Order No 29057.pdf

Office of the Secretary
Service Date
July 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL REVISION)
AND UPDATED CALCULATION OF THE
ADJUSTABLE PORTION OF THE AVOIDED
COST RATES FOR A VISTA CORPORATION
DBAAVISTA UTILITIES-WASHINGTON
WATER POWER DIVISION, IDAHO POWER
COMPANY ANDPACIFICORPDBA UTAHPOWER & LIGHT COMPANY.
CASE NOS. A VU-02-
IPC-02-
UPL-02-
ORDER NO. 29057
On April 8 2002, Avista Corporation dba Avista Utilities-Washington Water Power
Division (Avista; Water Power) filed with the Idaho Public Utilities Commission its annual
revised and updated calculations for the adjustable portion of avoided cost rates for gas at Sumas.
The Sumas adjustments apply to all contracts for projects, 1 MW and less, executed since
January 31 , 1995. The annual adjustable rate calculation based on Sumas rates was addressed in
Order Nos. 25883 and 26086, issued in Case No. WWP-93-1O.
Commission Staff calculated the annual revised and updated calculation for the
adjustable portion of avoided cost rates for coal using Colstrip. The Colstrip adjustments apply
only to contracts executed between September 28, 1990 and January 30, 1995. The annual
adjustable rate calculation based on Colstrip costs was calculated pursuant to a more recent
methodology approved by the Commission in Order No. 28708, Case No. GNR-99-
Adjustable Rates-Colstrip
The adjustable portion under the previous coal-fired Surrogate Avoided Resource
(SAR) methodology established in Case No. U-1500-170 is based on the variable costs
associated with the operation of Colstrip, a coal-fired generating facility in southeast Montana.
An annual filing is required for each jurisdictional utility under specific orders for each. (Order
No. 23349, Water Power; Order No. 23357, Idaho Power; and Order No. 23358, PacifiCorp.
Pursuant to the Commission s administrative determination of avoided cost rates, the adjustable
portion of avoided cost rates is the same for all of Idaho s major electric utilities.
The Idaho Public Utilities Commission in Order No. 28708 , Case No. GNR-99-
established a new methodology for the annual adjustable rate portion of avoided costs for those
ORDER NO. 29057
QF contracts using variable costs associated with the Colstrip generating facility. For those QF
contracts with Colstrip-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 Colstrip plus 20~/MWh
for generation taxes plus a five percent (5%) adjustment for line loss). Commission Staff
calculates that the Colstrip adjusted avoided cost rate calculated on actual 2000 costs changed
from 9.72 mill/kWh to 8.52 mill/kWh. The same calculated rate revision under the avoided cost
methodology is used by Avista, PacifiCorp dba UP&L and Idaho Power Company. This change
in the variable rate affects existing contracts under the previous SAR methodology.
By prior Commission Order No. 23738 annual updates require only a single filing by
Avista, with copies and party status provided to Idaho Power and PacifiCorp. All applications
for annual updates are to be filed by June 1 with the effective date for the new adjustable rate to
be July 1. Under the established practice, the revised updated calculations set forth in Avista
April 8, 2002 filing and Staff s calculated change in Colstrip adjustable rates are recognized as
being submitted also for approval for Idaho Power and PacifiCorp dba Utah Power & Light
Company.
Adjustable Rates-Sumas
By Order Nos. 25883, 25884 and 25882 issued in Case Nos. WWP-93-, IPC-
93-28 and UPL-93-3/UPL-93-7 on January 31, 1995, respectively, the Commission
determined that the adjustable portion of avoided cost rates for future projects should be based
on annual average gas prices indexed at Sumas, Washington. The purpose of including an
adjustable component in the avoided cost rates is to capture annual changes in natural gas fuel
costs. Under the Commission approved SAR avoided cost methodology, the adjustable portion
of avoided cost rates is the same for all of Idaho s major electric utilities and an annual filing is
required.
