20030225Affidavit James Smith Monsanto.pdf

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Randall C. Budge, ISB No. 1949
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
O. Box 1391; 201 E. Center Street
Pocatello, Idaho 83204-1391
Telephone: [phone]
Fax: [phone]
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Attorneys for Monsanto Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application ofPacifiCorp)
d/b/a Utah Power & Light Company for
Approval of Interim Provisions for the Supply)
of Electric Service to Monsanto Company
CASE NO. PAC-Ol-
AFFIDAVIT OF JAMES R. SMITH
ON BEHALF OF MONSANTO
STATE OF IDAHO
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County of Bannock
JAMES R. SMITH, being first duly sworn, deposes and states as follows:
I am employed by Monsanto. I am currently the Purchasing Supervisor for
Monsanto s Soda Springs Plant. This Affidavit is submitted in support of Monsanto s Answer and
Cross-Petition to PacifiCorp s Petition for Reconsideration and Clarification of Order No. 29157.
It is my understanding that the Commission expects the parties to submit for approval
a new Electric Service Agreement ("Agreement") within sixty days ofthe Final Order No. 29157
Final Order ) issued January 27, 2003. Accordingly, Monsanto prepared a proposed draft
Agreement based upon the 1995 Contract which was updated to incorporate the findings of the Final
Order, a true and correct copy of which is attached as Exhibit 1. To move forward and permit this
AFFIDAVIT OF JAMES R. SMITH - 1
matter to be finally brought to a conclusion, Monsanto presents its proposed Agreement for the
Commission s approval in the event the Petition for Reconsideration is rejected.
Monsanto s proposed Agreement was transmitted electronically to PacifiCorp on
February 7, 2003. A copy of the transmittal letter from Monsanto s counsel to PacifiCorp' s counsel
is attached as Exhibit 2. As expressed in that letter, as well as other letters and e-mails I have sent
Monsanto proposed to meet with PacifiCorp for the purpose of reviewing the proposed Agreement
and addressing and resolving any issues or concerns. Additionally, we requested written comments
in advance of any face-to-face meeting so that the issues could be identified and focused upon. To
date, PacifiCorp has not provided any comments on our proposed Agreement. Nor, has Monsanto
received any proposed Electric Service Agreement from PacifiCorp which incorporates the terms of
the Final Order.
I also wish to address the temporary outage of Furnace No.9 discussed on pages 5
and 6 ofthe Petition for Reconsideration and Mr. Griswold's Affidavit. As soon as the Final Order
of January 27, 2003 was received, efforts were undertaken by Monsanto to implement and comply
with the Order on an interim basis pending a final Electric Service Agreement being negotiated
between the parties and approved by the Commission. For implementation purposes, it was agreed
that the new rates specified in the Final Order would go into effect for billing purposes as of January
, 2003. Additionally, the parties agreed that the same operating procedures used in the past for
purposes ofPacifiCorp interrupting Monsanto, would continue to be utilized until such time as the
new Agreement was approved. These arrangements were agreed upon through e-mails between our
attorney and PacifiCorp s on January 27 2003.
1 PacifCorp did provide a proposed agreement bye-mail on the afternoon of February 20 2003; however, it does not
reflect the Final Order and instead reflects PacifiCorp s positions which the Commission has rejected.
AFFIDAVIT OF JAMES R. SMITH - 2
Thereafter, on January 29, 2003, I had a discussion with PacifiCorp s Account Manager
Brent Barker for the purpose of implementing Order No. 29157 on an interim basis pending the
Commission s approval of a new Agreement. At that time, Mr. Barker and I agreed that we need not
develop a temporary plan for Economic Curtailments, because PacifiCorp did not expect to take
Economic Curtailments until sometime next summer. Accordingly, those details could be addressed
in the new Agreement. To enable immediate utilization of the 300 hours of Operating Reserves at 95
MW on a temporary basis until the new Agreement was approved, we agreed to utilize the last
Operating Reserve Agreement, which was dated July 9, 2002, for all issues except pricing.
Accordingly, I instructed Monsanto s operators to follow those procedures for purposes of handling
Operating Reserve requests from PacifiCorp.
On January 30, 2003, the Number 9 Furnace unexpectedly went down requiring
maintenance work completed February 16, 2003.Monsanto operators notified PacifiCorp
dispatchers of the unexpected outage and when the furnace went back in service, per the agreement
as they have always done under similar circumstances for the past 50 years. During the time of this
shutdown, Mr. Griswold began sending letters incorrectly claiming a right to interrupt both
remaining furnaces (in addition to No.9) for operating reserves. In accordance with the July 9, 2002
Operating Agreement which Monsanto and PacifiCorp both agreed to operate under on a temporary
basis, Monsanto was entitled to keep one furnace operating under Section 9, which states as follows:
PacifiCorp acknowledges that the electric furnaces at P4 will be removed
from service from time to time during the terms of this agreement for maintenance
and overhauls. P4 will provide PacifiCorp notice by telephone with followup by fax
of expected maintenance schedules and delays, including scheduled time
interruption, duration, and electrical load of corresponding furnace. P4 will also
inform PacifiCorp by telephone or fax prior to restoring electric power to a furnace
after such a delay. If two of P4's furnaces are simultaneously unavailable due to
maintenance or overhaul and/or interruption by PacifiCorp due to other agreements
AFFIDAVIT OF JAMES R. SMITH - 3
P4 shall have no obligation to curtail load, and PacifiCorp shall be relieved of its
obligations to pay during such maintenance period.(emphasis added)
All this language mayor may not be included in the new Agreement, but it is what PacifiCorp and
Monsanto both agreed to use until the new Agreement is in place. Attached as Exhibit 3 is a true and
correct copy of the letter I sent to Mr. Griswold on February 4, 2003, addressing this issue.
