FMC Corp. v. Idaho Public Utilities Com'n
| Decision Date | 02 February 1983 |
| Docket Number | No. 13991,13991 |
| Citation | 658 P.2d 936,104 Idaho 265 |
| Parties | FMC CORPORATION, Appellant, v. IDAHO PUBLIC UTILITIES COMMISSION, Respondent, and Idaho Power Company, Co-Respondent. |
| Court | Idaho Supreme Court |
James N. Roethe, Pillsbury, Madison & Sutro, San Francisco, Cal., and Michael R Southcombe, Clemons, Cosho & Humphrey, Boise, for appellant.
David H. Leroy, Atty. Gen., Lynn E. Thomas, Sol. Gen., John J. McMahon and Samuel J. Petrillo, Deputy Attys. Gen., Boise, for respondent Idaho Public Utilities Com'n.
Paul L. Jauregui, Boise, and Larry D. Ripley, of Elam, Burke, Evans, Boyd & Koontz, Boise, for co-respondent Idaho Power Co.
N. Randy Smith, Boise, Louis F. Racine and Robert C. Huntley, Jr., Racine, Huntley, Olson, Nye & Cooper, Pocatello, William Ringert and Jeffrey Christenson, Anderson, Kaufman, Ringert & Clark, Boise, for intervenors.
This is an appeal by FMC Corporation from an order of the Idaho Public Utilities Commission establishing a new contract rate to be charged FMC for electric power delivered to FMC. We affirm the order of the Commission.
Idaho Power is a public utility providing electrical energy to consumers in Idaho, Nevada and Oregon. Idaho Power, since its inception, and until recently, was basically a hydroelectric utility. In recent years, in view of limitations on available hydro power, Idaho Power has had to utilize thermal generation facilities to supply the demands being placed on its system. FMC is a foreign corporation whose Idaho operations are located near Pocatello, Idaho. FMC is the largest single customer of Idaho Power, with annual purchases equal to approximately 17% of Idaho Power's total electric sales. FMC utilizes the bulk of the power sold to it in four electric furnaces at its phosphorous manufacturing plant. FMC's supply of electric service from Idaho Power is interruptible.
Idaho Power furnishes electrical service to FMC pursuant to a written agreement entered into between the parties on April 23, 1973. The agreement provides for delivery of electric service to FMC under four separate service schedules, each schedule staggered to expire at two year intervals, the first expiration being set for December 31, 1975. The agreement provides that FMC at its option could renew any expiring service schedule by giving one year's advance notice of its intent to renew. Not later than October 15 of the calendar year in which any service schedule was set to expire, the parties were to "agree upon rates and charges for the ensuing two year period to be included in each and every Service Schedule." In so acting, the parties were to give "consideration to the changes in all factors bearing upon the costs for the services supplied." The agreement further provides that a negotiated agreement would be submitted to the Commission for final approval.
FMC by letter dated December 8, 1978, gave notice to Idaho Power that it intended to renew the third service schedule, which was due to expire December 31, 1979. As mentioned above, in accordance with their agreement, FMC and Idaho Power were to reach a new agreement by October 15, 1979, which would cover the two year period beginning January 1, 1980. Despite good faith efforts, negotiations between the two parties proved unsuccessful and a deadlock ensued as to the rates to be charged FMC for electric service for the two year period beginning January 1, 1980.
On November 30, 1979, Idaho Power filed an application with the Commission requesting that a tariff schedule be substituted for the existing contract between Idaho Power and FMC. The matter was designated I.P.U.C. case no. U-1006-157 (hereinafter case no. 157). On the same day, FMC filed a petition requesting the Commission to resolve the existing contract impasse and establish a new contract rate for electrical service to FMC for the two year period beginning January 1, 1980. The matter was designated I.P.U.C. case no. U-1006-158 (hereinafter case no. 158).
A hearing was jointly held in cases nos. 157 and 158 on December 27, 1979, for the purpose of establishing a temporary rate for electrical service to FMC, effective January 1, 1980, and continuing thereafter until a final resolution of the contract rate impasse could be arrived at by the Commission. During the course of that hearing a stipulation by all parties was presented to the Commission. The stipulation specified a temporary rate format under which FMC would continue to receive electrical service after January 1, 1980. The stipulation was accepted and approved by the Commission in order no. 15224, issued December 31, 1979. Additionally, pursuant to an agreement of all parties entered upon the record in that proceeding, the Commission determined that it would first proceed with the petition of FMC in case no. 158. The application of Idaho Power in case no. 157 would be held in abeyance until a decision was reached in case no. 158. Accordingly, the application of Idaho Power for approval of a tariff filing proposing a new rate schedule for FMC in case no. 157 was suspended pursuant to I.C. § 61-623 or until such time as the Commission entered an order with respect thereto.