Water Power (now Avista), in consultation with the Commission Staff, devised a
methodology for making annual adjustments, which was accepted by the Commission in Order
No. 26135 in Case Nos. WWP-95-3/IPC-95- 7/UPL-95-2. As reported by Avista in its
annual filing of April 8, 2002, the 2001 annual average gas price indexed at Sumas, Washington
was $4.58/mmBtu resulting in an increase of $O.41/mmBtu. The previously approved base gas
price of $4.82/mmBtu plus the $O.41/mmBtu increase results in a gas price of $5.23/mmBtu for
ORDER NO. 29057
2002-2003 year. This by Staffs calculation equates to an SAR fuel cost of 38.44 mills/kWh as
used in the model. The difference in the Sumas average price and the new base gas price is the
result of a timing difference and the use of a trailing average. A proposed schedule of revised
rates and a detailed sheet of variables for each utility was prepared by Staff and reviewed by the
utilities. As reflected in letters filed with the Commission, PacifiCorp and Avista concur with
Staffs variable adjustment calculations.
Idaho Power accepts the computation of the revised Colstrip and Sumas variable rate
calculations for existing contracts. Idaho Power filed an answer accepting the computation of
the Colstrip related fuel costs that applies only to a specific group of existing contracts. Idaho
Power also agreed with the purchase rates based on changes to gas prices as measured at Sumas
but only for existing contracts. The Company objects to the proposed rates, however, for use as
published rates available for future QF contracts. Idaho Power contends the proposed published
rates no longer represent the Company s avoided costs and that the assumptions used to compute
the rates are no longer fair, just and reasonable.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case
Nos. A VU-02-, IPC-02-6 and UPL-02-1. We find that the accuracy of the variable rate
methodology figures submitted by A vista based on Sumas and calculated by Staff based on
Colstrip has not been challenged, as they apply to existing contracts. While Idaho Power objects
to the rates for use as published rates, it does not object to the rate calculations for existing
contracts. There being no objection, the Commission finds the rate calculations to be just, fair
and reasonable as they apply to existing contracts. For existing contracts, the rates reflected in
the attachments to this Order shall be effective July 1 , 2002.
Whether the rates are appropriate as published rates, however, must await the
Commission s decision on Petitions for Reconsideration in Case No. GNR-02-1. The
Commission s decision in that case to increase the project size limitations and contract length for
QFs gives rise to the concern that the new rates are inappropriate for future projects. The
Commission will issue its decision on those petitions no later than July 8 , 2002.
The methodology that this Commission has approved for determining the variable
components of the avoided cost rate is a relatively simple arithmetic recalculation. We find
based upon our review of the calculations of both the Colstrip and Sumas updates, that the
ORDER NO. 29057
resulting adjustable rates are fair, just and reasonable for existing contracts. Attached to this
Order as Appendices A, B and C are the tables showing the adjustable rates as updated by
Avista s filing for Avista, Idaho Power and PacifiCorp, respectively.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
A vista Utilities-Washington Water Power Division, Idaho Power Company and PacifiCorp dba
Utah Power & Light Company, electric utilities, pursuant to the authority and power granted it
under Title 61 of the Idaho Code, and the Public Utility Regulatory Policies Act of 1978
(PURP A).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed term obligations for the purchase of energy from qualified facilities
and to implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described, IT IS HEREBY
ORDERED that the Colstrip related adjustable portion of the avoided cost rate for existing
contracts and the Sumas related adjustable portion of the avoided cost rates for A vista, Idaho
Power and PacifiCorp dba Utah Power & Light Company are changed effective July 1 , 2002, as
outlined in the attached schedules. The rates shall be effective only for existing contracts.
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.
ORDER NO. 29057
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
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1",:.10day ofJ.tffie 2002 .
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MARSHA H. SMITH, COMMISSIONER
~NER
ATTEST:
mmission Secretary
bls/O:A VUE0204 lPCE0206 UPLEO201 sw
ORDER NO. 29057
AVISTA UTILITIES
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 1 2002 - June 30, 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
27.28.29.30.32.33.2002 27.
27.28.30.31.32.34.40 2003 28.24
28.29.45 30.32.33.35.2004 29.
28.30.31.41 32.34.44.2005 30.
29.30.32.33.48 41.49 50.2006 32.
29.31.32.39.46.55.2007 33.
30.49 31.37.43.51.59.2008 35.
31.35.41.47.54.62.46 2009 36.77
34.39.49 44.51.57.65.43 2010 77.
37.42.47.53.60.68.2011 81.
40.46 45.50.56.63.70.2012 86.
42.47.53.59.65.73.2013 90.
