Power Costs Factor For Simplot?

Published online: Apr 29, 2002
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Electrical power rates for Simplot’s Heyburn, ID, french fry processing plant are proving a big factor in “bad feelings” between the company and the city.

Simplot claims it isn’t a factor on reasons it is cutting back on grower contacts in the area by an estimated one million cwt. However, with the contract cutbacks, speculation is flying the company plans a phase-out of the plant, moving more production to Canada.

Simplot has had a power-purchasing contract with the city. Heyburn has been a preference-distributing customer of the Bonneville Power Administration since the 1920s.

However, Simplot filed suit, claiming the city’s power rates were too high. Then, Heyburn city annexed the plant into the city, which brought another lawsuit. Simplot said the city did not have the authority to annex it. The latter action will raise the plant’s property taxes about $175,000. The tax charge will take effect next year.

Steve Tuft, Heyburn city attorney, says because of the power rate increases seen throughout the Pacific Northwest in the last two years, he doesn’t think Simplot can get lower rates elsewhere.

The city has even agreed to sell its power company to either Idaho Power or United Power to help ease the situation. However, to do so would require voter approval.

Idaho Power and United Power, a small utility serving the area surrounding Heyburn, are in strong negotiations to purchase Heyburn Power. This would take the city out of the power business and hopefully end the bad power supply/demand/rate controversy with the city. Tuft said negotiations are continuing and “there is a light at the end of the tunnel.”

The city reportedly has had a hard time serving its largest customer, because it does not have a contract stipulating peak load demands. However, Tuft says the city believes its rates have been reasonable. He says the city won’t sell its power company “as a forced sale. It has to be reasonable.”