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HomeMy WebLinkAbout20080609_2263.pdfDECISION MEMORANDUM TO:CO MMISSI 0 NER RED FO RD COMMISSIONER SMITH COMMISSIONER KEMPTON COMMISSION SECRETARY LEGAL FROM:SCOTT WOODBURY DEPUTY ATTORNEY GENERAL DATE:JUNE 6, 2008 SUBJECT:CASE NO. GNR-08-01 (Idaho Power, Avista, PacifiCorp) ADJUSTABLE PORTION OF A VOIDED COST RATE REVISEDfUPDA TED CALCULATION FOR EXISTING CONTRACTS. CASE NO. PAC-08-04 (PacifiCorp) ANNUAL VARIABLE ENERGY RATE ADJUSTMENT - 1992 AMENDMENT QF CONTRACTS. The Idaho Public Utilities Commission in Order No. 28708, Case No. GNR-99- established a methodology for the annual adjustable rate portion of avoided costs for those QF contracts using variable costs associated with Colstrip, a coal-fired generating facility in southeast Montana. For those QF contracts with Colstrip-related fuel costs and variable O&M future Colstrip variable cost adjustments are to be calculated by using FERC Form 1 Colstrip Unit Coal Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of Colstrip plus 20~/MWh for generation taxes plus a five percent (5%) adjustment for line loss). As computed by Commission Staff, the Colstrip related adjustable rate should change from 11.47 mill/kWh to 12.06 mill/kWh. The same calculated rate revision under the avoided cost methodology is used by A vista, PacifiCorp dba Rocky Mountain Power and Idaho Power Company. This change in the variable rate affects existing contracts under the previous SAR methodology. The adjustable portion of the avoided cost rates under Sumas-based methodology is based on annual average gas prices indexed at Sumas, Washington. As reported by Avista, the indexed gas prices have increased by $0.24/MMBtu. The approved gas price of $6.940/MMBtu plus the $0.24/MMBtu increase results in a gas price of $7. 18/MMBtu for the 2008-2009 year. DECISION MEMORANDUM This equates to a SAR fuel cost of 50.98 mill/kWh using a heat rate of7 100 Btu/kWh as used in the model for potential future contracts in accordance with Order No. 29124. For existing contracts signed under an assumed heat rate of7 350 Btu/kWh, this equates to a SAR fuel cost of 52.77 mill/kWh. The Commission Staff by letter (attached) dated May 5 , 2008 , prepared by Staff Engineer Rick Sterling, calculated changes to the annual adjustable rate portion of avoided costs for those QF contracts using variable costs associated with Colstrip and Sumas for review by the respective utilities. Avista, Idaho Power and PacifiCorp by letter responses (attached) indicated that Staff s calculations are correct. In accordance with Order No. 29316, the adjustable portion of the avoided cost rate for existing PacifiCorp contracts with year 1992 amendments has also been recomputed: Beginning on July 1 , 2003, the adjustable portion for these contracts was ordered to be equal to the average cost of fuel for the Carbon, Hale, Naughton, Huntington and Hunter generating plants, including a variable O&M component of $1.51 but exclusive of generation taxes and a line loss adjustment. The variable energy rate applicable to deliveries commencing July 1 , 2008 extending through June 30, 2009 has been computed by PacifiCorp to be $14.11/MWh, an increase from $12.17 last year. COMMISSION DECISION Under avoided cost methodology the adjustable portion of avoided cost rates for existing contracts is calculated annually for an effective date of July 1. A vista, Idaho Power and PacifiCorp agree with Staffs proposed calculations. Also adjusted annually is the adjustable portion of avoided cost rates for existing PacifiCorp contracts with year 1992 amendments. PacifiCorp for those contracts has computed the new variable energy rate. Does the Commission agree with the proposed changes in the variable rates? ~-= Scott D. Woodbury Deputy Attorney General bls/M:GNR-O8-01 PAC-O8-04 sw DECISION MEMORANDUM zn~~ K!