20111227AVU to Staff 1-3.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 12/27/2011
CASE NO: AVU-E-11-6
REQUESTER: Commission Staff RESPONDER: Steve Silkworth
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: 1 TELEPHONE: [phone]

REQUEST:

Please explain why the definition of “Market Energy Cost” has been changed from the Stimson
Lumber Contract. Reference § 1.14 of Power Purchase Agreement between Stimson Lumber
Company and Avista Corporation.

RESPONSE:

The Market Energy Cost definition changed from the Dow Jones Mid Columbia index to the
Intercontinental Exchange (ICE) index because the ICE index is currently the commonly used
index to settle market energy transactions in the region.

RECEIVED
2011 December 27 AM 11:42
IDAHO PUBLIC
UTILITIES COMMISSION

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 12/27/2011
CASE NO: AVU-E-11-6
REQUESTER: Commission Staff RESPONDER: Steve Silkworth
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: 2 TELEPHONE: [phone]

REQUEST:

Please explain why the minimum requirement for comprehensive general liability insurance has
increased from $1 million per occurrence in the prior contract to $2 million per occurrence in the
proposed contract. Reference § 7.1.1 of Power Purchase Agreement between Stimson Lumber
Company and Avista Corporation.

RESPONSE:

The requested $2 million per occurrence general liability insurance is established through
management discretion, taking into account the cost of a potential claim and the vendor’s ability to
pay. The prior contract that is expiring was entered into in 2006. The $1 million insurance
requirement of the expiring contract may no longer be sufficient to cover the potential cost of
current industry claims, and for Avista’s protection, a $2 million per occurrence is an updated
figure that Avista will generally use in new contracts and when renewing contracts.

RECEIVED
2011 December 27 AM 11:42
IDAHO PUBLIC
UTILITIES COMMISSION
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 12/27/2011
CASE NO: AVU-E-11-6
REQUESTER: Commission Staff RESPONDER: Jeff Schlect
TYPE: Production Request DEPARTMENT: Transmission
REQUEST NO.: 3 TELEPHONE: [phone]

REQUEST:

Please explain why charges for Stimson’s use of Avista’s Plummer Substation facilities are
specified in the proposed contract but were not specified in the prior contract. Were payments
made for Stimson’s use of these facilities in the past under a separate agreement from the power
sales agreement? Reference § 31 of Power Purchase Agreement between Stimson Lumber
Company and Avista Corporation.

RESPONSE:

While use-of-facilities charges for dedicated sole-use facilities in Avista’s Plummer Substation
were inadvertently omitted in the prior power purchase agreement dated October 1, 2006,
use-of-facilities charges for these dedicated facilities were included in the previous power
purchase agreement dated July 1, 2003. Avista rebuilt its Plummer Substation in March 2009 and
the use-of-facilities charges included in the current agreement reflect the cost of the upgraded
dedicated facilities.
RECEIVED
2011 December 27 AM 11:42
IDAHO PUBLIC
UTILITIES COMMISSION