20041201Final Order No 29646.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
December 1 , 2004
IN THE MATTER OF THE REVISION AND
UPDATED CALCULATION OF THE
AVOIDED COST RATES FOR A VISTA
CORPORATION DBA A VISTA UTILITIES,
FOR IDAHO POWER COMPANY AND FOR
PACIFICORP DBA UTAH POWER AND
LIGHT COMPANY.
CASE NOS. A VU-O4-
IPC-O4-
P AC-O4-
ORDER NO. 29646
Pursuant to the Public Utility Regulatory Policies Act of 1978 (PURP A) and the
implementing regulations of the Federal Energy Regulatory Commission (FERC), the Idaho
Public Utilities Commission (Commission) has approved a methodology for calculation of the
avoided cost rates paid to PURP A qualifying cogeneration and small power production facilities
(QFs) by Idaho Power Company, Avista Corporation and PacifiCorp. Avoided cost rates are the
purchase price paid to QFs for purchases ofQF capacity and energy.
Three recent events have triggered a revision and updated calculation of new
PURP A avoided cost rates, i., the conclusion of general rate cases for Idaho Power and A vista
and the release of a new natural gas price forecast by the Northwest Power and Conservation
Council (NPCC) 1
The conclusion of a general rate case affects avoided cost rates because cost of
capital figures are used in avoided cost computations in accordance with the approved
methodology. The appropriate time to incorporate new cost of capital figures is following a
general rate case. A final Order in Idaho Power s general rate case was issued on May 25 , 2004
(Order No. 29505) and a Reconsideration Order was issued on September 28, 2004 (Order No.
29601). A final Order in Avista s general rate case was issued on October 8, 2004 (Order No.
29602).
Pursuant to Commission approved avoided cost methodology (Order No. 29124)
natural gas prices are to be updated when a new Northwest Power & Conservation Council
forecast becomes available. The medium fuel price forecast prepared by the Northwest Power &
Conservation Council has changed. The resultant change in avoided cost rates is a simple
Formerly the Northwest Power Planning Council (NWPPC).
ORDER NO. 29646
arithmetic calculation. The new forecast includes a new starting gas price and fuel escalation
rate.
The new rates computed using the Council's September 24, 2004 natural gas price
forecast and Idaho Power s and Avista s revised costs of capital are approximately 5 mills/kWh
higher than the rates currently in effect for all three utilities. A copy of the revised fuel price
forecast, computation of starting year gas price and escalation rate, and Staff computation of the
resultant avoided cost rates was provided to PacifiCorp, Idaho Power and Avista for their review.
Also incorporated in the computation of the rates and pursuant to Commission direction are the
new cost-of-capital figures for Idaho Power and Avista. Reference Order No. 29628.
On November 4, 2004 the Commission issued Notices of Avoided Cost
Recalculation and Modified Procedure in Case Nos. A VU-04-, IPC-04-25 and
PAC-04-5. The deadline for filing written comments was November 23 , 2004. Comments
were filed by Avista, PacifiCorp, Idaho Power and Commission Staff.
In its review of the draft rate computations, Idaho Power pointed out to Staff that an
updated general inflation rate of 2.9% had been used in the spreadsheet that calculates the initial
gas price and the gas price escalation rate. Idaho Power contends that updating the general
inflation rate is outside the scope of the fuel price and cost of capital changes outlined by the
Commission in establishing these dockets. Moreover, the general inflation rate is also one
many other variables used in the avoided cost spreadsheet, yet none of those other variables are
being updated in these proceedings. Staff agrees with Idaho Power that the general inflation rate
should not have been changed. PacifiCorp in its comments concurs. Staff has re-computed the
avoided cost rates using a general inflation rate of 2., the rate incorporated in avoided cost
methodology Order No. 29124. The Commission is informed that Avista accepts the updated
calculations. No other errors or corrections were identified or recommended by any of the
utilities following their reviews.
Staff recommends that the Commission approve the Staff calculated changes in the
avoided cost rates for Idaho Power, Avista and PacifiCorp for an effective date of December 1
2004.
ORDER NO. 29646
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case Nos. A VU-04-
IPC-04-25 and PAC-04-5 including the filed comments and recommendations of Idaho
Power, PacifiCorp, A vista and Commission Staff.
The Commission has reviewed the revised and updated calculation of the avoided
cost rates as set forth in the appendices to this Order and finds that they correctly incorporate the
latest Northwest Power and Conservation Council natural gas price forecast and cost-of-capital
figures for Idaho Power and Avista. See Order No. 29646, Appendices A, B and C. We find the
resultant change in avoided cost rates to be a simple arithmetic calculation.We find it
reasonable to approve the avoided cost rates approved in this Order for QF contracts executed on
or subsequent to December 1 2004.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
PacifiCorp dba Utah Power & Light Company and A vista Corp dba A vista Utilities, 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 PURP A qualified
facilities and to implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described above, IT
HEREBY ORDERED that the avoided cost rates for fueled and non-fueled projects for Avista
Idaho Power and PacifiCorp be updated as reflected in the appendices to this Order for an
effective date of December 1 , 2004, to reflect incorporation of the NPCC September 24, 2004
natural gas price forecast, in addition to the newly adopted cost-of-capital figures for Idaho
Power and Avista as determined in their recently concluded rate cases.
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. 29646
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of December 2004.
Out of the Office on this Date
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~illJe D. Jewell
Commissi on Secretary
vld/O:A VUE045 IPCE0425 P ACE045 sw2
ORDER NO. 29646
AVISTA UTILITIES
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 1 , 2004
mills/kWh
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
14.14.14.14.15.15.2004 14.
14.14.47 14.15.15.15.2005 14.
14.14.14.15.15.16.2006 14.
14.45 14.15.15.15.16.2007 14.
14.14.15.15.15.16.2008 15.
14.15.15.42 15.16.16.2009 15.
14.15.15.15.16.16.2010 16.
15.15.15.16.16.45 16.2011 16.41
15.15.15.16.16.16.2012 16.
15.15.15.16.16.17.2013 17.
15.41 15.16.16.16.17.2014 17.
15.15.16.16.17.17.41 2015 17.
15.16.16.16.17.17.2016 18.
15.16.16.16.17.17.2017 18.
15.16.16.17.17.41 17.2018 19.25
16.16.16.17.17.17.2019 19.
16.16.49 16.17.17.18.2020 20.
16.16.16.17.17.18.2021 20.
16.16.17.17.48 17.18.2022 21.
16.43 16.17.17.17.18.41 2023 21.
2024 22.
2025 22.
2026 23.
2027 23.
2028 24.
2029 24.
EFFECTIVE DATE ADJUSTABLE COMPONENT
12/1/2004 36.21
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables
above.
Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates:
Years Rate
16.80 + 36.42
16.80 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates:
Years Rate
14.32 + 36.42
14.65 + Adjustable component in year 2006
14.98 + Adjustable component in year 2007
15.33 + Adjustable component in year 2008
APPENDIX A
CASE NOS. A VU-O4-
I PC-O4-
PAC-O4-
ORDER NO. 29646
AVISTA UTILITIES
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 1 , 2004
mills/kWh
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
50.51.52.53.54.56.2004 50.
50.51.53.54.55.56.2005 51.
51.52.48 53.54.56.57.48 2006 52.
51.53.54.55.49 56.58.2007 53.
52.53.54.56.57.58.2008 54.
52.54.55.56.57.59.2009 56.
53.54.55.57.58.46 59.2010 57.
53.55.56.57.59.60.2011 58.
54.55.56.58.59.60.2012 60.
54.56.57.58.60.61.43 2013 61.
55.56.57.59.60.61.2014 63.
55.57.58.59.61.62.45 2015 64.48
56.57.4 7 58.60.61.62.2016 65.
56.57.59.60.61.63.42 2017 67.48
57.58.59.61.62.45 63.2018 69.
57.42 58.60.61.47 62.64.2019 70.
57.59.60.61.63.64.2020 72.
58.59.60.62.63.65.2021 73.
58.59.61.62.64.65.2022 75.
58.60.61.63.64.66.2023 77.
2024 79.
2025 80.
2026 82.
2027 84.
2028 86.
2029 88.
APPENDIX A
CASE NOS. A VU-O4-
I PC-O4-
PAC-O4-
ORDER NO. 29646
IDAHO POWER COMPANY
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 1 , 2004
mills/kWh
. NON~LE"ELIZEJ:)
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
13.13.13.13.14.14.2004 13.
13.13.45 13.14.14.40 14.2005 13.
13.13.13.14.14.14.2006 13.
13.43 13.14.14.14.15.2007 13.
13.13.14.14.14.15.2008 14.
13.14.14.14.15.15.2009 14.
13.14.14.49 14.15.15.2010 14.
13.14.14.14.15.15.2011 15.
14.14.43 14.15.15.46 15.2012 15.
14.14.14.15.15.15.2013 15.
14.14.15.15.15.16.2014 16.
14.49 14.15.15.15.16.2015 16.
14.14.15.15.16.16.2016 17.
14.15.15.42 15.16.16.2017 17.
14.15.15.15.16.16.2018 17.
14.15.15.16.16.40 16.2019 18.
15.15.43 15.16.16.16.2020 18.
15.15.15.16.16.17.2021 19.
15.15.16.16.16.17.2022 19.
15.41 15.16.16.16.17.2023 20.
