20160531_4979.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
DATE:MAY 19,2016
SUBJECT:CASE NO.GNR-E-16-01 (Idaho Power,Avista,PacifiCorp)
ANNUAL REVISION AND UPDATED CALCULATION OF THE
ADJUSTABLE PORTION OF THE AVOIDED COST RATE FOR
EXISTING PURPA CONTRACTS
CASE NO.PAC-E-16-09 (PacifiCorp)
ANNUAL REVISION OF QF VARIABLE ENERGY PRICES PURSUANT
TO THE 1992 AMENDMENTS OF QF CONTRACTS
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 Coistrip,a coal-fired generating facility in
southeast Montana.For those QF contracts with Coistrip-related fuel costs and variable O&M,
future Colstrip variable cost adjustments are to be calculated by using FERC Form 1 Coistrip
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
16.68 mill/kWh to 15.61 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 decreased by $2.008/MMBtu.The approved gas price of $5.10/MMBtu
DECISION MEMORANDUM 1
minus the $2.008/MMBtu results in a gas price of $3.092/MMBtu for the 20 16-2017 year.This
equates to a SAR fuel cost of 21.95 mill/kWh as used in the model.
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,
and provided the respective utilities with the updates for review by letter dated May 12,2016.
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
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 1,2016 extending through
June 30,2017 has been computed to be $23.61/MWh,an increase from $21.75 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 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?
DaphnQjluang
Deputy Attorney General
bIsfM:GNR-E-16-01_PAC-E-1 6-09_djh
DECISION MEMORANDUM 2
COLSTRIP ADJUSTABLE RATE CALCULATION Updated
For Period 7/1/16-6130117
Colstrip Fuel Cost from Avista FERC Form 1 for CY 2015
line 12 Net Generation (kwh)1689986000
line 20 Fuel S22992450
Fuel cost per kwh $0.013605
Fuel Cost per MWh $136051
Variable O&M,Gen.Tax,5%line loss per MWh $20000
Total Colstrip Adjustable Rate $15.6051
Reference GNR-E-99-1 O.N 28708 4117/2001
Colstrip_1 61 7
Average Gas Prices at Surnas,Washington from inside FERC publication
(SIMMBtu)
Calculating the 2016-2017 Avoided Cost Adjustable Rate
2014 2015
Jan $4.89 $3.23
Feb $5.12 $2.56
Mar $5.78 $2A0
Apr $4.37 $2.15
May $4.53 $2.13
Jun $4.28 $2.48
July $4.37 $2.21
Aug S3.6)$2.43
Sep $3.85 $2.41
Oct $3.91 $2.41
Nov $3.62 $2.1 1
Dcc $4.68 $2.47
Average S4.424 $2.416
Actual Airnual Adjustment:
$5.10—($4,424—$2.416)S3.092
Note:
$6.94/MMBtu =2007-08 Approved Rate
$7.1 8/MN1I3tu =2008-09 Approved Rate
$9.00/MMI3tu =2009-10 Approved Rate
$4.62/MMBtu 2010-1 1 Approved Rate
$4.99/MMBIu2OII-12 Approved Rate
$4.60/MMBtu =20 12-13 Approved Rate
$3.45/MMBtu =20 13-14 Approved Rate
$4.35/MMBtu 2014-15 Approved Rate
$5.l0/MMBtu =2015-16 Approved Rate
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