments for three interruptible or curtailment options including system integrity, non-spin
contingency operating reserves and an economic curtailment option which has a buy-through
provision. Total allowed hours of interruption or curtailment are 800 hours per calendar year.
The operating reserve component of the Interruptible Agreement would be subject to reopener
for WECC operating reserve criteria changes. The Interruptible Agreement will be system
allocated. Additional interruptible or curtailment opportunities may be negotiated between
PacifiCorp and Monsanto as separate agreements during the term.
Additional interruptible or curtailment opportunities may be negotiated between PacifiCorp and
Monsanto as separate agreements during the Term.
Summary
Term:4+ years ( September 1, 2002 – December 31, 2006)
Delivered Power:$31.40 per MWh based on cost of service components
Interruptibility:800 hours total
Credit for Interruptibility
System Integrity:Monthly credit of $ 40,500. Hours included in 800 hours.
Operating Reserves:Monthly credit of $ 259,350 for 95MW minimum for 300
hours.
Economic Curtailment:Monthly credit of $ 195,000 for 46MW minimum for 500
hours.
TOTAL CREDIT Monthly credit of $ 494,850
Monsanto net price $ 27.00 per MWh.
Monsanto Draft Terms for Electric Service
Case No. PAC-E-01-16
Exhibit No. 10 (BWG-R2), Page 2 of 5
Witness: Bruce W. Griswold
Electric Service Agreement
Term Four (4) years and 4 months, effective September 1, 2002 and
terminating December 31, 2006. No extension language.
Delivered Power Charges Customer Charge:$282.89 per month
Demand Charge: $ 9.51 per kW month
Energy Charge: $ 16.31 per MWh
Monsanto will be responsible to maintain at all a power factor of
average power factor is found to be less than 90% lagging, the
of 1% for every 1% that the power factor is less than 90%.
Monsanto must ‘take’ a minimum monthly quantity of 112,500
Integrity, Economic Curtailment and Operating Reserve payments
would be prorated for consumption below this level.
Billing All billing statements for power and energy shall show the amount
due for the type and quantity of power and energy purchased and
and Regulations of Idaho. Payments for interruptibility identified
and applied to monthly bills.
Interruptibility
Product System Integrity
Monsanto’s Interruptible Load at its Facility if PacifiCorp
interruption of Power and Energy to Monsanto is necessary to
maintain System Integrity.
Interruptible Load All defined interruptible plant load – up to three (3) furnaces and
auxiliary load – 162MW
Availability All hours HE 0100 through HE 2400. Allowable option days shall
be each Monday through Sunday during the Term.
Duration of Interruption As long as required to stabilize PacifiCorp's electrical system
Frequency Limited to System Integrity only – included in 300 hours of
Operating Reserves total.
Monsanto Draft Terms for Electric Service
Case No. PAC-E-01-16
Exhibit No. 10 (BWG-R2), Page 3 of 5
Witness: Bruce W. Griswold
Notification Except under emergency conditions, PacifiCorp shall give
Monsanto as much advance notice as practicable, but not less than
advance notice of when interruption will be discontinued.
Monthly Payment Monthly payment to Monsanto for the interruptibility for System
Integrity would be $ 40,500.
Product Operating Reserves
Day-of Call option for PacifiCorp’s right to interrupt Monsanto’s
furnace load (capacity and associated energy use).
Interruptible Load Minimum 95 MW
Availability All hours HE 0001 through HE 2400. Allowable option days shall
be each Monday through Sunday during the Term.
Duration Up to one (1) hour continuous
Frequency · Maximum three hundred (300) interruptions per calendar year.
· Maximum of twenty-five (25) interruptions per month.
· Maximum of three (3) interruptions in any four (4) hour period
per day
Notification PacifiCorp shall provide Monsanto at least 6 minutes notice prior
to the beginning of the Load Interruption Period.
Monthly Payment Monthly payment of $259,350 for 95MW minimum
Liquidated Damages / Non-
performance
NONE – Failure to interrupt load upon notification shall result in
noticed Interruptible Load was actually interrupted when
PacifiCorp executed the option.
