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HomeMy WebLinkAbout20080728_2311.pdfDECISION MEMORANDUM TO:COMMISSIONER REDFORD COMMISSIONER SMITH COMMISSIONER KEMPTON COMMISSION SECRETARY COMMISSION STAFF LEGAL FROM:WELDON STUTZMAN DEPUTY ATTORNEY GENERAL DATE:JUL Y 22, 2008 SUBJECT:CASE NO. A VU-08- VISTA CORPORATION'S APPLICATON FOR WIND GENERATION COSTS TO BE CONSTRUCTION WORK IN PROGRESS On June 4, 2008 , A vista Corporation filed an Application requesting an order allowing for costs associated with wind generation site land, land rights , reservation costs, and other incremental costs associated with site evaluation, selection and acquisition to be accounted for as construction work in progress (CWIP), and allowing for the accrual of allowance for funds used during construction (AFUDC)." Avista s Integrated Resource Plan calls for the acquisition of 300 MW of wind generation capacity. The Application states that in May the Company purchased permits, studies, lease assignments and wind data for the development of a wind generation site near Reardan Washington. The Company is requesting to have all reservation payments and other costs associated with development of the site accounted for as CWIP. According to the Application Commission authorization is required to account for wind generation site costs in FERC Account 107-CWIP, because normally this account is used when plant is in the process of construction. Construction at the site is not expected to begin until 20 II. Given the lead time between the expenditures for site costs, the ordering of equipment and start of construction, A vista states it is necessary to obtain Commission approval to account for these costs in Account 107-CWIP. DECISION MEMORANDUM On June 25, 2008, the Commission issued a Notice of Application and Notice of Modified Procedure that, among other things, established a period for interested parties to file comments. Written comments were filed only by Staff. Staff recommends the Commission authorize A vista to book the described costs associated with wind generation site land, land rights, reservation costs and other incremental costs as CWIP, and that Avista be required to utilize a separate subaccount for the AFUDC and maintain workpapers identifying the components of AFUDC. COMMISSION DECISION Should A vista Corporation s Application for an accounting order authorizing wind generation site costs as construction work in progress be approved? vfL:/ Weldon B. Stutzman Deputy Attorney General blsIM:A VU-O8-04 ws2 DECISION MEMORANDUM