20121224Avista to Clearwater 1-10.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
RE
Av1Sm'
Corp.
U12 DEC 2 J1 8:56
December 21, 2012
Richardson & O'Leary, PLLC
Mr. Peter Richardson
515 N. 27th Street
Boise, ID 83702
!DAFT Li
Re: Production Request of Clearwater Paper Corporation in Case Nos. AVU-E-12-08 and
AVU-G- 12-07
Dear Mr. Richardson,
Enclosed are original copies of Avista's responses to Clearwater Paper Corporation's production
requests in the above referenced docket. Included in this mailing are Avista' s responses to
production requests 01 - 10. The electronic versions of the responses were emailed on 12/21/12
and are also being provided in electronic format on the CD included in this mailing.
Also included are Avista's CONFIDENTIAL responses to Clearwater 06C and 08C. These
responses contain TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and
are separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
It is being provided under a sealed separate envelope, marked CONFIDENTIAL.
If there are any questions regarding the enclosed information, please contact me at (509) 495-
4584 or via e-mail at paul.kimab1lavistacorp.com
Sincerely,
Paul Kimball
Regulatory Analyst
Enclosures
CC (Email): all parties electronic
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/05/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: Clearwater Paper RESPONDER: Pat Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Clearwater-01 TELEPHONE: [phone]
REQUEST:
Please provide an electronic copy, with all formulae and links intact, of the electric related portions
of Exhibit 12 attached to Tara Knox's direct testimony. Please include, also in electronic format
where possible, all workpapers and other documents used in the development of the electric
portions of Exhibit 12.
RESPONSE:
Per discussion between Mr. Ehrbar and Dr. Reading, the requested information is available in the
electronic workpapers contained on the CD's delivered with the original case filing.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/05/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: William Johnson
REQUESTER: Clearwater Paper RESPONDER: Pat Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Clearwater-02 TELEPHONE: [phone]
REQUEST:
Please provide an electronic copy, with all formulae intact, of Exhibit 6 attached to William
Johnson's direct testimony. Please include, also in electronic format where possible, all
workpapers and other documents used in the development of Exhibit 6.
RESPONSE:
Per discussion between Mr. Ehrbar and Dr. Reading, the requested information is available in the
electronic workpapers contained on the CD's delivered with the original case filing.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/06/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Patrick Ehrbar
REQUESTER: Clearwater Paper RESPONDER: Joe Miller
TYPE: Production Request DEPARTMENT: State & Federal Reg
REQUEST NO.: Clearwater-03 TELEPHONE: [phone]
REQUEST:
On page 9 of Patrick Ehrbar's direct testimony he states:
The spread of the proposed increase generally results in the rates of return for the various
electric service schedules moving approximately 15% closer to the overall rate of return
(unity).
Please provide the calculations supporting the calculations for the percentage increase and
resulting relative rates of return for each rate class on page 10 in Tables 4 and 5.
Per discussion between Mr. Ehrbar and Dr. Reading, the requested information is available in the
electronic workpapers contained on the CD's delivered with the original case filing. Please refer
to the electronic workpaper file labeled "Ebrbar Electric Workpapers.xlsm". The tabs labeled
"ROR" and "Exh 1" contain the supporting calculations related to the approximate 15% move
towards unity as well as the percentage increases.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:- IDAHO DATE PREPARED: 12/05/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Patrick Ebrbar
REQUESTER: Clearwater Paper RESPONDER: Patrick Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Clearwater-04 TELEPHONE: [phone]
REQUEST:
Please explain the logic used in applying the proposed increase for Clearwater Paper (Schedule
25P) all on the energy rate rather than spreading it between the demand and energy charges, as
shown in Exhibit A, the tariff pages.
RESPONSE:
In recent general rate cases, the Company has received approval to increase the demand charge,
and certain basic charges, by a percentage typically higher than the increase in the energy rates for
Schedules 11, 21, 25 and 25P. For example, Schedule 25 received a energy rate decrease of 0.5%
while the minimum monthly demand charge increased by 4.2% and the demand charge increased
by 12.5% in Case AVU-E-11-01. The Company chose to apply the increase to the energy charge
in this case, after taking into account the prior increases in the demand charge.
AVISTA-CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:-
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED: 12/06/2012
A\TUE1208 / AVU-G-12-07 WITNESS: Patrick Ehrbar
Clearwater Paper RESPONDER: Joe Miller
Production Request DEPARTMENT: State & Federal Reg
Clearwater-05 TELEPHONE: [phone]
REQUEST:
Please explain the logic used in the increase in the Annual Minimum for Clearwater Paper
(Schedule 25P), as shown in Exhibit A, the tariff pages.
