20060103final_order_no_29940.pdf

Office ofthe Secretary
Service Date
January 3 , 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR APPROVAL OF AN
ELECTRIC SERVICE AGREEMENT WITH
NU -WEST INDUSTRIES ORDER NO. 29940
CASE NO. PAC-05-
On December 2, 2005, 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 October 31 , 2005. The Agreement replaces an Electric Service Agreement
(Prior Agreement) dated December 10 2001 , approved by the Commission in Case No. PAC-
01-17. The Commission in this Order approves the submitted Agreement.
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 terminates on
December 31 2005. The submitted Agreement will become effective January 1 2006, subject to
approval by the Commission, and will terminate on December 31 , 2010.
In compliance with Commission Order No. 29833 approving the Stipulation in Case
No. PAC-05-, the Company on October 26 2005 submitted Revised Tariff Sheet No. 400.2
reflecting new rates for Nu- West pursuant to the Stipulation. The Company requests an effective
date of January 1 2006.
As reflected in Section 4 of the Agreement, the following monthly charges will apply
to Nu-West:
MONTHLY CHARGES
May-October N ovember-Aoril
Customer Charge $ Per Month $282.$282.
Demand Charge $ Per kW-Month $ 11.19
Energy Charge $ Per MWh
(HLH)Monday - Friday $ 23.$ 19.22
HE0800-HE2300 MPT
(LLH)All other hours and holidays $ 17.$ 17.
ORDER NO. 29940
The demand and energy charges identified in the Agreement are to be uniformly adjusted semi-
annually effective July 2006 and January 2006 and each July 1 and January 1 thereafter, so
that they equal the tariff rates. Agreement Section 4.2.
Section 8.1 of the Agreement provides that PacifiCorp may terminate the Agreement
if the Order approving the Agreement does not provide for the direct assignment of the revenues
and costs from the Agreement to the Idaho jurisdiction for ratemaking purposes.
Section 8.3 of the Agreement provides that the Commission has the authority to
modify the rates for service under the Agreement under the same standard that applies to tariff
customers generally. Commission authorized tariff rate changes, including surcharges or credits
that apply to tariff customers generally, will also apply to service under the Agreement.
Accordingly, the Company requests that, except as provided in Section 4.2 of the Agreement, the
Order approving the Agreement include an acknowledgement that rates for service to Nu-West
are subject to modification by the Commission under the same standard that applies to tariff
customers generally.
On December 6, 2005, the Commission issued Notices of Application and Modified
Procedure in Case No. P AC-05-11. The deadline for filing written comments was December
, 2005. Comments were filed by Commission Staff and Gerald Fleischman of Boise, Idaho.
Staff notes that the proposed rates for service to Nu- West comply with the approved
Stipulation and the Commission s Order No. 29833 in Case No. PAC-05-1. Staff notes that
the proposed rates represent a 1.7% increase over rates that expire December 31 , 2005. Staff
recommends that the Commission approve the proposed rates and charges.
As reflected in the contract, Staff notes that the Commission retains full jurisdiction
over Nu-West contract rates and charges under the Tariff Standard. Proposed changes
Agreement Section 4.2 eliminate the Prior Agreement annual rate adjustment in favor of a semi-
annual adjustment.Staff believes this is an improvement over the Prior Agreement and
recommends approval. Staff notes that electric service Schedule 400, Sheet 400.2 still includes a
reference to "annual adjustments.Staff and the Company agree that this language should be
revised to reflect the proposed change. Staff recommends that the Company be directed to file a
separate tariff sheet for Nu- West each time tariff rates change and that the reference to "annual
adjustment" be changed to "semi-annual adjustments.Staff supports continued use of
ORDER NO. 29940
previously approved Prior Agreement language that treats Nu- West as a situs customer for
purposes of jurisdictional allocation.
Mr. Fleischman in his comments notes that it is interesting in this day of expectations
of increasing demand for electric power and knowing that two of the resources that can supply
this power, coal and natural gas, especially natural gas, are going to climb in price, that
PacifiCorp is offering to sell power to Nu-West for 3.8~/kWh on the high end. This, Mr.
Fleischman contends, is an extremely low price, especially compared to irrigation, residential
and small commercial rates. Mr. Fleischman contends that if Nu- West cannot compete using
rates that are justifiable on a cost basis, that is residential and small commercial rate minus the
cost savings to a large customer, then perhaps this form of phosphate mining cannot be justified.
Make that the price, Mr. Fleischman recommends, and see what happens. Mr. Fleischman
contends that incentives are needed for companies to improve energy use and develop new
technologies to increase electric energy productivity.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. PAC-05-
including the comments and recommendations of Commission Staff and Mr. Fleischman.
The Commission finds that the proposed rates and charges set forth in the
PacifiCorplNu-West Agreement are consistent with the Commission s Order No. 29833 in Case
No. PAC-05-1. The contract rates and charges set forth in the Agreement, we find, are
adjustable by the Commission under the Tariff Standard. The Commission notes that PacifiCorp
intends to file an avoided cost case in April 2006. We intend at that time to look at the cost-of-
service related to Nu- West. The Commission finds it reasonable to treat Nu- West as a situs
customer for purposes of jurisdictional allocation. We find it reasonable to approve the
Agreement for an effective date of January 2006. We also find it reasonable that a separate
tariff sheet be utilized for service to Nu- West and direct the Company to file a separate tariff
sheet conforming to the Agreement, i.
, "
semi-annual adjustments " and our Order.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Utah
Power & Light Company, an electric utility, pursuant to Title 61 of the Idaho Code and the
Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER NO. 29940
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve PacifiCorp s Electric Service
Agreement with Nu- West Industries dated October 31 , 2005 for an effective date of January 1
2006. The Company is directed to file a conforming and separate tariff sheet for Nu-West.
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 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 3()-fI-
day of December 2005.
L1
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANS N , COMMISSIONER
ATTEST:
Commission Secretary
bls/N:PAC-05-11 sw
ORDER NO. 29940