Order No 28616.pdf

Office of the Secretary
Service Date
January 22, 2001
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF PROPOSED CHANGES
AND ADJUSTMENTS TO THE POWER COST
ADJUSTMENT (PCA) METHODOLOGY OF
AVISTA CORPORATION (REFERENCE
ORDER NO. 28402).
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CASE NO. AVU-E-00-6

ORDER NO. 28616

The Idaho Public Utilities Commission (Commission) in Order No. 28402 in Case
No. AVU-E-00-2, directed that a new docket (Case No. AVU-E-00-6) be established to examine
proposed changes and adjustments to the Power Cost Adjustment Methodology of Avista
Corporation dba Avista Utilities—Washington Water Power Division (Idaho). The identified
scope of inquiry pertains to the following generation resources: Rathdrum, Kettle Falls and
Centralia—specifically exploring the manner (actual or dispatchable and the timing of the
adjustment) in which Rathdrum (which is now included in the Company’s normalized base
power supply costs—reference Order No. 28097, Case No. WWP-E-98-11) should be included
as a resource in the PCA methodology; and whether given alleged fuel supply limitations, Kettle
Falls and Centralia should continue to be included as dispatchable resources in the PCA
methodology.
On June 13, 2000, the Idaho Public Utilities Commission (Commission) in Order
No. 28409 initiated Case No. AVU-E-00-6 to examine proposed changes and adjustments to the
PCA methodology of Avista Corporation dba Avista Utilities. The public and interested parties
were apprised of the opportunity to formally intervene (IDAPA 31.01.01.072-073) or submit
written comments. Also provided was the opportunity for formal discovery (IDAPA
31.01.01.221-234). By Order No. 28453, Avista and Commission Staff were directed to file
initial statements of position by August 4, 2000. On October 30, 2000, Avista filed an
Agreement reflecting changes to its initial position. The filed statements and Agreement can be
summarized as follows:
Avista
Avista in its initial statement of position proposed the following modifications to the
PCA:

ORDER NO. 28616 1
1. The Rathdrum Turbine would be included in the PCA based on “actual”
generation and “actual” fuel costs on a prospective basis beginning
September 1, 2000.

2. There would be no adjustments to the PCA balancing account related to
the Rathdrum turbine, Centralia or Kettle Falls for the period prior to
September 1, 2000.

3. Centralia would be included in the PCA based on “authorized”
generation and “authorized” fuel costs.

4. Colstrip and Kettle Falls would be included in the PCA to track 90% of
the difference between “actual” and “authorized” generation and fuel
costs beginning September 1, 2000.

5. The trigger for the PCA balancing account would be increased from $2.2
million to $3.0 million effective September 1, 2000.

Should the Company and Staff have differences regarding proposed PCA modifications, the
Company noted its intention to continue discussions with Staff to attempt to resolve any
differences.
Staff
Staff in its initial statement of position states that changes need to be made to the
PCA on a going-forward basis to make the PCA more representative of actual Company
operations. Staff proposes the following modifications to the PCA:
1. Include the Rathdrum generating station at actual generation and actual
fuel costs.

2. Centralia should no longer be dispatched in the PCA model but should
be included at normalized levels.

3. The PCA trigger should be reset to $3 million, which is approximately
2.5% of today’s Idaho jurisdictional revenue requirement.

Staff’s initial position is that there should be no change in the PCA operation of Kettle Falls or
Colstrip generating stations.
Agreement
Based on discussions following the filing of its initial statement of position, the
Company on October 30, 2000, filed an Agreement reflecting changes to its initial position

ORDER NO. 28616 2
recommendations. As reflected in the Agreement, the Company has adopted the changes
recommended by Staff. Avista now recommends the following changes to its PCA:
1. Prospective inclusion of Rathdrum turbine in the PCA.
The Rathdrum turbine shall be included in the PCA based on “actual” generation and
“actual” fuel costs beginning November 1, 2000. The first PCA entry to reflect this change will
occur in the December 2000 PCA Journal, which will be based on actual information for
November 2000. There will be no adjustments to historical PCA entries related to the Rathdrum
turbine.
2. Centralia
The Centralia steam generating plant shall be included as a PCA resource based on
fixed levels of “authorized” generation and “authorized” fuel costs established in the Company’s
last general rate case, as has been reflected in the PCA beginning in May 2000 when the plant
was sold.
3. Colstrip and Kettle Falls
No modification shall be made to the PCA for Colstrip and Kettle Falls at the present
time. These two plants are included in the PCA based on economic dispatch using the
incremental operating cost established in the last rate case (authorized incremental operating
cost) and the actual short-term market price. If the authorized incremental operating cost is less
than the PCA market price, then the units are run in the PCA at the equivalent availability factor
established for the plants in the last rate case. Any change in fuel costs is established using the
authorized unit price per ton for fuel established in the last rate case.
4. Balance Account Trigger
The trigger amount for rebates and surcharges shall be increased from $2.2 million to
$3.0 million effective with PCA journal entries beginning in December 2000. The trigger
amount was intended to be about 2.5% of revenues. Based on current revenues of roughly $119
million, a 2.5% trigger should be $3.0 million.

The Company and Staff being in agreement, it was jointly recommended that the
PCA be so modified.

ORDER NO. 28616 3
On December 14, 2000, the Commission following its review of the filings of
record, initial statements of position and subsequent company agreement in Case
No. AVU-E-00-6 issued a Notice of Modified Procedure and solicited public comment on the
proposed changes to Avista’s PCA methodology. The deadline for filing written comments was
December 27, 2000. The Commission Staff was the only party to file comments. Staff in its
comments adopted its previously filed initial position with the exception of the date on which
Rathdrum was to be first included. Staff in its initial comments proposed September 1, 2000, but
has since agreed to November 1, 2000.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. AVU-E-00-6
including the initial statements of position of Avista and Commission Staff and the terms of the
Company’s subsequent agreement. We find that the Company has adopted Staff’s proposed
changes and we find those changes to be reasonable. Accordingly, we find that the Rathdrum
turbine should be included in the Rathdrum PCA based on “actual” generation and “actual” fuel
costs effective November 1, 2000. We also find that Centralia is to be included in the PCA
based on “authorized” generation and “authorized” fuel costs. We further find that the trigger in
the PCA balancing account should be increased from $2.2 million to $3.0 million effective with
journal entries beginning with December 2000. We find that the higher trigger amount continues
to approximate 2.5% of Idaho revenues.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Avista Corporation dba
Avista Utilities—Washington Water Power Division (Idaho), an electric utility, and the issues
presented in Case No. AVU-E-00-6 pursuant to the authority granted in Idaho Code, Title 61 and
the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the following modifications to
Avista’s Idaho PCA methodology:
1. The Rathdrum turbine is to be included in the PCA based on “actual” generation
and “actual” fuel costs on a perspective basis beginning November 1, 2000. The first PCA entry

ORDER NO. 28616 4
to reflect this change will occur in the December 2000 journal, which will be based on actual
information for November 2000.
2. The Centralia steam generating plant is to be included as a PCA resource based on
fixed levels of “authorized” generation and “authorized” fuel costs established in the Company’s
last general rate case (Case No. WWP-E-98-11).
3. The trigger amounts for rebates and surcharges is to be increased from $2.2
million to $3.0 million effective with PCA journal entries beginning in December 2000.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of January 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary
vld/O:AVU-E-00-06_sw4

ORDER NO. 28616 5