20190110Avista to Staff 1-15.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
January 8,2079
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Idaho Public Utilities Commission
472W. Washington St.
Boise, ID 83702-0074
Attn: Edward Jewell
Deputy Attorney General
Re: Production Request of the Commission Staff in Case No. AVU-E-I8-13
Dear Mr. Jewell,
Enclosed are Avista's responses to IPUC Staffs production requests in the above referenced
docket. Included in this mailing are the original and two paper copies of Avista's responses to
production requests: Staff 01 - 15. Also enclosed on a separate CD are copies of Avista's
responses to the production requests. The electronic versions of the responses were emailed on
0l /08/19.
If there are any questions regarding the enclosed information, please contact Paul Kimball at (509)
495-4584 or via e-mail at [e-mail]
Sincerely
Paul Kimball
Mgr., Compliance & Discovery
Enclosures
CC (Email):IPUC (Hanian)
Clearwater (Richardson)
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-O1
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Joe Miller
DEPARTMENT: Regulatory Affairs
TELEPHoNE: [phone]s46
REQUEST:
Please estimate the cost impact of replacing the current2013 Agreement with:
a. The 2018 Agreement
b. An agreement based on IRP-based avoided cost pricing.
For part b, please provide a detailed explanation of the calculation of the IRP-based avoided cost
price. These analyses may be based on either test-year data from the last general rate case or data
for a recent consecutive 12-month period. Please provide workpapers in Excel, with formulae
intact.
RESPONSE:
a. The impact of replacing the 2013 Agreement with the 2018 Agreement is cost
neutral. Under no circumstances do the Parties anticipate that the new 2018
Agreement could negatively impact any of the other Idaho customers that the
Company seryes. At a minimum, the new 2018 Agreement should provide a
benefit to all customers through the sharing of REC benefits passed through the
Company's Power Cost Adjustment Mechanism.
Per discussions with Staff, see the attachment labeled "Staff_PR_0I Attachment
A" for a hypothetical REC benefit analysis of the 2018 Agreement utilizing the
billing determinants from the Company's most recent general rate case
(AVU-E-17-01).
b. See the Company's response to Sta[PR_04 and StaflPR_05 for the calculation
and description of the IRP-based avoided cost price.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-02
DATE PREPARED: 0110712019WITNESS: N/A
RESPONDER: Tara Knox
DEPARTMENT: Regulatory Affairs
TELEPHONE: [phone]
REQUEST:
Please describe any controls or risk mitigation that the Company will employ to ensure that the
revenue Avista receives from energy generated by Clearwater is no less than the amount Avista
pays for the power Clearwater generates minus Avista's share of the REC benefit.
RESPONSE:
The proposal in this contract clearly identifies the incremental rate revenue and the new energy
purchase while keeping the measurement of the equivalent to Clearwater's current contract exactly
the same. Exhibit D of the Clearwater PPA document shows that the demand charges and Block I
energy charges are measured from the Ml and M2 meters exactly the same as under the current
self-generation contract. All revenues associated with the generation unit metered usage (Gl
through G4 meters) is collected under the Schedule 25P Block 2 energy rate.
Provision l2 of the Joint Petition (page 9) states that the effects of Clearwater's Generation will be
removed with respect to ooGeneral Rate Case filings, Cost of Service studies, Production and
Transmission Ratio calculations, and PCA rate calculations etc.," in order to "provide consistency
with current practice, and hold Clearwater, and all other rate schedules "neutral" as to whether
Clearwater is generating into its own load or selling the output from its Generation to Avista to the
benefit of all customers."
l) The purchased power expense is directly assigned to Idaho in exactly the same manner as
the 2003 contract (see provision l0). Necessarily the associated energy and demand is
excluded from the ratio used to assign all allocated production and transmission costs.
2) Within the revenue requirement determination of General Rate Case filings, adjustments
will be included that eliminate the Clearwater Block 2 Revenue, Clearwater contract
Purchased Power Expense, and Commission Fees on the Block 2 Revenue. (The net effect
of this elimination on revenue requirement is $0, but Cost of Service studies, the PCA base
and LCAR associated with the case will reflect only the Block I usage and demand.)
3) Similarly, to facilitate the REC values flowing through the PCA mechanism as they occur,
all REC revenues and expenses associated with this contract will be pro formed out of
General Rate Case revenue requirement and related PCA base determination.
4) All adder schedule rates are determined exclusive of Schedule 25P Block 2 usage,
therefore this contract does not affect the amount ofrebates or surcharges that are assigned
to Clearwater.
