20070119final_order_no_30224.pdf

Office of the Secretary
Service Date
January 19 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT PETITION
OF A VISTA CORPORATION AND STIMSON
LUMBER COMPANY FOR APPROVAL OF
A POWER PURCHASE AND SALE
AGREEMENT
CASE NO. A VU-06-
ORDER NO. 30224
On December 6, 2006, A vista Corporation and Stimson Lumber Company
(collectively Petitioners) filed a Joint Petition with the Idaho Public Utilities Commission
(Commission) for an Order approving a Power Purchase Agreement (Agreement) between
Stimson Lumber Company (Stimson) and Avista Corporation (Avista; Company) dated October
, 2006. Also included is a Generator Interconnection Agreement (GIA) between Avista and
Stimson.
Stimson Lumber Company operates a thermal wood waste small power electric
generation plant at Plummer, Idaho.Stimson s facility is capable of generating up to
approximately 6.5 MW of energy. The facility is a qualifying facility (QF) pursuant to the
Public Utility Regulatory Policies Act of 1978 (PURP A).
The Stimson facility was previously owned and operated by HaleyWest LLC.
Stimson has assumed HaleyWest LLC'obligations under a Power Sale and Purchase
Agreement between Avista and HaleyWest LLC that expired under its own terms on September
, 2006. Stimson and Avista both desired that energy deliveries from the facility to Avista
continue without interruption following termination ofthe HaleyWest LLC Agreement.
The Stimson Purchase and Sale Agreement is for a term of five years. A vista will be
the sole purchaser of Stimson s generation. For all Net Delivered Output received by Avista that
is not surplus energy, Avista shall pay the published non-Ievelized avoided cost rates for non-
fueled projects smaller than 10 MW. For all surplus energy received by A vista, A vista shall pay
to Stimson the current month's market energy cost per megawatt hour or the Net Delivered
Output purchase price, whichever is lower. Stimson shall operate the facility in such a manner
that the hourly scheduled amount of Net Delivered Output does not exceed 6.5 MW in any hour.
Avista shall have the right, but not the obligation to purchase ,any Net Delivered Output from the
facility in excess of 6.5 MW in any hour. The maximum annual amount of electric power that
ORDER NO. 30224
A vista is obligated to purchase is 56 940 MWh in any operating year that is a non-leap year;
(57 069 MWh leap year).
Petitioners are not requesting retroactive approval of the Agreement. The Agreement
allows for energy deliveries and payments by A vista to Stimson at the published avoided cost
rates effective October 1 , 2006. In the event that the Commission does not approve the
Agreement by January 30, 2007, or approves it subject to conditions unacceptable to the parties
the Agreement will terminate. In such event, Stimson shall refund certain amounts to Avista.
Reference Agreement ~ 5.4.
The Petitioners request Commission approval of the Agreement and the related
interconnection agreement. The Petitioners also request a Commission Order allowing deferral
and recovery of all power purchase costs subject to Avista s Power Cost Adjustment (PCA)
mechanism or as otherwise recovered by A vista through base rates, and declaring that prices to
be paid for energy and capacity are just and reasonable, in the public interest, and that the costs
incurred by A vista for purchasing capacity and energy from Stimson are legitimate expenses.
The parties request approval of the Agreement as satisfaction of the entirety of Avista
obligations under PURP A with regard to the facility.
The Agreement originally submitted in this case included a definition for "Market
Energy Cost" defined in part as "eighty five percent (85%) of the weighted average of the daily
On-Peak and Off-Peak Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices for
firm energy." The reference to the Mid-firm energy price was mistaken. By First Amendment
to the Agreement filed December 26, 2006, the Market Energy Cost definition is corrected to
instead refer to the Mid-non-firm energy in accordance with Schedule 62.
On December 22, 2006, the Commission issued a Notice of Application and
Modified Procedure in Case No. A VU-06-1 O. The deadline for filing written comments was
January 11 , 2007.The Commission Staff was the only party to file comments.Staff
recommends approval of the Stimson Agreement and the first amendment to the Agreement.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No.
A VU-06-1 0 including the comments and recommendation of Commission Staff. A negotiated
Power Purchase Agreement dated October 1 , 2006 has been submitted by Stimson Lumber
ORDER NO. 30224
Company and A vista Corporation for Commission consideration and approval. Also submitted
is a related Generator Interconnection Agreement and a First Amendment dated December 21
2006. Based on our review of the record, we continue to find it reasonable to process this case
pursuant to Modified Procedure, i., by written submission rather than by hearing. IDAP A
31.01.01.204.
The Stimson Agreement is for a term of five years. The Commission finds that the
Agreement submitted in this case contains acceptable contract provisions and comports with the
terms and conditions of prior Commission Orders. We find the negotiated terms and contract
rates to be just and reasonable and in the public interest. We further find it reasonable to allow
payments made under the Agreement as prudently incurred expenses for ratemaking purposes.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
Avista Utilities, an electric utility, pursuant to the authority and power granted it under Title
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. 18 C.R. Part 292 (2003).
ORDER
In consideration of the foregoing, IT IS HEREBY ORDERED and the Commission
does hereby approve the October 1 , 2006 Power Purchase Agreement between A vista
Corporation dba A vista Utilities and Stimson Lumber Company together with the related
Generator Interconnection Agreement and First Amendment.
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. 30224
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 191"11.
day of January 2007.
PAUL KJELl\; NDER, PRESIDENT
lf~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:AVU-O6-10 sw
ORDER NO. 30224