Loading...
HomeMy WebLinkAbout20140623_4394.pdfDECISION MEMORANDUM TO:COMMISSIONER KJELLANDER COMMISSIONER REDFORD COMMISSIONER SMITH COMMISSION SECRETARY COMMISSION STAFF LEGAL __________ DEPUTY ATTORNEY GENERAL DATE:JUNE 20,2014 — --SUBJECT:CASE NO.GNR-E-1441 (Idaho Power,Avista,PadiliCorp ADJUSTABLE PORTION OF AVOIDED COST RATE REVISED/IJPDATED CALCULATION FOR EXISTING CONTRACTS. CASE NO.PAC-E-14-04 (PacifiCorp) ANNUAL VARIABLE ENERGY RATE ADJUSTMENT - 1992 AMENDMENT QF CONTRACTS. The Idaho Public Utilities Commission in Order No.28708,Case No.GNR-E-99-l, established a methodology for the annual adjustable rate portion of avoided costs for those QF contracts using variable costs associated with Coistrip,a coal-fired generating facility in southeast Montana.For those QF contracts with Coistrip-related fuel costs and variable O&M, future Coistrip 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 Coistrip plus 20Ø/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 15.12 mill/kWh to 16.08 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 $0.9/MMBtu.The approved gas price of $3.45/MMBtu DECISION MEMORANDUM 1 plus the $0.9/MMBtu increase results in a gas price of $4.35/MMBtu for the 2014-2015 year. This equates to a SAR fuel cost of 30.89 mill/kWh,using a heat rate of 7,100 BtUJkWh as used in the model for potential future contracts in accordance with Order No.29124.For existing contracts signed under an assumed heat rate of 7,350 btu/kWh,this equates to a SAR fuel cost of 31.97 mill/kWh. The Commission Staff calculated changes to the annual adjustable rate portion of avoided costs for those QF contracts,using variable costs associated with Coistrip and Sumas, -ded the respective utilities with theupdaf reewby iefferdated June 3,20- Avista,Idaho Power,and PacifiCorp responded by letter that Staff’s calculations are correct. In accordance with Order No.29316,the adjustable portion of the avoided cost rate eontraets—with-•year 199-2amendrnents has—aiso been-reeomputed---------------- 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 1,2014 extending through June 30,2015 has been computed by PacifiCorp to be $20.47/MWh,an increase from $19.17 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.Avista,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? ‘4 Krihfie A.Sasser Deputy Attorney General blsfM:GNR-E-14-0 1_PAC-E-14-04_ks DECISION MEMORANDUM 2 STATE OF IDAHO OFRCE OF THE ATTORNEY GENERAL LAWRENCE G,WASDEN RE CE!V F: 2mJUN-3 PM 2:29 IDAHO (i1U1!UT1ES COMMISSION June 3,2014 AvistaCorpratin —____ Michael Andrea Clint Kalich Avista Utilities Avista Utilities 141 1 E.Mission 141 1 E,Mission POBox3727 POBox3727 Spokane,WA 99220-3727 Spokane,WA 99220-3727 Rocky Mountain Power Daniel Solander Ted Weston PacifiCorp dba Rocky Mountain Power One Utah Center 201 S.Main Street,Suite 2300 Salt Lake City,UT 84111 Idaho Power Company Donovan E.Walker Idaho Power Company P0 Box 70 Boise,ID 83707-007 Re:Case Nos.GNR-E-14-O1;PAC-E-14-04 Greg Duvall Hui Shu Laren Hale PacifiCorp dba Rocky Mountain Power 825 NE Multnomah Street Portland,OR 97232 Randy Aliphin Idaho Power Company P0 Box 70 Boise,ID 83707-0070 The Idaho Public Utilities Commission in Order No.28708,Case No.GNR-E-99-1,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 0&M,future Coistrip 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 20Ø/MWh for generation taxes plus a five percent (5%)adjustment for line loss).As computed by Commission Staff,the Coistrip related adjustable rate will change from 15.12 mill/kWh to 16.08 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 the Sumas-based