45.50.55.61.48 68.75.2014 95.
47.41 52.57.63.70.77.2015 101.
49.43 54.59.65.72.79.2016 106.
51.56.61.67.74.43 81.2017 112.
53.58.63.69.76.41 83.2018 118.
54.59.65.71.78.85.2019 125.
56.61.67.73.48 80.87.2020 132.
58.63.41 69.75.82.89.48 2021 139.
2022 147.
2023 155.77
2024 164.49
2025 173.
2026 183.46
2027 193.
Appendix A
Page 1
AVISTA UTILITIES
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 1 2002 - June 30, 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
27.28.29.30.32.33.2002 27.
27.28.30.31.32.34.40 2003 28.
28.29.45 30.32.33.35.2004 29.
28.30.31.41 32.34.30.2005 30.
29.30.32.33.48 31.28.2006 32.
29.31.32.31.29.27.2007 33.
30.49 31.30.29.27.26.2008 35.
31.30.43 29.28.46 27.25.2009 36.77
29.29.28.27.26.24.2010 16.
29.28.27.27.25.24.2011 16.
28.27.27.26.25.24.2012 17.
27.27.47 26.26.25.24.2013 17.
27.42 27.26.25.25.24.2014 18.41
27.26.26.25.24.23.2015 19.
26.26.26.21 25.24.23.2016 19.
26.26.44 26.25.24.23.2017 20.41
26.26.25.25.24.24.2018 21.
26.26.25.25.48 24.24.2019 21.
26.26.25.25.47 24.24.2020 22.
26.26.25.25.48 24.24.2021 23.42
2022 24.
2023 25.
2024 25.
2025 26.
2026 27.
2027 28.
EFFECTIVE DATE ADJUSTABLE COMPONENT
7/1/02-6/30/03 38.44
Beginning In the year 2010, the annually adjustable component shall be added to each of the rates shown above.
Example 1. A 20 year levelized contract with a 2002 on-line date would receive the following rates:
Years Rate
26.25
26.25 + Adjustable component in each year
Example 2. A 15 year non-Ievelized contract with a 2002 on-line date would receive the following rates:
Years Rate
Non-Ievelized rates from table above
16.05 + Adjustable component in year 2010
16.61 + Adjustable component in year 2011
17.19 + Adjustable component in year 2012
17.79 + Adjustable component in year 2013
18.41 + Adjustable component in year 2014
19.05 + Adjustable component in year 2015 Appendix19.72 + Adjustable component in year 2016 Page
IDAHO POWER COMPANY
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 1 2002 - June 30, 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
51.53.56.59.63.66.2002 51.
52.44 55.58.61.40 64.68.2003 53.
53.56.59.62.66.69.2004 56.
55.58.61.64.68.71.2005 59.
56.42 59.47 62.66.69.73.47 2006 63.
57.60.64.67.71.75.2007 66.
59.62.65.69.73.76.2008 70.
60.43 63.67.70.74.78.2009 73.
61.65.68.72.76.80.2010 77.
63.66.70.73.77.82.2011 82.
64.43 67.71.75.79.84.2012 86.
65.69.73.77.81.85.2013 91.
67.70.74.78.82.87.2014 96.
68.40 72.76.80.84.89.2015 101.
69.73.77.81.86.90.2016 107.45
71.74.78.83.87.92.2017 113.
72.76.80.41 84.89.47 94.2018 119.
73.77.81.86.91.96.2019 126.
74.78.83.87.92.97.2020 133.
76.80.84.89.94.99.41 2021 140.
2022 148.
2023 156.
2024 165.
2025 174.
2026 184.
2027 194.
Appendix B
Page 1
IDAHO POWER COMPANY
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 2002 - June 30, 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
12.13.13.14.14.15.2002 12.
12.13.13.14.14.15.2003 13.
13.13.14.14.15.15.2004 13.
13.13.14.27 14.15.15.2005 14.
13.14.14.49 15.15.16.2006 14.
13.14.21 14.15.15.16.2007 15.
13.14.42 14.15.45 15.16.2008 15.
14.14.15.15.16.16.2009 16.
14.14.15.15.16.44 17.2010 16.
14.15.15.16.16.17.2011 17.
14.15.15.16.16.17.47 2012 17.
