20090821Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKNG FILE
FROM:RICK STERLING Avo -L -o'1-o~
RE:
AUGUST 19,2009
ADJUSTMENT TO A VISTA'S PUBLISHED AVOIDED COST RATES TO
REFLECT COST OF CAPITAL APPROVED IN THE COMPANY'S LAST
GENERAL RATE CASE, A VU-E-O~- of
DATE:
Pursuant to the Public Utilty Regulatory Policies Act ofI978 (PURPA) and the
implementing regulations of the Federal Energy Regulatory Commission (FERC), the Idaho
Public Utilities Commission (Commission) has approved a Surrogate Avoided Resource (SAR)
methodology for calculation of the avoided cost rates paid to PURP A qualifying cogeneration
and small power production facilties (QFs) by Idaho Power Company, Avista Corpration and
PacifiCorp. A voided cost rates are the purchase price paid to QFs for purchases of QF capacity
and energy.
On July 17, 2009, the Commission issued Order No. 30856 approving a joint motion by
A vista and the Commission Staf for a Settlement Stipulation in Case No. A VU-E-09-0 1, the
Company's most recent general rate case. On August 7, 2009, the deadline for filing petitions for
reconsideration elapsed with no petitions being fied.
The conclusion of a general rate case trggers a revision and updated calculation of new
PURP A avoided cost rates. 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 figues is
following a general rate case.
Staf has computed revised avoided cost rates for A vista using new cost of capital
figures. The revised rates are shown on the attched tables. The effect of A vista's new cost of
DECISION MEMORANDUM - 1 -AUGUST 19,2009
capita is an increase in avoided cost rates of less than $ i per MWh for a 20-year levelized
contract.
STAFF RECOMMENDATION
Staff recommends that Avista's published avoided cost rates be adjusted to incorporate
new cost of capital figures as approved in Order No. 30856 issued in the Company's last general
rate case. Staff recommends an effective date for the new rates of September i, 2009.
COMMISSION DECISION
Does the Commission agree with Stafs recommendation for adjusting Avista's published
avoided cost rates?
1Ps~ic Sterling
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DECISION MEMORANDUM - 2-AUGUST i 9,2009
AVISTA
AVOIDED COST RATES FOR FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
September 1, 2009
$IMWh
LEVEUZED NON-LEVELIZED
CONTRACT ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
(YEARS)2009 2010 2011 2012 2013 2014 YEA RATES
1 21.61 21.93 22.26 22.60 22.94 23.28 2009 21.61
2 21.76 22.09 22.42 22.76 23.10 23.45 2010 21.93
3 21.91 22.24 22.58 22.92 23.26 23.61 2011 22.26
4 22.06 22.40 22.73 23.07 23.2 23.77 2012 22.60
5 22.21 22.55 22.88 23.23 23.58 23.93 2013 22.94
6 22.35 22.69 23.03 23.38 23.73 24.09 2014 23.28
7 22.50 22.83 23.18 23.53 23.88 24.24 2015 23.63
8 22.63 22.97 23.32 23.67 24.03 24.39 2016 23.99
9 22.77 23.11 23.46 23.81 24.17 24.53 2017 24.35
10 22.90 23.24 23.59 23.95 24.31 24.67 2018 24.71
11 23.03 23.37 23.72 24.08 24.44 24.81 2019 25.09
12 23.15 23.50 23.85 2421 24.58 24.95 2020 25.46
13 23.27 23.62 23.98 24.34 24.70 25.08 2021 25.85
14 23.39 23.74 24.10 24.46 24.83 25.20 2022 26.24
15 23.50 23.86 24.22 24.58 24.95 25.33 2023 26.3
16 23.61 23.97 24.33 24.70 25.07 25.45 2024 27.04
17 23.72 24.08 24.44 24.81 25.19 25.56 2025 27.45
18 23.83 24.19 24.55 24.92 25.30 25.68 2026 27.86
19 23.93 24.29 24.66 25.03 25.40 25.79 2027 28.28 .
20 24.03 24.39 24.76 25.13 25.51 25.89 2028 28.71
2029 29.14
2030 29.58
2031 30.03
2032 30.49
2033 30.95
2034 31.42
EFFECTIVE DATE r ADJUSTABLE COMPONENT
9/1/2009 I 55.21
The total avoided cot rate in each year is the sum of the adjustable component and the fied component from eiter of the tables
above.
Example 1. A 20-year levelized contract with a 2009 on-line date would receive the following rates:
Years Rate
1 23.66 + 55.21
2.20 23.66 + Adjustable component in each year
Example 2. A 4.year non-levelized contract with a 2009 on.line date would receive the following rates:
Years Rate
1 21.26 + 55.21
2 21.58 + Adjustable component In year 2010
3 21.91 + Adjustable component in year 2011
4 22.23 + Adjustable component in year 2012
Note: The rates shown In this table have been computed using the Norhwest Power and Conservation Council's December 29. 2008
Fuel Price Forecast. (See Order No. 30480).
AVISTA
AVOIDED COST RATES FOR NON.FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
September 1, 2009
$/MWh
LEVELIZED NON-LEVELIZED
CONTRACT ON.L1NE YEAR
LENGTH CONTRACT NON-LEVELiZED
¡YEAS)2009 2010 2011 2012 2013 2014 YEAR RATES
1 76.82 75.91 78.04 80.32 82.23 84.18 2009 76.82
2 76.38 76.93 79.13 81.24 83.17 85.14 2010 75.91
3 76.89 77.97 80.8 82.14 84.09 86.12 2011 78.04
4 7765 78.91 80.98 83.03 85.03 87.07 2012 80.32
5 78.2 79.80 81.86 83.93 85.94 88.02 2013 82.23
6 79.19 80.66 82.73 84.80 86.85 88.94 2014 84.18
7 79.96 81.50 83.58 85.67 87.73 89.85 2015 86.18
8 80.74 82.33 84.42 86.52 88.60 90.73 2016 88.34
9 81.50 83.14 85.24 87.35 89.45 91.60 2017 90.43
10 82.25 83.93 86.04 88.17 90.28 92.45 2018 92.70
11 82.99 84.0 86.82 88.96 91.10 93.29 2019 94.89
12 83.71 85.45 87.59 89.74 91.90 94.10 2020 97.15
13 84.42 86.19 88.34 90.51 92.68 94.92 2021 99.46
14 85.11 86.90 89.07 91.25 93.46 95.74 2022 101.83
15 85.78 87.60 89.78 92.00 94.24 96.56 2023 104.26
16 86.44 88.29 90.49 92.74 95.02 97.37 2024 106.74
17 87.09 88.97 91.20 93.8 95.79 98.17 2025 109.29
18 87.73 89.64 91.90 94.21 96.55 98.95 2026 112.40
19 88.36 90.31 92.60 94.93 97.28 99.70 2027 115.61
20 88.99 90.97 93.28 95.62 97.99 100.44 2028 118.91
2029 122.31
2030 125.82
2031 128.6
2032 132.11
2033 135.65
2034 139.30
Note: The rates shown in this table have been computed using the Nortwest Power and Conservation Council's December 29. 2008
Fuel Price Forecast. (See Order No. 3080).