Accordingly, PacifiCorp' s inference that Monsanto did not comply with the Final Order with respect
to providing 95 MW of operating reserves is not accurate.
7. I further wish to correct PacifiCorp' s misunderstandings of Monsanto' s firm load , an issue
PacifiCorp raises for the very first time in its Petition. Previously, there has never been an issue
raised by Pacifi Corp regarding the size nor billing of Monsanto s firm load. Statements made in Mr.
Griswold's Affidavit and in the Petition clearly show that PacifiCorp does not understand how the
interruption of Monsanto works. PacifiCorp does not interrupt Monsanto directly and never has.
Instead, PacifiCorp dispatcher calls Monsanto operators requesting interruption. Monsanto operators
then interrupt the load.
Electric service is delivered to Monsanto over two transmission lines. The "109 line" or
South line" only serves Monsanto s furnaces, which are subject to interruption. The "106 line" or
North line" provides Monsanto with 9 MW of firm load and also provides auxiliary load for such
things as generators, fans, motors and other equipment associated with the operation of the furnaces.
This auxiliary load is also interrupted whenever Monsanto s furnaces are expected to be interrupted
for one hour or longer. In fact, only the first 9 MW delivered on the North line are firm load and
have always been billed as such. There is no need for any clarification on this issue or for the
Commission to revise its Final Order. Had PacifiCorp contacted us on this issue, we would have
easily clarified their misunderstanding.
AFFIDAVIT OF JAMES R. SMITH - 4
02/24/2003 11: 56 FAX [phone] MONSANTO ~002
FURTHER YOUR AFFIANT SAYETHNAUGHT.
DATED this 24th day of February, 2003.
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SUBSCF1BED AND SWORN TO before me this 2th day of February, 2003.
KAREN L M~ fi ARD
Notary PuI:)UC NOTARY PUBLIC FOR IDAHO
State of Id :lhO Residing at Pocatello.
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State of JdtVfvo
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On this 1-L-flt-jay of .jihu
appeared be~))"e me
--JVhose identity I verified on the basis of
.JL who is p€ r:)onally known to me
whose idmltity I verified on the oath/affirmation of
a crediblE: witness
to be the sigr er of the foregoing document, and he/she acknowledged that he/she signed it.
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personally
KAREN L MA'tNARD
Notary PUb!
State of Idail'
~otary Public
My Commission expires: 1/-1'1-
Attribution Clause: T.1is Acknowledgment Certificate is prepared for, and exclusively belongs to. the accompanying document entitled
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c. 'p:Tight 1995 by lite Notary LDW Institute. Unauthorized reproduction of'lIIY kind oflltj. foml is slrictly prohibited.
AFFIDAVIT OF JAM ES R. SMITH - 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 25th day of February, 2003, I served a true, correct and
complete copy ofthe foregoing document by U.S. Mail, postage prepaid, to the following:
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington Street
Boise, Idaho 83702-5983
James F. Fell
John M. Eriksson
Stoel Rives
900 S.W. Fifth Avenue, Suite 2600
Portland, Oregon 97204
Eric L. Olsen
Racine, Olson, Nye, Budge &
Bailey, Chartered
O. Box 1391
Pocatello, Idaho 83204-1391
James R. Smith
Monsanto Company
O. Box 816
Soda Springs, Idaho 83276
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RANDALL C. BUDGE
AFFIDAVIT OF JAMES R. SMITH - 6
MONSANTO ATTACHMENT
ELECTRIC SERVICE AGREEMENT
BETWEEN
PACIFICORP
AND
MONSANTO COM P ANY
THIS ELECTRIC SERVICE AGREEMENT ("Agreement"), dated as of the 1 st day
of January, 2003, is by and between PacifiCorp, an Oregon corporation that provides
electric service in the State of Idaho (hereinafter referred to as "PacifiCorp ) and Monsanto
Company, a Delaware corporation that owns and operates an elemental phosphorus plant
at a site near Soda Springs City in Caribou County, Idaho (hereinafter referred to as
Monsanto
WITNESSETH:
WHEREAS, PacifiCorp and Monsanto have entered into a Power Supply
Agreement dated November 1 , 1995 for a retail electric service to the Soda Springs Plant
(hereinafter "1995 Contract"
WHEREAS, PacifiCorp and Monsanto are engaged in litigation in the United
States District Court for the District of Idaho, Case No. CIV-01-0607-BLW, regarding the
termination date of the 1995 Contract; and
WHEREAS , the Idaho Public Utilities Commission (hereinafter
Commission ) by Order No. 28918 issued December 21 , 2001 , determined that the
existing rate under the 1995 Contract would remain in effect subject to a true-up
mechanism retroactive to the termination date of the 1995 Contract based upon the
difference between the existing rate and the new rate; and
WHEREAS, the Commission by Final Order No. 29157 issued January 27
2003 , established new rates and other terms to be incorporated in this new Electric
Service Agreement; and
WHEREAS, the new rate and terms provided for in the Commission s Final
Order No. 29157 are incorporated in this Agreement, which shall be effective as of
January 1 , 2003 , subject to said true-up mechanism when the Federal District Court has
determined the termination date of the 1995 Contract.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1: Definitions
As used in this Agreement, the following terms have the following meanings:
Billinq Demand means for Firm Power in any Billing Period for this
Agreement the Measured Demand up to and equal to 9 000 kW. Billing Demand means
for interruptible power the Measured Demand is in ~xcess of the Firm Power.
Billina Period means the period of approximately thirty (30) days intervening
between regular successive meter reading dates.
