20080725AVU toStaff 195, 198, 200-201, 204.pdf

July 24, 2008
~~'iI'STJI.
Corp.
Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170 \ ::lU
Idaho Public Utilities Commission
472 W. Washington St.
Boise, il 83720-0074
1\ttn: Scott Woodbury
Deputy 1\ttomey General
Re: Production Request of the Commission Staff in Case Nos. 1\ VU-E-08-01 and
1\ VU-G-08-01
Dear Mr. Woodbur,
Enclosed are an original and three copies of Avista's responses to !PUC Staffs production
requests in the above referenced docket. Included in this mailing are 1\vista's responses to
production requests 195, 198, 200, 201 and 204. The electronic versions of the responses were
emailed on 7/24/08 and are also being provided in electronic format on the CDs included in this
mailing.
If there are any questions regarding the enclosed information, please contact me at (509) 495-
8620 or via e-mail atpat.ehrbar(Ðavistacorp.com
Sincerely,Q~~
Patrick Ehrbar
Regulatory Analyst
Enclosures
CC: Brad Purdy, CAP 1\1 (Paper and Email)
.
.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
JUSDICTION:
C)\SENO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
)\ VU-E-08-01 / A VU-G-08-01
IPUC
Production Request
Staff-1 95
REQUEST:
D)\TE PREPARD:
WITSS:
RESPONDER:
DEPAATMENT:
TELEPHONE:
07/21/2008
Tara Knox
Tara Knox
State & Federal Regulation
[phone]
Please provide weather normalized Idaho retail sales in Mwhs for the year 2007 by month and
forecasted normalized retail sales in Mwhs for 2008 by month.
RESPONSE:
The attached schedule (StafCPR_195-)\ttachment-A.xls) shows the requested monthly Idaho
sales volumes as well as the associated base retail sales for the PC)\ retail revenue credit
calculation. In the PC)\, the Potlatch contract is excluded from system costs, then directly
assigned at 100% in concert with retail revenue from the load equivalent to the purchased
generation. This requires separating the Potlatch contract generation equivalent sales from Idaho
total sales and pricing them at the proposed Schedule 25P rates. The monthly base for Potlatch
Revenue Related to Generation MWs at proposed rates is shown on the attached worksheet.
The 2007 actual level of Schedule 95 Optional Renewable Power Rate revenue was included in the
revenue requirement as an offset to cost recovered from rates. Curently these revenues are used to
offset power costs as an addition. to the retail revenue credit in the PC)\. Once an amount is
included in rates as a reduction to revenue requirement, only incremental Schedule 95 revenues are
available to further offset renewable power costs in the PCA. The monthy base for Schedule 95
revenues is also shown on the attached worksheet.
.
.
.
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A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
C)\SENO:
REQUESTER:
TYE:
REQUEST NO.:
D)\TE PREPARD:
WITSS:
RESPONDER:
DEPAATMENT:
TELEPHONE:
07/21/2008
Tara Knox
Tara Knox
State & Federal Regulation
[phone]
IDAHO
)\ VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-1 98
REQUEST:
What PC)\ Idaho retail revenue adjustment would the Company propose if actual Idaho retail
loads in 2009 are less than the forecasted loads used to establish )\uthorized Power Supply
Expense for the PCA? Please explain your answer.
RESPONSE:
The PC)\ retail revenue credit is calculated in thee pars.
1 )\ctual retail sales (excluding Potlatch generation load) are compared to the base retail
sales, the difference is then multiplied by the retail revenue credit rate.
)\ctual Schedule 95 Optional Renewable Power Rate revenue is compared to the base
Schedule 95 revenue. Proportionate administrative expense is deducted from the
incremental amount. The remainder is added to the amount computed in 1 (above) and
that total is then deducted from the Idaho share of the difference between actual and
authorized Power Supply Expense in the PCA
)\ctual Potlatch purchased generation equivalent load retail revenue is computed from
the actual purchased generation volumes (with related demand determined assuming
100% load factor). This amount is compared to the base Potlatch revenue computed in
the same way on 2007 purchased generation volumes. The difference between actual
and base Potlatch generation related revenue is then deducted from the difference
between actual and base Potlatch generation purchase expense shown as separate line
items in the PC)\ calculation.
2
3
There is no difference in the calculation ifthe case occurs in some months where actual retail sales
are less than base retail sales. Mathematically, deducting a negative amount effectively becomes
an addition to the costs which merely offsets lower actual costs resulting from lower than expected
loads.
The Company prefers a retail revenue credit rate representative of production and transmission
costs recovered from customers in approved rates. The production propert adjustment fuctions
as a retail revenue credit in determining the revenue requirement to be recovered from 2007 biling
determinants by removing the proportion of those costs assumed to be recovered through load
growt. If the actual Idaho retail loads in 2009 are less than the forecasted loads (used for both the
authorized power supply expense and the production propery adjustment), then the production
property adjustment deducted too much fixed and variable cost from the revenue requirement and
customers are not paying the full fixed costs in rates. )\ retail revenue credit rate in the PC)\
representative of the costs deducted in the Production Property adjustment repairs the differences
caused by any volume variance, either higher or lower, to fixed and varable production and
Page i of2
.
.
.
transmission costs recovered from customers. See page 2 of Exhibit No. 14, Schedule 1 which
shows the proposed Production/ransmission Revenue Requirement on the per kWh basis.
Page 2 of2
.
.
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A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
D)\TE PREPARD:
WITSS:
RESPONDER:
DEPAATMENT:
TELEPHONE:
IDAHO
)\ VU-E-08-01 1 )\ VU-G-08-01
IPUC
Production Request
Staff-200
REQUEST:
07/23/08
Elizabeth Andrews
Jeane Pluth
State & Federal Reg.
[phone]
For each legal expense included in the rate case filing please provide a schedule with the following
information:
Name of Vendor
Date Invoice Paid
Voucher Number
)\ccounts Invoice charged to
Description of Services Provided
Whle Staff may be in possession of the first four items requested, the description of each
transaction is not accessible from the currently provided information. The description of servces
provided should clearly define what the expenses have been incured for; however, on many
invoices that Staff reviewed on site, these reference line statements are vague, such as "Regulatory
Monitoring". In this instance, a better description is needed. Staff is requesting the information
for all legal expenses in all accounts, not just those in account 923.
RESPONSE:
The data requested was provided in the Company's response to PR-008, specifically the written
response "Staff PR 008.doc" and "Staff PR 008-)\ttachment B.xls".- - - -
.
.
.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
DATE PREPARD:
WITSS:
RESPONDER:
DEPAATMENT:
TELEPHONE:
07/23/08
Elizabeth Andrews
Patrck Ehrbar
State & Federal Reg.
[phone]
IDAHO
)\ VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-201
REQUEST:
In Order No. 29602, the Commission accepted Staffs adjustments removing non-recurrng
extraordinary legal expense as reasonable and appropriate. Specifically Staff removed legal
expenses related to subsidiary activities, and extraordinar and non-recurng events such as the
banptcy proceedings of Enron Corporation and the FERC investigation into electrcity trading
practices. Please provide a listing of all legal expenses included in the rate case filings, both gas
and electric, for subsidiar activities, extraordinar events, and non-recurrng events. Specifically
note any legal expenses related to subsidiares, the banptcy proceedings of Enron Corporation
or the FERC investigation into electricity trading practices.
