20150812AVU to Staff 48.docx

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATIONJURISDICTION:IDAHODATE PREPARED:08/05/2015CASE NO.:AVU-E-15-05/AVU-G-15-01WITNESS:Bryan CoxREQUESTER:IPUCRESPONDER:William JohnsonTYPE:Production RequestDEPARTMENT:Power SupplyREQUEST NO.:Staff-048TELEPHONE:[phone]REQUEST:
Regarding the termination of the 150 MW Point to Point Contract (See Cox DI, pg. 25, line 3), please provide a copy of the original contract and all correspondence and notifications associated with the contract termination. When did the Company know the Lancaster Generation Station would be integrated into its transmission system? What is the cost associated with the nine-month delay in contract termination? Where are these costs booked?RESPONSE:
Staff_PR_048 Attachment A is the original transmission contract, Staff_PR_048 Attachment B is the correspondence with BPA regarding the construction of the interconnection of Avista’s transmission system to the Lancaster substation, and Staff_PR_048 Attachment C is the termination notice letter for the Lancaster transmission.
The interconnection of Avista’s transmission system and the Lancaster substation was dependent on BPA’s work schedule (the Lancaster substation is owned by BPA). BPA notified Avista in June 2012 that the expecteddate of interconnection completion was late 2013. Ideally, BPA would have given Avista a 2 year notice of expected construction completion since the transmission agreement had a 2 year notice of termination provision. Also, it was only through discussion and agreement from BPA that the termination notice was worded as the later of 2 years after notice or when construction was completed. Without that language Avista would have been at risk of not having transmission should there have been construction delays. Therefore, the earliest the transmission termination notice could have been given was June 30, 2012.
The net cost of the transmission for the months of July and August 2014 is dependent on several factors. The gross cost of the transmission was the BPA point-to-point (PTP) transmission rate ($1.736/kW/mo). Offsetting that expense was the remarketing of some of the transmission and the use of the remaining transmission for other system use, including redirecting to other plants that lack long-term transmission under peak generating conditions, moving power to John Day/COB to support long-term energy/REC sales to California entities, and reducing the purchase of redirected PTP from third parties.
Transmission expense is booked in Account 565 and transmission revenue is booked in Account 456.