200303171st 2nd 3rd Responses of Avista.pdf

Avista Corp.
1411 East Mission PO Box 3727
Spokane. Washington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
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March 14 2003
VIA OVERNIGHT DELIVERY
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
PO Box 83720
Boise, Idaho 83720-0074
RE:Case No. A VU-02-08 (Potlatch Corporation v. Avista Utilities)
Ms. Jewell :
Please find enclosed three (3) copies of A vista s responses to Staff Production Request No.(s) 1
, 2-Confidential, and 3. Please be aware that the 3.5 inch Diskette Avista has provided is in
response to Staff Production Request No.(s) 2 and
If you have any questions, please call me at [phone].
Sincerely,
Enclosures
cc:Blair Strong
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the day of March 2003 , I caused to be served a
true and conect copy of the foregoing by the method indicated below, and addressed to the
following:
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
PO Box 83720
Boise, Idaho 83720-0074
Conley Ward
Givens Pursley LLP
277 North 6th Street, Suite 200
PO Box 2720
Boise, Idaho 83701
US Mail
Hand Delivery
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VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
REQUEST NO.
DATE PREPARED: 03/12/2003
WITNES S
RESPONDER: Clint Kalich
DEPT./JOB TITLE: Energy Resources/Manager of
Resource Planning & Analysis
[phone]TELEPHONE:
JURISDICTION: Idaho
CASE NO: A VU-02-
REQUESTER: IPUCTYPE: Data Request
REQUEST:
Staff understands that Avista made an offer on or about February 14 2003 to purchase
generation from Potlatch. Please provide a copy of A vista s offer. Also please provide a written
description of how the rate was determined, along with the complete data and analysis upon
which the offer is based.
RESPONSE:
A copy of the offer letter dated February 14, 2003 to Potlatch is attached. The rate was
determined by using the Company s monthly forward price curve of January 31 2003 for Mid-
Columbia power for the period March 2003 through February 2008. The monthly values were
levelized over the five-year period using a discount rate of 8.22 percent to obtain a rate for
Potlatch. The spreadsheet "February 14 Offer Analysis.xls" is attached to detail the specific
calculations. An electronic copy of this spreadsheet is also provided in response to Staff
Production Requests 2 and 3.
February 14,2003
Mr. Howard E. Ray
The Potlatch Corporation
Idaho Pulp and Paperboard Division
803 Mill Road
POB 1126
Lewiston, ill 83501-1126
Dear Mr. Ray:
It was October 29, 2001 when we last shared price and terms for an energy purchase from your Lewiston
facility. As was discussed at that time, market prices indicated a five-year price of approximately $31 per
MWh. Forward prices for electricity have risen significantly since then and now present an opportunity
for us to offer a much higher price for your generation.
The purpose of this letter is for A vista to present to Potlatch a conceptual offer to purchase the generation
output from Potlatch's Lewiston facility. All together, it has the potential to generate payments over a
five-year term of $104.9 million, or $39.90 per MWh. This amount is nearly thirty percent more than
what was possible in late 2001. While other terms and conditions will still need to be negotiated, the
main provisions of this offer are as follows:
Base Contract Terms
Begin Date March or Aoril2003, at the election of Potlatch Corporation
Contract Term 60 months continuous
Quantitv 60 megawatts
Product Tvpe 7x24 deliverv (flat all hours), less scheduled maintenance
Purchase Price $39.90/MWh
Point of Delivery Potlatch-Lewiston Bus
Other Avista is exclusive purchaser of all generation at the Potlatch-
Lewiston facility for the term of the contract.Agreement is
subject to acceptance by the IPUc.
Offer Expiration Offer to purchase is subject to withdrawal upon notice from
Avista. Price is subject to chanl!e without notice.
This indicative offer is based on market conditions at this time. Given the volatility inherent in the
marketplace for electricity, Avista cannot hold this price open and reserves the right to adjust the price
where market conditions warrant such a change. If a price change is necessary, it will be based on actual
forward market price levels at the time an agreement is reached.
As I discussed with you recently on the phone, I also want to express A vista s willingness to discuss areas
of differences and/or assumptions used in determining this offered price, and any other thoughts or
capabilities that Potlatch may have which could increase the value of this generation to A vista.
We look forward to continuing discussions as soon as possible.
~cere
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Manager of Wholesale Marketing
