20240314AVU to Staff 1-4.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 03/14/2024
CASE NO: AVU-E-24-03 WITNESS: Scott Kinney
REQUESTER: Staff RESPONDER: Ryan Finesilver
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: Staff-001 TELEPHONE: [phone]

REQUEST:

Please explain the purpose of the "use-of-facilities charge." Also, please explain the impact on
ratepayers. Please include in your response (but not limited to) how only paying the charge when the
project operates will ensure the Company recovers the cost associated with the charge without shifting
the cost to ratepayers.

RESPONSE:

Avista’s dedicated feeder position in the Plummer Substation is for the sole use and purpose of
integrating the Stimson Lumber generation project. Costs include components for distribution
asset investment recovery, general & intangible plant, common plant, O&M and depreciation
expense, and taxes. Since Stimson is the sole user of the 13.8 kV facilities a Use of Facilities
(UOF) charge is assessed.

This charge was developed based on the following formula but has later been modified as the
Annual Cost Ratio has been updated.

Sole Use Investment: $60,991
Annual Cost Ratio: 15.54% 1
Annual Sole Use Charge: $60,991X 0.1554 = $9,480/year
Monthly Sole Use Charge: $790/month

The UOF charge included in the PPA recovers the initial investment as well as any ongoing O&M
costs. The charge is also intended to plan for the future should that equipment need to be replaced
or maintained.

Regarding the impact on ratepayers, the use of facilities charge is recorded in FERC account 456 –
Transmission Revenue, which is an account included in the Company’s annual PCA. The impact
of the charge is approximately $8,448 on an annual, system basis. After allocating between WA
and ID, and then applying the PCA cost sharing, the estimated annual impact is $2,620.06.2 Note
that the entirety of the initial Sole Use Investment has been recovered through the monthly
charges.

1 Based on 2010 Distribution Annual Cost Ratio. Later this value was updated to 13.86% which resulted in a monthly
charge of $704 as shown in the Company’s response to Staff-PR-004.
2 Calculated as ($8,448*.3446 (the P/T Ratio portion for Idaho) *0.90 (Customer share under the PCA))
RECEIVED
Thursday, March 14, 2024 10:55AM
IDAHO PUBLIC
UTILITIES COMMISSION

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 03/14/2024
CASE NO: AVU-E-24-03 WITNESS: Scott Kinney
REQUESTER: Staff RESPONDER: Ryan Finesilver
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: Staff-002 TELEPHONE: [phone]

REQUEST:

Please explain the purpose and the function of the 13.8 kV facilities that the Project Developer is
charged through the use-of-facilities charge.

RESPONSE:

Avista’s dedicated feeder position in the Plummer Substation is for the sole use and purpose of
integrating the Stimson Lumber generation project.

Page 1 of 2

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 03/14/2024
CASE NO: AVU-E-24-03 WITNESS: Scott Kinney
REQUESTER: Staff RESPONDER: Ryan Finesilver
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: Staff-003 TELEPHONE: [phone]

REQUEST:

The Monthly Sole Use Charge = Sole Use Investment * Annual Cost Ratio/ 12. Please respond to the
following regarding the formula.

a. Please explain whether this formula applies to all qualifying facilities ("QFs") that have sole
use of the Company's interconnection facilities.
b. Please provide the formula for the situation when a QF shares interconnection facilities with
other projects.
c. For Stimson Lumber, the Sole Use Investment was $60,991. Please define "Sole Use
Investment," explain how the $60,991 was determined; please also explain whether it included
both the initial investment and ongoing maintenance costs.
d. When the monthly use-of-facilities charges reach $60,991, will the Project Developer keep
paying the monthly use-of-facilities charge of $704/month? Please explain.
e. If the interconnection facilities are replaced, will the monthly use-of-facilities charge be
recalculated? Please explain.
f. Please define "Annual Cost Ratio" and explain how the Annual Cost Ratio of 13.86% was
determined.

RESPONSE:

a. If a similar situation arises as part of a PURPA, Avista anticipates having a similar fee
structure as part of its negotiation.
b. Typically, these are handled on a case-by-case basis as part of the Company’s
interconnection agreement and there is not a standardized formula. The sole use situation is
unique since the Avista owned assets (dedicated feeder position in the Plummer
Substation) were for the sole use of Stimson.
c. In general, Sole Use Investment refers to the use of the investment exclusively by the
Project Developer. Specific to this agreement, the Sole use amount was an initial,
incremental costs associated with the project and once the amount was reached, would go
towards ongoing maintenance costs.
d. Yes, while the initial fee of $60,991 was intended to recover the initial investment, ongoing
O&M is expected. The monthly fee is a provision for those anticipated costs. Specific to
this request, the proposal is when Stimson is not generating for an extended time, related
O&M driven costs should be minimal.
e. Yes, monthly use-of-facilities charge would be recalculated. This process would be
informed by the projected facilities charges associated with such project.
f. The Annual Cost Ratio is based on the Distribution Annual Cost Ratio (DACR) which is
based upon the actual investment in dedicated facilities. The DACR incorporates a full
Page 2 of 2

allocation of costs, including components for distribution asset investment recovery,
general & intangible plant, common plant, O&M and depreciation expense, and taxes. This
ratio was used to ensure the company recovered expenses associated with the dedicated
feeder over a reasonable timeframe.

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 03/14/2024
CASE NO: AVU-E-24-03 WITNESS: Scott Kinney
REQUESTER: Staff RESPONDER: Ryan Finesilver
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: Staff-004 TELEPHONE: [phone]

REQUEST:

Please explain how much monthly use-of-facilities charges the Project Developer has paid so far
broken down by the different categories such as initial investment, ongoing maintenance, etc.

RESPONSE:

Avista does not maintain a level of detail that allocates these costs into different categories.
However, Avista provides the below table to illustrate the approximate allocation between the
requested costs. Please note that Stimson’s UOF charges are netted off its PURPA payment in the
months where it generates. Thus, these numbers are based on costs incurred and do not represent
the actual receipts of UOF charges.

Year
Monthly
Charge
No.
Months
Approx
UOF
Charges
Sole
Use
Ongoing
O&M
2014 $790 12 $9,480 $9,480
2015 $790 12 $9,480 $9,480
2016 $790 12 $9,480 $9,480
2017 $790 12 $9,480 $9,480
2018 $790 12 $9,480 $9,480
2019 $790 12 $9,480 $9,480
2020 $704 12 $8,448 $4,111 $4,337
2021 $704 12 $8,448 $8,448
2022 $704 12 $8,448 $8,448
2023 $704 12 $8,448 $8,448
2024 $704 2 $1,408 $1,408
Total $92,080 $60,991 $31,089