20170619_5292.pdf

DECISION MEMORANIMJM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:YAO YIN
DAPHNE HUANG,DAG
DATE:JUNE 13,2017
SUBJECT:CASE NO.GNR-E-17-01 (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-17-04 (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-l,
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 Coistrip-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 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 will change from
15.61 mill/kWh to 17.61 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 $0.243/MMBtu.The approved gas price of
DECISION MEMORANDUM 1
$3.O92IMMBtu minus the $0.243/MMBtu results in a gas price of $2.850/MMBtu for the 2017-
2018 year.This equates to a SAR fuel cost of 20.24 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 Colstrip and Sumas,
and provided the respective utilities with the updates for review by letter dated May 12,2017.
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 1,2017 extending through
June 30,2018 has been computed to be $23 .29/MWh,a decrease from $23.61 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?
Daphn41uang
Deputy Attorney General
bls/M:GNR-E-1 7-OIPAC-E-17-04_djh
DECISION MEMORANDUM 2
COLSTRIP ADJUSTABLE RATE CALCULATION Updated
For Period 7/1/17-6/30/18
Colstrip Fuel Cost from Avista FERC Form 1 for CY 2016
line 12 Net Generation (kwh)1455836000
line 20 Fuel $22729,210
Fuel cost per kwh $0.01 5612
Fuel Cost per MWh $1 5.6125
Variable O&M,Gen.Tax,5%line loss per MWh $2.0000
Total Coistrip Adjustable Rate $1 7,6125
Reference GNR-E-99-1 O.N.28708 411712001
Colstripi 7-18
Average Gas Prices at Sumas,Washington from Inside FERC publication
($/MMBtu)
Calculating tile 2017-2018 Avoided Cost Adjustable Rate
2015 2016
Jan $3.23 $2.57
Feb $2.56 $2.10
Mar $2.40 $1.41
Apr $2.15 $1.42
May $2.13 $1.34
Jun $2.48 $L46
July $2.21 $2.28
Aug $2.43 $2.34
Sep $2.41 $2.63
Oct $2.41 $2.64
Nov $2.11 $2.62
Dec $2.17 $3.27
Average $2.416 $2.173
Actual Annual Adjustment:
$3.092 —($2.416 $2.173)=$2.850
Note:
$6.94/MMBIu =2007-08 Approved Rate
$7.18/MMl3tu =2008-09 Approved Rate
$9,00/MMBtu =2009-10 Approved Rate
$4.62/MMBIu =2010-11 Approved Rate
$4,99IMMBtu 2011-12 Approved Rate
$4.60/MMBtu 2012-13 Approved Rate
$3.45/MMBtu =2013-14 Approved Rate
$4.351MMBtu =2014-15 Approved Rate
$5.I 0/MMBtu =20 15-16 Approved Rate
S3.092/MMI3tu 2016-17 Approved Rate
PacfflCorp
Tofti Variable Energy Rate
far 2D17 I 2G8
CarS:n Nau2hon KuitTntan Hu.tar Tatas
Fuel Cost Cs)$-110,2?,322 $‘i29,97,273 $1S,374,iO4 $379,652,69
201B FERO FORtV I -P&g 4t12 Ur.i 2
Generstion (tWH)-4,871 5,503,890 7057,745 17,433,474
2316 FERC FORM I -P ‘O Uric 2
Average Fuei Cost ($IMWH)$21.78 IMWH
Variabie O&M
Total Vañabl Erier9y Rate ftr 2017 /2018 $23.29 JMWH
For deliveries cornm€cir J’1,2017 xdir thrcrnh June 30,2018
12 PciCop/Fs contrts with pprovr.I £?2 nnentlanguag
2017