20030225Monsanto Answer to Pac Petition for Reconsideration.pdf

Randall C. Budge, ISB No. 1949
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
O. Box 1391 - 201 E. Center Street
Pocatello, ID 83204-1391
Telephone: [phone]
Facsimile: [phone]
~:ECE iVED
!LEO
Ci!r-.
ZOG3 FEB 25 Mi 10: 20
, f"' ,0 , ~ I"'. "",
' , ,,~
UTILI j-IES CUijt'11 SSIOri
Attorneys for Monsanto Company
BEFORE THE IDAHO PUBLIC UTITLITIES COMMISSION
In The Matter of the Application of
PacifiCorp d/b/a Utah Power & Light
Company for Approval of Interim
Provisions for the Supply of Electric Service)To Monsanto Company
CASE NO. PAC-OI-
MONSANTO'S ANSWER TO
P ACIFICORP'S PETITION FOR
RECONSIDERATION AND
CLARIFICATION OF ORDER
NO. 29157
COMES NOW Monsanto Company ("Monsanto ), through counsel, and pursuant to
Idaho Code ~61-626 and Rule 331 of the Idaho Public Utilities Commission Rules of Procedure
and hereby answers PacifiCorp s Petition for Reconsideration and Clarification of Order No.
29157.
INTRODUCTION
While a number of Monsanto s proposals were rejected, including its request for a single
rate and lower price, Monsanto does not seek reconsideration of the decision. Unlike PacifiCorp,
Monsanto has accepted the Commission s final Order No. 29157 as a reasoned, balanced and
comprehensive analysis and solution to the issues in dispute between the parties. Instead
Monsanto focuses its efforts in moving beyond past differences and proceeding in a positive
fashion to secure Commission approval of a new electric service agreement embodying the terms
of the Final Order.
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 1
Monsanto will briefly address each of the four issues on which PacifiCorp seeks
reconsideration. The first issue seeking to adjust monthly "credits" to reflect furnace availability
and the second issue regarding the 95 MW limit on system integrity interruptions present nothing
new by PacifiCorp.The Commission has fully and fairly analyzed all issues concerning
availability in reaching its balanced decision. PacifiCorp s latest attempts to argue that the
Commission did not properly consider the evidence and/or that the record was inadequate to
support the findings and conclusions are meritless if not ludicrous. The parties went to great
lengths presenting extensive testimony and analysis on all cost and pricing issues which the
Commission is well aware of and upon which no further elaboration is needed. PacifiCorp
request to re-analyze these same issues should be soundly rejected.
The third issue seeking clarification of Monsanto s firm load pricing is simply a non-
Issue. Questions regarding the size and billing of Monsanto s firm load have never previously
been an issue either in this proceeding, or historically. PacifiCorp s apparent misunderstandings
of Monsanto s 9 MW firm load could easily have been clarified by asking Monsanto instead of
needlessly raising the matter as an issue before the Commission.
The fourth issue requesting clarification of a possible future true up is premature. There
may well be no true-up. The need for any true-up depends upon the termination date ofthe old
contract, yet to be decided in Federal Court. True up issues are not ripe for decision and may not
exist at all.
ELECTRIC SUPPLY AGREEMENT PROPOSAL
Both parties were informed the Commission expects a new Electric Service Agreement
Agreement") be submitted for approval within 60 days of the January 27, 2003 final order.
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 2
Accordingly, Monsanto prepared a proposed draft Agreement based upon the 1995 contract
which was updated to incorporate Order No. 29157. Affidavit of James R. Smith, Exhibit
Monsanto s proposed Agreement was sent electronically to PacifiCorp on February 7, 2003. As
indicated in the transmittal letter Monsanto proposed to meet with PacifiCorp as soon as possible
for the purpose of reviewing the proposed agreement and addressing and resolving any issues or
concerns. Additionally, written comments were requested from PacifiCorp in advance of any
face to face meeting so that the issues could be identified and focused upon. Affidavit of James
R. Smith, Exhibit 2. PacifiCorp has not provided any comments whatsoever on Monsanto
proposed Agreement. Nor has PacifiCorp presented to Monsanto any proposed Agreement
which incorporates the terms of the Final Order
! .