Page I of2
Provision 10 of the joint petition (page 8) discusses continuing to track the directly assigned
Clearwater purchased power expense and the Clearwater retail revenue based on kilowatt-hour
sales equivalent to the level of Clearwater generation, at 100% through the PCA in the same
manner as the 2003 contract.
5) Given that these amounts will be excluded in Rate Case filings (item 2 above), the
authorized amounts for both components will always be $0. The actual amount of the
purchased power expense and the associated retail revenue will always be equal to each
other because the Block 2 rate is directly related to the purchased power rate (the amount
intended to recover Idaho Commission fees will not go through the PCA).
6) Therefore the effect of these line items will be to remove the directly assigned cost
from actual total Account 555 expenses compared to authorized Account 555 expenses,
then separately show the actual directly assigned expense and related revenue that net to $0
for the PCA calculation.
7) Actual net REC revenues and expenses associated with this contract will flow
through the Resource Optimization line item in the PCA calculation thereby providing the
benefit to all customers at the 90/10 sharing.
Page 2 of 2
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-03
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: (s09) 495-2564
REQUEST:
Please describe the actions the parties took to ensure that the proposed contract rates would not
exceed Avista's avoided costs pursuant to l8 CFR 5 292.304.
RESPONSE:
FERC's regulations require that the rates: "Be just and reasonable to the electric consumer of the
electric utility and in the public interest..." l8 C.F.R. $292.304(aXlXi). FERC's regulations
further provide: "Nothing in this subpart requires any electric utility to pay more than the avoided
costs for purchases." 18 C.F.R. 5 292.304(a)(2). Clearwater is not eligible for the Idaho PUC's
published avoided cost rates because it is too large, so it gets a negotiated rate. Because this is a
negotiated PURPA deal and, given the unique circumstances, the rate is negotiated and is intended
to hold Clearwater and customers harmless and facilitate the REC transaction, which is a benefit to
both Clearwater and other Idaho customers Given the unique nature of this transaction, the
negotiated rate at issue here meets the requirement that it be "just and reasonable" and "in the
public interest."
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-04
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: [phone]
REQUEST:
Page 2 of the Petition states "these generators are Qualifying Facilities ("QF") pursuant to the
Public Utility Regulatory Policies Act of 1978 and l8 C.F.R. Part292;' Please explain the
following.
a. Were the contract price negotiations based on an IRP model run, pursuant to
Commission Orders on IRP-based avoided cost pricing? Order No. 32697 requires
that "when a QF project is larger than the eligibility cap set for access to published
avoided cost rates, the avoided cost rates for the project must be individually
negotiated by the QF and the utility using the Integrated Resource Planning
Methodology." If the answer is yes, please provide workpapers showing the inputs
and outputs of the model run.
b. If the answer to (a) is no, why weren't the avoided cost rates used as the basis to
establish the rates for this Agreement?
RESPONSE:
Yes, the contract price was based on a blend of the IRP model run and forward market prices.
Please see the response to Sta[PR_03 and 05, including the attached work paper supporting the
contract price of $24.50/MWh.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-05
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: [phone]
REQUEST:
Please describe how the Parties arrived at "a five-year PURPA rate" of $24.50 per MWh. Please
provide supporting workpapers.
RESPONSE:
Clearwater is not eligible for published avoided cost rate because it is too large so it gets a
negotiated rate. Given the unique circumstances of the power purchase rate being equal to the
Block 2 generation rate there is no financial impact related to the exact rate. The rate was based on
the IRP methodology rate and the forward energy prices, which were very similar.
Please see Staff PR_05 Attachment A for the work paper supporting the contract price of
$24.s0/MWh.
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-06
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Joe Miller
DEPARTMENT: Regulatory Affairs
TELEPHONE: (509) 49s-4s46
REQUEST:
Page 4 of the Petition states, "Avista will sell to Clearwater all of Clearwater's required energy and
capacity at the new Schedule 25P Block 2 PURPA rate of $24.50/MWh and would purchase all of
the output from Clearwater's Generation, including the RECs at the same PURPA rate of
$24.50/MWh." However, page 6 of the Petition states, "The Block I retail energy rate will
continue to capture Clearwater's net load at the retail meter priced at the existing Schedule 25P
energy rate. The Block 2 energy rate will capture Clearwater's generation load at the generation
meter priced at the PURPA contract rate of $0.0245 cents per kwh." Please clarify the apparent
contradiction between these statements. Specifically answer:
a. What rate will Avista purchase Clearwater's generation?
b. What rate will Avista sell electricity to Clearwater Paper, Block I or Block 2?
