Nucor Steel and Utah Power & Light Co. have been granted final approval for a 10-year precedent-setting service agreement. The action by the Utah Public Service Commission finalizes a temporary order issued on Jan. 17.
The pact provides the Plymouth, Box Elder County, firm a substantial rate reduction for interruptible power service. Nucor said the rate reduction was needed to keep the company competitive with other steel manufacturers.The agreement includes a contract for a firm power supply involving 8 megawatts per year and interruptible service for up to 62 megawatts per year. The interruptible service allows UP&L to cut off that portion of service with a minimum of 10 minutes advance notice to Nucor. This allows UP&L to ensure that residential service throughout the system is not adversely affected. UP&L can interrupt service for up to 1,314 hours annually or 15 percent of the time.
Also, Nucor must buy out its existing contract for $5 million.
Nucor had threatened to leave the UP&L system and join a nearby municipal system that would be operated by the town of Plymouth, Box Elder County. UP&L estimated Nucor's leaving would cost the company between $1 million and $4 million in annual revenues, a cost that would likely have to be passed on to other ratepayers.
In granting the request, the PSC ruled that the contract would remain subject to its review and jurisdiction. This action was taken because in-depth analysis of cost figures supplied in the original petition is still in progress. The commission said it wanted to be sure future issues affecting rates could be applied to the agreement if warranted.