RESPONSE:
The Company provided a listing of attorneys used by )\ vista and a general description of the
services performed in Staff DR 008. In addition, a detailed listing of all legal expenses incurred
in 2007 was provided in Staff_DR_008-Attachment B.
None of the 2007 legal expenses recorded to utility operations were related to subsidiares, the
banptcy proceedings of Enron Corporation or the FERC investigation into electrcity trading
practices.
The Company's legal expenses were incurred in order to protect the interest of )\vista's customers
and were both necessar and prudent. )\ vista believes that the costs incurred in 2007 were
incured in the ordinary course of business. Going forward, the Company wil continue to incur
some level of representative legal expenses that cover a multitude of matters.
.
.
.
JUSDICTION:
C)\SENO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-08-01 1 A VU-G-08-01
IPUC
Production Request
Staff-204
D)\TE PREPARD:
WITNSS:
RESPONDER:
DEPAATMNT:
TELEPHONE:
07/23/08
Dennis Vermilion
John Lyons, PhD.
Energy Resources
(509) 495'"8515
Please provide copies of all documentation associated with CFI revenues, CFI expenses and CCX
expenses.
RESPONSE:
Please see the following attachments:
"StafCPR_204-)\ttachment-A.pdl' - Chicago Climate Exchange Invoice (dated October 17,
2007).
"Staff_PR_204-)\ttachment-B.pdl' - Baseline, 2003, 2004, 2005 & 2006 Emissions Verification
and Analysis (dated April 24, 2008).
"StafCPR_204-)\ttachment-C.pdl' - 2007 Emissions Verification and Analysis (dated July 9,2008). i
"StafCPR_204-)\ttachment-D.pdl' - Memo Update On The Sale Of Chicago Climate Exchange
Carbon Mlowances (dated May 14, 2008).
"StafCPR_204-)\ttachment-E.pdl' - )\ VU-E-08-02 - )\pplication of )\vista Corporation for an
Order )\uthorizing Deferral of Net Revenues from Sales of Carbon Financial Instrents. This
application was filed on May 21,2008 with the IPUC. On June 25, the Commission ordered that
the )\pplication be processed by Modified Procedure. Comments of the Commission Staff are
attached as "Staff_PR_204-)\ttachment-F.pdl'.
StafCPR _ 204-Attachment-Ä. pdf Page 1 of 1
.~Invoice
Invoice Number
MD06665
Invoice Date:
SaMTa:
John Lyons
A vista Coortion
1411 E. Mission Ave.
Spokane, W A 99202
10/16/07
Please make ch eck payable to:
Chcago Claie Exchange, Inc.
190 South Lalle Stret, Suite 1100
Chcago, II 60603
Contact: Doug Dobben [phone]
.
Payment Terms
.~et 30. Days '.___"----'.,..._----
Fees based on estimates ar subject to chage based on acal baseline and elected opt-ins
submitted to CCX
DescriDtion Amount
Phae I Enollment Fee (Memer)15,000..00
Phase II Enrllment Fee 10,000.00
2003 Annua Dues 35,000.00
2004 Annual Dues 35,000.00
2005 Annual Dues 35,000.00
2006 Annua Dues 35,000.00
2007 Annual Dues 35,000;00
WIRE INSTRUCTIONS ACH INSTRUCTIONSBank of Amri Bank of Amri
231 Sout Lasalle Stret 231 Sout Lalle Street
Clicago.IL Chicago,ll
AB #026009593 ABA #081904808
Creit To: Credìto:
Ct"cago Climte Excharge. Inc.Chicago Climte Excharge. inc.
NC# 0028-7993-645 AlC# 0028-7993-7645
Phoie Advise: Sophia Bobak Phoie Advie: Sohia Bobak
312-828.5073 312-828-5073
Subtotal
Sales Tax
Tota Invoice Amunt
Payment/Cret Applied
200,000.00
200,000.00
..US!i ""-AlA .f..A..2. .... .WARP,AS. C... P.t.AP-li 2.4 .4J;;4. _Ut 4bl4 9;(1'4.:.\ ÄsZC.J4 .co; (!l:i.'... . J._X.iØt;A#JU,4I$iX t L 1.. ...p;lW...... :, L9£1¥tJt4s.ai 4" AS ad; -i.£z.A sus, :z
fit,"'" so~ 146.s~4s" HOXAl:\p:'t voc ui4..iJ, PMlO 4~:t..es~ CJu¡.:..."r', moi~luiil..7l1t s.CI 2~too CO ti:1i",tol s.~ i"-i-t.t). NOX ¿Sei:~ vrJi:4..i~ ~iQ¿ii:z..e"oC CH izr,+171i N2C' iasa',.n12 SF200..l_..._.i.lifq~..~~_lí!~Ja.._!l.lO.I.Ii_:tltJlI.mì.IIl_?,.!!!.
li.. +7Sp Ilo.. +210¡i eu Chng 4O1u Ad Ra'1S li lllI +4 We +to ri_ +7St 81DdI) +2o, ei Cl'UO Mlll.u.. li Qul\ +4 We +I
TOTAL USDS 200,000.00
Vt"A'W .cIicagoc!imateexchange.com
StafCPR _ 204-Attachment-B. pdf Page 1 of 5
2CX~
~ Chicago Climate Exchange 190 South LaSalle Street, Suite 1100 T 312.554.3350
Chicago, Ilinois 60603 . . F 312.554.3373
Apri24,2008
Mr. John Lyons
Power Supply Analyst
Avita Corporation
1411 East Mision Ave.
Spokan, W A 99202
Re: Baselie, 2003, 2004, 2005 & 2006 Eussions Verfication aid Analysi
Dear Mr. Lyons:
The Chcago Clite Exchange ("CCX") Environmntal Compliance Commtte ("Commtte") reviewed
thé reprt issed by FI, CCX' Regutory Seice Provider, regarding Avist Corpration's ("Avist")
Baselie, 2003, 200, 2005 and 2006 emissions.
On the basis of th inortion presented, the Commttee detered to accept the baselie and the 2003,
2004, 2005 and 2006 anua emission report sumittd on Decembèr 4, 2007.
CO2 memc tons
Direct Emissions Baselie
2,027,300
2003 Emssions 2004 Emisions 2005 Emissions 2006 Emisions
CO2 memc tons 1,632,800 1,571,000 1,849,600 1,761,800
FI's combind Baselie, 2003, 2004, 2005 and 2006 Emsions Report is enclosed
CCX will cancel the appropnate numr of Vintaes 2003, 2004, 2005 and 2006 Carbon Financial
Intrnts ("CFI") to cover Avista's emisions for 2003,2004,2005 and 2006. The atthed statements
reflect Àviata's Registr Accunt Holdings as of Apri 24, 2008 based on the appved baseli level and
net of th Vintages 2003, 200, 2005 and 2006 CFIs to be cacelled.
The Commtte wishes to than Avita for its coopration dug the FIN review. Please address any
questions you have to the undersigned at [phone] or bboyk(eccx.com.;;~~-~
William G. Boyk
Seor Vice Preident - Exchange Operations
cc: Matt Reybur FIN .
ww.chicagoclimateexchange.com
.".' "." ,,,,_. ",.' ,,'. ~. ,'i ...,.. ,_. "'.
