20080604Application.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
~~tll'STJI.
Corp.¡I ri
2lJfiS - 4 Ø¡l'l fO=13
VIA OVERNIGHT MAI
June 3, 2008
Ms. Jean D. Jewell
Commission Secretar
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702-5983
Re: Case No. A VU-E-08- aL
Application of A vista Corporation for an Order Authorizing the Accounting of Wind
Generation Site Costs as Construction Work in Progress.
Dear Ms. Jewell:
,Enclosed is Avista's Application for an Order Authorizing the Accounting of Wind Generation Site
Costs as Constrction Work in Progress. The filing consists of an original and seven copies of
'Avista's Application.
Please direct any questions regarding this filing to Ron McKenzie at [phone].
Enclosure
c: See attached service list
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation's Application for an Order
Authorizing the Accounting of Wind Generation Site Costs as Construction Work in
Progress, by mailng a copy thereof, postage prepaid to the following:
Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utiliies Commission
472 W. Washington
Boise, ID 83720-5983
Scott Woodbury
Deputy Attorney
Idaho Public Utilties Commission
472 W. Washington
Boise,ID 83702-0074
Pamela Mull
Vice President & General Counsel
Potlatch Corporation
601 West First Ave., Suite 1600
Spokane, WA 99201
Dated at Spokane, Washington this 3rd day of June 2008.
pfl~
Rates Coordinator
¡:""oKelly O. Norwood
Vice President
State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
inrig lIlt! 4uu ",Un - Ar'ffO: i 3
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF A VISTA CORP. dba AVISTA UTITIES ) Case No. A VU-E-08-oLl
FOR AN ORDER AUTHORIING THE ) APPLICATION OF A VISTA
ACCOUNTING OF WIN GENERATION SITE ) CORPORATION
COSTS AS CONSTRUCTION WORK IN PROGRESS)
I. INTRODUCTION
1.A vista Corporation, doing business as A vista Utilities (hereinafter A vista or
Company), at 1411 East Mission Avenue, Spokane, Washington, puruant to Section 61-524
Idaho Code and Rule 52 of the Idaho Public Utilities Commission ("Commission Rules of
Procedure"), hereby petitions the Commission for an order allowing for costs associated with
wind generation site land, land rights, reseration costs, and other incremental costs
associated with site evaluation, selection, and acquisition to be accounted for as constrction
work in progress (CWIP), and allowing for the accrual of allowance for funds used durng
constrction (AFUDC). A vista also requests that ths application be presented under the rules
for modified procedure.
2.Avista is a utility that provides service to approximately 352,000 electric customers
and 215,000 natural gas customers in a 26,000-square-mile area in eastern Washington and
northern Idaho. Avista Utilities also serves 95,000 natural gas customers in Oregon. The
largest community served in the area is Spokane, Washington, which is the location of the
APPLICATION OF AVISTA CORP.Page 1 of6
corporate headquarers. Communications in reference to this Application should be
addressed to:
Kelly O. Norwood
Vice President
State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: kelly.norwood(favistacom.com
David J. Meyer, Esq.
Vice President and Chief Counsel of
Regulatory and Goverental Affairs
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: david.meyer(favistacorp.com
II. BACKGROUND
3.In the current Electrc Integrated Resource Plan (IR), submitted in August of2007,
A vista discussed the strategic resource portfolio that wil meet futue electrc load
requirements, promote environmental stewardship and meet obligations to provide reliable
electrc service to customers at fair and reasonable rates. A vista's preferred resource plan in
the IR calls for the acquisition of 300 megawatts of wind generation capacity.
4.Wind generation has proven to be the most commercially viable technology for
meeting the renewable portfolio standards discussed in the IR. In order to fulfill the
preferred resource plan, the Company has been actively seeking rights to develop wind
generation sites. Wind generation sites take a long span of time to procure and develop.
That, coupled with an increasing demand and a limited availabilty of sites, makes securing
cost-effective land rights, sooner rather than later, a priority.
5.On May 1, 2008 the Company purchased permits, studies, lease assignents and four
years of wind data for the development of a wind generation site near Reardan, Washington.
