140521_IPCSimplot.pdf

Idaho Public Utilities Commission
Case No. IPC-E-13-23, Order No. 33038
Contact: Gene Fadness [phone]

Commission returns contract dispute
back to Idaho Power, Simplot to resolve

BOISE (May 21, 2014) – The Idaho Public Utilities Commission is denying a
proposed contract between Idaho Power Company and one its largest customers,
the J.R. Simplot Company’s new potato processing plant in Caldwell, until the two
parties can resolve disputes over liability and price.
The plant will require enough energy, in excess of 20,000 kilowatts, to place it in a
customer class that requires a special contract with Idaho Power for power
delivery. Simplot objects to Idaho Power language that places limits on both
parties’ direct liability and waives damages for indirect or consequential liability.
Further, Simplot maintains the formula Idaho Power uses to calculate the rate
Simplot would pay Idaho Power is outdated.
Idaho Power argues that limits on liability are needed to protect customers.
“Today, the electric grid faces a variety of challenges to maintaining its reliability,
from integrating increasing amounts of intermittent generation to acts of
sabotage,” the utility claims. “The grid’s technological complexity results in
potential service failures unrelated to human error. In light of this complexity, it is
very difficult for a jury to distinguish between human error, negligence and
failures of technology beyond Idaho Power’s control.” Idaho Power claims the
liability limits protect the utility and customers from catastrophic loss.
Simplot argues that previous Idaho Supreme Court decisions have held that public
utilities should not be immune from damage claims because customers cannot
choose between competing suppliers of electric power and are, thus, “compelled
to rely absolutely on the care and diligence of the company in the transmission of
power. Idaho Power’s proposed exculpatory language shielding it from virtually all
liability is a violation of the public trust under which it serves.”
In an order issued this week, the commission said exempting a public utility from
the consequences of negligent conduct when the utility is charged with a public
duty is not reasonable. “Idaho Power cannot abrogate its general duty to exercise
reasonable care in operating its system to avoid unreasonable risks of harm to its
customers.”
However, while the commission said limits on “intentional tortious conduct or
gross negligence” are not in the public interest, it is reasonable to consider limits
on liability to an agreed-upon amount for a non-willful breach of duty.
Regarding the rate Simplot would pay Idaho Power, the utility proposed about
4.24 cents per kWh. Simplot proposed about 3.94 cents per kWh. Commission
staff proposed using an average of rates charged all Idaho Power’s special
contract customers.
The commission rejected the staff’s averaging proposal and said a rate could be
determined by using Idaho Power’s most recent cost-of-service study as a starting
point for negotiation.
The commission directed the parties to renegotiate those portions of the
proposed contract regarding liability and price based on the commission’s findings
in this week’s order. The final proposed contract must still be approved by the
commission.
All documents related to this case are available on the commission’s Web site at
www.puc.idaho.gov. Click on “Open Cases” under the “Electric” heading and
scroll down to Case Number IPC-E-13-23.

###