\ ~21 M" 5:33 ,.,. t.:::~\:EUC Ul'\~HW.~rCokiMISS\ON 'iI'STA. Corp. ::.'$;" dahoPublic Utilities Commission " Mt;.ruck Sterling Statehouse Mail West 472 Washington Boise, ill 83720 RE: Case No. GNR-08- Dear Mr. Sterling: Avista is responding to the notice dated May 5,2008 regarding the annual revision and updated calculation cifthe adjustable portion of the avoided cost rates. The Company is in agreement with the Co1strip adjustable rate of 12.06 mill/kWh and the annual average gas price of $7 . 18/MMBtu for the 2008-2009 year. Thank you, Clint Kalich Manager of Resource Planning and Power Supply Analyses RECEIVED DB tiAY -5 PH 4= 02 STATE OF IDAHO IDAHO PUI3U(' UTILIllES COMMISSION OFFICE OF THE ATIORNEY GENERAL LAWRENCE G, WASDEN May 5, 2008 Avista Corporation Blair Strong Paine, Hamblen, et al 717 W. Sprague Avenue, Suite 1200 Spokane, WA 99201-3505 Clint Kalich Avista Utilities 1411 E. Mission PO Box 3727 Spokane, WA 99220-3727 Michael Andrea Avista Utilities 1411 E. Mission PO Box 3727 Spokane, WA 99220-3727 Rocky Mountain Power Dean Brockbank PacifiCorp dba Rocky Mountain Power 201 S. Main Street, Suite 2300 Salt Lake City, UT 84111 Greg Duvall Laren Hale PacifiCorp dba Rocky Mountain Power 825 NE Multnomah Street Portland, OR 97232 Mark Moench General Counsel 201 S. Main Street, Suite 2300 Salt Lake City, UT 84111 Ted Weston PacifiCorp dba Rocky Mountain Power One Utah Center 201 S. Main Street, Suite 2300 Salt Lake City, UT 84111 Idaho Power Company Barton L. Kline Idaho Power Company PO Box 70 Boise, ID 83707-007 Randy Allphin Idaho Power Company PO Box 70 Boise, ID 83707-0070 RE:Case Nos. GNR-O8-01; PAC-O8- The Idaho Public Utilities Commission in Order No. 28708 , Case No. GNR-99-, established a methodology for the annual adjustable rate portion of avoided costs for those QF contracts using, variable costs associated with Colstrip, a coal-fired generating facility in southeast Montana. For those QF contracts with Colstrip-related fuel Contracts & Administrative Law Division, Idaho Public Utilities Commission Q, Box 83720, Boise, Idaho 83720-0074, Telephone: (208) 334-0300, FAX: (208) 334-3762, E-mail: Ipuc(Qjpuc.state.id. Located at 472 West Washington St, Boise, Idaho 83702 May 5 , 2008 Page 2 costs and variable O&M, future Colstrip variable cost adjustments are to be calculated by using FERC Form Colstrip Unit Coal Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of Colstrip plus 20~/MWh for generation taxes plus a five percent (5%) adjustment for line loss). As computed by Commission Staff the Colstrip related adjustable rate will change from 11.47 mill/kWh to 12.06 mill/kWh. The same calculated rate revision under the avoided cost methodology is used by Avista, PacifiCorp dba Rocky Mountain Power and Idaho Power Company. This change in the variable rate affects existing contracts under the previous SAR methodology. The adjustable portion of the avoided cost rates under the Sum as-based methodology is based on annual average gas prices indexed at Sumas, Washington. As reported by Avista, the indexed gas prices have increased by $0.24/MMBtu. The approved gas price of $6.94/MMBtu plus the $0.24/MMBtu increase results in a gas price of $7. 