RESPONSE:
Referring to the tariff for Schedule 25P, "The annual minimum is based on 916,667 kWh's per
month (11,000,000 kWh's annually), plus twelve months multiplied by the monthly minimum
demand charge for the first 3,000 kVa of demand."
The increase in the Annual Minimum was derived by taking 11,000,000 kWh's times the proposed
volumetric increase of $0.00157. Please note, there was no proposed increase to the monthly
demand charge for the first 3,000 kVa of demand.
Please refer to the electronic workpaper file labeled "Ehrbar Electric Workpapers.xlsm"
previously provided with the Company's filing. The tab labeled "Exh 3" contains the calculation
of the Annual Minimum for Clearwater Paper (Schedule 25P).
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/13/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: Clearwater Paper RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Clearwater-06 TELEPHONE: [phone]
REQUEST:
On page 15 of Robert Lafferty's direct testimony he states:
Analysis indicated that the combination of the significant drop in project cost and the
substantial tax incentives available for renewable projects completed by December 31,
2012 yielded long-term benefits for customers compared to waiting until tax incentives,
attractive project pricing, and particular attractive wind project sites may no longer be
available to Avista.
Please provide a copy of the analysis that led Avista to the conclusion that the Palouse Wind
Project was in the best long-run interest for its customers. Please include all workpapers,
spreadsheets (in electronic form),1 and assumptions used in the analysis.
RESPONSE:
Please see Avista's response 06C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
Please refer to Lafferty Confidential Exhibit 4, Schedule 7C for a discussion of the analysis of the
request for proposal (RFP) that resulted in the selection of the Palouse Wind Project.
Clearwater—PR-06C Confidential Attachment A contains an electronic copy of the analysis for the
first round of the RFP and Clearwater PR 06C Confidential Attachment B contains an electronic
copy of the analysis for the second round of the RFP.
Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FORINFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/11/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: Clearwater Paper RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Clearwater-07 TELEPHONE: [phone]
REQUEST:
On pages 12 and 13 of Robert Lafferty's direct testimony he-states:
Avista's 2009 Integrated Resource Plan (IRP) indicated an approximate need for 50 aMW
of qualifying renewable energy credits prior to 2016 in order to meet Washington's
renewable portfolio standard (RPS). In early 2011, the 2011 IRP was well into
development and identified a slightly lower need level of 42 aMW of qualifying renewable
energy credits. In February 2011, Avista decided to issue a request for proposals (RFP)
that would meet the Company's 2016 need for qualifying renewable energy credits prior to
the December 3 1, 2012 expiration of federal and state tax incentives and other benefits, and
also take advantage of the low equipment and construction costs that appeared to be
available at the time.
It appears that the need for the Palouse Wind project is being driven by the need to meet
Washington's renewable portfolio standard (RPS). Please provide all studies and analysis of the
cost advantage of constructing the Palouse Wind project as opposed to simply purchasing
renewable energy credits (REC) in the various markets for said credits. If the Company has not
conducted such a study please explain in detail why such a study was not conducted.
RESPONSE:
The Company determines its need for energy, capacity and REC's through the IRP process, which
includes public involvement of state commissions, customers, and other interested parties.
Avi-sta's 2009 IRP process demonstrated the need for 150 MW of nameplate capacity wind
generation in the Preferred Resource Strategy. The 2011 IRP process demonstrated the need for
120 MW of nameplate capacity wind. The 2009 IRP was provided in Lafferty Exhibit No. 4,
Schedule 5 and the 2011 IRP in Lafferty Exhibit No. 4, Schedule 1.
Page 1 of I
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12113/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: Clearwater Paper RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Clearwater-08 TELEPHONE: [phone]
REQUEST:
Please provide a detailed list of all RECs purchased and all RECs sold by the Company since the
Washington RPS-standards were implemented. Please include, in electronic format, if possible,
the date of the sale or purchase, the number of RECs sold orpurchased, the price-per REC for each
REC sold or purchased, and identify the counter party for each transaction.
RESPONSE:
Please see Avista's response 08C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
Washington's Energy Independence Act was passed by voters in November 2006 under
Initiative-937, but was not implemented until the first renewable energy target in 2012. Please
refer to Clearwater _PR_08C Confidential Attachment A for a spreadsheet containing the
requested REC purchase and sale information.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/04/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert Lafferty
REQUESTER: IPUC RESPONDER James Gall
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Clearwater- 09 TELEPHONE: [phone]
REQUEST
On page 15 of Robert Lafferty's direct testimony, he states:
The need for the type and size of resource provided by the Palouse Wind PPA was
demonstrated in the 2009 Integrated Resources Planning process. (See Exhibit 4, Schedule
5) The need was also confirmed in the 2011 IRP, which was nearing completing with the
Palouse Wind PPA was executed.