RESPONSE:
a.Avista will purchase Clearwater's generation at $0.02450 per kWh.
b. Avista will sell electricity to Clearwater related to its net retail load at the present Block I
rate of $0.04524 per kwh, which is consistent with the existing 2013 Agreement in place
today. Avista will sell electricity to Clearwater related to its generation load at the new
Block 2 rate of $0.02456 per kWh. The slight difference in the Block 2 rate and the
purchase price is related to revenue-related gross up for Commission fees.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-07
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: [phone]
REQUEST:
The Petition states, "All costs associated with non-performance by the Third Party will be the sole
responsibility of Clearwater, and would be netted against any future payments from Avista to
Clearwater under the 2018 Agreement." Please describe how non-performance is defined in
context of the contract.
RESPONSE:
In the context of the 2018 Agreement, non-performance by the Third Party refers to any failure by
Morgan Stanley Capital Group to perform its obligations under the REC Agreement attached to
the 2018 Agreement as Exhibit F.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-08
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: [phone]
REQUEST:
Page 4 of the Petition states, o'Absent another agreement between the Parties, upon termination or
expiration of the 2018 Agreement prior to the expiration of the 2018 Agreement, the Parties will
revert back to the terms of the 2013 Agreement such that it will generate into its own load under
the same rate structure that is in place today." Please clarify how the agreement can expire prior to
the expiration date. Or, should it read, ". . . prior to the expiration of the 2013 Agreement . . ."? Or,
should it read similar to page 5, fl (a), e.g "termination" or "suspension"?
RESPONSE:
The Petition is correct as drafted and submitted. The 2018 Agreement and the REC Agreement
(Exhibit F to the 2018 Agreement) are to run concurrently. In the event that the REC Agreement is
terminated or suspended prior to the expiration of the 2018 Agreement, Clearwater may request to
terminate the 2018 Agreement. See Section 5(d) of the 2018 Agreement. In the event that the
2018 Agreement is terminated, the 2013 Agreement will spring back and be effective until the
earlier to occur of either (i) the end of the term of the 2018 Agreement or (ii) such time as the
parties enter into a new agreement regarding the output of Clearwater's Project. See Sections 3
and 5(d) of the 2018 Agreement.
If the REC Agreement is terminated or suspended prior to the expiration of the 2018 Agreement,
the Clearwater 2018 Agreement will be suspended rather than terminated. See Section 5(d) of the
2018 Agreement. If the 2018 Agreement is suspended, the 2013 Agreement shall be effective
during any period in which the 2018 Agreement is suspended. See Sections 3 and 5(d) of the 2018
Agreement.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-09
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Joe Miller
DEPARTMENT: Regulatory Affairs
TELEPHONE: [phone]
REQUEST:
Page 5 of the Petition states "the term of the 2018 Agreement is four years and eleven months,
beginning on February 1,2019 and ending on December 31, 2023" . However, page 6 of the
Agreement states that "this agreement shall be effective on December 15, 2018, or such other date
set by Commission Order ("Effective Date"), and shall terminate at2400 hours on December 31,
2023, unless terminated earlier pursuant to this Agreement". Please reconcile the February l,
2019, and December 15,2018, effective dates.
RESPONSE:
The Parties had been originally targeting an earlier date of December 15,2018 but the finalization
of the 2018 Agreement and Joint Petition took longer than expected. The Agreement was signed
by Clearwater and Avista prior to the preparation of the Joint Petition with the earlier date. The
Parties stated a more reasonable effective date of February l, 2019 inthe Joint Petition, but did not
believe it was necessary to amend the already signed Agreement. The language stating "or such
other date set by Commission Order ("Effective Date")" was intended to supersede any stated
effective date should the finalization of the Agreement take longer than expected, as was the case.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-l 0
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Joe Miller
DEPARTMENT: Regulatory Affairs
TELEPHONE: [phone]
REQUEST:
Page 7 of the Petition states, "Clearwater would no longer use its Generation to offset its own
load." Further, in the proposed agreement,'oDelivered Net Output" is defined in paragraph 5(a) as
"the total amount of electric power generated by the Project bundled with all RECs associated with
such electric power generated by the Project and delivered to Avista at the Points of Delivery."
This statement and contract provision indicate that generation will not be netted against
consumption (despite calling it "Delivered Net Output"). However, page 6 references
"Clearwater's net retail meter" and "Clearwater's net load at the retail meter." Please clarify
whether Clearwater's generation and consumption would be net under the proposed agreement or
ifthe references to net retail on page 6 are in error.
