20060810final_order_no_30111.pdf

Office of the Secretary
Service Date
August 10, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF A VISTA
CORPORATION'S "REVISED" APPLICATION)
TO INCORPORATE REVISIONS TO TARIFF
SCHEDULES 62 AND 70 AND THE ADDITION
OF ANEW TARIFF SCHEDULE 63
CASE NO. A VU-06-
ORDER NO. 30111
On June 19, 2006, Avista Corporation ("Avista" or "Company ) filed a revised
Application with the Commission seeking authority to incorporate certain revisions into its tariff
Schedules 62 and 70 and to add a new Schedule 63. On July 7, 2006, the Commission issued a
Notice of Application and Modified Procedure requesting comments from interested parties.
Order No. 30093. The only comments received were submitted by the Staff.
THE APPLICATION
According to the Application, the three areas of revision of the tariff are: (1) new
tariff language on interconnection standards for net-metered projects less than 25 kW; (2) new
and updated definitions for small power projects; and (3) housekeeping changes to clarify
verbiage. Schedule 62 of the proposed tariff sets forth terms and conditions related to the
Cogeneration and Small Power Production Schedule. The newly created Schedule 63 includes
the net metering provisions previously contained in Schedule 62. The updated definitions
include definitions for a Market Energy Rate and a Daily Shape Adjustment.
The tariff changes also include an administrative change to reflect the modification in
applicability in Schedule 62 to qualifying facilities with a generation capacity no more than 10
average megawatts (aMW), and to clarify or delete certain verbiage as appropriate. Avista
further proposes adding language setting forth rules and regulations for Interconnection
Standards to Schedule 70.
STAFF COMMENTS
Daily Shape Adjustment
Staff noted that this proposed change is likely the most significant of all set forth in
the Application. The proposed Daily Shape Adjustment would create a difference between on-
peak and off-peak avoided cost rates of $5 per MWh. The Daily Shape Adjustment would be
prorated based on two-thirds of the hours in a day being on-peak and one-third being off-peak.
ORDER NO. 30111
The effect of the proposed change would be that projects generating more during on-
peak hours would receive greater revenue than if no Daily Shape Adjustment was applied, and
projects generating more during off-peak hours would receive less revenue. Projects with a flat
generation shape spread evenly throughout the day would receive the same revenue and be
unaffected by the Daily Shape Adjustment.
The Daily Shape Adjustment would be in addition to the seasonalization factor
currently employed by A vista that recognizes that power delivered to the utility is more or less
valuable during certain times of the year than others. While neither adjustment mechanism is
particularly accurate, both adjustments produce rates that are closer to real-time rates than if no
adjustments were made. A vista believes that the proposed Daily Shape Adjustment provides a
measure of protection to the Company for power purchases that are not evenly delivered across
all hours and provides incentive for power producers to deliver power during more valuable
hours.
One of Staffs concerns with a Daily Shape Adjustment is that it could introduce
some uncertainty in the monthly payments to a small power producer because many small power
producers have no way of accurately knowing how many kilowatt-hours their project will
produce in on-peak vs. off-peak hours. Another concern of Staff is the need for hourly metering
capability at all future projects. Some existing projects, particularly if they are very small, do not
have hourly metering capability. Staffs final concern is that adoption of a Daily Shape
Adjustment introduces additional complexity to an already fairly complex system of avoided cost
rates.
Despite the concerns discussed above, Staff recommended that the Daily Shape
Adjustment be approved as proposed, and that it be a requirement for all future qualifying
cogeneration and small power production facilities (QFs) with Avista contracts. Staff does not
recommend that a Daily Shape Adjustment be required for Idaho Power and PacifiCorp at this
time. To clarify how the Daily Shape Adjustment would be applied, Staff recommended that the
following language be added to the definition of Daily Shape Adjustment:
The "Daily Shape Adjustment" increases the on-peak rate and decreases the
off-peak rate such that the difference between the on-peak and off-peak rate
is $5/MWh and the average rate weighted by the number of on-peak and off-
peak hours is equal to the unadjusted avoided cost.