Contract Demand means the specified Demand in kilowatts that Monsanto
contracts with PacifiCorp to supply and that PacifiCorp agrees to have available for
delivery to Monsanto. Monsanto may require the delivery of such amounts of Firm and
Interruptible Power as Monsanto may require to meet Monsanto s load requirements up to,
but not in excess of, the applicable Contract Demand. The applicable Firm Power
Contract Demand in this Agreement shall be 9 000 kW, and the applicable Interruptible
Power Contract Demand shall be 206 000 kW.
1.4 Demand means the rate in kilowatts at which electric energy is delivered by
PacifiCorp to Monsanto at a given instant or averaged over any designated period of time.
Firm Power and Enemy means electric power expressed in kilowatts and
associated energy expressed in kilowatt-hours intended to have assured availability to
Monsanto to meet all or any agreed upon portion of Monsanto s load requirements. In this
Agreement, Firm Power shall be the Measured Demand in any Billing Period in amounts
up to and equal to the Contract Demand of 9 000 kW. Firm Energy supplied by PacifiCorp
to Monsanto during any Billing Period shall be the amount of energy, in kilowatt-hours,
delivered to Monsanto equal to the number of hours in the Billing Period multiplied by the
Firm Power.
Interruptible Power and EnerQV means electric power expressed in kilowatts
and associated energy expressed in kilowatt-hours made available to Monsanto to meet
the portion of Monsanto s load requirements subject to interruption of delivery at
PacifiCorp s option under the conditions and at the times set forth in Exhibits A and B
attached to this Agreement. Interruptible Power shall be the Measured Demand in any
Billing Period in excess of the Firm Power. Interruptible Energy delivered to Monsanto
during any Billing Period shall be the total energy in kilowatt-hours, in that Billing Period
less the Firm Energy, and less any Replacement Energy.
Measured Demand means the Demand in kilowatts supplied by PacifiCorp
as shown by or computed from the readings of PacifiCorp s Power (Demand) meter for the
15-minute period of Monsanto s greatest use during the Billing Period.
Monsanto Facilities means all facilities and equipment within Monsanto s 138
kV substation at its Soda Springs Plant except for PacifiCorp s metering equipment, under-
frequency relays, capacitors and any other equipment owned by PacifiCorp and installed
in Monsanto s substation under the terms and conditions of this Agreement.
Point of Delivery for all paper and energy delivered to Monsanto means the
termination of PacifiCorp s two 138 kV transmission lines at Monsanto s substation located
approximately eight miles from PacifiCorp s Soda (Idaho) hydroelectric station in Caribou
County, Idaho.
10 Prudent Electrical Practices means those practices, methods and equipment
as changed from time to time , that are commonly used in prudent electrical engineering
and operations to operate electric equipment lawfully and with safety, dependability,
efficiency and economy and that are in accordance with the National Electrical Safety
Code or the National Electric Code or any other applicable government code in effect
during the term of this Agreement.
11 Replacement EnerQV means the measured energy for any Curtailment Hour.
12 Retail Customer means a PacifiCorp customer who purchases electric power
and energy for its own consumption (Le., not for resale).
13 System Inteqrity means the ability of PacifiCorp s electric generation or
transmission system to continue to operate at a high degree of reliability and with relatively
constant voltage levels. PacifiCorp may temporarily physically interrupt service to
Monsanto when PacifiCorp s system providing service has actually become out of balance
through inadvertent or unplanned sudden occurrences and interruption is necessary to
maintain firm service to those retail customers receiving from service from PacifiCorp.
Section 2: Term: Reopeners
Term. This Agreement shall become effective on January 1 , 2003, subject to
the true-up mechanism in accordance with the Commission s Order Nos. 28918 and
29157. This Agreement shall terminate on December 31, 2006.
Reopeners . The payment rate set forth in Section 3 cannot be changed
during the term of the Agreement, unless the Commission finds that the change in rates is
necessary to prevent an adverse affect on the public interest as set forth in the case of
Agricultural Products vs. Utah Power Light Co.98 Idaho , 557 2d 617 (1976). This
Agreement may be reopened by either party in the event the WECC amends the quantity
and requirements of both contingency reserves and frequency response reserves by
petition filed with the Commission.
Section 3: Purchase and Sale of Power
Scope of Deliveries. PacifiCorp shall deliver such amounts of Power and
Energy to the Point of Delivery as Monsanto requires to meet its load requirements up to,
but not in excess of, Contract Demand, subject to the provisions of Exhibits "A" and "
attached hereto and incorporated herein by reference.
Character of Power. PacifiCorp shall deliver Power and Energy at the Point
of Delivery in the form of three-phase, alternating current at a nominal frequency of 60
cycles per second, and at a nominal voltage of 138,000 volts. Except during temporary
emergency conditions, PacifiCorp shall maintain voltage within the limits of 5 percent
above and 5 percent below a normal operating voltage, such normal voltage to be
established by PacifiCorp from time to time upon reasonable notice to Monsanto, between
the limits of 120 000 volts and 138,000 volts.
Restricted Service. PacifiCorp shall make every best reasonable effort to
supply Monsanto s Power and Energy requirements, but at any time PacifiCorp may
interrupt service to Monsanto only in accordance with Exhibits "A" and "
3.4 Phase Balance Monsanto shall balance its loads among phases to the
extent practicable. If the difference between maximum and minimum phase loads
regularly or frequently exceeds 10 percent, PacifiCorp may require that Measured
Demands be determined on the basis of three times the load in the maximum. phase.