Product Economic Curtailment
option to buy-through the interruption at defined market index
hourly shaped.
Interruptible Load 46MW minimum
Availability Hours HE 0700 through HE 2200 Mountain Prevailing Time.
during the Term.
Duration of Interruption Maximum of 500 hours based on one (1) furnace in calendar year
· Up to eight (8) hours for one (1) furnace. PacifiCorp has right
Monsanto Draft Terms for Electric Service
Case No. PAC-E-01-16
Exhibit No. 10 (BWG-R2), Page 4 of 5
Witness: Bruce W. Griswold
to designate which furnace the curtailment for that shall apply.
Frequency Limited to one (1) interruption per day
Notification PacifiCorp shall provide Monsanto at least 2 hours notice prior to
shall notify Monsanto by hour ending 1400 for a curtailment
period that begins hour ending 1600.
Monthly Payment Monthly payment to Monsanto for the interruptibility for would be
$195,000 per month.
Buythrough provision Monsanto shall have the right to decline the Day-of option and
purchase power for the Curtailment Load for the Duration of
Interruption for the day. (“Replacement Power”).
Monsanto shall notify PacifiCorp by phone and/or fax of its
option to curtail. For example, if PacifiCorp notifies Monsanto by
MPT. If Monsanto fails to notify PacifiCorp of its decision to
Load as agreed.
Replacement Power Price
Monsanto shall purchase daily Replacement Power for the
Duration of Interruption from the PacifiCorp as calculated:
Hourly Shaped Market Price multiplied by the
Interruptible Load multiplied by the Duration of
Interruption (hours).
Hourly Shaped Market Price shall be defined as daily Dow JonesTM
following hourly shaping factors for each applicable month:
January 114%May 122%September 119%
February 114%June 126%October 113%
March 114%July 130%November 111%
April 110%August 130%December 116%
Holidays include only New Year’s Day, President’s Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
Saturday) or the Monday following the holiday (if the holiday falls
Monsanto Draft Terms for Electric Service
Case No. PAC-E-01-16
Exhibit No. 10 (BWG-R2), Page 5 of 5
Witness: Bruce W. Griswold
on a Sunday) will be considered a Holiday.
Monthly Replacement Power shall equal the sum of daily
Replacement Power for that month.
Agreement Reopeners
Direct Access In the event that the statutes of the state of Idaho are amended to
other than PacifiCorp, either party may terminate this agreement
notice delivered to the other party.
Cost of Service In the event the Delivered Power Charges are not achieving
Party may apply to the Commission not more frequently than once
and conditions contained in this Agreement.
Interruptibility In the event (i) other interruptible service options become
service tariff(s) by the Commission; (ii) analyses, offerings, or
or different rates or terms, or approaches to or conditions of
reasonable changes or adjustments to the rates, terms and
conditions for interruptibility contained in the 2002 Agreement.
Other Provisions
Annual Price Adjustment Once per year adjustment to all price components in the agreement
decrease for that calendar year.
Agreement Language Modify or remove contentious terms including favored nation,
significant changes, and termination clauses.
Update to reflect any new power quality standards based on
flicker issue.
Update to address cooperation in operation for safety issues
Case No. PAC-E-01-16
Exhibit No. 11
Witness: Bruce Griswold
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
PACIFICORP
____________________________________________
Exhibit Accompanying Rebuttal Testimony of Bruce Griswold
August, 2002
MWh Load Factor
Monsanto Load 1,354,000 83%
Cost / Benefit per
Agreement Price 42,502,060$ 31.39$
Reserves ($ per kW month)95 300 (259,350)$ (3,112,200)$ (2.30)$
Economic Curtailment ($ per kW month)46 500 (195,000)$ (2,340,000)$ (1.73)$
System Integrity ($ per MWh)162 Included in 800 (40,500)$ (486,000)$ (0.36)$ (4.39)$
800 (494,850)$ 36,563,860$ 27.00$
Interruptible / Curtailment Load
File: Griswold Exhibit Exhibit 11/Sheet1
8/23/02 - 1:53 PM
Case No. PAC-E-01-16
Exhibit No. 11 , Page 1 of 1
Witness: Bruce Griswold