28948.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

in the matter of THE APPLICATION OF AVISTA CORPORATION DBA AVISTA UTILITIES FOR APPROVAL OF ELECTRIC TARIFF SCHEDULE 95—OPTIONAL WIND POWER RATE. )
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CASE NO. AVU-E-01-16

ORDER NO. 28948

On December 3, 2001, Avista Corporation dba Avista Utilities (Avista; Company) filed an Application with the Idaho Public Utilities Commission (Commission) for approval of an Optional Wind Power Rate under proposed Tariff Schedule 95.
Avista’s wind power option is priced in increments, or “blocks”, of $1.00. Each $1.00 block of wind purchased by customers equals 55 kilowatt hours (kWh). Under this “buck-a-block” pricing, customers may choose one of two purchase approaches. Customers may elect to purchase wind power in one or two-dollar monthly amounts with no linkage to their energy usage. These customers, the Company states, may view this payment as a contribution to support alternative energy production. Alternatively, customers can buy a selected percentage calculated to serve their average monthly load, e. g., a customer who wishes to have half of his or her 1,100 kWh average monthly load served by wind power would pay an incremental $10 per month (i.e., 10 blocks of 55 kWh per block multiplied by $1.00). The optional wind power charge is in addition to all other charges contained in a customer’s applicable tariff schedule. Avista represents that wind power will be delivered to the Company within one year of purchase by a customer under this schedule.
Avista states its intention to have its offering “certified” as renewable energy by the regional entity providing such endorsements, Renew 2000. Such certification would support the Company’s marketing efforts and would aid allied marketing by environmental organizations. Renew 2000’s board of directors, as reported by the Company, has indicated that the utility’s minimum 55 kWh block “was ‘certifiable’ if, on average, participating residential customer usage averaged greater than 150 kWh.”
As reflected in the Company’s Application, Avista Utilities is in the process of contracting with PacifiCorp to purchase output from its Stateline Wind Facility on the Oregon-Washington border. The sales agreement would specifically provide for the delivery of wind power to Avista Utilities’ system to support customer purchases under Tariff Schedule 95.
All customer classes are eligible to participate in this program. Because the tariff is optional, the rate change associated with this filing is voluntary. The Company estimates that approximately $150,267 in incremental revenue will result from this offering. All incremental revenue will be applied to program costs. The Company represents that there are no earnings associated with this program.
The Company requests that the Commission approve the proposed Schedule 95 Optional Wind Power Rate for an effective date of February 1, 2002.