Wave Form.In the design, selection , and operation of equipment using
electric power, Monsanto shall observe due precautions to avoid distortion of wave form
that, reacting through the system of PacifiCorp, may result in interference to operation of
telephone systems or in other injurious effects. If difficulties result at any time from
distortion of wave form by causes originating in Monsanto s facilities, upon notice thereof
Monsanto shall take the necessary measures to remove such causes.
Cooperation in Operation
1 Monsanto shall endeavor to supply PacifiCorp in advance with
information as to conditions affecting Monsanto s power load that may aid PacifiCorp in
load dispatching and in planning PacifiCorp s power system operation , such as the
probable times and durations of substantial daily load changes. Following an unexpected
furnace outage, Monsanto shall notify PacifiCorp s dispatcher as quickly as possible of the
expected duration of such outage. Such estimates or advance information shall not
binding on either party.
PacifiCorp shall hold in reserve sufficient generating capacity to
supply Monsanto s anticipated load requirements for a period not to exceed thirty (30)
minutes beyond Monsanto s estimated time of load increase. If Monsanto s load
requirements have not begun to increase within such thirty (30) minute period, PacifiCorp
may sell or otherwise dispose of such reserve capacity to another utility as surplus energy
until such times as Monsanto is ready to increase load; provided , that if such a sale is
made, Monsanto may not increase load until such sale can be terminated or PacifiCorp is
able to obtain additional capacity through some other means. Such restriction to
Monsanto s load shall not be accounted for as curtailment, but shall not extend more than
one (1) hour beyond the time Monsanto is ready to increase load.
In order to administer the terms and conditions of this Agreement,
PacifiCorp and Monsanto shall each designate from time to' time in writing their respective
representatives for the purpose of giving and receiving notices required under this
Agreement.
6.4 PacifiCorpacknowledges that Monsanto s electric fumaces require
shutdowns for maintenance and overhauling, and it is the intent of the parties hereto that
such shutdowns and consequent reduction of power requirements be predetermined
insofar as possible by agreement between the parties.
Section 4: Payment for Power and Enerav
Determination of Billino Amounts
1 Power and Energy delivered under this Agreement shall be recorded
by appropriate metering devices mutually acceptable to the parties.
All payments to PacifiCorp under this subsection shall be delivered by
wire transfer as follows:
Account Name:PacifiCorp
Bank Name:Bank ONE
Account Number:5547458
ABA Routing Number:071000013
3 The following monthly charges apply to all Firm Power and Energy
delivered to Monsanto under this Agreement:
Energy Charge: 16.31 mills per kilowatt hour
Customer Charge: $283 per month
Demand Charge: $8.81 per kw of Firm Billing Demand
1.4 The following monthly charges apply to all Interruptible Power and
Energy delivered to Monsanto under this Agreement:
Energy Charge: 16.31 mills per kilowatt hour
Demand Charge: $4.09 per kw of Interruptible Billing Demand
Payments. In the event that all or a portion of Monsanto s bill , or of any other
claim or adjustment arising hereunder, is disputed , Monsanto shall pay the undisputed
portion of the bill when due and shall provide PacifiCorp with a written explanation of any
disputed portion withheld. If it is determined that the disputed portion is due PacifiCorp,
Monsanto shall pay such to PacifiCorp within 15 days following such determination,
together with interest from the date the bill was originally due at the current prime rate of
interest charged at CitiBank N.
Section 5: Operations and Maintenance
Licenses. At no additional cost to PacifiCorp, Monsanto hereby licenses to
PacifiCorp for its use in connection with this Agreement and during the term of this
Agreement, and any extensions hereof, sufficient space in Monsanto s 138 kV substation
to be used solely by PacifiCorp s metering equipment and associated facilities required to
serve Monsanto , which license shall include reasonable rights of ingress and egress
necessary for PacifiCorp s exercise of such license.
138 kV Substation. Except as may otherwise be provided herein, Monsanto
shall be responsible for the operation and maintenance of all facilities and equipment
within Monsanto s existing 183 kV substation.
Operation of Customer Facilities
In order to minimize the hazards to both PacifiCorp s and Monsanto
138 kV systems, protective devices and other Customer Facilities shall be operated by
qualified Monsanto personnel only upon prior notification to, and receipt of permission
from, PacifiCorp s System Dispatcher, except as provided in Paragraph 5.4 hereof.
PacifiCorp s System Dispatcher shall honor Monsanto s verbal requests for permission to
operate Monsanto s protective devices and other Customer Facilities if such operation will
not, in the opinion of PacifiCorp, impair such facilities and the reliable operation of
PacifiCorp s system or impair service to other Retail Customers of PacifiCorp; provided
that Monsanto may operate Monsanto s circuit breakers and other Customer Facilities
without prior notification when Monsanto deems it necessary to protect persons or
property at its Soda Springs Plant. In such event, Monsanto shall assume full and sole
liability for injury or damages to persons or property at Monsanto s plat resulting from such
operation of the circuit breakers.
Monsanto shall provide potential and current transformers for use in
connection with its own relaying and metering operations and PacifiCorp may use such
transformers to any reasonable extent for PacifiCorp s metering, relaying, and
communication requirements. Should Monsanto s potential and current transformers not
meet PacifiCorp s requirements, Monsanto shall install any potential and current
transformers required by PacifiCorp that are supplied by PacifiCorp. Any equipment
supplied by PacifiCorp shall remain the property of PacifiCorp.
PacifiCorp may operate Monsanto s circuit breakers to accommodate
operation of PacifiCorp s and Monsanto s systems in a manner consistent with Prudent
Electrical Practiges; provided , that, except as provided in Paragraph 5.4, PacifiCorp shall
notify Monsanto prior to operating such circuit breakers and shall keep Monsanto informed
as to the operating status of such breakers.
