Idaho Public Utilities Commission

Case No. IPC-E-10-23, Order No. 32132

December 8, 2010

Contact: Gene Fadness (208) 334-0339, 890-2712

Website: www.puc.idaho.gov

 

Utility given more flexibility to negotiate with large customers

 

The Idaho Public Utilities Commission has approved a request by Idaho Power Company to allow it to negotiate special contract provisions with future large industrial customers which would make it easier for the utility to serve those customers without negatively impacting other customers.

 

Idaho Power said it has received inquiries from as many as 75 potentially new large industrial and irrigation customers. Due to generation and transmission constraints, Idaho Power said it would not be able to serve the new customers if it cannot negotiate provisions that allow the utility to adapt its transmission system to accommodate the new load.

 

Currently, all Idaho Power industrial customers with a load between 1 megawatt and 25 megawatts are served under a tariff – Schedule 19 – that that has the same rates and delivery requirements. Four industrial customers that have a load of 25 megawatts or more are classified as “special contract” customers. That classification gives Idaho Power the price and delivery flexibility to accommodate the requirements of these large customers without negatively impacting other customers. The four special contract customers are Micron, the Idaho National Laboratory, JR Simplot Company and Hoku Materials.

 

In this case, Idaho Power sought commission approval to lower the load requirement for customers to qualify as special contract customers from 25 megawatts to 20 megawatts, which, the utility says, would capture most of the potential industrial customers requesting service. The commission has granted that request and it becomes effective Jan. 1, 2011.

 

The commission said it recognizes that the ability of Idaho Power’s generation and transmission system to serve new large load customers is constrained. “We find that the company’s proposal will enable it to better manage the impacts of potential new large loads on its system,” the commission said.

 

For example, a special contract would permit Idaho Power and the industrial customer to reach an agreement to curtail power or exercise other options to the customer if Idaho Power is unable to provide service. Further, a special contract could lessen the rate impact on other customers by including a rate structure for contract customers that has a marginal cost component for an initial period. The contract could also require the large customer to make upfront contributions for new or upgraded distribution or transmission needed to serve the new customer.

 

Because of constraints on its power supply and transmission, Idaho Power would not have been able to serve Hoku Materials, Inc., a new polysilicon production facility in Pocatello, without a special contract. Hoku requested 82 megawatts of year-round capacity. The two entities last year agreed on a four-year seasonally-shaped contract that requires Hoku to reduce its demand during the peak summer months through 2012, the year Idaho Power expects to have enough power supply and transmission to serve Hoku at full capacity. During those peak months, Hoku will reduce its demand by performing annual maintenance on its systems.

 

The agreement also allowed Idaho Power to charge Hoku a special rate rather than the standard rate for the entire load, which would have likely placed upward pressure on all of Idaho Power’s customer rates. Hoku is paying the costs for Idaho Power to build the transmission and substation upgraded needed to enable delivery of energy to Hoku’s facilities.

 

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to Case No. IPC-E-10-23.