20240408Comments of the Commission Staff.pdf

RECEIVED
Monday, April 8, 2024 2:32:55 PM
IDAHO PUBLIC
UTILITIES COMMISSION
MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT PETITION )
OF AVISTA CORPORATION AND STIMSON ) CASE NO. AVU-E-24-03
LUMBER COMPANY FOR APPROVAL OF )
AMENDMENT NO. 6 TO POWER )
PURCHASE AND SALE AGREEMENT ) COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Michael Duval, Deputy Attorney General, submits the following
comments.
BACKGROUND
On February 6, 2024, Avista Corporation d/b/a Avista Utilities ("Company") and
Stimson Lumber Company("Stimson") (collectively "the Parties")jointly petitioned the Idaho
Public Utilities Commission("Commission")requesting an order approving Amendment No. 6
to the Power Purchase Agreement ("PPA")between the Parties ("Joint Petition"). Amendment
No. 6 proposes that Stimson will only be required to pay a use-of-facilities charge in the months
when the Facilityl operates. Currently, Section 31 of the PPA requires Stimson to pay the use-
of-facilities charge every month, regardless of whether the Facility operates or not.
' The Facility is a thermal wood waste small power electric generation plant located at Plummer,Idaho.
STAFF COMMENTS 1 APRIL 8, 2024

STAFF ANALYSIS
Staff analyzed the purpose of the use-of-facilities charge and the impacts of the proposal
on ratepayers. Staff recommends:
1. The Commission reject the Joint Petition. However, Staff is not opposed to the
Parties filing a new Joint Petition that allows Stimson to pay use-of-facilities related
charges only in the months when the Facility operates, as long as the annual revenue
of$8,4482 can be fully recovered; and
2. The Company meet with Staff prior to the next General Rate Case to explore the
potential development of a tariff schedule in the next General Rate Case for recovery
of use-of-facilities related costs.
Purpose of Use-of-Facilities Charge
Staff recommends rejection of the Joint Petition because it defeats the purpose of use-of-
facilities charges.
Stimson pays the monthly use-of-facilities charge for the 13.8 kV facilities in the
Plummer Substation, which are for the sole use and purpose of interconnecting the Facility to the
Company's system. See Response to Staff Production Request No. 2. Originally, the use-of-
facilities charge was used to recover both the initial investment of the interconnection facilities
and ongoing operation and maintenance ("O&M") costs. See Response to Staff Production
Request No. 1. The monthly use-of-facilities charge was calculated as follows:
Monthly Use-Of-Facilities Charge= Sole Use Investment x Annual Cost Ratio/12
Where:
Sole Use Investment was the $60,991 initial investment of the facilities. See Responses to
Staff Production Request No. 1 and 3 (c).
Annual Cost Ratio was 15.54%. See Responses to Staff Production Request No. 1.
After the initial investment was recovered around 2020, the Annual Cost Ratio was
reduced to 13.86%to only recover O&M-driven costs. See Responses to Staff Production
Request No. 1 and 4. This current Annual Cost Ratio allocates a fair share of the Company's
annual O&M-driven costs to Stimson, independent of whether and how the Facility is operated.
z$8,448 is equal to$704/month multiplied by 12 months.
STAFF COMMENTS 2 APRIL 8, 2024

Staff believes if Stimson is allowed to pay use-of-facilities only in the months when the Facility
operates, the purpose of the use-of-facilities charge is compromised and Stimson's share of the
Company's annual O&M-driven costs will not be fully recovered.
Impacts on Ratepayers
Additionally, Staff recommends rejection of the Joint Petition because the proposal will
have a negative impact on ratepayers. However, Staff is not opposed to the Parties filing a new
Joint Petition that allows Stimson to pay use-of-facilities related charges only in the months
when the Facility operates, as long as the annual revenue of$8,448 can be fully recovered.
Currently, Stimson's monthly use-of-facilities charge is $704. The charge is recorded in
FERC Account 456 (Transmission Revenue) and is included in the Company's annual Power
Cost Adjustment("PCA"). See Response to Staff Production Request No. 1. In the PCA, both
the base rate revenue and the actual revenue are $8,448. However, if the proposal is approved,
the actual revenue collected from Stimson will be lower than $8,448.
Because the difference between the actual revenue and the base rate revenue associated
with Stimson will result in a surcharge to customers, ratepayers will be negatively impacted by
the reduction in transmission revenue. Staff recommends rejection of the Joint Petition due to
the negative impact on ratepayers.
Potential Development of Tariff Schedule
Currently,Avista's use-of-facilities charges are determined on a case-by-case basis. Staff
recommends that the Company meet with Staff prior to the next general rate case to explore the
potential development of a tariff schedule for recovery of use-of-facilities related costs.
STAFF RECOMMENDATIONS
Staff recommends rejection of the Joint Petition because it compromises the purpose of
the use-of-facilities charge and has negative impacts on ratepayers. Staff also recommends that
the Company meet with Staff prior to the next general rate case to explore the potential
development of a tariff schedule for recovery of use-of-facilities related costs.
3 The base rate revenue was established in Avista's most recent general rate case.Case No.AVU-E-23-01.
STAFF COMMENTS 3 APRIL 8, 2024

Respectfully submitted this 8th day of April 2024.
Michael buval
Deputy Attorney General
Technical Staff: Yao Yin
I:\Utility\UMISC\COMMENTS\AVU-E-24-03 Comments.docx
STAFF COMMENTS 4 APRIL 8, 2024

CERTIFICATE OF SERVICE
k
I HEREBY CERTIFY THAT I HAVE ON THIS I DAY OF APRIL 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-E-24-03, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
CHRIS DRAKE MICHAEL ANDREA
AVISTA CORPORATION SENIOR COUNSEL
PO BOX 3727 AVISTA CORPORATION
SPOKANE WA 99220-3727 PO BOX 3727
E-mail: chris.drake(cr�,avistacolp.com SPOKANE WA 99220-3727
E-mail: michael.andrea[abavistacorp.com
LISA ZENTNER
STIMSON LUMBER CO
9400 SW BARNES RD STE 530
PORTLAND OR 97225
E-mail: [e-mail]
Patricia Jordan, Secre ary
CERTIFICATE OF SERVICE