3.4 Upon notice to Monsanto, PacifiCorp shall have reasonable access to
Monsanto s substation control building. PacifiCorp personnel shall comply with all health,
safety, and confidentiality rules, regulations and practices that Monsanto has provided to
PacifiCorp.
5 Any failure of Monsanto s Facilities to operate adequately or properly
shall not subject PacifiCorp to liability to Monsanto for any resulting loss or damages , or
consequential damages of any kind, and Monsanto hereby releases PacifiCorp from any
such liability.
5.4 Emerqencv Conditions. In the event of an emergency resulting in danger to
persons or property, or potential danger to Monsanto s and/or PacifiCorp s systems, either
PacifiCorp or Monsanto may open Monsanto s circuit breakers without notice to the other
party. Whenever possible , the parties shall notify the other party prior to opening any such
device, and notification shall be made as soon as possible after the device has been
opened. When corrective actions have been completed, PacifiCorp shall restore service
upon receiving notice and being satisfied that all necessary corrections have been made.
Substation Space Monsanto shall provide suitable space at its substation
for installation by PacifiCorp of static capacitors, not to exceed 30,000 kilovars, as
PacifiCorp may require.
Meterinq Equipment.PacifiCorp shall provide and install suitable metering
equipment, including panels, to obtain measurements needed for its operating purposes
and in connection with settlements hereunder. The metering equipment shall be installed
in an appropriate space in Monsanto s substation made available by Monsanto without
charge. Such equipment shall be and remain the property of PacifiCorp.
Relays.PacifiCorp may provide and install on Monsanto s relay panel
under-frequency relays for the purpose of tripping Monsanto s power circuit breakers at
such under-frequencies as may be specified by PacifiCorp.
Maintenance of Facilities
Monsanto shall be solely responsible for the operation and
maintenance of Monsanto s Facilities. Monsanto shall inspect its Facilities on a regularly
scheduled basis and maintain them in safe operating condition.
PacifiCorp may, but is not required to, inspect Monsanto s Facilities
during reasonable business hours and if, in the sole judgment of PacifiCorp, Monsanto
Facilities are not maintained in safe operating condition, thereby creating a hazard to
persons or property or to the operation of PacifiCorp s system, PacifiCorp shall notify
Monsanto promptly stating the required maintenance, replacement, or repair necessary to
put Monsanto Facilities in safe operating condition and specifying a reasonable period in
which to make repair. Monsanto shall make such or equivalent repairs, replacement or
maintenance within a reasonable time. In the event specified corrective procedures are
not completed as required by the notice, PacifiCorp may, without further notice to
Monsanto, discontinue service to Monsanto. In the event PacifiCorp discc:mtinues service
under this Subparagraph 5., PacifiCorp shall not be liable to Monsanto for any resulting
loss or da~age , including, but not limited to , lost profits or consequential damages of any
kind , and Monsanto hereby releases PacifiCorp from any such liability.
Section 6: Meterina
PacifiCorp Obliqations. PacifiCorp shall provide , maintain, and test meters
and metering equipment required for purposes of settlement hereunder, except any
potential transformers and current transformers owned by Monsanto under Paragraph
2. Maintenance and periodic testing procedures with respect to meters and metering
equipment shall be in accordance with generally accepted practices and the rules and
standards established by the Idaho Public Utilities Commission. In addition to PacifiCorp
periodic tests, special tests shall be made if requested by Monsanto, which special tests
shall be' conducted at the expense of Monsanto. Monsanto shall furnish without charge
reasonable incidental service, such as removal of tapes and charts, and shall
communicate to PacifiCorp the meter readings necessary for operation. PacifiCorp
designated agents shall have access to such metering equipment at all reasonable times
and shall be permitted to install and operate from time to time any testing equipment
needed in connection with operations or settlements hereunder.
Obliqations. If either Monsanto or PacifiCorp provides check metering
equipment, information with respect to registrations thereof will be provided.
Meter Testinq . Representatives of PacifiCorp and Monsanto may be present
at all routine or special tests of meters and metering equipment and upon occasions when
any readings are taken for purpose of settlements.
6.4 Adjustments to Bills If, at any test of any meter or metering equipment, an
inaccuracy is disclosed exceeding two percent, the account for service theretofore
supplied shall be adjusted to correct for such inaccuracy for a period of 90 days prior to
the date of such test, or for the period during which such inaccuracy may be determined to
have existed , whichever period is the shorter. Should any meter at any time fail to
register, or should the registration be so erratic as to be meaningless, the quantities shall
be determined from check meters, if installed, or otherwise from the best available data.
Section 7: Force Majeure
Neither PacifiCorp nor Monsanto shall be subject to any liability or damages for
inability to provide or receive service to the extent that such failure shall be due to causes
beyond the control of either PacifiCorp or Monsanto, including, but not limited to the
following: (a) the operation and effect of any rules, regulations and orders promulgated by
any commission , municipality, or governmental agency of the United States, or subdivision
thereof; (b) restraining order, injunction or similar decree of any court; (c) war; (d)
explosion; (e) fire; (f) major breakage or failure of equipment; (g) flood; (h) earthquake; (i)
act of God; U) sabotage; or (k) strikes or boycotts. Should any of the foregoing occur,
Monsanto shall have no liability for service until such time as Monsanto is able to resume
service except for any term minimum guarantees designed to cover special facilities
extension costs , if any. Performance of this Agreement is subject to all laws, rules and
regulations , including those involving priorities, allocations, or restrictions of materials and
the furnishing of electric service , nor or hereafter promulgated by lawful authority. The
party claiming Force Majeure under this provision shall make every reasonable attempt to
remedy the cause thereof as diligently and expeditiously as possible.