RESPONSE:
In practical terms Avista will now be selling Clearwater its full load requirement. For billing
purposes, as described in the Company's response to Production Request 6, Avista will sell
electricity to Clearwater related to its net retail load at the present Block 1 rate of $0.04524 per
kWh, which is consistent with the existing 2013 Agreement in place today. Avista will sell
electricity to Clearwater related to its generation load at the new Block 2 rate of $0.02456 per
kwh.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-1 1
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: (s09) 49s-2s64
REQUEST:
Page 7 of the Petition states "in the event that the agreement with the Third Party is terminated, for
any reason, the 2018 Agreement may be terminated and, in such case Clearwater will revert to
generating into its own load pursuant to the terms of the 2013 Agreement." Does Avista have the
ability to cancel the 2018 Agreement and revert back to the 2013 Agreement for other reasons?
Please explain.
RESPONSE:
Yes. In addition to Clearwater's ability to terminate or suspend the 2018 Agreement under Section
5(d), Avista can terminate the 2018 Agreement due to (i) Commission action (e.g., disapproval)
under Section 3(c), or (ii) due to an event of default under Section l9(b). Under Section 3, the
2013 Agreement will spring back and be effective if the 201 8 Agreement is terminated or
suspended for any reason.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- l8- 13
IPUC
Production Request
Staff-12
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
0U0412019
N/A
Mike Andrea
Legal Staff
(s0e) 4es-2s64
REQUEST:
Please explain what happens if the 2018 Agreement-which has a proposed term until December
31,2}z3-terminates after June 30,2021, the date the 2013 Agreement expires per Order No.
333s0.
RESPONSE:
Section 3(a) of the 2018 Agreement provides:
Notwithstanding anything to the contrary in the 2013 Agreement, in the event that the 2013
Agreement comes back into effect pursuant to the terms of this Agreement , the 2013
Agreement shall be effective from the date it comes back into effect until the earlier of (i)
December 31,2023, or (ii) the date upon which the Parties enter into a new agreement
regarding the output of the Project.
The intent is for the 2013 Agreement to be the fallback agreement notwithstanding its stated term.
That is, even if the 2013 Agreement would have otherwise expired pursuant to its terms, in the
unlikely event that the 201 8 Agreement is suspended or terminated, the 201 3 Agreement is
intended to fill the gap until the earlier of (i) the expiration date of the 2018 Agreement (December
31,2023), or (ii) the date upon which the parties enter into a new agreement regarding the output of
the Project.
AVISTA CORPORATION
RESPONSE TO REQUEST F'OR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-13
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Joe Miller
DEPARTMENT: Regulatory Affairs
TELEPHONE: (s09) 495-4546
REQUEST:
Page 8 of the Petition states "Table No. 1 below summarizes the differences between the current
2013 Electric Service Agreement and the new 2018 Power Purchase and Sale Agreement."
However, Table No. I is not included in the Application. Please provide Table No. l.
RESPONSE:
The Parties inadvertently left in the reference to Table No. I in the Joint Petition. Table No. I does
not exist and the reference to it should be disregarded.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-14
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Bill Johnson
DEPARTMENT: Power Supply
TELEPHONE: [phone]
REQUEST:
Is the facility a topping-cycle cogeneration facility or a bottoming-cycle cogeneration facility, as
defined in l8 CFR 5 292.202? Please explain.
RESPONSE:
The facility is a topping-cycle cogeneration facility as defined in 18 C.F.R. $ 292.202. As
described in Paragraph 7h of the facilities' Form 556 Qllotice of Self-Recertification) filed on
September 9,2013, "After steam passes through the turbines for electrical generation, it is used in
the industrial facility..."
A complete detailed description of the facilities is provided in their Notice of Self-Recertifications
that were filed on September 9,2013 in FERC Docket Nos. QF83-142, QF83-143, QF83 -144 and
QF92-64.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-18-13
IPUC
Production Request
Staff-15
DATE PREPARED: 0110412019WITNESS: N/A
RESPONDER: Mike Andrea
DEPARTMENT: Legal Staff
TELEPHONE: [phone]s64
REQUEST:
Does the facility currently meet the requirements of 18 CFR S 292.205? Under which subsection
does the facility meet the criteria to be a qualifying cogeneration facility under PURPA? Please
explain.
RESPONSE:
It is Avista's understanding that the Project meets the requirements of l8 CFR 5 292.205(a) which
describes the criteria for qualifying cogeneration facilities. Clearwater filed to self-recertify the
Projects as QFs in 2013 in Docket Nos. QF83-142, QF83-143, QF83-144 and QF92-64. In the
2018 Agreement, Clearwater represents and warrants that "the Project is, and during the Term of
this Agreement will remain, a Qualifying Facility." See Section 2(a) of the 2018 Agreement.
Breach of this representation and warranty is a material breach of the 2018 Agreement and would
be grounds for Avista to terminate the 2018 Agreement. See Sections 2(a) and 19 of the 2018
Agreement.