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HomeMy WebLinkAbout20090615_2601.pdfDECISION MEMORANDUM TO:COMMISSIONER KEMPTON COMMISSIONER SMITH CO MMISSI 0 NER REDFORD COMMISSION SECRETARY COMMISSION STAFF LEGAL FROM:SCOTT WOODBURY DEPUTY ATTORNEY GENERAL DATE:JUNE 8, 2009 SUBJECT:CASE NO. GNR-09-02 (Idaho Power, Avista, PacifiCorp) ADJUST ABLE PORTION OF AVOIDED COST RATE REVISEDIUPDA TED CALCULATION FOR EXISTING CONTRACTS. CASE NO. PAC-09-04 (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 Colstrip 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 12.06 mill/kWh to 14.09 mill/kWh. The same calculated rate revision under the avoided cost methodology is used by Avista, PacifiCorp dba Rocky Mountain Power 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 reported by Avista, the indexed gas prices have increased by $ 1. 82/mmbtu. The approved gas price of $7.18/mmbtu DECISION MEMORANDUM plus the $1.82/mmbtu increase results in a gas price of $9.00/mmbtu for the 2009-2010 year. This equates to a SAR fuel cost of 63.90 mill/kWh using a heat rate of 7 100 btu/kWh as used in the model for potential future contracts in accordance with Order No. 29124. For existing contracts signed under an assumed heat rate of7 350 btu/kWh, this equates to a SAR fuel cost of 66.15 mill/k Wh. The Commission Staff by letter (attached) dated May 13 , 2009, 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 , 2009 extending through June 30, 2010 has been computed by PacifiCorp to be $14.36/MWh, an increase from $14.11 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 Staffs 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 Woodbury Deputy Attorney General bls!M:GNR-O9-02 PAC-O9-04 sw DECISION MEMORANDUM ~ ~~~o ~OUNT AIN ':"" .:C. ':: IDD:1j4"Y ?13 \0: 3L~ 201 South Main, Suite 2300 Salt lake City, Utah 84111 May 28, 2009 liTVIA OVERNIGHT DELIVERY Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702 Attention: Scott D. Woodbury Deputy Attorney General RE: Case No. P AC-09- IN THE MATTER OF THE ANNUAL REVISION OF QF V ARIABLE ENERGY PRICES IN ACCORDANCE WITH THE TERMS OF THE 1992 AMENDMENTS TO POWER PURCHASE AGREEMENTS BETWEEN IDAHO QFS AND PACIFICORP. Dear Mr. Woodbury, Thank you for your letter of May 13,2009 in which you 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 the proposed price update and agrees that the prices have been updated correctly. The Company accepts the new schedules as accurate. If you have any questions please contact Ted Weston at (801) 220-2936 or email Ted. W eston~Pacifi Corp.com Sincerely, ~/~ Jeffrey K. Larsen Vice President, Regulation ~~~~OUNTAIN qr~r:f::' May 28, 2009 ?lJi it1 \Jro,("; Co ,:, C' '\"i)Jf).,:"r- ',i j ,~, ' "" 201 South Main , Suite 2300 Salt lake City, Utah 84111 VIA OVERNIGHT DELIVERY Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702 Attention: Scott D. Woodbury Deputy Attorney General RE: Case No. GNR-E-O9- IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE ADJUSTABLE PORTION OF THE A VOIDED COST RA TE(S) FOR EXISTING PURP A CONTRACTS FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER COMPANY, AND FOR ACIFICORP DBA ROCKY MOUNTAIN POWER. Dear Mr. Woodbury, Thank you for your letter of May 13 2009 in which you provided the 2009-2010 updated prices for the adjustable portion of the avoided costs rates under the present avoided cost methodology. EacifiCQrp__hasJ1~YiewedJh~s(,u~rQPo~~du!lpdated prices andagree that the prices have been updated correctly. The Company accepts the new schedules as accurate. If you have any questions please contact Ted Weston at (80l) 220-2936 or email Ted. Weston~PacifiCorp.com Sincerely,~k-~/(!AJ Jeffrey K. Larsen Vice President, Regulation IDAHOa..;!! POWER (ID June , 2009 RECEIVED 21109 JUN - 8 PH 12: IDAHO PUBLIC UTtL1TtES COMMISSiON An IDACORP Company Randy C. Allphin Senior Planning Administrator Tel: (208) 388-2614 rail phin((vj dahopower. com Idaho Public Utilities Commission Attn: Scott Woodbury PO Box 83720 Boise, ID 83720-0074 RE:CASE NOS. GNR-09- IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION THE ADJUSTABLE PORTION OF THE AVOIDED COST RATE(S) FOR EXISTING PURPA CONTRACTS FOR AVISTA CORPORATION DBA AVISTA UTILITIES , FOR IDAHO POWER COMPANY AND FOR P ACIFICORP DBA ROCKY MOUNTAIN POWER.. We have reviewed the infonnation you have provided in your letter dated May 13 , 2009 notifying Idaho Power of revision of the adjustable portion of the Avoided cost rate(s) for existing PURP A 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, 12 f.I (andy C Allphin Contract Administration cc:Bart Kline (IPCo) Donovan Walker (IPCo) Page 1 of I POBox 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702 AliistaCorp. , . 1411EastMission Box 3Z2-7' , Spokane, W ashi ngton~9220:372T Telephone , 5O9-4B9,.O5!XJ, ' ' ,, ' Toll Free 8O(H27-917q, r:, r:: : . ~:' ,, ,,-- '' .," ' :'V'ST~. ~p. ?fJD1 j\j~"; - j fiH B: 31 , ', '.'",.. ." , . -- "",,--- ';:"" ,c:' \ U i\Y~ ,~~; . UT\L\'r'E~: ' . Idaho Public Utilities Commission A:~:Scott Woodbury POBox 83720 Boise, ill 83720-0074 Dear Mr. Woodbury: A vista is responding to the notice dated May 13 , 2009 regarding the annual revision and updated calculation of the adjustable portion of the avoided cost rates. The Company has reviewed and is in agreement with the Colstrip adjustable rate of 14.09 mill/kWh and the annual average gas price of$9.00/MMBtu for the 2009-2010 year. Thank you &--\ Clint Kalich Manager of Resource Planning and Power Supply Analyses cc:Rick Sterling, IPUC Michael Andrea, A vista Linda Gervais, A vista STATE OF IDAHO OFFICE OF THE ATTORNEY GENERAL LAWRENCE G. WASDEN May 13 , 2009 Avista Corporation Blair Strong Paine, Hamblen, et al 717 W. Sprague Avenue, Suite 1200 Spokane, WA 99201-3505 Clint Kalich A vista Utilities 1411 E. Mission PO Box 3727 Spokane, W A 99220-3727 Michael Andrea A vista Utilities 1411 E. Mission PO Box 3727 Spokane, W A 99220-3727 Rocky Mountain Power Mark Moench Daniel Solander Ted Weston PacifiCorp dba Rocky Mountain Power One Utah Center 201 S. Main Street, Suite 2300 Salt Lake City, UT 84111 Greg Duvall Hui Shu Laren Hale PacifiCorp dba Rocky Mountain Power 825 NE Multnomah Street Portland, OR 97232 Idaho Power Company Barton L. Kline Idaho Power Company PO Box 70 Boise, ID 83707-007 Randy Allphin Idaho Power Company PO Box 70 Boise, ID 83707-0070 RE:Case Nos. GNR-O9-02; P AC-O9- 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 Colstrip Unit Coal Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of Colstrip 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 will change from 12.06 mill/kWh to 14.09 mill/kWh. The Contracts & Administrative Law Division, Idaho Public Utilities Commission O. Box 83720, Boise, Idaho 83720-0074, Telephone: (208) 334-0300, FAX: (208) 334-3762, E-mail: IpucCi!!puc.state.id, Located at 472 West Washington St., Boise, Idaho 83702 May 13, 2009 Page 2 same calculated rate revision under the avoided cost methodology is used by Avista, PacifiCorp dba Rocky Mountain Power 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 the Sumas-based methodology is based on annual average gas prices indexed at Sumas, Washington. As reported by Avista, the indexed gas prices have increased by $ 1. 