Section 8: Resale of Power
Electric power purchased by Monsanto pursuant to this Agreement may not be
resold directly or indirectly by Monsanto to any party, except as the parties may otherwise
agree in writing.
Section 9: Liability
Liabilitv. Each party hereto (the "liability causing party ) shall defend,
indemnify and hold harmless the other party from and against any liability, damage, loss
costs and expenses, including but not limited to attorneys' fees, on account of injury to or
death of persons including, but not limited to, Monsanto s employees and PacifiCorp
employees, or damage to property to the extent caused by or arising from the negligent
acts or omissions of the liability-causing party.
Limitation of Liabilitv. PacifiCorp shall endeavor at all times to provide
steady and continuous service to Monsanto and shall make reasonable efforts to prevent
irregularities and interruptions. PacifiCorp shall use its best efforts to notify Monsanto prior
to or, in any event, immediately after an interruption or irregularity in order that Monsanto
may attempt to mitigate its damages resulting therefrom. In the event of interruption of
electricity, or its supply be irregular, defective , or fail from causes beyond control of
PacifiCorp, PacifiCorp shall not be liable therefor.
Section 10: Successors and AssiQns
Neither PacifiCorp nor Monsanto shall assign this Agreement without the written
consent of the other party hereto, which consent shall not be unreasonably withheld
except Monsanto may assign this Agreement without any such consent to the acquirer of
the majority of the value of Monsanto s Soda Springs plant, provided that Monsanto as
assignor shall continue to guarantee the performance by the assignee of the Monsanto
obligations under this Agreement. If assigned with such consent, this Agreement shall
inure to the benefit and be binding upon the assignee , its agents and assigns; provided
that nothing herein shall prevent either party from assigning this Agreement to its parent
corporation or to its survivor in connection with a corporate reorganization, provided that
such assignee is solvent and is able to meet its obligations hereunder;
Section 11: Jurisdiction of ReQulatorv Authorities
11.ReQulatorv Authorities . This Agreement is subject to the approval of the
Idaho Public Utilities Commission. Execution of this Agreement by PacifiCorp and
Monsanto shall not constitute a waiver of PacifiCorp s right or Monsanto s right to petition
the Idaho Public Utilities Commission.
11.Electric Service ReQulations. PacifiCorp s currently applicable, effective
Service Regulations are incorporated herein and by reference made a part hereof.
Monsanto acknowledges and agrees that it is familiar with such existing regulations and
agrees to abide by them and all amendments and changes thereto so approved by the
Idaho Public Utilities Commission. In the event that the Idaho Public Utilities Commission
or any other state, federal, or municipal authority having jurisdiction issues any rules
regulations, or orders that require PacifiCorp to alter or amend any of the terms and
conditions of this Agreement or to terminate or curtail the delivery of power and energy to
Monsanto, neither party hereto shall be liable for damages or losses of any kind
whatsoever which the other party hereto may sustain as a result of such rule, regulation or
order, including consequential damages.
Section 12: Remedies
Notwithstanding anything to the contrary in this Agreement, each party retains all
common law rights and remedies in the event of a breach of this Agreement, including but
not limited to (i) the right to recover any power required to be delivered but not yet
received under this Agreement, and (ii) the right to receive payment for power delivered.
Section 13: Representatives and Notices
For the purpose of Formal notice under this Agreement, the following authorized
representatives are designated:
Representatives of Monsanto:
Plant Manager
Monsanto Company
O. Box 816
Soda Springs, Idaho 83276
Tel: [phone] , ex 201
Fax: [phone]
Vice President - Procurement
Monsanto Company
800 N. Lindbergh Blvd.
St. Louis, MO 63167
Tel: [phone]
Fax: [phone]
Representatives of PacifiCorp:
Strategic Account Director
PacifiCorp
105 Commerce Drive
Evanston, WY 82930
Tel: [phone]
Fax: [phone]
General Business Manager
PacifiCorp
105 Commerce Drive
Evanston, WY 82930
Tel: [phone]
Fax: [phone]
This notice requirement does not apply to regular and ordinary business and operation
communications between the parties' employees.
Section 14: Other Contracts
This Agreement constitutes and contains the entire Agreement of the parties hereto
and supersedes any and all prior negotiations, correspondence, understanding, and
agreements between the parties respecting the subject herein. This Agreement may not
be modified, altered, or changed in any manner whatsoever except pursuant to Section
11.2 of this Agreement or obey written agreement between the parties hereto, subject to
Idaho Public Utilities Commission approval.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers or representatives as of the date first hereinabove
written.
PACIFICORP MONSANTO COMPANY
Its Vice President Its Vice President
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EXHIBIT" A"
Contin2encv Operatin2 Reserve and Svstem Inte2ritv Interruption A2reement
Between
PacifiCorp
And
Monsanto
Def"mitions
Operating Reserve shall mean a specific amount of electrical resources that all
control areas must have available at all times to ensure the reliable operation
of the interconnected electrical system.
Contingency Operating Reserve shall mean the non-spin component of
Operating Reserve that may inc1ud~ interruptible load and is an amount of
reserve necessary to reduce Area Control Error (ACE) to zero within ten
minutes of a loss of energy associated with a transmission or generation
contingency.
Amount of Interruption.
PacifiCorp recognizes that each of Monsanto s electric phosphorus furnaces
operates at different electrical rates. Upon a notification by PacifiCorp for
Contingency Operating Reserves or System Integrity Interruption, Monsanto
at its sole discretion, shall determine which of its furnaces to interrupt.