On January 7, 1980, the Idaho Irrigation Pumpers Association, Inc. (hereinafter Irrigators), together with several other parties, was granted leave to intervene in cases nos. 157 and 158.
On February 28, 1980, FMC filed with the Commission a proposal for a new contract rate. Testimony and exhibits in support of the FMC proposal were submitted on March 10, 1980. On March 31, 1980, FMC filed a motion to consolidate cases nos. 157 and 158 as well as Idaho Power's pending application for general rate relief from all of its customers except FMC (I.P.U.C. case no. U-1006-159, hereinafter case no. 159). The Commission approved the motion of FMC to consolidate the records in cases nos. 157 and 158, but nonetheless determined that it would consider the petition of FMC in case no. 158 prior to addressing the application of Idaho Power in case no. 157. A decision to consolidate case no. 159 with cases nos. 158 or 157 was deferred.
On April 18, 1980, a motion was filed by Idaho Power requesting a prehearing conference and bifurcation of the hearings in case no. 158. FMC filed a response in opposition to the motion. The Commission denied the motion and scheduled a hearing to commence on June 30, 1980 for the purpose of considering the petition submitted by FMC in case no. 158.
During the course of the hearing, only FMC and intervenor Irrigators presented contract rate proposals for consideration. The FMC contract rate proposal recommended that the preexisting rate for electrical service be increased by approximately 29% or $3,956,300 in calendar year 1980, and provided for an additional increase of 8.29% or $1,458,000 over the proposed 1980 rate in calendar year 1981. The Irrigators' contract rate proposal recommended that the preexisting rate for electrical service be increased by approximately 96% or $13,240,800.
In support of their respective contract rate proposals, both parties submitted cost of service studies. 1 The cost of service study offered by FMC was prepared by Mr. James Lim, while the cost of service study submitted by the Irrigators was developed by Mr. Anthony Yankel. Both were embedded cost analyses. A major difference between the two studies concerned the method in which Idaho Power's thermal plant investment was to be classified. Mr. Lim recommended that Idaho Power's thermal plant investment be classified totally as a demand related cost and all variable costs of operating the thermal plant as energy related. In contrast, the cost of service study developed by Mr. Yankel and submitted by the Irrigator's recommended that approximately 70% of Idaho Power's fixed investment in its thermal plant be classified as an energy related cost and only 30% of those costs be treated as demand related. The other primary difference between the cost of service studies presented was the chosen method to allocate demand related costs. The cost of service study submitted by FMC incorporated the average and excess demand (AED) method of allocating demand costs whereas the cost of service study presented by the Irrigators opted in favor of the average of the twelve coincident peak (12 CP) approach.
The testimony at the hearing tended to focus upon these differences in the two cost of service studies as well as the credit to be assigned FMC for receiving electrical service from Idaho Power on an interruptible basis.
Faced with only these two studies, the Commission concluded in order no. 15866, case no. 158, that the cost classification and allocation approaches endorsed by the Irrigators were better suited to the Idaho Power system than those advanced by FMC. Nonetheless, the Commission observed that under the Irrigator's contract proposal, FMC would have been required to pay approximately 17 mills/kwh for electric energy or about 95% more than its previously approved contract rate of 8.7 mills per kwh. In this regard the Commission found that the rate proposed by the Irrigators should be offset by a credit of 2.5 mills/kwh so as to adequately reflect the interruptible benefits afforded Idaho Power by the existing contractual arrangement with FMC. Thus, the Commission established a final contract rate requiring FMC to pay roughly 14.5 mills/kwh. FMC subsequently filed a petition for rehearing and upon the Commission's denial of that petition, timely perfected the instant appeal.
Although numerous sub-issues are presented on appeal, the arguments of the parties tend to focus on the following questions of law: (1) did FMC receive adequate notice of the nature and scope of the proceedings below; (2) is there substantial evidence in the record to support the findings of the Commission; (3) is the contract rate, as established, nondiscriminatory; and (4) is the Commission without authority to base a new contract...
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