2024 20.
2025 21.
2026 21.
2027 22.
2028 22.
2029 23.
EFFECTIVE DATE ADJUSTABLE COMPONENT
12/1/2004 36.
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables
above.
Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates:
Years Rate
15.76 + 36.42
15.76 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates:
Years Rate
13.30 + 36.42
13.61 + Adjustable component in year 2006
13.92 + Adjustable component in year 2007
14.24 + Adjustable component in year 2008
APPENDIX B
CASE NOS. A VU-O4-
I PC-O4-
PAC-O4-
ORDER NO. 29646
IDAHO POWER COMPANY
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 1 , 2004
mills/kWh
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
49.50.51.52.53.55.2004 49.
49.50.52.53.54.55.2005 50.
50.51.45 52.53.55.56.2006 51.
50.52.53.54.42 55.56.2007 52.
51.52.53.54.56.57.2008 53.
51.53.54.55.56.58.2009 55.
52.53.54.56.57.58.2010 56.41
52.54.55.56.57.59.2011 57.
53.54.55.57.58.4 7 59.2012 59.
53.55.56.57.59.60.2013 60.40
54.55.56.58.59.60.2014 61.
54.56.57.58.60.61.44 2015 63.
55.56.57.59.60.61.2016 64.
55.57.58.59.61.62.46 2017 66.
56.57.48 58.60.61.62.2018 67.
56.57.59.60.62.63.45 2019 69.
57.58.59.61.62.49 63.2020 70.
57.4 7 58.60.61.62.64.40 2021 72.49
57.59.60.61.63.40 64.2022 74.
58.59.60.62.40 63.65.2023 75.
2024 77.
2025 79.41
2026 81.
2027 83.
2028 85.
2029 87.
APPENDIX B
CASE NOS. A VU-O4-
IPC-O4-
PAC-O4-
ORDER NO. 29646
PACIFICORP
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 1 , 2004
mills/kWh
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
14.14.14.15.15.15.2004 14.
14.14.14.15.15.15.2005 14.
14.14.15.15.15.16.2006 14.
14.49 14.15.15.15.16.2007 15.
14.14.15.15.16.16.40 2008 15.
14.15.15.46 15.16.16.2009 15.
14.15.15.15.16.16.2010 16.
15.15.15.16.16.48 16.2011 16.46
15.15.15.16.16.17.2012 16.
15.15.16.16.16.17.2013 17.
15.43 15.16.16.16.17.2014 17.
15.15.16.16.17.17.42 2015 18.
15.16.16.16.17.17.2016 18.45
15.16.16.16.17.17.2017 18.
15.16.16.17.17.40 17.2018 19.
15.16.16.17.17.17.2019 19.
16.16.46 16.17.17.18.2020 20.
16.16.16.17.17.18.2021 20.
16.16.17.17.43 17.18.2022 21.
16.16.17.17.17.18.2023 21.
2024 22.
2025 22.
2026 23.
2027 23.
2028 24.
2029 24.
EFFECTIVE DATE ADJUSTABLE COMPONENT
12/1/2004 36.
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables
above.
Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates:
Years Rate
16.75 + 36.42
16.75 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates:
Years Rate
14.36 + 36.42
14.69 + Adjustable component in year 2006
15.03 + Adjustable component in year 2007
15.38 + Adjustable component in year 2008
APPENDIX C
CASE NOS. A VU-O4-
I PC-O4-
P AC-O4-
ORDER NO. 29646
PACIFICORP
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
December 2004
mills/kWh
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2004 2005 2006 2007 2008 2009 YEAR RATES
50.51.41 52.53.55.56.2004 50.
50.51.53.54.55.56.2005 51.41
51.52.53.54.56.57.2006 52.
51.53.54.55.56.58.2007 53.
52.53.54.56.57.58.2008 55.
52.54.55.56.57.59.2009 56.
53.54.55.57.58.46 59.2010 57.
53.55.56.57.58.60.2011 58.
54.55.56.58.59.60.2012 60.
54.56.57.58.60.61.2013 61.
55.56.49 57.59.60.48 61.2014 63.
55.56.58.59.60.62.2015 64.
56.57.58.60.61.40 62.2016 66.
56.47 57.59.60.45 61.63.2017 67.
56.58.59.60.62.63.2018 69.
57.58.59.61.62.64.2019 70.
57.58.60.61.63.64.2020 72.
57.59.60.62.63.46 64.2021 73.
58.59.60.62.40 63.65.2022 75.
58.59.61.62.64.65.2023 77.42
2024 79.
2025 81.
2026 82.
2027 84.
2028 86.
2029 88.
APPENDIX C
CASE NOS. A VU-04-
IPC-04-
P A C- E -04-
ORDER NO. 29646