20020110SW.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
BILL EASTLAKE
DAVE SCHUNKE
RICK STERLING
RANDY LOBB
TERRI CARLOCK
TONYA CLARK
DON HOWELL
LYNN ANDERSON
GENE FADNESS
WORKING FILE
FROM:
DATE:
JANUARY 10, 2002 RE: CASE NO. PAC-E-01-17 (PacifiCorp)
NU-WEST INDUSTRIES—ELECTRIC SERVICE AGREEMENT

On December 26, 2001, PacifiCorp dba Utah Power & Light Company (PacifiCorp; Company) filed an Application with the Idaho Public Utilities Commission (Commission) requesting approval of an Electric Service Agreement (Agreement) with Nu-West Industries (Nu-West) dated December 10, 2001. The Agreement, along with a separate agreement, entered into under Electric Service Schedule No. 9, replaces an electric service agreement (Prior Agreement) dated June 9, 1998, approved by the Commission in Case No. PAC-E-00-03.
Nu-West is engaged in the production of phosphate fertilizer at facilities located in Soda Springs, Idaho.
The Prior Agreement governing electric service to Nu-West terminated on December 31, 2001. Rates under the Prior Agreement were 03.3¢ per kilowatt-hour for all kilowatt-hours if Nu-West used a specific minimum amount of energy. However, if Nu-West used less than the minimum amount on an annual basis, it paid 03.4339¢ per kilowatt hour for all kilowatt hours.
Rates for service to Nu-West under the Agreement submitted are based, the Company contends, on the cost of serving Nu-West. Accompanying the Company’s Application is a summary of the Cost-Of-Service Study results for service to Nu-West. Due to the size of its load (approximately 20,000 kW), the Company does not have an electric service schedule applicable to service to Nu-West, thus necessitating a special contract. The Agreement, the Company contends, is effectively a customer-specific tariff schedule. By its terms the Agreement is effective January 1, 2002, subject to approval by the Commission, and will terminate on December 31, 2004, unless renewed in accordance with the Agreement’s terms.
As reflected in Section 4 of the Agreement, the following monthly charges will apply to Nu-West:
May-October November-April Customer Charge $$ Per Month $282.89 $282.89 Demand Charge $$ Per kW-Month $ 11.00 $ 8.89 Energy Charge
Heavy Load Hours
(HLH) $$ Per MWh
Monday – Friday
HE0800–HE2300 MPT $ 22.71 $ 18.92 Light Load Hours
(LLH) All other hours and holidays $ 17.03 $ 17.03
*These contract rates will result in an effective contract rate of 3.384¢/kWh.

The demand and energy charges identified in the Agreement are to be uniformly adjusted annually effective January 1, 2003 and each January 1 thereafter in accordance with the formula set out in the Agreement.
A separate agreement under electric service Schedule No. 9 has been entered into for service to Nu-West’s Mountain Fuel Substation, service to which was included in the Prior Agreement. The effective rate for that part of Nu-West’s service under Schedule 9 will be 4.232¢/kWh. The overall effective rate for all of Nu-West’s service (Agreement and Schedule 9) is 3.48¢/kWh.
Regarding jurisdiction of regulatory authorities, Section 8 of the Agreement includes the following language:
8.1

This Agreement is subject to approval of the Commission. In the event the Commission Order approving this Agreement either requires imputation of revenue to PacifiCorp, or provides for possible future imputation of revenues to PacifiCorp, PacifiCorp may terminate this Agreement by providing Nu-West notice within 30 days of entry of the Commission’s Order. In the event the Commission Order approving this Agreement does not provide for the direct assignment of the revenues and costs of this Agreement to the Idaho jurisdiction for ratemaking purposes, PacifiCorp may terminate this Agreement by providing Nu-West notice within 30 days of the entry of the Commission’s Order. In the event that the Commission Order approving this Agreement contains any condition that is materially adverse to either party, the party adversely impacted by the condition may terminate this Agreement by providing the other party notice within 30 days of the entry of the Commission’s Order.

8.2

The electric service regulations of PacifiCorp, together with all changes and amendments thereto as approved by the Commission, are incorporated herein and made a part of the Agreement. Once the Commission approves the Agreement, the provisions of the Agreement shall take precedence over any conflicting provisions of PacifiCorp’s electric service regulations.

8.3

The parties agree that the Commission has the authority to modify the rates for service under this Agreement under the same standard that applies to tariff customers generally. Accordingly, surcharges or credits that apply to service to tariff customers generally will also apply to service under this Agreement.

8.4

In the event that the statutes of the state of Idaho are amended to provided Nu-West with the ability to choose an electric supplier other than PacifiCorp, either party may terminate the Agreement within 90 days of the effective date of the legislation by written notice delivered to PacifiCorp. (sic)

PacifiCorp requests that its 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.
Commission Decision
The Company has requested that its Application be processed pursuant to Modified Procedure. Staff concurs. Does the Commission find Modified Procedure to be reasonable? If not, what is the Commission’s preference?

vld/M:PAC-E-01-17_sw

DECISION MEMORANDUM 2