. 12 14.15.42 15.16.17.17.2013 18.
15.15.16.16.17.17.2014 19.
15.15.16.16.17.18.2015 19.
15.44 15.16.17.17.18.2016 20.
15.16.16.17.17.18.2017 21.
15.16.16.17.18.18.2018 22.
15.16.17.17.18.18.2019 22.
16.16.17.26 17.18.49 19.2020 23.
16.27 16.17.43 18.18.19.2021 24.40
2022 25.
2023 26.
2024 27.
2025 28.
2026 28.
2027 30.
EFFECTIVE DATE ADJUSTABLE COMPONENT
7/1/02-6/30/03 38.44
Beginning in the year 2002, the annually adjustable component shall be added to each of the rates shown above.
Example 1. A 20 year levelized contract with a 2002 on-line date would receive the following rates:
Years Rate
16.27 + 38.44
16.27 + Adjustable component in each year
Example 2. A 4 year non-Ievelized contract with a 2002 on-line date would receive the following rates:
Years Rate
12.69 + 38.44
13.13 + Adjustable component in year 2003
13.59 + Adjustable component in year 2004
14.07 + Adjustable component in year 2005
Appendix B
Page 2
PACIFICORP
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 2002 - June 30, 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
51.46 54.57.60.63.47 66.2002 51.46
52.55.58.61.65.68.2003 54.
54.57.60.63.66.70.2004 57.
55.40 58.61.64.68.72.2005 60.
56.59.77 63.66.41 70.73.2006 63.47
58.61.64.46 67.71.75.2007 66.
59.62.65.69.73.77.2008 70.
60.63.67.71.74.78.2009 74.
61.65.68.72.76.80.2010 78.41
63.66.70.74.78.82.2011 82.
64.49 67.71.75.79.84.2012 87.
65.69.73.77.81.85.2013 91.
67.70.74.49 78.82.87.2014 97.
68.71.75.80.84.88.2015 102.
69.47 73.77.24 81.45 85.90.2016 107.
70.74.78.82.87.41 92.2017 113.
71.75.79.84.88.93.77 2018 120.
73.77.81.85.90.95.2019 126.
74.78.82.87.91.96.2020 133.
75.79.45 83.88.93.98.2021 141.
2022 149.
2023 157.
2024 166.
2025 175.
2026 185.
2027 195.77
Appendix C
Page 1
PACIFICORP
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN FIVE MEGAWATTS
July 2002 - June 2003
mills/kWh
LEVELIZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2002 2003 2004 2005 2006 2007 YEAR RATES
13.13.47 13.14.43 14.15.46 2002 13.
13.13.14.14.15.15.2003 13.47
13.45 13.14.41 14.15.43 15.2004 13.
13.14.14.15.15.16.2005 14.43
13.14.14.15.1.5.16.47 2006 14.
14.14.15.15.16.16.2007 15.46
14.14.15.15.16.16.2008 16.
14.47 14.15.16.16.17.2009 16.
14.15.15.16.16.17.42 2010 17.
14.15.15.16.48 17.17.2011 17.
15.15.16.16.17.17.2012 18.
15.15.16.16.17.48 18.2013 19.
15.41 15.16.17.17.18.2014 19.
15.16.16.17.17.18.2015 20.
15.16.16.17.46 18.18.2016 21.
15.16.47 17.17.18.18.2017 21.
16.16.17.17.18.45 19.2018 22.
16.16.17.18.18.19.2019 23.
16.16.17.18.18.19.46 2020 24.
16.17.17.18.18.19.2021 25.
2022 25.
2023 26.
2024 27.77
2025 28.
2026 29.
2027 30.
EFFECTIVE DATE ADJUSTABLE COMPONENT
7/1/02-6/30/03 38.44
Beginning in the year 2002, the annually adjustable component shall be added to each of the rates shown above.
Example 1. A 20 year levelized contract with a 2002 on-line date would receive the following rates:
Years Rate
16.53 + 38.44
16.53 + Adjustable component in each year
Example 2. A 4 year non-Ievelized contract with a 2002 on-line date would receive the following rates:
Years Rate
13.02 + 38.44
13.4 7 + Adjustable component in year 2003
13.95 + Adjustable component in year 2004
14.43 + Adjustable component in year 2004
Appendix C
Page 2