82/MMBtu. The approved gas price of$7.18/MMBtu plus the $1.82/MMBtu increase results in a gas price of $9.00/MMBtu for the 2009-2010 year. This equates to a SAR fuel cost of 63.90mill1kWh as used in the model. In accordance with Order No. 29316, the adjustable portion of the avoided cost rate for PacifiCorp contracts with 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 I , 2009 extending through June 30, 2010 has been computed to be $14.36/MWh, an increase from $14.11 last year. Accompanying this letter are worksheets showing the computation of the revised adjustable rates for the various affected contracts. If after reviewing the revisions, you accept them as accurate please indicate your approval by letter (or other filing) directed to the Commission in the reserved case docket numbers identified above. The case heading for the generic adjustment, Case No. GNR-09-, will read as follows: IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE ADmSTABLE PORTION OF THE AVOIDED COST RATE(S) FOR EXISTING PURPA CONTRACTS FOR AVISTA CORPORATION DBA AVISTA UTILITIES, FOR IDAHO POWER COMPANY AND FOR PACIFICORP DBA ROCKY MOUNTAIN POWER. The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment language, Case No. P AC-09-, is as follows: IN THE MATTER OF THE ANNUAL REVISION OF QF VARIABLE ENERGY PRICES IN ACCORDANCE WITH TERMS OF THE 1992 AMENDMENTS TO POWER PURCHASE AGREEMENTS BETWEEN IDAHO QFS AND P ACIFICORP. Please file your respective responses with the Commission on or prior to June 5 , 2009. Thank you for your cooperation. Please feel free to contact me, or Rick Sterling, if you have any questions. Sincerely, Scott D. Woodbury Deputy Attorney General Enclosures bls/L:GNR-09-P AC-09-sw _avoided cost COLSTRIP ADJUSTABLE RATE CALCULATION For Period 7/1/09-6/30/10 Colstrip Fuel Cost from Avista FERC Form 1 for CY 2008 line 12 line 20 Net Generation (kwh) Fuel Fuel cost per kwh Fuel Cost per MWh Variable O&M, Gen. Tax, 5% line loss per MWh Total Colstrip Adjustable Rate Reference GNR-99-N. 28708 4/17/2001 Colstrip_09-10.xls 757 659 000 $21 253 774 $0.012092 $12.0921 $2.0000 $14.0921 52 9 82 3 50 3 80 2 27 1 88 4 10 8 , 4 2 1 72 3 28 4 72 7 23 2 20 4 98 2 11 4 , 4 0 9 14 8 85 0 69 1 72 1 $ 15 9 96 2 15 . 14 . 11 . 12 . 12 . 85 / M W h 51 / M W h 14 . 36 / M W h Pa c i f i C o r p To t a l V a r i a b l e E n e r g y R a t e fo r 2 0 0 9 / 2 0 1 0 Ca r b o n Na u g h t o n Hu n t i n g t o n Fu e l C o s t ( $ ) FE R C F o r m 1 - P a g e 4 0 2 , l i n e 2 0 Ge n e r a t i o n ( M W h ) FE R C F o r m 1 - P a g e 4 0 2 , l i n e 1 2 Av e r a g e F u e l C o s t ( $ / M W h ) Va r i a b l e O & M IP U C O r d e r N o . 2 8 7 0 9 To t a l V a r i a b l e E n e r g y R a t e f o r 2 0 0 9 / 2 0 1 0 Pa c i f i C o r p 0 9 - 10 V a r i a b l e c o s t a d j . xl s Hu n t e r To t a l s RECEiVED Average Gas Prices at Sumas, Washington from Inside FERC pu4M.~JiiNnI6 11M 8: ($/MMBtu) ;T'1!,wr, fJ' ;' ~. .., T' 'I..U ~\'" i.J;:-L.!: !UTk::,) C;Oi'J/I: ,q'~,:,:!.,",-, -""Ji' Calculating the 2009-2010 Avoided Cost Adjustable Rate 2007 2008 Jan $6.41 $7.48 Feb $6.$8. Mar $7.$8.46 Apr $6.$8. May $6.$10. Jun $6.$10. July $6.$11.69 Aug $5.22 $7. Sep $4.$6. Oct $5.$6.23 Nov $7.45 $6.28 Dec $8.$6. Average $6.$8. Actual Annual Adjustment: $7.18 - ($6.52-$8.33) = $9. Note: $2.00/MMBtu = 1997-98 Approved Rate $2.35/MMBtu = 1998-99 Approved Rate $2.26/MMBtu = i 999-00 Approved Rate $2.80/MMBtu = 2000-01 Approved Rate $4. 82/MMBtu = 2001-02 Approved Rate $5.23/MMBtu = 2002-03 Approved Rate $3.33/MMBtu = 2003-04 Approved Rate $5.31/MMBtu = 2004-05 Approved Rate $5.92/MMBtu = 2005-06 Approved Rate $7.80/MMBtu = 2006-07 Approved Rate $6.94/MMBtu = 2007-08 Approved Rate . $7; 18/MMBtu = 2008-09 Approved Rate