18/MMBtu for the 2008-2009 year. This equates to a SAR fuel cost of 52.77 mill/kWh as used in the model. In accordance with Order No. 29316, the adjustable portion of the avoided cost rate for PacifiCorp contracts with 1992 amendments has also been recomputed. Beginning on July 1 , 2003 , the adjustable portion for these contracts was ordered to be equal to the average cost of fuel for the Carbon, Hale, Naughton Huntington and Hunter generating plants, including a variable O&M component of $1.51 but exclusive of generation taxes and a line loss adjustment. The variable energy rate applicable to deliveries commencing July 1 , 2008 extending through June 30, 2009 has been computed to be $14.11 /MWh, an increase from $12.17 last year. Accompanying this letter are worksheets showing the computation of the revised adjustable rates for the various affected contracts. If after reviewing the revisions, you accept them as accurate please indicate your approval by letter (or other filing) directed to the Commission in the reserved case docket numbers identified above. The case heading for the generic adjustment, Case No. GNR-08-0 1 , will read as follows: IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE ADJUSTABLE PORTION OF THE AVOIDED COST RA TE(S) FOR EXISTING PURP A CONTRACTS FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER COMPANY AND FOR PACIFICORP DBA ROCKY MOUNTAIN POWER. The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment language, Case No. P AC-08-, is as follows: IN THE MATTER OF THE ANNUAL REVISION OF QF VARIABLE ENERGY PRICES IN ACCORDANCE WITH TERMS OF THE 1992 AMENDMENTS TO POWER PURCHASE AGREEMENTS BETWEEN IDAHO QFS AND PACIFICORP. Please file your respective responses with the Commission on or prior to June 3 , 2008. Thank you for your cooperation. Please feel free to contact me, or Rick Sterling, if you have any questions. Sincerely, ~~~~ Scott D. Woodbury __~_~ Deputy Attorney General Enclosures bls/L:GNR-O8-0 1 P AC-O8-04 sw avoided cost - - COLSTRIP ADJUSTABLE RATE CALCULATION For Period 7/1/08-6/30/09 Colstrip Fuel Cost from Avista FERC Form 1 for CY 2007 line 12 line 20 Net Generation (kwh) Fuel Fuel cost per kwh Fuel Cost per MWh Variable O&M , Gen. Tax, 5% line loss per MWh Total Colstrip Adjustable Rate Reference GNR-99-1 O.N. 28708 4/17/2001 -.--.- ...--.-...... Colstrip - 08-09 .xls 672 761 000 $16 829 966 $0.010061 $10.0612 $2.0000 $12.0612 ......-...--.......--------- Average Gas Prices at Sumas, Washington from Inside FERC publication ($/MMBtu) Calculating the 2008-2009 Avoided Cost Adjustable Rate 2006 2007 Jan $9.$6.41 Feb $7.$6. Mar $6.$7. Apr $5.$6. May $5.$6. Jun $4.$6. July $5.$6. Aug $5.$5. Sep $5.$4. Oct $3.$5. Nov $7.$7.45 Dec $7.$8. Average $6.28 $6. Actual Annual Adjustment $6.94 =-($6.28~$6:52)= $7. Note: $2.00/MMBtu = 1997-98 Approved Rate $2.35/MMBtu = 1998-99 Approved Rate $2.26/MMBtu = 1999-00 Approved Rate $2.80/MMBtu = 2000-01 Approved Rate $4.82/MMBtu = 2001-02 Approved Rate $5.23/MMBtu = 2002-03 Approved Rate $3.33/MMBtu = 2003-04 Approved Rate $5.31/MMBtu = 2004-05 Approved Rate $5.92/MMBtu = 2005-06 Approved Rate $7.80/MMBtu = 2006-07 Approved Rate $6.94/MMBtu = 2007-08 Approved Rate 10 5 80 1 34 3 85 7 67 9 , 4 5 0 38 5 51 4 27 3 51 4 62 2 33 9 34 3 21 0 61 8 12 7 08 4 03 8 66 6 $ 71 5 71 1 12 . 14 . 11 . 12 . 12 , 60 IM W h 51 IM W h 14 . 