20060628_1596.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:SCOTT WOODBURY
DATE:JUNE 20, 2006
SUBJECT:CASE NO. GNR-06-1 (Idaho Power, Avista, PacifiCorp)
ADJUSTABLE PORTION OF AVOIDED COST RATE
REVISED/UPDATED CALCULATION FOR EXISTING CONTRACTS.
CASE NO. PAC-06-6 (PacifiCorp)
ANNUAL VARIABLE ENERGY RATE ADJUSTMENT -
1992 AMENDMENT QF CONTRACTS.
The Idaho Public Utilities Commission in Order No. 28708, Case No. GNR-99-
established a methodology for the annual adjustable rate portion of avoided costs for those QF
contracts using variable costs associated with Colstrip, a coal-fired generating facility in
southeast Montana. For those QF contracts with Colstrip-related fuel costs and variable O&M
future Colstrip variable cost adjustments are to be calculated by using FERC Form 1 Colstrip
Unit Coal Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M
cost of Co 1st rip plus 20~/MWh for generation taxes plus a five percent (5%) adjustment for line
loss). As computed by Commission Staff, the Colstrip related adjustable rate should change
from 8.87 mill/kWh to 9.38 mill/kWh. The same calculated rate revision under the avoided cost
methodology is used by Avista, PacifiCorp dba UP&L and Idaho Power Company. This change
in the variable rate affects existing contracts under the previous SAR methodology.
The adjustable portion of the avoided cost rates under Sumas-based methodology is
based on annual average gas prices indexed at Sumas, Washington. As r~ported by A vista, the
indexed gas prices have increased by $ 1. 88/mmbtu. The approved gas price of$5.92/mmbtu
plus the $ 1. 88/mmbtu increase results in a gas price of$7.80/mmbtu for the 2006-2007 year.
This equates to a SAR fuel cost of 57.33 mill/kWh as used in the model.
DECISION MEMORANDUM JUNE 20, 2006
The Commission Staff by letter dated May 17, 2006, prepared by Staff Engineer Rick
Sterling, calculated changes to the annual adjustable rate portion of avoided costs for those QF
contracts using variable costs associated with Colstrip and Sumas for review by the respective
utilities. Avista, Idaho Power and PacifiCorp by letter responses (attached) indicated that Staff's
calculations are correct.
In accordance with Order no. 29316, the adjustable portion of the avoided cost rate for
existing PacifiCorp contracts with year 1992 amendments has also been recomputed: Beginning
on July 1 , 2003, the adjustable portion for these contracts was ordered to be equal to the average
cost of fuel for the Carbon, Hale, Naughton, Huntington and Hunter generating plants, including
a variable O&M component of $1.51 but exclusive of generation taxes and a line loss
adjustment. The variable energy rate applicable to deliveries commencing July 1 , 2006
extending through June 30, 2007 has been computed by PacifiCorp to be $12.03/MWh, an
increase from $11.55 last year.
COMMISSION DECISION
Under avoided cost methodology the adjustable portion of avoided cost rates for existing
contracts is calculated annually for an effective date of July 1. A vista, Idaho Power and
PacifiCorp agree with Staff's proposed calculations. Also adjusted annually is the adjustable
portion of avoided cost rates for existing PacifiCorp contracts with year 1992 amendments.
PacifiCorp for those contracts has computed the new variable energy rate. Does the Commission
agree with the proposed changes in the variable rates?
Scott D. Woodbury
gdk/M:GNREO61 PACEO66
DECISION MEMORANDUM JUNE 20, 2006
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Randy C. Allp~~~
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June 5, 2006
Idaho Public Utilities Commission
Attn: Scott Woodbury
PO Box 83720
Boise, ID 83720-0074
RE:CASE NOS. GNR-06-
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE
ADJUSTABLE PORTION OF THE AVOIDED COST RATE(S) FOR EXISTING PURPA
CONTRACTS FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER
COMPANY AND FOR P ACIFICORP DBA UTAH POWER AND LIGHT COMPANY.
We have reviewed the information you have provided in your letter dated May 17, 2006 notifying
Idaho Power of revision of the adjustable portion of the Avoided cost rate(s) for existing PURPA contracts..
Idaho Power concurs that the model and calculations used by the IPUC staff for Idaho Power Company are
consistent with IPUC Order 28708.
Sincerely,
Randy C Allphin
Contract Administration
Cc:Monica Moen (Ipco)
Bart Kline (Ipco)
Telephone: [phone] Fax: [phone] Rallphin~ldahopower,com
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~ ~~f.N ~I~Q~P 825 NE Multnomah. Suite 600
Portland. Oregon 97232
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June 12 2006
Idaho Public Utilities Commission
PO Box 83730
Boise, ID 83720-0074
Attention: Scott D Woodbury
RE: Case Nos. GNR-06-1; Case No. PAC-06-
Dear Mr. Woodbury,
Thank you for your letter of May 17 2006 in which you provided the 2006-2007 updated
prices for the adjustable portion of the avoided costs rates under the present avoided cost
methodology. Your letter also provided an update to the adjustable rate portion of
avoided costs for QF contracts using variable costs associated with Colstrip and for
PacifiCorp contracts with 1992 amendments.
PacifiCorp has reviewed these proposed updated prices and agree that the prices have
been updated correctly. The Company accepts the new schedules as accurate.
If you have any questions please feel free to call or email me at [phone] or
Mark. W idmer(q),P acifi Corp. com
Sincerely,~d~
Mark Widmer
Director, Net Power Cost
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Avista Corp.
141lEastMission
Spokane Washington
Telephone 509:489-0500
Toll Free 800-72709170
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May 25 2006
State of Idaho Public Utilities Commission
My. Rick Sterling
Statehouse Mail
West 472 Washington
Boise, ID 83720
RE:Case No. GNR-06-
Dear Mr. Sterling:
A vista is responding to the notice dated May 17, 2006 regarding the mIDual revision and
updated calculation of the adjustable portion of the avoided cost rates. The Company is
in agreement with the Colstrip adjustable rate of9.38 mil1/kWh and the annual average
gas price of$7.80/mmbtu for the 2006-2007 year.
Thank you
mt Kalich
Manager of Resource Planning and Power Supply Analyses