20100628_3003.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KEMPTON
COMMISSIONER SMITH
CO MMISSI 0 NER RED FO RD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
DATE:JUNE 21, 2010
SUBJECT:CASE NO. GNR-I0-02 (Idaho Power, Avista, PacifiCorp)
ADJUST ABLE PORTION OF AVOIDED COST RATE
REVISEDIUPDA TED CALCULATION FOR EXISTING CONTRACTS.
CASE NO. PAC-I0-06 (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 14.09 mill/kWh to 12.78 mill/kWh. The same calculated rate revision under the avoided
cost methodology is used by A vista, 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 decreased by $4.38/MMBtu. The approved gas price of $9.00/MMBtu
DECISION MEMORANDUM
plus the $4.38/MMBtu increase results in a gas price of $4.62/MMBtu for the 2010-2011 year.
This equates to a SAR fuel cost of 32.80 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
33.96 mill/kWh.
The Commission Staff by letter (attached) dated June 3, 2010, 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 , 2010
extending through June 30, 2011 has been computed by PacifiCorp to be $14.53/MWh, an
increase from $14.36 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-I 0-P AC-I 0-06 _
DECISION MEMORANDUM
RECEIVED
261U JUN -
p,", z: 39
STATE OF IDAHO \DA~~l~~~M~S1DN
OFFICE OF THE ATTORNEY GENERALUT\LlTI
LAWRENCE G. WASDEN
' .,.:~
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ftr.-~~oy
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June 3, 2010
Avista Corporation
Michael Andrea
Avista Utilities
1411 E. Mission
PO Box 3727
Spokane, W A 99220-3727
Clint Kalich
Avista 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
Donovan E. Walker
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-IO-O2; PAC-IO-
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 I Colstrip Unit Coal Costs per megawatt hour (MWh) and adding
$2.00/MWh (the average variable O&M cost of Colstrip plus 20~1M\\'h 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 14.09 mill/kWh to 12.78 mill/kWh. The same calculated rate revision under the
avoided cost methodology is used by A vista, PacifiCorp dba Rocky Mountain Power and Idaho Power
Company. This change in the variable rate affects existing contracts under the previous SAR
methodology.
Contracts & Administrative Law Division, Idaho Public Util~s Commission
O. Box 83720, Boise, Idaho 83720-0074, Telephone: [phone]. FAX: [phone], E-mail: Ipuc~puc.state.id.
Located at 472 West Washington St., Boise, Idaho 83702
June 3 2010
Page 2
The adjustable portion of the avoided cost rates under the Sumas-based methodology is based on annual
average gas prices indexed at Sum as, Washington. As reported by Avista, the indexed gas prices have
decreased by $4.38/MMBtu. The approved gas price of $9.00/MMBtu plus the $4.38/MMBtu decrease
results ina gas price of $4.62/MMBtu for the 2010-2011 year. ' This equates to a SAR fuel cost
32.80mi1VkWh 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 b~n 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 $14.53/MWh, an
increase from$14.36 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-IO-02, will read as
follows:
IN THE MA TIER OF THE ANNUAL REVISION AND UPDATED CALCULATION
OF 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 PACIFICORP DBA
ROCKY MOUNTAIN POWER.
The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment language,
Case No. P AC-1 0-, is as follows:
IN THE MA TIER 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 18,2010.
Thank you for your cooperation. Please feel free to contact me, or Rick Sterling, if you have any
questions.
Sincerely,
c4t,~
Scott D. Woodbury
Deputy Attorney General
Enclosures
blslL:GNR-IO-O21AC-IO-avoided cost
COLSTRIP ADJUSTABLE RATE CALCULATION
For Period 7/1/10-6/30/11
Colstrip Fuel Cost from Avista FERC Form 1 for CY 2009
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-E-99-1 O.28708 4/17/2001
Colstrip_10-11.xls
277 376 000
$13,774 324
$0.010783
$10.7833
$2.0000
$12.7833
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RECE!VED .J.~I'V'STA.
Corp.
'1fll'" 't'~' I i "~l".. At:tufUJJN ! I An O' uo
IDAHO
UTILITIES
Utilities Commission
Woodbury
83720
ill 83720-0074
Dear Mr. Woodbury:
Avista is responding to the notice dated June 3 2010 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 12.78 mil1/kWh and the
annual average gas price of $4. 62/MMBtu for the 2010-2011 year.
Thank you
C------z
Clint Kalich
Manager of Resource Planning and Power Supply Analyses
cc:Rick Sterling, IPUC
Michael Andrea, A vista
Linda Gervais, A vista
..-
DAHO~POWER~
REGEIVED An IDACORP company
2010 JUN \ 6 PK~~51.
June 15 2010 UTI~H'~~) ~j~J(Nf!SS!Oi
Randy C. Allphin
Senior Energy Contracts Coordinator
Tel: [phone]
rallphin(Q),idahopower.com
Idaho Public Utilities Commission
Attn: Scott Woodbury
PO Box 83720
Boise, ID 83720-0074
RE:CASE NOS. GNR-10-
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 AVISTA CORPORATION DBA AVISTA UTILITIES, FOR
IDAHO POWER COMPANY AND FOR PACIFICORP DBA ROCKY MOUNTAIN
POWER.
We have reviewed the information you have provided in your letter dated June 3 , 2010
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,
13
I.
Randy C Allphin
Senior Energy Contracts Coordinator
cc:Donovan Walker (IPC)
Page 1 of I
POBox 70 Boise, Idaho 83707 1221 W Idaho St. Boise, Idaho 83702
~~l~oUNT
AIN
201 South Main, Suite 2300
Salt Lake City, Utah 84111
June 22, 2010
VIA ELECTRONIC FILING
AND OVERNIGHT DELIVERY
Idaho Public Utilities Commission
472 West Washington
Boise, ill 83702-5983
Attention:Jean D. Jewell
Commission Secretary
Scott D. Woodbury
Deputy Attorney General
Re:Case No. GNR-I0-02:
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED
CALCULATION OF THE ADJUSTABLE PORTION OF THE AVOIDED COST
RA TE(S) FOR EXISTING PURP A CONTRACTS FOR A VISTA
CORPORA TION DBA A VISTA UTILITIES FOR IDAHO POWER COMPANY
AND FOR P ACIFICORP DBA ROCKY MOUNTAIN POWER.
And
Case No. PAC-10-O6:
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
ACIFICORP.
Dear Mr. Woodbury,
Thank you for your letter and worksheets dated June 3, 2010 in which you provided the
2010/2011 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 agrees that the prices have been
updated correctly. The Company accepts the new schedules as accurate.
Idaho Public Utilities Commission
June 22, 2010
Page 2
Any informal inquiries related to this application should be directed to:
Ted Weston
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Email: ted. weston~pacificorp.com
Phone: [phone]
Sincerely,
r!./) lJI1 \)l:l \ lGV2ttA
Jeffrey K. Larsen
Vice President, Regulation