Monsanto urges the Commission to reject PacifiCorp Petition and to approve
Monsanto s proposed Agreement.By so doing the Commission could bring this case to a
conclusion without further delays. 2
RESPONSE TO P ACIFICORP ARGUMENTS
I. Response to PacifiCorp argument that "monthly credits" should be adjusted for furnace
availability .
PacifiCorp continues to repeat in its Petition ad nauseam the same arguments made at the
hearing, in its Post-Hearing Brief and in its comments on the Proposed Order that "monthly
credits for curtailment should be adjusted to account for furnace availability." The Commission
should again reject this argument as it did in the final Order No. 29157, page 2:
We reject PacifiCorp s proposal to revise a method for calculation of monthly credits for
interruptable/curtailment options to reflect the monthly availability of furnace load.
1 PacifiCorp did send a proposed Agreement on February 20, 2003 , but it does not incorporate the directive given by
the Commission in the Final Order No. 29157, instead reflecting positions asserted by PacifiCorp in its Petition for
Reconsideration, and which the Commission has previously rejected.2 It is noteworthy that in the Magcorp case in Utah, Docket No. 01-035-38 decided July 2, 2002, PacifiCorp has yet
to submit a new contract to the Utah Commission for approval.
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 3
PacifiCorp continues to advocate its OwrI "credit" philosophies when in fact there are no
credits nor payments to Monsanto for interruptibility under the Final Order. PacifiCorp s claims
that it "will be paying Monsanto substantial sums, in the form of credits" is utterly phony. To
the contrary, the Commission has rejected any such crediting scheme, and instead established
specific rates for firm and interruptible service. Under this new set of rates, it is Monsanto that
compensates PacifiCorp for both firm and interruptible service. There are no "monthly credits
and thus nothing exists which must be adjusted.
Without question the Commission considered the availability and reliability of
Monsanto s furnaces in arriving at the 500 hours of economic curtailment and 300 hours of
operating reserves including system integrity, together with the rates for firm and interruptible
power. Monsanto has in the past ran its furnaces all out, and plans to continue to do so in the
future. The importance of running all furnaces as much as possible to maximize production and
achieve operating efficiencies was emphasized throughout the proceeding by Monsanto
personnel. It is frivolous for PacifiCorp to suggest, let alone argue, that the Commission did not
consider furnace availability in arriving at the interruption levels and rates.
As for the January 2003 furnace incident Monsanto must correct several fallacies
presented by PacifiCorp in its Petition. In the Griswold Affidavit and its Petition at Pages 5-
PacifiCorp discusses a temporary outage of furnace No.9 for maintenance work that occurred
from January 30 through February 16, 2003. Monsanto properly notified PacifiCorp of this
outage in the normal course of business, thus making it unnecessary for PacifiCorp to supply the
67 MW. As discussed in the Affidavit of James R. Smith ("Smith Affidavit ), at the time of this
temporary outage Monsanto and PacifiCorp had already agreed to begin immediately supplying
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 4
the 300 hours of operating reserves at 95 MW under the terms of the last Operating Reserve
Agreement dated July 9, 2002. This was done to implement the Order on a temporary basis until
a new agreement is approved. This temporary arrangement was made between Mr. Smith and
PacifiCorp Account Manager, Brent Barker, on January 29 , 2003. Apparently Mr. Griswold was
either unaware that the arrangements had been made by PacifiCorp, or did not recall the specific
terms ofthe July 9, 2002 Operating Agreement. During the period ofthe shut-dowrI ofthe No.
furnace, Mr. Griswold began sending letters incorrectly claiming that PacifiCorp had a right to
interrupt both of Monsanto s remaining operating furnaces for operating reserves. Section 9
the July 9 , 2002 Operating Agreement anticipated the possibility that a furnace could be removed
for maintenance specifically providing that if two furnaces were unavailable due to maintenance
or other interruptions Monsanto could still keep one furnace operating. This was explained in
Mr. Smith's letter to Mr. Griswold dated February 4, 2003 , Exhibit 3 to the Smith Affidavit, also
attached to the Griswold Affidavit.
In summary, PacifiCorp s request to adjust the interruptible rate to reflect furnace
availability it yet another attempt to take a bite out of the apple by undermining the value
provided by Monsanto interruptions and should be rejected.
