PUC asked to settle contract dispute between Idaho Power and Simplot

March 15, 2014 

Idaho Power Co. has asked the Idaho Public Utilities Commission to intervene in a contract dispute with the J.R. Simplot Co.

The utility and Simplot have been unable to come to terms on liability clauses and the rate Simplot will pay for electricity for the company's new potato processing plant in Caldwell.

The plant will require more than 20,000 kilowatts of electricity. The large usage falls into a customer category that requires Simplot to enter into a special contract with Idaho Power.

Simplot objects to a cap on damages and a waiver from indirect or inconsequential damages that Idaho Power wants to impose. The potato company says that violates PUC rules.

Under current market standards, Idaho Power argues, utilities do not assume risk for direct damages nor do they allow for unlimited direct damages.

Those exclusions, Simplot said, do not appear in contracts between Idaho Power and industrial customers such as Micron and the Idaho National Laboratory. Idaho Power said the language has been included in more recent contracts, including the one for the failed Hoku polysilicon plant in Pocatello and one with the builders of the Langley Natural Gas plant near Payette.

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," Simplot argues. The company says Idaho Power's proposed contract language shielding it from virtually all liability is a "violation of the public trust under which it serves."

Under Idaho Power's proposed contract, Simplot would pay 4.441 cents per kilowatt-hour. Simplot has proposed an overall rate of 4.197 cents per kWh.

Simplot claims Idaho Power is relying on an outdated formula to calculate its rate schedule.

Simplot is constructing a 420,000-square-foot building to replace three aging plants in Caldwell, Nampa and Aberdeen. More than 1,000 employees were laid off from those plants late last year.

When the new high-tech plant that will process French fries and shredded and formed potato products opens this year, it will operate with about one-quarter of the workers employed at the previous plants.

The plant is being built to Energy Star and LEED gold standards, with an expected 25 percent savings in energy consumption. The new plant will use less electricity for refrigeration, air compressors, heating and lighting, according to documents from the federal Department of Energy.

The measures are expected to save the company millions of dollars in costs.

Comments to the utilities commission will be accepted by email through March 28. Go to www.puc.idaho.gov and click on "Case Comment Form,” under the “Electric” heading. Fill in the case number (IPC-E-13-23) and enter your comments.

Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

All documents related to this case are available on the commission’s website. Click on “Open Cases” under the “Electric” heading and scroll down to the above case number.

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