S1.+1. S0 1465.+3. NQ 486sr2 VOC 1124+31. Pfl0432-61. CII12B'.+771. ~D 18983.+771. Sf6 ~D:~.. co~ ~.+I:'~02" 146'~+S~ NO 486'~ 'v¿c 1124+31. PMl04322-SI. CI 12ø3a+771. H2O 1898'.+771. Sf 2("'_íllr..J.'...:I.l.JJ.lIlIlIJlfillIiU...1Jf¥JJi.'ltli::::nlicn.UUII.ll.,....lt.lIt......lui.1
fo +76pt. Bitdve +211 COmate Clang.1O Aci Ran -t58pt AI QulJ +45 Weø +9Is Rai +7S B1odlt +21"" Cllini C.. .14l Ac Rain -1S AI Quti +l We
.
.
.
StafCPR _ 204-Attachment-B. pdf Page 2 of 5
Chicago Climate Exchange Carbon Financial Instrument (CFI) Positions Summary
Vintae 2003 CFIs
CCX Member: Avista Corporation Aso¡'Apri 24, 2008
All quantities are in CFIs, each of which represents one hundred metric tons carbon dioxide.
I. Emission baseline, reduction objective, 2003 emissionsEnsion Baselie "20,273
Emision Reduction Objective (Rulebook section 4.6) 20,0702003 Emisions 16,328
II. Current Holdings and Alowed Bankig of Vintage 2003 CFI
Exchange Allowance Intial Allocation 20,070
Net Sales or Purchaes via CCX Tradin Platfonn as of
Apn124, 2008 o
Net holdin as of Apri 24, 2008 20,070
LESS: CFIs to be cancelled for compliance (16,328) (Adjustment to Registiy Account)
Gross Surlus of Vintae 2003 CFs before
reclasifcations 3,742
Reclassifcations:
CFI to be placed in Suer Reductons 1 (3,134) (Adjusent to Regitr Account)
CFs that can be banked and/or sold i 6081
lThe applicable bang plus net sales lit for 2003 vintage is the lesser of the
surlus, 3% of each Membts baselie (608 CF) or the Single Fin Sales Limt
(SFSL) for Vintage 2003 CFIs, plus aucton purchaes and plumius net tradin
activi. The difference between the ma recognd emissions rection (3%
of baselie) and the SFSL wil be placed in Super Reductions. For the 2003 vitage,
the SFSL has increased to 1,841 CFIs due to baselie growt.
plese note: These colculations are based on: 4udited baseline, revised if appliable, audied 2003
emissions, revised if appliable, your purchases and sales of CFIs, your purchases and sal of CFls
during the CCX Auction and any other necessar informtion yøu provided to ccx CCX asumes no
libüit for the acuracy of informatn as provided to Ccx
Due to roimding, your CCX Registr Account Holdings may var slightly from this statement.
.
.
.
StafCPR _ 204-Attachment-B. pdf Page 3 of 5
Chicago Climate Exchange Carbon Financial Instrument (CFI) Positions Summary
Vintage 2004 CFIs
CCX Member: A vita Corporation As of: April 24, 2008
All quantities are in CFls, each of which represents one hundred metrc tons carbon dioxide.
I. Emision baselie, reuction objective, 2004 emissionsDirect Emission Baseline 20,273
Emission Redcton Objectie (Rulebook section 4.6) 19,8682004 Direct Emisions 15,710
II. Current Holdings and Alowed Banking of Vintage 2004 CFIs
Exchange Allowance Intil Allocation 19,868
Net Sales or Purchases via CCX Trading Platform as of
Apri 24, 2008 o
Net holdigs as of Apnl24, 2008 19,868
LESS: CFIs to be cancelled for compliance (15,710) (Adjustment to Regitr Account)
Gross Sulus otVine 2004 CFs before
reclassifcations 4,158
Reclassifcations:
CFIs to be place in Supe Reductons
1 (3,347) (Adjustment to Regstr Account)
CFIs that ean be banked or sold1 I 811 I
lThe applicable baning plus net sales limt for 2004 vintage is the lesser of the smlus, 4% of each Member's
baselie (81 I CFIs) or the Single Fir Sales Limt (SFSL) for 2004 CFls, plus/mius net tradig actvity. The
dierence between the maxum recogn emissions reducton (4% of
baselie) and the SFSL wi be place in
Super Reductions. For the 2004 vintage, the SFSL has incrased to 3,580 CFIs due to baseline growt
Please note: These calculatons are based 0": audited blUeline, revised if applicable, audited 2004 emissions,
revised if applicable, your purchases and sale of CFIs, your purchases and sales of CFls during the CCX
Auction and any other necessary information you provided to CCX CCX assumes no liabilty for the acciirac
of information as provided to CCX
Due to rounding, your CCX Regi Account Holdings may vary slghtly from this sUtement.
StafCPR _204-Attachment-B. pdf Page 4 of 5
. Chicago Climate Exchange Ca~bon Fiancial Instrument (CFI Positions Summary
V'intage 2005 CFIs
CCX Member: Avista Corporation As of: Apri124, 2008
All quantities are in CFls, each of which represents one hundred metric tons carbon dioxide.
L Emision baseline. reduction objective. 2005 emissionsDire Emission Basline 20,273
Enuion Redcton Objectve (Rulebook section 4.6) 19,6652005 Direct Emissions 18,496
II. Current Holdings and Allowed Bankig of Vintage 2005 eFIs
Exchange Alowance Intil Allocation 19,665
Net Sales or Puhass via CCX Traing Platorm as of
April 24, 2008 o
Net holdis as of Apri 24, 2008 19,665
LESS: CFs to be cacelled for compliance (18,496) (Adjustment to Regitr Accout).Gross Sulus of Vintage 2005 CFs before
reclasifcations 1,169
Reclassifications:
CFIs to be placed in Super Reductions!o
CFI that ca be banked or sold1 I.1,1691
!The applicable ban plus net sales lit for 2005 vintage is the lesser of the surlus, 6% of eah Membets
baselie (1,216 CFIs) or the Sinle Fir Sales Limt (SFSL), plumius net trding activity. The difference
between the maum recognd emisions reduction (6% of baselie) and the SFSL wil be placed in Suer
Reductons. For the 2005 vintage, the SFSL has increaed to 5,181 CFs due to baselie growt
Please note: These calculttions are based on: audited basele, revised if applicable, audied 2005 emisions,
revised if applicable, your purchases and sales of CFls, your purchases and rales of CFls during the CCX
Aucton and any other necessary iiiformatin you provided to Ccx CCX assumes no liaili for tlie accurac
ofinfonnatn as provided to CCX
Due to rounding, your CCX Regist Account Holdings may var slighty from this statement.
.
.
.
.
StafCPR_204-Attachment-B. pdf Page 5 of 5
Chicago Climate Exchange Carbon Financial Instrument (CFI Positions Summary
Vintage 2006 CFIs
CCX Member: Avista Corporation As of April 24, 2008
All quantities are in CFIs, each of which represents one hundred metrc tons carbon dioxide.