ORDER NO. 30111
Schedule 70 - Interconnection Standards
One of Avista s proposed changes adds "Interconnection Standards to the
Company s "Rules and Regulations tariff sheet 70-r through 70-x, describing general
conditions, requirements and technical specifications for the safe and reliable operation of
interconnected customer-owned generation facilities. This tariff language will provide standard
guidelines for interconnection as more customers opt for or consider the addition of self-owned
generation. Included in the Company s proposed revisions is information on general conditions
such as applications and agreements, unauthorized connections, dedicated distribution
transformer, metering, labeling, insurance and liability, future modification or expansion
customer-owned equipment protection and interconnection costs. Also included are technical
specifications and interconnection requirements.The Company believes that these
interconnection standards are "industry standards" and desires to have these included in its tariffs
as customers express more interest in self-owned generation.
Avista s proposed interconnection standards are very similar to standards that Idaho
Power has included in its Schedule 72 for many years. Those standards have proven adequate
and have not led to customer complaints or confusion. Consequently, Staff believes that the
proposed interconnection standards are acceptable and recommends that they be approved.
Schedule 62
The Company has made several additions to the "Definitions" section to support
tariff Schedule 62. These additions include the definitions for the following: Market Energy
Rate, Daily Shape Adjustment, Facility, In-Service Date, Interconnection Service Agreement
Network Distribution System, Point of Common Coupling, Qualifying Facility, and Seasonal
Factors. In addition, several administrative changes have been made to reflect the change in
applicability of Schedule 62 to no more than 10 aMW and to clarify and/or delete verbiage under
Power Rates" to clarify the "Non-Firm Energy Rate" and the applicability of the Seasonal and
Daily Shape Adjustments. Staff characterized these changes as "housekeeping" matters
necessary either for clarification purposes or to insure that the tariff conforms to prior
Commission orders.
ORDER NO. 30111
Schedule 63 - Net Metering
The Company removed the "Net Metering Option" from Schedule 62 and added this
to a new Schedule 63 to be consistent with changes made to the Company s Washington tariff.
Staff has no objection to this change.
COMMISSION FINDINGS
The Commission finds that the advantages of a Daily Shape Adjustment outweigh
the disadvantages. Although imprecise, adding the Daily Shape Adjustment to the
seasonalization factor more closely matches avoided cost rates to the true value of power at the
time of delivery. The Commission finds that the proposed tariff and additional language in the
definition for the Daily Shape Adjustment helps clarify the effective rates. The Commission
finds that the other proposed changes to the tariff are acceptable, but we note that many of these
topics are currently under review pursuant to the mandate under the Energy Policy Act of 2005
to consider certain standards for inter alia net metering, time-based metering and
interconnection. The Commission will further review these terms and conditions at a later date to
evaluate how they comport with the Commission s consideration of these standards under the
Energy Policy Act of2005.
CONCLUSIONS OF LAW
The Commission has jurisdiction over Avista Corporation dba Avista Utilities and
the issues presented in Case No. A VU-06-4 pursuant to the authority granted in Idaho Code
Title 61 and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq. Pursuant to this
authority, the Commission concludes that the modifications to Avista s tariff are just and
reasonable as required under Idaho Code 99 61-301 and -307.
ORDER
IT IS HEREBY ORDERED that the Application of the Company is hereby
approved, with the addition of the following language to be added to the definition of the Daily
Shape Adjustment in Schedule 62:
ORDER NO. 30111
The "Daily Shape Adjustment" increases the on-peak rate and decreases the
off-peak rate such that the difference between the on-peak and off-peak rate
is $5/MWh and the average rate weighted by the number of on-peak and off-
peak hours is equal to the unadjusted avoided cost.
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 9 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of August 2006.
ENNIS S. HANSEN, COMJV1ISSIONER
ATTEST:
~\.0~ OuC~.fBarbara Barrows
Assistant Commission Secretary
O:A VU-E06-cg2
ORDER NO. 30111