11 IM W h Pa c i f i C o r p To t a l V a r i a b l e E n e r g y R a t e fo r 2 0 0 8 / 2 0 0 9 Ca r b o n Na u g h t o n Hu n t i n g t o n Fu e l C o s t ( $ ) FE R C F o r m 1 - P a g e 4 0 2 , l i n e 2 0 Ge n e r a t i o n ( M W h ) FE R C F o r m 1 - P a g e 4 0 2 , l i n e 1 2 Av e r a g e F u e l C o s t ( $ / M W h ) Va r i a b l e O & M IP U C O r d e r N o , 28 7 0 9 To t a l V a r i a b l e E n e r g y R a t e f o r 20 0 8 / 2 0 0 9 Pa c i f i C o r p 08 - 09 Va r i a b l e c o s t a d j , xl s Hu n t e r To t a l s 'J ~PACIFICORP ENERGYl.ECE\VED A DIVISION OF PACIFICORP LI1GB PlA'i 23 at; to: 41 825 NE Multnomah, Suite 600 Portland, OR 97232 \;'~ , L\C UTILITIES CU:,;;\,;\SSION May 23, 2008 Idaho Public Utilities Commission PO Box 83730 Boise, ID 83720-0074 Attention: Scott D Woodbury , RE: Case Nos. GNR-08-1; Case No. PAC-08- Dear Mr. Woodbury, Thank you for your letter of May 5 2008 in which you provided the 2008-2009 updated prices for the adjustable portion of the avoided costs rates under the present avoided cost methodology. Your letter also provided an update to the adjustable rate portion of avoided costs for QF contracts using variable costs associated with Colstrip and for PacifiCorp contracts with 1992 amendments. PacifiCorp has reviewed these proposed updated prices and agree that the prices have been updated correctly. The Company accepts the new schedules as accurate. If you have any questions please feel free to ca)) or email me at (503) 813-5540 or Hui. Shu~Paci fi Corp .com Sincerely, ~L-- Hui Shu Manager, Net Power Cost CERTIFICATE OF SERVICE I hereby certify that on May 23 , 2008, I caused to be served, via Overnight Delivery, a true and correct copy of Rocky Mountain Power s Response in PAC-08-, to the following: I Blair Strong - ------'-- Iclint Kalich Paine, Hamblen, et al i Michael Andrea I 717 W. Sprague Ave, Suite 1200 11411 E. Mission i Spokane, WA 99201-3505 i PO Box 3727 Spokane, WA 99220-3727 Dean Brockbank Greg Duvalli Mark Moench I Laren Halei Ted Weston 1825 NE Multnomah Street : 201 S. Main Street, Suite 2300 I Portland, OR 97232 ! Salt Lake City, UT 84111 I Barton L. Kline ! Randy Allphin i PO Box 70 I Boise, ID 83707-007 , .. -,--,-------- Carrie Meyer Coordinator, Administrative Services """-,""-,...",....,"""""""","... ",0".._..,, .,,.",...."", """'"" -'.."""""---"'., .., u '" .....'.." ,.., ,......"".-." .. " ,pc(' i-\\; !:".1..1 """"""""'"""'-"""""",. "'W~" "" "...."....,..,...".,.".....""", t;;, ."::. '...--: IDAHO PCMER May 20, 2008 ZUfiBMA Y 2"~~ 8:' "", ".... UT, ~g.\~~:) dJA, ~\~' st~ ' "'" """~"-~""",~,"'-""""'-"""'._.~,'-"-"~~""---' " " """""""","'..-"",..,,-,, .,".."",........"..-,~,."._..."., """'-""'"......"""" . An IDACORP company , "',..T"" .",. ,.0, ...."..,", , w",, .... "-..,...,,,-.'..- Randy C. Allphin Senior Planning Administrator Tel: (208) 388-2614 milD h incwi dahopower. com Idaho Public Utilities Commission Attn: Scott Woodbury PO Box 83720 Boise, ID83720-0074 RE:CASE NOS. GNR-08- IN THE MATIER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE ADJUSTABLE PORTION OF THE AVOIDED COST RATE(S) FOR EXISTING PURP A CONTRACTS FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER COMPANY AND FOR P ACIFICORP DBA ROCKY MOUNTAIN POWER.. We have reviewed the infonnation you have provided in your letter dated May 5, 2008 notifying Idaho Power of revision of the adjustable portion of the Avoided cost rate(s) for existing PURP A contracts.. Idaho Power concurs that the model and calculations used by the IPUC staff for Idaho Power Company are consistent with IPUC Order 28708. Sincerely, (J. 'l-andY C Allphin Contract Administration cc:Bart Kline (IPCa) Donovan Walker (!PCa) Page I of I POBox 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702