Monsanto shall curtail 46, 49 or 67 MW of electric service. Monsanto
operators shall inform PacifiCorp s dispatcher at the time of the notification of
the amount of service it will be curtailing. While the amount of interruption
provided by this Agreement is dependent on the furnace Monsanto chooses to
. curtail, Monsanto will stand ready to supply a minimum 95 MW per
curtailment event, except as provided in Section 7, Force Majeure, of the
Agreement and Section 8 below.
Purpose of Interruption.
PacifiCorp may direct such interruption at any time it concludes in its sole
reasonable discretion, that PacifiCorp needs to utilize the Contingency
Operating Reserves or System Integrity Interruption as provided by Monsanto
subject to the terms of this Exhibit.
Interruption of Monsanto
(a) Operating Reserve:
Monsanto shall take action as needed to curtail the electrical supply
to one or two of its electric phosphorus furnaces within (6) minutes
after receipt of telephone notice from PacifiCorp s dispatcher
requesting such interruption of electrical service for Operating
Reserve. The interrupted service shall be restored at the earlier of:
1) notice from PacifiCorp s Dispatcher or, 2) sixty (60) Minutes after
interruption of the furnace load. PacifiCorp will provide Monsanto
with as much notice as possible for any interruption for system
integrity.
(b) System Integrity:
Monsanto shall take action as needed to curtail the electrical supply
to one or two of its electric phosphorus furnaces within (1) minute
after receipt of telephone notice from PacifiCorp s dispatcher
requesting such interruption of electrical service for System
Integrity. The interrupted service shall be restored when no longer
needed to maintain System Integrity.
Number of Interruptions
The maximum number of Operating Reserve interruptions that PacifiCorp
may direct shall be
(1) Three hundred (300) hours per year
(2) Twenty-five (25) interruptions for each month
(3) Three (3) interruptions in any four (4) hour period
(4) Up to one (1) hour per interruption
Each hour of System Integrity interruption shall count against the three
hundred (300) hours per year maximum.
Any interruption shall count as a minimum of one (1) hour.
Maintenance of Dedicated Telephone Line
Monsanto and PacifiCorp shall maintain a dedicated telephone line at their
own cost in their respective control rooms. This line shall be solely dedicated
for communications between Monsanto furnace operators and PacifiCorp
dispatchers. Each party shall have an authorized employee available at all
times to immediately respond interruption notices or interruption of
operations.
Communication of Maintenance Scheduling
PacifiCorp acknowledges that the electric phosphorus furnaces at Monsanto
will be removed from service from time to time during the terms of this
Agreement for maintenance and overhauls. Monsanto will provide PacifiCorp
notice by telephone or fax, of expected maintenance schedules and delays
including scheduled time of interruption, duration, and electrical load of
corresponding furnace. Monsanto will also inform PacifiCorp by telephone or
fax prior to restoring electrical power to a furnace after such a delay.
If two of Monsanto s furnaces are simultaneously unavailable due to
maintenance or overhaul and/or interruptions by PacifiCorp due to Economic
Curtailment, under provisions of Exhibit B. Monsanto shall have no obligation
to curtail the remaining furnace. However, if requested by PacifiCorp for
Operating Reserves or System Inegrity, Monsanto will not resume operation
of the unavailable furnaces until the earlier of: 1) notice from PacifiCorp
Dispatcher or, 2) sixty (60) minutes after the notification of Monsanto toresume servIce.
EXHIBIT "
Economic Interruption A2reement
Between
PacifiCorp
And
Monsanto
Defmitions
Interruption Hour is the consecutive hours designated by PacifiCorp for
Economic Interruption during each calendar day.
Economic Interruption shall mean PacifiCorp s right to interrupt Monsanto for
economic reasons, exercisable when PacifiCorp s cost of delivering energy to
Monsanto exceeds the strike price, subject to Monsanto s right to buy through
as provided in Section 5 below.
Path C: The particular high voltage transmission corridor comprised of the
Borah-Ben Lomond 345 kV, Brady-Treasureton 230 kV, Goshen-Grace 161
kV and American Falls-Malad 138 kV lines, located in northern Utah and
southern Idaho. In accordance with the WECC criteria for rating paths, its
transfer capability is based on a simultaneous loss of both the Borah-Ben
Lomond 345 kV and the Brady-Treasureton 230 kV lines, which share
common right-of-way for approximately 50 miles.
Replacement Energy is the measured energy for any Curtailment Hour.
Strike Price is the fixed price of $16.31/MWH at which PacifiCorp may
exercise its right to curtail.
Amount of Economic Interruption.
Monsanto will stand ready to supply 67 MW of Economic Interruption up to a
maximum of 500 hours per year upon not less than two (2) hours of telephone
notice.
Purpose of Interruption.
PacifiCorp may direct such interruption at any time the cost of supplying
energy to Monsanto exceeds the strike price, subject to the terms of this
Exhibit.
Interruption of Monsanto
PacifiCorp may interrupt Monsanto, upon not less than two (2) hours of
telephone notice from PacifiCorp s dispatcher to Monsanto s control operator
requesting interruption of electric service for economic purposes and
providing the amount and duration, start and end time, and buy-through price
for each hour of interruption.
Monsanto shall take action as needed to interrupt the electrical supply to its 67
MW Number 9 electric phosphorus furnace at the designated interruption
time. The interrupted service shall be restored at the end of the duration of the
interruption.
Buy-Through Replacement Energy
Monsanto shall have the option to buy-through Economic Interruption by
paying PacifiCorp for replacement power costs at PacifiCorp s lowest
possible actual cost at the time the transaction is made. Monsanto may
exercise its right to buy-through the interruption by telephone notice to
PacifiCorp s dispatcher requesting such buy through at any time up to 15
minutes prior to the time the designated Economic Interruption is to
commence.