II. Response to PacifiCorp arguments that System Integrity Interruptions should be
limited to 95MW.
The Commission limited Spinning Reserves and System Integrity Interruptions to 300
hours per year at 95 MW. Final Order No. 29157, page 12. PacifiCorp argues at page 10 of its
Petition that "the limitation of 95 MW for System Integrity Interruptions is not supported by any
substantial evidence and is not reasonable . PacifiCorp requests that the entire furnace load of
162 MW be subject to System Integrity Interruptions. PacifiCorp s contention that Monsanto did
not oppose interrupting all of its furnaces at once is ridiculous and ignores the overwhelming
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 5
testimony to the contrary. While Monsanto has the ability to interrupt all three furnaces, it has
consistently expressed a strong desire to keep at least one furnace running at all times for
operational and economic reasons. This is the very reason Monsanto insisted upon the option to
buy-through economic curtailments.
While numerous models and methods were proposed for determining the interruptible
rate, the Commission ultimately chose not to adopt any definitive methodology. Furthermore
Monsanto consistently stated that it not be interrupted any more than necessary to achieve its
desired rate. Based upon the substantial record presented, the Commission exercised sound
discretion in determining a level of interruptibility and rate which is both reasonable and
balanced under the circumstances.
PacifiCorp s contention that the 95 MW limitation for System Integrity is not reasonable
or supported by the evidence is entirely without supporting basis and should be rejected.
III. Response to PacifiCorp request for clarification of firm service rates.
This issue is yet another example of how PacifiCorp acts to obstruct progress rather than
moving forward with a new agreement. At no time in this proceeding has PacifiCorp raised an
issue regarding the delivery and billing of the 9 MW of firm load delivered to Monsanto - that is
until its Petition. The first 9 MW delivered on the North line have always supplied Monsanto
firm load and have always been billed as such. As addressed in paragraph 7 of the Smith
Affidavit, PacifiCorp obviously misunderstands how the power is delivered to Monsanto and as
how the interruption of Monsanto works. PacifiCorp does not interrupt Monsanto , Monsanto
operators interrupt Monsanto upon notification from PacifiCorp.
Electric service is delivered to Monsanto over two transmission lines. The South line
serves only the furnaces which are all subject to interruption.The North line provides
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 6
Monsanto s 9 MW of firm load and also provides additional auxiliary load which is interruptible
The auxiliary load includes fans, motors and other equipment related to the operation of the
furnaces. More importantly, this auxiliary load is also interrupted by Monsanto operators
whenever the furnaces are expected to be interrupted for one hour or longer. By raising this
issue now, it appears PacifiCorp is grabbing at any and all straws to avoid coming to agreement
on contractual terms. If PacifiCorp had simply asked, their misunderstanding could have been
easily clarified. There is certainly no need for any clarification by the Commission on this issue.
Firm load is 9 MW and is defined in the proposed Agreement as it should be.
IV. Response to PacifiCorp request for clarification of the true-up mechanism.
The Commission properly did not address any true up issues in the Final Order as none
are properly before the Commission. There mayor may not be a need for any true-up. This will
not be knowrI until the Federal Court decides the termination date of the old contract.
PacifiCorp s attempt to raise true-up issues at this time is premature. True-up issues are not ripe
for decision and may not exist at all.
CONCLUSION
Monsanto respectfully requests that the Commission deny PacifiCorp s Petition for
Reconsideration and Clarification in its entirety. Monsanto further respectfully requests that the
Commission adopt Monsanto s proposed Electric Service Agreement which fully incorporates
the Commission s final Order No. 29157.
DATED this 24th day of February, 2003.
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 7
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
~LL
~.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 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, ID 83702-5983
James F. Fell
John M. Eriksson
Stoel Rives
900 S.W. Fifth Avenue, Suite 2600
Portland, OR 97204
Eric L. Olson
Racine, Olson, Nye, Budge &
Bailey, Chartered
O. Box 1391
Pocatello, ID 83204
James R. Smith
Monsanto Company
O. Box 816
Soda Springs, ID 83276
c,~
RANDALL C. BUDGE
MONSANTO'S ANSWER TO PACIFICORP'S PETITION FOR
RECONSIDERATION AND CLARIFICATION OF ORDER NO. 29157 - 8