On December 18, 2001, the Commission issued Notices of Application and Modified Procedure in Case No. AVU-E-01-16. The deadline for filing written comments was January 23, 2002. Comments were filed by Commission Staff, Idaho Rivers United, the Land and Water Fund of the Rockies and several of the Company’s customers. The comments can be summarized as follows:
Commission Staff
Staff recommends that the Company’s tariff be approved for an effective date of February 1, 2002. Staff proposes no modifications to the proposed tariff.
Staff notes that the wind power tariff proposed by Avista arose initially as a result of legislation passed in the state of Washington in 2001. The legislation requires utilities in that state to have in place by January 1, 2002, a voluntary option for the retail purchase of qualified alternative energy resources by Washington customers. The tariff filed with this Commission is identical to the tariff approved by the Washington Commission on December 28, 2001.
One of the provisions of the Washington State legislation requires that “all costs and benefits associated with any option offered by an electric utility must be allocated to the customers who voluntarily choose that option and may not be shifted to any customers who have not chosen such option.” Staff presumes that because Avista has stated it intends to have the program and its associated tariff in Idaho mirror that in Washington, the restrictions imposed by the Washington legislation will be followed in Idaho as well. Consequently, the program will be entirely self-supporting. Only those customers who choose to participate in the program will bear its cost. Customers who do not choose to participate will not subsidize the program in any way.
The State Line Project is located on the Oregon-Washington border, about 17 miles southwest of Walla Walla, Washington. The project is touted as the largest single wind-powered renewable energy development in the world. It will ultimately consist of up to 450 wind turbines with capacity to produce up to 300 MW of electricity. FPL Energy, LLC, is the developer, owner and operator of the State Line facility. FPL Energy is the largest producer of wind power in the country with more than 1,000 MW of wind turbines in operation or under construction in seven states. PacifiCorp Power Marketing, a wholly owned non-regulated subsidiary of PacifiCorp, is the sole purchaser of energy from the facility, and markets the energy to wholesale customers throughout the west. Avista will purchase energy sold under its wind energy tariff from PacifiCorp Power Marketing. Under a negotiated contract, Avista has agreed to purchase one aMW for two years, commencing January 1, 2002. Avista must purchase at least the full one aMW, regardless of the amount subscribed to by the customers. Because the total annual revenue under the program is expected to be only $150,267 system wide, any potential revenue shortfall, Staff contends, would be minimal.
The price premium for wind energy under this tariff, Staff notes, is equal to 1.8¢/kWh ($1 divided by 55 kWh). In Staff’s opinion this premium is reasonable. It appears to be one of the lowest premiums being charged in unsubsidized renewable programs throughout the West. Marketing and administrative costs associated with the program represent 28% of the total program costs. Staff believes 28% for marketing and administrative costs is a reasonable amount, and not excessive.
Idaho Rivers United
Land and Water Fund of the Rockies
Idaho Rivers United (IRU) and the Land and Water Fund of the Rockies (LAW Fund) recommend that Avista’s optional wind power rate program be approved. Supplying wind power to Idaho, they note, is an important way to diversify Idaho’s power base, providing greater reliability and reducing the environmental impact of energy production. IRU and the LAW Fund hope that Avista will work towards acquiring renewable energy resources as part of its rate-based portfolio. Voluntary programs, they contend, are good for a start, but they are no substitute for integrating renewable energy into the base energy supply.
IRU and the LAW Fund support the rate structure proposed by Avista. The most successful green power programs, they note, involving charging a set price for a defined amount of power. Avista has proposed such a program by setting the price of $1 for 55/kWh. However, IRU and the LAW Fund would like to see a higher minimum purchase requirement. They would also like to see customer participation tied to average electricity usage. As it is currently written, any customer may choose to participate at any financial level.
Avista’s filing, the commenters note, provides little detail on how the Company intends to market the wind program. Avista, they contend, must engage in a concerted effort to market this program to its customers. They caution Avista not to target communication so narrowly as to miss customers who may be interested in the program. In addition to any targeted marketing, Avista must at a minimum, they contend, notify all ratepayers of the program when opening an account, through bill stuffers or direct mailings twice a year, and through Avista’s web site. Avista, they contend, should work to gain media attention for the program.
The parties suggest that Avista also target non-residential customers. Targeting such customers, they contend, can be a good way to leverage marketing efforts. If high profile commercial clients sign up, they may choose to advertise that fact, in effect providing free advertising for the green power program.
IRU and the LAW Fund recommend that the Commission require annual year-end reports from Avista on the wind power program. This should include the total number of customers signed up and the number signed up each year, the total blocks purchased through the program, the number of kilowatt hours bought or generated, the amount of money spent on marketing and a description of marketing efforts undertaken.
Other Commenters
Comments were received from some of the Company’s customers who look forward to the opportunity to purchase wind power.
COMMISSION FINDINGS
The Commission has reviewed the filings of record and comments in Case No. AVUE-01-16. We continue to find that the public interest does not require a hearing and that the issues presented can be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference IDAPA 31.01.01.204.
Avista in this case seeks Commission approval of a proposed wind power rate. Participation is voluntary and open to all classes of customers. The option is priced in “blocks” of $1, each block purchasing 55 kWh. The premium is equal to 1.8¢ per kWh. The premium is in addition to a customer’s other applicable tariff charges.
All commenters in this case recommend approval. As proposed, we find that the program will be entirely self supporting, i.e., with no subsidization from non-participants. IRU and the LAW Fund offer suggestions regarding marketing and recommend annual year-end reporting. We encourage the Company to consider their suggestions in developing a marketing plan for this tariff. We further find it reasonable to require the Company to provide annual year-end reports on the wind power program. Reporting should include annual and cumulative subscription, the total blocks purchased through the program, the total number of wind kilowatt hours bought or generated, the amount of money spent on marketing and a description of the marketing efforts undertaken.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Avista Corporation, an electric utility, and the issues presented in Case No. AVU-E-01-16 pursuant to the authority granted the Commission 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 proposed electric Tariff Schedule 95 Optional Wind Power Rate—Idaho for an effective date of February 1, 2002.
IT IS FURTHER ORDERED and the Commission does hereby require the Company to submit annual year-end reports regarding its Schedule 95 Optional Wind Power Rate Program.
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 with regard to any matter decided in 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 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:AVUE0116_sw

ORDER NO. 28948 1

Office of the Secretary
Service Date
January 31, 2002