I. Emission baseline. reduction objective. 2006 emissionsDirect Emission Basline 20,273
Emission Reuction Objective (Rulebook secton 4.6) 19,4622006 Diret Emisions 17,618
II. Current Holdings and Alowed Bankig of Vintage 2006 CFIs
Exchange Allowance Inti Allocation 19,462
Net Sales or Puchases via CCX Trading Platfon as of
Aprl 24, 2008 o
. Net holdigs as of April 24, 2008 19,462
LESS: CFIs to be cacelled for compliance (17,618) (Adjustment to Regitr Accont)
Gross Surlus of Vintage 2006 CF before
reclassifcations 1,844
Reclassifcations:
CFIs to be placed in Super Reductions '(425) (Adjutment to Regitr Account)
eFIs that can be banke or sold1 1,4191
'The applicable bang plus net sales lit for 2006 vintage is the lesser of the surlus, 7% of each Member's
baseline (1,419 CFls) or the Single Fin Sales Limt (SFSL). For Vintage 2006, the SFSL is 7,272 CFs,
plus/mius net trdig activit.
Please note: T/iese calcullons are based on: audited baseIe, revised if appliable, audited 2006 emissions,
reiiised if applicable, your purchases and sals of CFls, yor" purchases and sales of CFIs durig the CCX
Aucton and any other necessary information you provided to CCX CCX assumes no liabilit for the accurac
of informaon as provided to Ccx
Due to rounding, your CCX Regist Account Holdgs may lIary süghtly from this statment.
StafCPR_204-Attachment-C. pdf Page 1 of9
T 312.554.3350
July 9. 2008
Mr. John Lyons
p(Jwcr Supply Analyst
A vista Corporation
14 i i East I'vlission Ave.
Spokane, \VA 992Q2
Re: 2007 Emission Verification and Analysis
Dear Mr. Lyons:
The Chicago Climate Exchange ("CeX") Environmental Compliance Committee ("Committeen) reviewed
¡he report issued by FINRA. CCX. Regulatory Service Provider, regarding Avista Corporation's 2007
emissions. On thi~ basis of the information presented, the Committee determined to accept the 2007
emissions submitted as of June 4, 200S.
CO2 metric tons
2.Q07 El1iissioiiS
1,841,800
FINRA '5 report is enclosed.
The appropriate 2007 emission levels wil be used for the cex 2007 Final True-up scheduled for
September 26,2008. Prior to the 2007 Final True-up, cex \vil communicate Avista Corporation's
Vintage Holdings, the apprüpiiate 2007 emissions and the difference between the two levels. The
difference between the eligible Vintage Holdiiigs and the 2007 cl1ùssions mayor may not require Avista
Corporation to take appropriate actÎons to comply with CCX' 2007 Final True-up.
The Conunittce wishes to thank Avista Corporation for its cooperation during the FINRA review. Please
address any questions you have to the undersigned at (311) 554- 1 019 or QlJo\'~theccx,ç(Jm.
For the Environmental Compliance Committee,
WiTJiâm G. Bôyk
Senior Vice President Exchange Operations
ec: Matt Reyburn, FINRi\
,..L,," ";"pt. S¡"dlv.,,.!t~ +21~pt. Climnte cò"og. .;lOOpis Acid Hal. .1S$pls ...1, Qusf!l +4Ôils Wcm:Q' +20pt$ Riinfe,em +iSpls Slooivsts! ..210¡ih Climate CMnge.iOQiI$Aeld Ral" .1SS¡ Air Quaity +4S;r Wea.het .5:
.
.
.
StafCPR_204-Attachment-C. pdf Page 2 of9
CCX 2007 Emissions Verification and Analysis
Member Name:Avista Corporation
Examiner:Marc Neri, Associate Examiner
Supervisor:Matt Reyburn, Examination Manaqer
Firm Contact:John Lyons, Power Supplv AnaiYst
CCX Contact:Willam BoVk, Senior Vice President
Date:July 8,2008
Executive Summary
Avista Corporation ("Avista" or "the Company") submited its 2007 Emissions and
Efectricity Purchases Reporting Form (trEEPRF") on June 4, 2008 to the Chicago
Climate Exchange (UCCX". These documents were submited by Kevin Booth
("Booth", Environmental Compliance Coordinator, and disclosed direct emissions of
1,841,841 metric tons of carbon dioxide equivalent emissions ("metric tons of CO2'?
for the Compliance Year (trCY'~ 2007. Staff conducted a review of 100 percent of the
Company's reported direct emissions by examining the emissions data repotted to the
Environmental Protection Agency's ("EPA") Acid Rain Program and the consumption
data reported to the Federal Energy Regulatory Commission ("FERC"), and noted no
material deviations from the direct emissions reported on the Company's 2007 EEPRF.
Comparing the repotted 2007 direct emissions with the Company's Baseline, Staff
noted that ihis represents an apparent 9.15% reduction in direct emissions. On June
25, 2008, John Lyons ("Lyons"), Power Supply Analysis, indicated that the reduction
in direct emissions is attributed to the annual fluctuations in stream flow which
impacts the Company's hydroelectric generation levels, changing customer loads, and
effciency upgrades were made to Colstrip Unit #3 during the CY2007.
Metric Tons of CO2
Fillnr¡ #Date Submitted CY2007 Emissions I Baseline Emissions % Change
1 June 4,2008 1.841,841 I 2,027.336 9.15%
i. Filng History
The Company submitted its 2007 EEPRF to the CCX on June 4, 2008. These documents
were submitted by Booth. and disclosed direct emissions of 1,841,841 metric tons of CO2 for
CY2007. Staff conducted a review of the reporting form and supplemental worksheets
provided by the Company, and noted no apparent concerns regarding these documents. In
addition, Staff noted that the 2007 EEPRF was consistent with that submitted by the
Company for prior emissions verifications conducted by FINRA.
.
.
.
Staff PR 204-Attachment-C.pdf
CCX 2007 Emissions VerificatÎon and Ãnalysis
Avista Corporation
July 8,2008
Page 2 of 7
Page 30f9
H. Acquisitions and Divestitures
The Company did not report any acquisition or divestiture activity on its 2007 EEPRF. Staff
reviewed the Company's reporting form and other supporting documents, and did not find
any reason to suggest that an acquisition or divestiture might have taken place during
CY2007. Staff received a statement (via-email) from Lyons which stated that no ownership
changes occurred during CY2007 on June 25, 2008.
IIi. Sampling Guidelines and Information Request
Staff examined the 2007 EEPRF submitted by the Company and identified a detection
population of five direct emission sources for the CY2007. Staff noted that this includes a 100
percent ownership in Units #1 and #2 at the Rathdrum Combustion Turbine Project
('Rathdrum"), a 15% ownership in Units #3 and #4 at the Colstrip Generation Facility
("Colstrip"), and a 100 percent ownership in the Northeast Combustion Turbine ("NECT").
Staff noted that these units, facilities, and ownership percentages were consistent with those
reported for the prior emissions verifications conducted by FINRA.