methodology is based on annual average gas prices indexed at Sumas,Washington.As reported by Avista,the indexed gas prices have Contracts &Adrmnistratjve Law Dvison,Idaho Pubto UtWes Commission P.O.Etox 83720,0oa,Idaho 837200374 ThIephon2:(208)334-0300,FAX:(208)334-3762,E-ma:Ipuc@puc.s1at.us Located at 472 Wast Washington St.,Boo,Idaho 83702 June 3,2014 Page 2 increased by $0.9/MMBtu.The approved gas price of $3.45/MMBtu plus the $0.9IMMBtu increase results in a gas price of $4.35/MMBtu for the 2014-2015 year.This equates to a SAR fuel cost of 30.89 mill/kWh 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 1,2014 extending through June 30,2015 has been computed to be $20.47/MWh,an increase from $19.17 last year. Accompanying this letter are worksheets showing the computation of the updated adjustable rates for the various affected contracts.If you accept the updated rates after reviewing 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-E-14-01,will - - 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. The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment language, Case No.PAC-E-1 4-04,is as follows: IN THE MATTER OFTI-IE ANNUAL REVISION OF QF VARIABLE ENERGY PRICES IN ACCORDANCE WITH TERMS OF THE 1992 AMENDMENTS TO POWER PURCHASE AGREEMENTS BETWEEN IDAHO QFS AND PACIFICORP. Please file your respective responses with the Commission on or prior to June 17,2014. Thank you for your cooperation.Please feel free to contact Yao Yin if you have any questions. Sincerely, ./ r Kristine A.Sasser Deputy Attorney General Enclosures blsfL:GNR-E-I4-0 I_PAC-E-1 4-04_avoided cost COLSTRIP ADJUSTABLE RATE CALCULATION Updated For Period 7/1/14-6/30/15 Co!strp Fuel Cost from Avista FERC Form I for CV 2013 Net Generation (kwh) Fuel Fuel cost per kwh 1,227,151,000 $17,275,865 $0.01 4078 Fuel Cost per MWh $14.0780 .Variable O&M,Geri.Tax,5%line loss per MWh $2.0000 Total Colstrip Adjustable Rate S16.0780 Reference GNR-E-99-1 O.N.28708 411712001 Colstripl 4-15 line 12 line 20 Average Gas Prices at Sumas,Washington from Inside FERC publication (S/MMBtu) Calculating the 2014-2015 Avoided Cost Adjustable Rate 2012 2013 Jan $3.47 $3.58 Feb $2.78 $3.58 Mar $2.47 $3.46 Apr $1.96 $3.93 May $1.82 $3.91 $235 394 July $2.44 $3.46 Aug $2.74 $3.27 Sep $2.44 $3.19 Oct $2.91 $3.24 Nov $3.94 $4.27 Dec $4.03 $4.31 Average $2.78 $168 Actual Annual Adjustment: $3.45 ($2.78—$3.68)$4.35 Note: $6.94/MMl3tu 2007-08 Approved Rate $7.I 8/MMF3tu 2008-09 Approved Rate $9.00/MMl3tu 2009-10 Approved Rate $4.62/MMBtu 20 10-I I Approved Rate $4.99/MMBtu 2011-12 Approved Rate $4.60/MMBtu =2012-13 Approved Rate $3.45/MMBtu 2013-14 Approved Rate Pa c i f i C o r p I To t a l Va r i a b l e En e r g y Ra t e fo r 20 1 4 1 2 0 1 5 Ca r b o n Na u g h t o n Hu n t i n g t o n Hu n t e r To t a l s Fu e l Co s t ($ ) FE R C Fo r m 1 - Pa g e 40 2 , li n e 20 $ 26 , 0 5 5 , 9 3 2 $ 11 6 , 9 3 5 , 3 0 8 $ 11 1 , 0 5 8 , 7 2 1 $ 15 4 , 8 3 6 , 5 3 $ 40 8 , 8 8 6 , 5 0 0 Ge n e r a t i o n (M W h ) FE R C Fo r m 1 - Pa g e 40 2 , li n e 12 1, 1 9 7 , 7 6 5 5, 5 3 3 , 8 9 5 6, 7 6 8 , 6 2 5 8, 0 6 7 , 8 8 9 $ 21 , 5 6 8 , 1 7 4 Av e r a g e Fu e l Co s t ( $ ! M W h ) $ 21 . 7 5 $ 21 . 1 3 $ 16 . 4 1 $ 19 . 1 $ 18 . 9 6 IM W h Va r i a b l e O& M IP U C Or d e r No . 28 7 0 9 $ 1. 5 1 IM W h To t a l Va r i a b l e En e r g y Ra t e fo r 20 1 4 1 2 0 1 5 $ 20 . 4 7 IM W h Fo r de l i v e r i e s co m m e n c i n g Ju l y 1, 2 0 1 4 ex t e n d i n g th r o u g h Ju n e 30 , 2 0 1 5 13 Pa c i f i C o r p OF co n t r a c t s wi t h 19 9 2 ap p r o v e d am e n d m e n t la n g u a g e I 11 Pa c i f i C o r p _ 1 4 - 1 5