20051216Comments.pdf

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SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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.
CASE NO. PAC-OS-
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 in response to the Notice of
Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on
December 6 2005 in Case No. PAC-05-, submits the following comments.
BACKGROUND
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;
STAFF COMMENTS DECEMBER 16, 2005
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.
reflecting new rates for Nu- West pursuant to the Stipulation. The Company requested 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 November-April
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.
The demand and energy charges identified in the Agreement are to be uniformly adjusted semi-
annually effective July 1 , 2006 and January 1 , 2006 and each July 1 and January 1 thereafter, so
that they equal the tariffrates. Agreement Section 4.
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
STAFF COMMENTS DECEMBER 16, 2005
modification by the Commission under the same standard that applies to tariff customers
generally.
STAFF REVIEW
The proposed Agreement closely mirrors the current agreement approved in Order No.
28984, Case No. P AC- E-O 1-17. The notable changes are in the revised rates and the adjustment
schedule of the contracted rates detailed in Section 4.
Staff has evaluated the proposed rates for service to Nu-West and finds that the rates
comply with the approved Stipulation and the Commission s Order No. 29833 in Case No.
PAC-05-1. The proposed rates represent a 1.7 % increase over the present agreement rates
that went into effect January 1, 2002 and expire in December 2005.
With respect to the contract rates going forward, Section 8.3 of the Agreement provides
that the Commission has the authority to modify the rates for service under the Agreement using
the same standard that applies to tariff customers. Commission-authorized tariff rate changes
including surcharges or credits that apply to service to tariff customers, 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. Staff believes this is appropriate.
Section 4.2 of the Agreement allows for Semi-annual Adjustments in the charges on
July 1 and January 1 as required by tariff rate changes authorized by the Commission. The Prior
Agreement only allows for annual adjustments in the charges on January 1. The Staff supports
this proposed modification to the adjustment schedule to implement on a more timely basis any
rate changes approved by the Commission. Staff notes that Service Schedule 400, sheet No.
400.2 still includes a reference to "Annual Adjustments . If the Commission approves the
proposed change to Semi-annual Adjustments this language should be revised to reflect that
change. Staff has discussed this with the Company and it concurs.
Service Schedule 400, Sheet No. 400.2 defines how rate adjustments will be made.
Specifically it states that the demand and energy charges shall be uniformly adjusted and the
customer charge shall remain at the same level throughout the term of the Agreement. Staff s
STAFF COMMENTS DECEMBER 16 , 2005
primary concern is that the necessary revenue requirement of the Company is met, and that no
subsidy ofNu- West is required from other Idaho customers. The tariff sheet language, however
seems to be inconsistent with the language in Agreement Section 8.3 that establishes that this
Agreement is subject to the same standard that applies to tariff customers generally. Staff
believes the language in Tariff Schedule 400, which places limitations on how future rate
changes will be made, is ultimately subject to the Commission authority under the Tariff
Standard.
In the Prior Agreement, Section 4.2 provides a detailed formula that stipulates how
adjustments in rates are to be calculated. Those adjustments are based on changes in the base
rates for all non-special contract customers. The proposed language in Section 4.2 states
, "
The
charges specified in this Section shall be adjusted.... so that they equal the Tariff Rates." In
Section 1.16 Tariff Rates are defined as "The Commission approved rates applicable to Nu-
West.... as specified in Idaho Electric Service Schedule No. 400 or its successor.
Often times Commission Orders do not directly address the rates of Special Contract
Customers. This was not a particular problem with the Prior Agreement because adjustments
were tied to changes in base rates. Therefore, if the Order did not specifically address special
contracts it was still clear how changes would be made. With the proposed change, future
Commission Orders will have to directly address how any change in rates or surcharges will
affect the rates and charges to Nu- West. Presently, both Monsanto and Nu- West are included on
Tariff Schedule 400. To avoid confusion Staff proposes that Nu- West rates and charges be
placed on a separate tariff as is required for all other tariffed customer classes. A revised tariff
must be filed each time there is a change in Nu-West tariff rates or charges.
The Company agrees that they must refile Schedule 400 with the corrections noted
providing for Semi-annual Adjustments. However, because Monsanto is also on Schedule 400
the Company would like to separate the tariffs in their general rate case filing which is expected
this spring.
Finally, the Company s Application and the attached Agreement Section 8.1 conditions
the Agreement on a Commission finding in this case that revenues and costs related to service
under the Agreement must be assigned to the state ofIdaho for ratemaking purposes. Section 8.
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
STAFF COMMENTS DECEMBER 16, 2005
customer for ratemaking purposes within the state of Idaho. Nu- West was treated as an Idaho
situs customer in the Prior Agreement, Case No. P AC-01-, Order No. 28984. Staff agrees
that it is reasonable to continue to include Nu-West as an Idaho jurisdictional customer and
directly assign revenues and allocate costs to the Idaho jurisdiction for ratemaking purposes.
RECOMMENDATION
The proposed rates and charges are consistent with the Commission s Order No. 29833 in
Case No. P AC- E-05-1. Staff notes that the proposed rates represent a 1.7% increase over rates
that expire December 31 , 2005 and that the rates proposed are acceptable to both parties. Staff
recommends that the Commission approve the proposed rates and charges.
Staff believes, and the contract parties seem to agree, that the Commission retains full
jurisdiction over Nu- West contract rates under the Tariff Standard.
Proposed changes to Agreement Section 4.2 eliminates the annual rate adjustment in
favor of a semi-annual tariff related adjustment. Staff believes this is an improvement over the
previous contract between PacifiCorp and Nu- West and recommends approval.
Staff recommends that the Company be directed to file a separate tariff sheet for Nu- West
each time tariff rates change and references to "Annual adjustment" be changed to "Semi-annual
adjustments
" .
Staff supports continued use of previously approved agreement language that treats
Nu-West as a situs customer for purposes of jurisdictional allocation.
Staff recommends that the PacifiCorp/Nu-West Electric Service Agreement be approved.
Respectfully submitted this /'6 day of December 2005.
'11~.
Scott Woodbury
Deputy Attorney General
Technical Staff: Dave Schunke
Bryan Lanspery
i:umisc:comments/paceO5.11swdesbl
STAFF COMMENTS DECEMBER 16, 2005
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF DECEMBER 2005
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. PAC-05-, BY MAILING A COpy THEREOF, POSTAGE PREPAID
TO THE FOLLOWING:
BOB LIVELY
P ACIFICORP
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84140
JAMES M VAN NOSTRAND
STOEL RIVES LLP
900 SW FIFTH AVE STE 2600
PORTLAND OR 97204-1268
DATA REQUEST RESPONSE CENTER
ACIFICORP
825 NE MUL TNOMAH STE 800
PORTLAND OR 97232
MAILED TO datarequest~pacificorp.com
SECRETARY
CERTIFICATE OF SERVICE