Staff noted that the emissions data for the Units #1 and #2 at Rathdrum and #3 and #4 at
Colstrip were calculated using Continuous Emissions Monitors ("CEMs") and reported to the
EPA's Acid Rain Program under Title IV of the Clean Air Act. After the EPA reviews the
quarterly submissions, it makes any adjustments it deems necessary and then reports the
Company's emissions data as final on the EPA's Clean Air Markets Data and Maps website
Within the Clean Air Markets Data and Maps
website, the public can view quarterly and annual reports organized by individual emission
stacks at Title IV reporting facilities.
Staff noted, however, that due to time constraints governing the annual CCX emissions
verification and the EPA's own timetable for the review of emissions data, all data reported
by the EPA for the calendar year 2007 is considered preliminary as of June 30, 2008. Staff
noted that the 'preliminary' classification is not specific only to Avista's emissions data, but
rather all of the EPA's emissions data for the calendar year 2007. Based on this information,
FINRA Staff wil do a comparison at the end of CY2007 emissions verification period and
report any differences noted between the EPA's preliminary and final emissions data to the
CCX for all electric generating members.
In prior emissions verifications conducted for electric generating entities, the CCX considered
these reports to be an acceptable verification source of a member's emissions data, as it was
obtained from CEMs and reported to a United States regulatory authority. As such, Staff did
not request supporting documents for #1 and #2 at Rathdrum and #3 and #4 at Colstrip.
Staff conducted its review for these facilities using exclusively the data contained within the
EPA's Clean Air Markets Data and Maps website.
Staff noted that for NECT, which is a Non-Title iV facility, that emissions data was calculated
using fuel consumption quantities reported to the FERC on its Annual Report for Major
Electric Utiliies ("Form 1"). Staff further noted that these reports could be found online at theFERC's website and that in prior
emissions verifications conducted for power generating entities, the CCX considered similar
.
.
.
Staff PR 204-Attachment-C.pdf
CCX 2007 Emissions Verification añd Añalysis
Avista Corporation
July 8,2008
Page 3 of 7
Page 4 of9
reports to be an acceptable verification source of a member's emissions data, as ¡t was
obtained from calibrated fuel meters and reported to a United States regulatory authority.
As such, Staff requested that the Company provide its FERC Form 1 and the supplemental
worksheet that was used to calculate the reported direct emissions for NECT for CY2007.
This request was issued to Booth on June 19, 2008. On June 24, 2008, Staff received the
requested documentation (via-email) from Booth. Staff noted that the documents provided
were consistent with the documentation provided for NECT for prior emissions verifications
conducted by FINRA.
IV. CY2007 Data Analysis
For the verification of the Company's Title iV reported direct emissions for the CY2007, Staff
submitted queries of the preliminary EPA data and recovered emissions data for Units #1
and #2 at Rathdrum and #3 and #4 at Colstrip. For the verification of the Company's Non-title
IV reported direct emisskms, Staff reviewed the Company's FERC Form 1 and recovered
consumption data for NECT for the CY2007.
During prior emissions verifications conducted for the Company by FINRA, Staff conducted a
review of the Company's internal emissions monitoring and reporting system to ensure that
the data being reported to the EPA's Add Rain Program and the FERC was accurate and
that operational procedures were in place to ensure the accuracy of the data. Staff previously
reviewed the Company's Relative Accuracy Test Audits, Electronic Data Reports, Quality
Assurance/Quality Control Plans, and Flow Meter records for the CY2002, CY2004 and
CY2006. Staffs review of these documents noted no apparent concerns regarding how the
Company tracks and reports its emissions data. On June 25, 2008. Staff received an email
from Lyons which stated that no material changes were made to the Company's internal
emissions monitoring and reporting system.
Based on this information, F1NRA deemed the information contained within the EPA's Clean
Air Market Data and Maps website and on the FERC Form 1 to be acceptable verification
sources of the Company's reported direct emissions for the CY2007.
Title IV Facilties
Staff's review of the preliminary EPA data for Units #1 and #2 at Rathdrum and #3 and #4 at
Colstrip noted immaterial differences (less than 0.001%) from the direct emissions reported
on the Company's 2007 EEPRF, which were likely attributed to rounding. Based on these
findings, FINRA deemed the reported direct emissions for Units #1 and #2 at Rathdrum and
#3 and #4 at Colstrip to be Completely Verifiable and Accurate for CY2007. The following
table summarizes the findings of FINRA's data analysis for Avista's Title iV facility:
Metric Tons of CO2
Facilty Reported to CCX Reported to EPA Diference %
Rathdrum #1-2 10,969 10.969 -0.13 -0.001%
Colstrip #3-4 1,829,300 1,829,318 -18.25 -0.001%
.
.
.
Staff PR 204-Attachment-C.pdf
CCX 2007 Emissions Verification añd Añalysis
Avista Corporation
July 8, 2008
Page 4 of 7
Page 5 of9
Non~Tjtle IV Faciities
Staff's review of the FERC consumption data for NECT and noted no differences from the
consumption quantity found within the Company's supplemental worksheet. Staff noted that
the calculation of the direct emissions reported on the Company's 2007 EEPRF was
consistent with prior reviews. Based on these findings, FINRA deemed the reported direct
emissions for NECT to be Completely Verifiable and Accurate for CY2007. The following
table summarizes the findings of FINRA's data analysis of Avista's Non-Title iV facilties:
Metric Tons of CO2
Facilty Reported to COX I Reported to FERC Difference %
NECT 1.572 I 1,572 0.00 0.000%
V. Verification Limitations and Guidelines
This review was conducted to verify the validity and accuracy of Avista's 2007 EEPRF based
on an evaluation of a representative sample of data. For purposes of the verification, FINRA
representatives reviewed the 2007 EEPRF and the data found on the EPA's website. FINRA
did not request independent verifications of raw data from vendors or other third parties, nor
was FINRA made aware of any previous reviews of these records other than that mentioned
in the text of this document.
FINRA conducted this verification in accordance with the Statement of Work and subsequent
determinations made under the mutual agreement of CCX and FINRA. FINRA
representatives did not perform on-site testing at any of the Company's physical locations
nor did FINRA verify the inclusion of all mandatory direct and inditect emissions sources in
the Company's 2007 EEPRF. Our review was based entirely on documentation provided by
the Company or obtained from the EPA website. FINRA's role is to assess the validity of the
2007 EEPRF based on our review of the Company's records.
Vi. Conclusion
The goal of this review was to generate conclusions regarding the expected accuracy and
reliabilty of the Company's 2007 reporting form. For the verifcation of the Company's
reported emissions for CY2007, Staff relied on the data contained within the EPA's Clean Air
Markets Data and Maps website for the Company's Title IV facilties, and on the consumption
data reported to the FERC for the Company's Non-Title iV facilties. Staff noted that these
were both deemed to be acceptable. verification sources during prior emissions verifications
conducted by FINRA. Staff's review of the preliminary EPA emissions data and the FERC
consumption data noted only immaterial variances (less than 0.001%) from the Company's
reported quantities for CY2007. Based on these findings, FINRA deemed the Company's
report direct emissions to be Completely Verifiable and Accurate for CY2007. The following
table summarizes the findings of FINRA's emissions verification for Avista for CY2007:
Metric Tons of CO2
Submission Avista I FINRA Difference %
June 4,2008 1,841,841 I 1,841,860 -18.38 -0_001%
.
.
.