On page 16 of Robert Lafferty's direct testimony, he states:
The Company's energy, capacity and REC needs were used as inputs to the development of
the Preferred Resource Strategy (PRS). The PRS is developed using a proprietary linear
programming model called PRISM.
On page 8-3 of the Company's 2009 IRP (at Exhibit 4, Schedule 5 of Robert Lafferty's direct
testimony) is a list of the object functions and constraints used as inputs to the PRISM model used
to conduct the analysis of the Palouse Wind PPA, among other resources. Please provide the
shadow prices found as a result of the analysis for each of the following identified constraints:
Capacity needs;
Energy needs;
Washington RPS;
Resource limitations;
Resource availability; and
Risk tolerance.
RESPONSE:
Avista has not calculated shadow prices for the constraints listed in the production request.
Further, the RFP analysis used prices derived from the 2011 IRP process. On page 8-18, table 8.6
of the 2011 IRP describes the prices used for Capacity, Energy, Washington RP and risk
tolerance (contained within the "Risk") column. These prices could be inferred to be shadow
prices.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/19/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Scott Morris
REQUESTER: Clearwater RESPONDER: Jeanne Pluth
TYPE: Production Request DEPARTMENT: State & Fed. Reg.
REQUEST NO.: Clearwater-0 10 TELEPHONE [phone]
REQUEST:
On page 14 of his direct testimony Mr. Morris states that:
These mandates, together with litigation and other claims related to the ownership and operation of
hydroelectric resources, have added, and continue to add, significant costs to run the utility.
The "requirements" referenced on pages 14— 16 aside, please identify and document all litigation
costs and "other claims" costs that are embedded in the Company's overall rates and that are also
additionally embedded in the $11.4 million increase in rates.
RESPONSE:
The litigation and other claims referred to in Mr. Morris' testimony were specific to the ownership
and operation of hydroelectric resources. A summary of the major costs related to hydroelectric
resources the Company has incurred and will continue to incur follows:
1)Under federal law we must have a license to operate our hydro-electric projects to serve
customers. In recent years we negotiated new licenses for the projects on both the Clark Fork and
Spokane rivers. The cost to gain new licenses was over $40 million up front and approximately
$600 million over the life of the new licenses (45 to 50 years). These costs reflect aggressive
bargaining on the part of the Company to keep the costs as low as possible. The requirements in
the new long-term licenses address environmental and cultural protection while preserving our
low-cost hydroelectric resources for the benefit of our customers, but they also represent
significant increases in costs associated with owning and operating our hydro-electric system. The
Company has approximately $2.8 million of Idaho's share -of the annual costs included in this case
test period, in addition to approximately $70,000 related to the amortization of the deferred costs.
In addition, the Company has approximately $19.0 million of rate base for the unamortized portion
of the relicensing and deferred costs included in this case.
2)The Montana Riverbed Lease Settlement: In this settlement, the Company agreed to pay the
State of Montana $4.0 million annually beginning in 2007, with annual inflation adjustments, for a
10-year period for leasing the riverbed under the Noxon Rapids Project and the Montana portion of
the Cabinet Gorge Project. The first two annual payments were deferred by Avista as approved in
Case No. AVU-E-07-10. In Case No. AVU-E-08-01 (see Order No. 30647), the Commission
approved the Company's proposed accounting treatment of the deferred payments, including
accrued interest, to be amortized over the remaining eight years of the agreement starting October
1, 2008. The Company has approximately $1.6 million of Idaho's share of the annual payment
included in this case test period, in addition to approximately $361,000 related to the amortization
of the deferred costs. In addition, the Company has approximately $1.0 million of rate base for the
unamortized portion of the deferred costs included in this case.
3) The Couer d'Alene Tribe Settlement: The settlement included the payment of $25.0 million in
December 2008, $10.0 million in 2009 and $4.0 million in 2010 for resolution of the past trespass
and §10(e) charges. The future § 10(e) payments are $400,000 flat annual payments for the first 21
years of the new Spokane River license, starting in December 2008, and $700,000 flat annual
payments for the remaining years of the license. The agreed upon settlement and payments were
reviewed in the company's electric general rate case proceeding, Case No. AVU-E-08-01. As
approved by the Commission's Order No. 30647, the Company was allowed to defer the
amortization of the initial 2008 - 2010 payments, including a carrying charge on the deferrals and
unamortized balance and include recovery of these costs in its next general rate cases. The
Company has approximately $140,000 of Idaho's share of the annual payment included in this case
test period, in addition to approximately $355,000 related to the amortization of the deferred costs.
In addition, the Company has approximately $13.6 million of rate base for the unamortized portion
of the deferred costs included in this case.