Forward Curves on January 31 2003
Year Month Peak Off-Peak Flat Potlatch Generation Offer
2003 Jan-40.33.37.
2003 Feb-43.36.40.
2003 Mar-43.36.40.Flat Rate (Mar-03 thru Feb-08)
2003 Apr-43.36.40.market $/MWh $39.
2003 May-39.29.35.option $/MWh $0.
2003 Jun-38.29.34.Total $/MWh $39.
2003 Jul-48.37.44 43.
2003 Aug-52.39.46.Annual MWh 525,600
2003 Sep-51.39.46.42 Annual Pmt$20,973,690
2003 Oct-48.39.44.
2003 Nov-49.39.45.Yr Pmt$104 868,448
2003 Dec-53.43.49.Old Pmt$336,600
2004 Jan-44.35.40.% increase 28.
2004 Feb-48.39.44.
2004 Mar-47.38.43.
2004 Apr-40.33.37.
2004 May-36.27.32.
2004 Jun-36.43 27.32.
2004 Jul-45.35.40.
2004 Aug-49.37.44.
2004 Sep-48.36.43.
2004 Oct-45.37.42.
2004 Nov-46.37.42.42
2004 Dec-50.40.46.
2005 Jan-41.33.38.
2005 Feb-45.37.42.
2005 Mar-44.36.41.
2005 Apr-38.40 32.35.
2005 May-34.26.31.
2005 Jun-34.26.46 31.
2005 Jul-43.33.44 38.
2005 Aug-46.35.49 41.
2005 Sep-46.35.41.45
2005 Oct-43.35.40.
2005 Nov-43.35.40.
2005 Dec-47.38.43.
2006 Jan-41.33.40 37.
2006 Feb-45.36.41.
2006 Mar-44.35.40.
2006 Apr-37.31.35.
2006 May-34.42 26.30.
2006 Jun-34.26.30.
2006 Jul-42.33.38.48
2006 Aug-46.35.41.
2006 Sep-45.34.40.
2006 Oct-43.34.39.
2006 Nov-43.35.39.
2006 Dec-47.38.43.
2007 Jan-41.33.37.
03-07-2003 02. 14.0ffer Analysis.xls cgk
2007 Feb-45.36.41.
2007 Mar-44.35.40.
2007 Apr-37.31.35.
2007 May-34.41 26.30.
2007 . Jun-34.26.30.
2007 Jul-42.33.38.47
2007 Aug-46.35.41.
2007 Sep-45.34.40.
2007 Oet-43.34.39.
2007 Nov-43.35.39.
2007 Dee-47.38.43.
2008 Jan-42.34.39.
2008 Feb-46.38.43.
2008 Mar-45.37.42.
2008 Apr-39.33.36.
2008 May-35.27.32.
2008 Jun-35.46 27.31.
2008 Jul-44.34.39.
2008 Aug-47.36.44 42.
2008 Sep-47.36.42.
2008 Oet-44.36.41.
2008 Nov-44.36.46 41.
2008 Dee-48.39.44.
03-07-2003 02. 14.0ffer Analysis.xls cgk
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
REQUEST NO.
DATE PREPARED: 03/12/2003
WITNESS:
RESPONDER: Clint Kalich
DEPT.lJOB TITLE: Energy Resources/Manager of
Resource Planning & Analysis
[phone]TELEPHONE:
JURISDICTION: Idaho
CASE NO: A VU-02-
REQUESTER: IPUCTYPE: Data Request
REQUEST:
What would be the rate offered to Potlatch if the rate was based on use of the avoided cost
methodology for projects larger than 10 MW as described in the Settlement Stipulation in Case
No. IPC-95-9? Please provide the AURORA input data files (AURORA project file and MDB
file) and the output file used to determine the rate. Also provide a copy of any analysis done
outside of the AURORA model to compute the avoided cost rate.
RESPONSE:
The rate under the Settlement Stipulation in Case No. IPC-95-9 ("95-9 Rate ) would be
$34.05 for the five-year period beginning in March 2003. The AURORA files "February 14
Offer Analysis-AURORAapf
" "
February 14 Offer Analysis-AURORA.mdb " and "February 14
Offer Analysis-AURORA Outputmdb" are provided on a compact disk (CD) for the
Commission s review under CONFIDENTIAL RESPONSE 2C.
The additional spreadsheet "February 14 Offer Analysis-AURORAxls" (provided in electronic
format on the attached diskette in answer to Staff Production Requests 2 and 3) is provided to
detail the calculations performed outside of AURORA to determine the E-95-9 Rate. In this
spreadsheet refer to the workbook entitled "Request 2.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
REQUEST NO.
DATE PREPARED: 03/1212003
WITNES S
RESPONDER: Clint Kalich
DEPT./JOB TITLE: Energy Resources/Manager of
Resource Planning & Analysis
[phone]TELEPHONE:
JURISDICTION: Idaho
CASE NO: A VU-02-
REQUESTER: IPUCTYPE: Data Request
REQUEST:
Please provide analysis showing the avoided cost rate determined using the following
assumptions:
a. assuming the Coyote Springs II project is already built and available for dispatch, and
b. assuming the Coyote Springs II project has not been built and is not available for
dispatch.
RESPONSE:
Two runs were pedormed in AURORA for Request 3. The first was run with CSII in the
Company s resource portfolio and developed market prices in this case. The second was done
without CSII. Refer to the workbook entitled "Request 3" in the file "February 14 Offer
Analysis-AURORA.xls" (provided in electronic format on an attached diskette in answer to Staff
Production Requests 2 and 3) to see that the market prices of power during the January 2003
through December 2008 (taken from the AREA PRICE table of the AURORA run of Request 2)
are identical in both alternatives, and therefore that the avoided cost rate calculated in this
manner is the same as the E-95-9 Rate, at $34.05/MWh for March 2003 through February 2008.
CONFIDENTIAL DOCUMENTS
WERE INCLUDED IN THIS FILING