Staff PR 204-Attachment-C.pdf
CCX 2007 Emissions Verification añd Analysis
Avista Corporation
July 8,2008
Page 5 of7
Page 6 of9
Vii. Internal Controls
During the course of FINRA's CY2007 emissions verification and analysis. Staff did not
identify any areas of deficiency pertaining to the Company's internal emissions tracking and
reporting systems.
VIII. Follow-Up
On June 24, 2008, Staff contacted Booth to provide him with an update regarding the status
of the emissions verification and analysis of Avista's CY2007 reported emissÎons. No further
follow-up was deemed necessary at that time.
.
.
.
Staff PR 204-Attachment-C.pdfCCX 2007 Emissions Verification and Analysis
A vista Corporation
July 8,2008
Page 6 of7
Page 7 of9
Avista Corporation
2007 Emissions Verifcation and Analysis
Completed By FINRA for Chicago Climate Exchange
Date:
Associate Examiner
Date:
Examination Manager
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Staff PR 204-Attachment-C.pdfCCX 2007 Emissions Verification añd Añalysis
Avista Corporation
July 8,2008
Page 7 of 7
Page 8 of9
Exhibit List:
1. FINRA Conflict or Interest Certification
2. FINRA Project Chronology
3. Avista Corporation 2007 EEPRF Submitted on June 4, 2008
4. Avista Corporation 2007 FERC Form 1
5. FINRA 2007 Data Analysis Spreadsheet
6. Email Received from John Lyons on June 25, 2008
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Staff PR 204-Attachment-D.pdf
~~'i'V'STAe --
Utilities
Page 1 of 1
Interoffce Memorandum
Power Supply & Resource Optìmìzatìon
DATE:May 14, 2008
TO:Dennis Vermillon
FROM:Dave Miler
SUBJECT: Update On The Sale Of Chicago Climate Exchange Carbon
Allowances
As of end of trading today, May 14, 2008:
~ 70 individual sales have been concluded
~ 370,700 of 400,000 tons of carbon allowances have been sold
~ Gross sales = $2,383,650 for an average price of $6.43 per ton
~ Net proceeds = $2,365,150 ($18,500 commission paid cæ $0.05 per
ton for an average price of $6.38.
~ Highest sale price received per ton = $6.60
~ Lowest sale price received per ton = $6.30
Thank you - Dave Miller
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Avista Corp.
1411 East Missioli P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
lii.srA.
Corp.HEGEIVED
zuna HAY 22 AM 10: 26
VI OVERNGHT MA JDß\f~f() r,'L1RLlC
UTfLlTlES COi\lMISSlON
May 21, 2008 Æ-vu-~-òS~
Ms. Jean D. Jewell
Commission Secreta
Idaho Public Utilities Commssion
472 W. Washington
Boise, ID 83702-5983
Re: Case No. AVU-E-08-0";
Application of A vista Corporation for an Order Authorizig Deferal
of Net Revenues from Sales of Carbon Financial Instrents
Dear Ms. Jewell:
Enclosed is Avista's Application for an Order Authorizing Deferrl of the Net Revenues from Sales
of Carbon Financial Intrents. The filing consists of an origial and seven copies of Avista's
Application.
Please direct any questions regarding ths filing to Ron McKenzie at [phone].
Sincerely,
7' ,Jr'~
Kelly Norwood
Vice President, State and Fedèral Regulation
Enclosure
c: See attched serce list
Staff PR 204-Attachment-E.pdf Page 1 of 10
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~:n: ('t: 'vr. ni..".\""...j .,~i",
David J. Meyer, Esq.
Vice President and Chief Counsel of
Reguatory and Goverenta Afairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, VV ashington 99220
Phone: [phone], Fax: [phone]
BEFORE TH IDAHO PUBUC UTITS COMMSSION
200BHAY 22 AM 10: 26
IDljlo:(".¡ PUPL'C
UTlLlTí ES "COMMlSSIDN
IN TH MATTR OF TH APPUCATION OF
A VISTA CORP., dba A VISTA UTITS, FOR
AN ORDER AUTORIG DEFERR OF
NET REVENUS FROM SALS OF CARON
FINANCIA INSTRUMS
)
) Case No. A VU-E-08-D;;
) APPUCATION OF
) A VITA CORPORATION
)
I. INTRODUCTION
1. A vista Corporation, doing business as A vista Utilities (hereiafter A vista or
Company), at 1411 Eat Mission Avenue, Spokae, Washigton, puruatto Secon 61-524
Idaho Code and Ru1e 52 of the Idaho Public Utilities Commssion ("Commission Ru1es of
Procedure"), hereby applies to the Commission for an order authorig the deferal of net
revenues from the sale of Carbon Financial Intrents ("CFIs")' on the Chicago Climate
Exchange ("CCX"). Puuant to Commission Ru1e of Procedure 201, the Company reuests
that this filing be processed under the Commission's Modified Procedure rues.
2. Avista is a utilty that provides serce to approximately 352,000 electrc customer
and 215,000 natu gas cutomer in a 26,000-squae-mile area in easter Washington and
norter Idaho. Avista Utilities also seres 95,00 natu gas customers in Oregon. The
largest communty sered in the area is Spokane, VVashigton, which is the loction of the
1 The commodity trded at the Chicago Cliate Exchage (CCX) is the CFI contract, each of which
represents 100 metrc tons of CO2 grouse gas equivalents.
APPUCATION OF A VISTA CORP.Page 1 of6
StafCPR _ 204-Attachment-E. pdf Page 2 of 10
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corporate headquarers. Communcations in reference to ths Application should be
addressed to:
Kelly O. Norwood
Vice President
State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: kelly.norwood(fvistacom.com
David J. Meyer, Esq.
Vice President and Chief Counsel of
Reguatory and Goverenta Affairs
A vist Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: david.meyer(áavistacorp.com
II. BACKGROUND
3. Avista is seeking to defer the revenues from the sale of credits relating to the
reduction in greeouse gas emssions through a pilot program offered though the Chicago
Climate Exchange ("CC:X"). CC:X is an emssion registr, reduction and trading system for
greeouse gases ("GHGs"), including caron dioxide (C02)' CC:X is a self-regulated, nies-
based exchange designed and govered by CC:X member. A vista became a member in
November 2007 for Phase I and Phase II of the program, descnbed below.
4. The CC:X GHG reduction commtment is divided into two phases: Phase I commts
member to emission reductions from 2003 to 2006; and Phase II commits member to
emission reductions between 2007 and 2010. Members pledge to reduce emissions by 1 %
per year for Phase I, for a total 4% reduction in four years. For Phase II, member pledge to
reduce 0.5% per year durg 2007-201 0, for a 6% tota reduction though 2010. Membeship
in CC:X is wholly volunta (for Phase I or Phase 11; however, the pledge for emssions
reductions is legally bindig under the ters of the CCX Accord.
5.The emission reductions any member must make are made against a calculated
baseline. The baseline for Phase I equals the emissions average for the perod beginnng
APPLICATION OF A VISTA CORP.Page 2 of6
StafCPR _ 204-Attachment-E. pdf Page 3 of 10
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. 1998 to the endof200l. The baseline for Phase IT can be either the 1998 -2001 average or
year 2000 emissions.