The constrction for this site is estimated to begin in 2011. This project is expected to
APPLICATION OF A VISTA CORP.Page 2 of6
generate approximately 50 megawatts of capacity, and approximately 15 average megawatts
of energy production. The market for wind tubines is very tight, with some manufactung
capacity sold years in advance. The supply constraints are unlikely to ease because of the
increasing number of states adopting renewable energy goals and increased international
competition for wind tubines. In order to meet the 2011 constrction date, the Company wil
have to commit to making non-refudable reseration payments and other initial payments
for the purchase of wind turbines to meet a commercial operation date by the end of20 11. In
addition to wind tubine down payments, the Company wil need to make transformer down
payments, incur site preparation costs, and make equipment payments over the next three
years. The Company is requesting to have all reservation payments and all other costs
associated with development of the wind generation site accounted for as CWIP.
III. PROPOSED ACCOUNTING TREATMENT
6. In this filing, the Company is requesting an order allowing for costs associated with
wind generation site land, land rights, reservation costs, and other incremental costs
associated with site evaluation, selection, and acquisition to be accounted for in FERC
Account 107 - CWIP, and allowing for the accrual of AFUDC. Incremental costs include,
but are not limited to, consulting fees, study costs, legal fees, permit acquisition costs, wind
data collection costs, goverental agency approval costs, lease costs, travel costs, as well as
the other equipment procurement costs discussed above. AFUDC would accrue on CWIP
until the plant is placed in serice. Depreciation would begin when the plant is placed in
service.
7. The time from when initial wind generation site costs are accumulated to the time of
constrction is an unkown period of time. The proposed accounting treatment would
APPLICATION OF A VISTA CORP.Page 3 of6
8.
provide the Company with the opportnity to recover its carrng costs, through the accrual
of AFUDC, associated with wind project costs. The prudence of the costs for ratemaking
purposes would be addressed in a futue proceeding.
Commission authorization is required to account for wind generation site costs in
FERC Account 107 - CWIP, since normally this account is used when plant is in the process
of constrction. Given the lead time between the expenditues for site costs and the ordering
of equipment and start of constrction at the site, it is necessar to obtain Commission
approval to account for these costs in Account 107 - CWIP.
Given the recent wind site transaction, the Company requests that the accounting
order to account for these costs as construction work in progress be issued as soon as
possible.
9.
iv. REQUEST FOR RELIEF
10. WHEREFORE, A vista respectfully requests that the Commission issue an Order
allowing the classification of the wind site generation' related costs described above as
construction work in progress and the accrual of AFC until the project is placed into
serice.
11. The Company requests that the matter be processed under the Commission's
Modified Procedure rules though the use of written comments.
APPLICATION OF AVISTA CORP.Page 4 of6
Dated at Spokane, Washington this 3rd day of June 2008.
AVISTA CORPORATION
BY -;~ d,w=
Kelly O. No ood
Vice President
State and Federal Regulation
APPLICATION OF AVISTA CORP.Page 5 of6
VERIICATION
STATE OF WASHIGTON)
)County of Spokane )
Kelly O. Norwood, being first duly sworn on oath, deposes and says: That he is
the Vice President of State and Federal Regulation of Avista Utilities and makes this
verification for and on behalf of A vista Corporation, being thereto duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be true.
~ (f../ g;.,
SIGNED AN SWORN to before me this 3rd day of June 2008, by Kelly O.
Norwood.
~\\\,,,iill"lll.
"....," 0l1VE; 1111,,,...... ..,\'l .......... ~o;: ~J.~ ., ....\l.~...~. -o¡~:: ,- ':r ..' s.?' .... - . ~~. "- .' _.."' ,.. '::: :~- ~\ ~:3 ! 0 ~~lA1r \ '!:: ~Y.. : I
î. PU\."" ilfg~. ~¡Jl$
~ 11 '. ~ tf...:~.,,. ....'-'T 22. ....Al-~..rt...........\~v~..'i OF tt; \\\\,~IItlltrii 1\\\\\
C?~NOTARY P IC in and for the State of
Washington, residing at Spokane.
Commission Expires:.; /.; 61) /07 J
APPLICATION OF A VISTA CORP.Page 6 of6