20061219Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
CO MMISSI 0 N STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:DECEMBER 12, 2006
SUBJECT:CASE NO. A VU-06-10 (Avista)
POWER PURCHASE AND SALE AGREEMENT - STIMSON LUMBER
COMPANY
On December 6, 2006, Avista 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 (A vista; Company) dated October 1 , 2006. Also included is a
Generator Interconnection Agreement (GIA) between A vista 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
5 MW of energy. The facility is a qualifying facility (QF) pursuant to the Public Utility Regulatory
Policies Act of 1978 (PURPA).
The Stimson facility was previously owned and operated by HaleyWest LLc. Stimson
has assumed HaleyWest LLC's obligations under a Power Sale and Purchase Agreement between
Avista and HaleyWest LLC that expired under its own terms on September 30, 2006. Stimson and
A vista both desired that energy deliveries from the facility to A vista continue without interruption
following termination of the 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, A vista shall pay the published non-levelized avoided cost rates for non-fueled
projects smaller than 10 MW. For all surplus energy received by Avista, Avista 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
DECISION MEMORANDUM
scheduled amount of Net Delivered Output does not exceed 6.5 MW in any hour. A vista shall have
the right, but not the obligation to purchase any Net Delivered Output from the facility in excess of
5 MW in any hour. The maximum annual amount of electric power that 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 A vista. 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 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 A vista s obligations under PURP A with regard to
the facility.
COMMISSION DECISION
Presented for Commission approval is a five-year Power Purchase and Sale Agreement
(and related Generator Interconnection Agreement) between Avista and Stimson Lumber. Stimson is
a PURPA QF. The Stimson facility has a capacity of6.5 MW. The contract rate is the non-levelized
published avoided cost rate for non-fueled projects smaller than 10 MW. The Petitioners and
Commission Staff recommend that the petition be processed pursuant to Modified Procedure, i., by
written submission rather than by hearing. Reference Commission Rules of Procedure, IDAP A
31.01.01.201-204. Does the Commission agree with the recommended procedure?
Scott Woodbury
bls/M:AVU-O6-1O sw
DECISION MEMORANDUM