6. The CCX has built-in provisions that protect member from beig overly penalized if
they miss thei reduction targets by growing too rapidly, and it also has built-in provisions or
safety valves to prevent members from gaming or unfaily capitalizig the market. As a
result, there is a maximum amount of credits that Avista wil be allowed to sell each yea.
Starng in 2003, member do not have to purchas more than 3% over thei baselie and also
canot sell more than 3% of any reductions under their baseline. These caps increae to 9%
by 2010. Reductions that exceed the sales cap in Phase I are deemed as Super Reductions,
which can be used to offset a portion of Phase IT emissions or may be sold outside of the
normal CCX trading system to the general public.
7. Under Phase I of the program, Avista is able to trade a certn number of credits
baned from Phase I years. The CCX allows member to ban credits each yea bas on the
allowed growt provisions minus the anual sales amount. A vista's baned credts for 2003
to 2006 total 4,007 Carbon Financial Instrents (CFls), and are shown in Exhbit A
attched to ths Petition. Avista has sold 4,007 surlus Phase I CFIs for $2,557,065, net of
.
the CCX commissions.
8. Under Phase IT of the prgram, the CFIs that wil be eaed in the yea 2007 though
2010 wil be available for sale by A vista in each of the subsequent years aft completion of
an audit.
9. Intial membership fees to join the CCX amounted to $200,000 and were paid in
2007. Ongoing membership fees will amount to $35,000 per year for each of the year 2008
thrugh 2010. Total fees for Phase I and IT amount to $305,000, and are shown in Exhbit B
APPLICATION OF AVISTA CORP.Page 3 of6
Staff _PR _ 204-Attachment-E. pdf Page 4 of 10
. attached to ths Petition. CCX memberhip fees paid by A vista in 2007 were recrded in
FERC Accunt 186 - Miscellaneous Suspense Account.
i o. In ths filing, the Company is requesting an order allowig for the deferal of the net
revenue (revenues from sale of CFIs, less cost, including membership fees paid) for both
Phase I and Phase II. A vista will address the proposed method of ultimate ratemakng
treatment in its next general rate cae filing or other proceeding, as appropriate.
III. PROPOSED ACCOUNING TREATMENT
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11. The Company requests authority to defer the CFI revenues in Account 254 - Other
Regulatory Liabilties. Upon approval, the Company will transfer the membership fees paid
in 2007 from FERC Account 186 to Accunt 254. In addition, the Company reuests
authority to defer the futue anual memberhip dues payments for 2008 - 201 0 in Account
254. The net revenues wil be allocated to the Washington and Idaho jursdictions based on
the curent Production!rasmission allocation of 64.59% to Washigton and 35.41 % to
Idaho, and place in separate Washington and Idao 254-accounts. Interest would accre on
the Idahò share of the deferls at the customer deposit rate. The Company would propose a
method of ratemakg treatment of the net revenues and accred interest in its next gener
rate case filing or other proceeding.
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APPLICATION OF A VISTA CORP.Page 4 of6
Staff _PR _204-Attachment-E. pdf Page 5 of 10
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IV. REQUEST FOR RELIEF
12.WHREFORE, A vista respectfuly requests that the Commssion issue an Orer
allowing the deferal of net revenues from the sale of CFIs. The ultiate ratemalng
treatment of the net revenues would be addressed in its next general rate cae filing or other
proceeding.
13. The Company requests that the matter be processed under the Commission's
Modified Procedure rules though the use of wrtten comments.
Dated at Spokane, Washigton ths 21 st day of May 2008.
A VISTA CORPORATION
r;vi(2 :c. -
Vice President and Chief Counsel of
Reguatory and Goverenta Affai
APPLICATION OF AVITA CORP.Page 5 of6
Staff PR 204-Attachment-E.pdf Page 6 of 10
.VERIICATION
STATEOFWASHlGTON)
)County of Spokane )
David J. Meyer, being fit duly sworn on oath, deposes and says: That he is the
Vice President and Chief Counsel of Regulatory and Goverental Affairs of A vista
Utilities and makes ths verfication for and on behalf of A vista Corporation, beig thereto
duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be tre.
9-1~7
SIGNED AN SWORN to before me ths 21 st day of May 2008, by David J. Meyer.
.~\\\"'''llni,1i11'!\\\'l "l OI~ li""§.'*~~~"'--""~&~:: ,in-," ~':U' ~.:- '... ~ ~~ ... . ~
§ I *OTA." ~\ ~~. . ~ ¡= l __ l-.. , ~
\ \ lfLt, i!~,,~, ~ JA~"~~~ ~ ..~~ "p!~7 tv;:~ ""'.Æ"'~_22 ..-;~~". ,. ~ A -_.. ..\+... ~""~/i ttF W, ''' ,~~.:fll"'iiini"'\\~ .
a~ .NOTAR~or the State of
Washington, residing at Spokane.
Commssion Expires:.:/~lor /
.
APPLICATION OF A VISTA CORP.Page 6 of6
StafCPR _ 204-Attachment -E. pdf Page 7 of 10
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AViSTA UTILITIES
Credits in CCX
2003 -2006
2003 I 2004 I 2005 I 2006 I Total I
Emissions Baseline 20,273 20,273 20,273 20,273
Emissions Reduction Objective 20,070 19,868 19,665 19,462
Actual Direct Emissions 16,328 15,710 18,496 17,618
Gross Surplus CFls 3.742 4,158 1,169 1,844 10,913
Reclassifcation to Super Reductions (3,134)(3,347)(425)(6.906)
NetCFls 608 811 1,169 1,419 4,007
All quantities are in CFls, each of which represents one hundred metric tons carbon dioxide.
Exhibit A
Page 1 of2
StafCPR _204-Attachment-E. pdf Page 8 of 10
ExhibitS.A VISTA UTILITIES
Membership Fees for CCX
2003.2010
Phase I Phase II Total
Enrollment Fee $15,000 $10,000 $25,000
2003 Annual Dues 35,000 35,000
2004 Annual Dues 35,000 35,000
2005 Annual Dues 35,000 35,000
2006 Annual Dues 35,000 35,000
2007 Annual Dues 35,000 35,000
2007 Payment 155,000 45,000 200,000
2008 Annual Dues 35,000 35,000
2009 Annual Dues 35,000 35,000
2010 Annual Dues 35,000 35,000.$155,000 $150,000 $305,000
.
StafCPR _ 204-Attachment-E. pdf
. Page20f2
_____ _ _Page 9 of 10
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation's Application for an Order
Authonzing Deferrl of Net Revenues from Sales of Carbon Financial Instruments by
mailng a copy thereof, postage prepaid to the following:
Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilties Commission
472 W. Washington
Boise, ID 83720-5983
Scott Woodbury
Deput Attorney
Idaho Public Utilties Commission
472 W. Washington
Boise,ID 83702-0074
.
Pamela Mull
Vice President & General Counsel
Potlatch Corporation
601 Riverside Ave., Suite 1100
Spokane, WA 99201
Dated at Spokane, Washington this 21st day of May 2008.
pa~dL
Rates Coordinator
.
Staff PR 204-Attachment-E.pdf Page 10 of 10
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F~,E(~E .,...