Lowest possible actual costs means the lowest price after PacifiCorp serves all
its other retail and wholesale loads. During those hours when PacifiCorp
ability to utilize to transmission on Path C is not constrained, Monsanto will
pay PacifiCorp the lower ofthe appropriate (on peak or off peak) Dow Jones
Mid-Columbia, or Palo Verde Index price for firm power, shaped hourly, in
accordance with the shaping factors set forth in PacifiCorp s Exhibit 16, as
attached to this Exhibit ". For all other hours, Monsanto will pay for
Replacement Energy at the Palo Verde Index prices, shaped hourly in
according with the shaping factors.
Number of Interruptions
The total interruptions will not exceed 500 hours per year.
Maintenance of Dedicated Telephone Line
Monsanto and PacifiCorp shall maintain a dedicated telephone line at their
own cost in their respective control rooms. This line shall be solely dedicated
for communications between Monsanto furnace operators and PacifiCorp
dispatchers. Each party shall have an authorized employee available at all
times to immediately respond to interruption notices or interruption of
operations.
Communication of Maintenance Scheduling
PacifiCorp acknowledges that the electric phosphorus furnaces at Monsanto
will be removed from service from time to time during the terms of this
Agreement for maintenance and overhauls. Monsanto will provide PacifiCorp
notice by telephone or fax, of expected maintenance schedules and delays
including scheduled time of interruption, duration, and electrical load of
corresponding furnace. Monsanto will also inform PacifiCorp by telephone or
fax prior to restoring electrical power to a furnace after such a delay.
If Monsanto s 67 MW Number 9 furnace is unavailable due to maintenance or
overhaul and/or interruptions by PacifiCorp for Operating Reserves or System
Integrity pursuant to Exhibit A, no furnace shall be considered available for
Economic Interruption during that time.
Reporting
Simultaneous with PacifiCorp s monthly invoice to Monsanto for power and
energy purchased, PacifiCorp shall provide Monsanto with a report detailing
all interruptions during the previous month, including the following
information:
1) Type of interruption (system emergency, operating reserves, or
economic)
2) Date
3) Beginning and end time
4) Duration
5) Megawatts interrupted
6) Year-to-date total hours of each type of interruption
7) Buy through charges, rate, source and energy purchased
10.Schedule
In order to enable Monsanto to anticipate possible interruption, to plan furnace
operations and make buy-through decisions in accordance herewith
PacifiCorp shall submit to Monsanto on the first day of each calendar month a
schedule showing the estimated amount, time and duration of interruption, if
any, expected during the following calendar month. PacifiCorp shall prepare
such schedule using best information available, but it is understood that it
shall reflect only an estimate of expected conditions and, therefore, shall not
be binding upon PacifiCorp.
MONSANTO ATTACHMENT 2
LAW OFFICES OF
LOUIS F. RACINE, .JR.
WILLIAM D. OLSON
W. MARCUS W. NYE
RANDALL C. BUDGE
.JOHN A. BAILEY, .JR.
.JOHN R. GOODELL
.JOHN B. INGELSTROM
DANIEL C. GREEN
BRENT O. ROCHE
KIRK B. HADLEY
FRED .J. LEWIS
MITCHELL W. BROWN
ERIC L. OLSEN
DAVID E. ALEXANDER
LISA M. CHRISTON
RICHARD A. HEARN, M.
LANE V. ERICKSON
PATRICK N. GEORGE
SCOTT .J. SMITH
LISA A. WOOD, CPA
RACINE, OLSON, NYE, BUDGE & BAILEY
CHARTERED
BOISE OFFICECENTER PLAZA-CORNER FIRST Be CENTER
POST OFFICE BOX 1391
POCATELLO, IDAHO 83204-1391
CONRAD .J. 'AIKEN
THEODORE C. PETERS
DEBORAH L. LEHOSIT
TELEPHONE [phone]
FACSIMILE [phone]
101 SOUTH CAPITOL
BOULEVA~DS. BANK PLAZA, SUITE 202
BOISE, IDAHO 83702
TELEPHONE: (20B) 395-0011
FACSIMILE: [phone]
SENDER'S E-MAIL ADDRESS: rcb(\j)raclnelaw.net
February 7, 2003
John M. Eriksson
Stoel Rives LLP
201 S. Main St., Ste 1100
Salt Lake City, Utah 84111
Transmitted Via E-Mail
Re:PaciftCorp Monsanto: New Electric Service Agreement
Dear John:
Enclosed please find Monsanto s proposed draft Electric Service Agreement, together with
attached Exhibits A and B. The Agreement is based upon the 1995 Contract which has been updated
to incorporate the Commission s Final Order No. 29157 issued January 27 2003.
Monsanto representatives are prepared to meet with PacifiCorp representatives at your
earliest convenience for the purpose of reviewing the proposed Agreement and addressing and
resolving any issues or concerns. In advance of any face-to-face meeting, please provide written
comments so that we might identify and focus upon an issue list.
It is my understanding that PacifiCorp is also working on its own proposed fonD Electric
Service Agreement. Please provide this to us electronically as soon as possible and we will also
review and comment on the same. Other than from a technical perspective, we have not undertaken
a review ofPacifiCorp s 1/20/03 draft Agreement since it preceded the Commission s Final Order
the tenDS of which need to be incorporated to permit a productive review.
John Eriksson
February 7, 2003
Page 2
Monsanto looks forward to working with PacifiCorp diligently and in good faith to arrive at
a new Electric Service Agreement to be submitted to the Commission for final approval as soon as
possible.
RCB:rr
Enclosurescc: Daniel R. Schettler (w/encl.)
James R. Smith (w/encl.)