WELDON B. STUTZMA
DEPUTY AITORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMSSION
POBOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3283
ZûûH JUt i 6 P!1 3:18
UJß~f.îi)
UTIliTiES
Street Address for Express Mail:
472 W WASHIGTON
BOISE ID 83702-5983
Attorney for the Commission Sta
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION DBAAVISTA ) CASE NO. AVU-E-08-2
UTILITIES FOR AN ORDER AUTHORIZING )
DEFERR OF NET REVENUS FROM SALES )
OF CARON FINANCIA INSTRUMNTS. ) COMMENTS OF mE
) COMMSSION STAFF
)
COMES NOW the Sta of the Idaho Public Utilities Commssion, by and though
its Attorney of record, Weldon B. Stutz, Deputy Attorney General, and in response to the
Notice of Application and Notice of Modified Procedure issued in Order No. 30580 on .
June 25, 2008, submits the following comments.
BACKGROUND
On May 22, 2008, A vista Corporation filed an Application requesting an Order from the
Commission authoring the Company to defer net revenues from the sale of carbon finacial
instrents (CFIs). The revenues result from the sale of credits relating to the reduction in
greenhouse gas emissions though a pilot progr offered though the Chicago Climate
Exchange. Paricipants in the Exchange are required to reduce greenhouse gas emissions durg
two phases. The Exchange allows members to sell greenhouse gas credits based on greenouse
STAFF COMMENTS JULY i 6t' 2008
Page 1 of5
1
StafLPR _ 204-Attachment-F .pdf
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gas reductions compared to a baseline. A vista baned credits for 2003 though 2006, and was
able to sell surlus Phase 1 CFIs for $2,557,065, net of the Exchage commissions.
In this filing, the Company is requesting an Order allowing for the deferral of the net
revenue (revenues from sales of CFIs, less cost, including membership fees pad to the
Exchange). The net revenues will be allocated to the Company's Washigton and Idaho
jursdictions bas on the curent production/trsmission allocation of 64.59% to Washington
and 35.41% to Idaho. The Company requests autority to defer the CFI revenues in Account 254
- Oter Regulatory Liabilties. The Company proposes to accrue intereSt on the Idao share of
the deferrals at the customer deposit rate. The Company will propose ratemakng treatment of
the net revenues and accrued interest in its next general rate case filing or some other proceeding.
STAFF REVIEW
The Chicago Climate Exchange (CCX) is an emission registr, reduction and trding
system for greenhouse gases. Membership in CCX is volunta for Pha I and Phae II,
although the emission reduction pledges are legally binding under the CCX Accord. Curently
members represent varous industres with emission soures and offset projects worldwide. In
the Electrc Power Generation industr there are 17 members. A vist became a member in
November 2007.
The Carbon Financial Instrent (CFI) is the traded commodity. Each CFI contract
represents 100 metrc tons ofCOi equivalents (COie). Emissions from six greenhouse gases
(OHOs) are converted to metrc tons COie using the one-hundred-year Global Warg
Potential values established by the Intergovernenta Panel on Climate Chage. The six GHGs
include carbon dioxide (COi), methane (C~), nitrous oxide (NiO), hydrofluorocarbons (HFCs),
perfuorocarbons (PFCs) and sulfu hexafuoride (SFs).
Members paricipating in Phase I and Phase II commit to meet emission reduction tagets
for Phase I of 1 % per yea for 2003 - 2006 and Phase II of 0.5% per yea for 2007 - 2010 or a 6%
reduction. Members joining during Phase II commit to a 6% reduction by 2010. Exhbit A to
the Application shows Avista's quaifying reductions for Phase I, 2003 - 2006. CCX has built-in
provisions to protect members from extreme penalties or gains. Members are not required to
purchase more th 3% of its baseline to cover missed reduction tagets if its operation grew
rapidly. A cap on sales of3% is established to prevent gaming or unai capitaization of the
market. These caps increase to 9% by 2010. Reductions that exceed the sales cap in Phase I are
STAFF COMMENTS IDLY 16,20082
Staff_PR_204-Attachment-F .pdf Page 2 of5
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reclassified to Super Reductions that may be baned to offset a portion of Phase II reductions or
may be sold outside of the normal CCX tradg system to the general public. Avista quaified
for 6906 CFI Super Reduction credits leaving 4007 CFI baned credits in Phase I as showÌ on
Exhbit A. These Phase I baned credts are the 4007 surlus CFIs sold by A vista for
$2,557,065, net ofCCX commissions.
A vista requests authority for deferred accounting in Account 254 - Other Reguatory
Liabilty. The deferred accounting tratment covers booking of the net revenues, revenues from
the sale of CFIs less costs including coinissions and fees durng both Phase I and Phase II of
the CCx. The tota CCX fees paid in 2007 or to be paid in 2008 - 2010 amounts to $305,000 as
shown òn Exhibit B to the Application. A vista proposes to address the ultimate ratemaking
treatment in its next general rate case fiing or other proceeding, as appropriate. Sta intends to
address the ratemang treatment in the curent rate case A VU-E-08-1 when it verifies the
expenses are not included in the base year.
Deferred accounting is appropriate to provide customers benefits from the sale of CFIs.
Deferred accounting is consistent with the authority grted by ths Commission for sulfu
dioxide (S02) credits. The revenues are derived from utility propert and should be allocated to
customers payig for tht 'propert.
Avista proposes to establish separe Washington and Idaho accounts using the curent
Production/rasmission allocator of 64.59% to Washington and 35.41% to Idao. Sta
believes ths allocation factor is appropriate. For futue Phase II acvity the p~centage
allocation wil change reflecting the then curent Production/ranmission allocator.
STAFF RECOMMENDATIONS
Staf recommends the Commission grant Avista's request for deferred accountig
treatment authority utilzing the following components:
The revenues should be deferred in Account 254 - Other Regulatory Liabilty
with an offset shown for associated CCX commissions and fees.
Separate regulatory sub account will be established for Washington and Idao
based on the Production/ransmission allocator.
Ratemaking treatment will be established in a separte case. Sta intends to
make its recommendation in the curent rate case, Case No. AVU-E-08-L.
STAFF COMMNTS JULY 16, 20083
StafCPR_204-Attachment-F .pdf Page 3 of5
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Respectflly submitted ths \~ Y- day of July 2008.
t.-~~
Weldon B. Stutzan
Deputy Attrney General
Techncal Staff: Terr Carlock
i:umisc:commentsavue.2wstc
STAFF COMMENTS 4 JULY i 6, 2008
Page 4 Of5StafCPR _ 204-Attachment-F. pdf
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16TH DAY OF JULY 2008, SERVED
THE FOREGOING COMMNTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-E-08-02, BY MALING A COPY THREOF, POSTAGE PREPAID; TO TI
FOLLOWIG:
DAVIDJ.MEYER
VICE PRESIDENT AND CHIEF COUNSEL
AVISTA CORPORATION
POBOX 3727
SPOKA WA 99220
E-MAIL: david.meyerißavistacol".com
KELLY NORWOOD
VICE PRESIDENT - STATE & FED. REG.
A VISTA UTILITIES
POBOX 3727
SPOKAE WA .99220
E-MAIL: kelly.norwoodißavistaor..com
CERTIFICATE OF SERVICE
StafCPR_204-Attachment-F .pdf Page 5 of 5