20161220final_order_no_33678.pdf

Office of the Secretary
Service Date
December 20, 2016
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT )
APPLICATION OF AVISTA CORPORATION ) CASE NO. AVU-E-16-08
AND STIMSON LUMBER COMPANY TO )
APPROVE THE FIRST AMENDMENT TO ) ORDER NO. 33678
THEIR POWER PURCHASE AGREEMENT )
On October 24, 2016, A vista Corporation and Stimson Lumber Company filed a joint
Application asking the Commission to approve the First Amendment to their Power Purchase
and Sale Agreement ("Agreement"). The Amendment extends the term of their Agreement -set
to expire January 14, 2017 -through December 31, 2019. The Agreement falls under the Public
Utility Regulatory Policies Act of 1978 (PURPA), and is a contract for the sale and purchase of
electric energy generated by Stimson Lumber's thermal wood waste small power electric
generation plant (Facility) near Plummer, Idaho. The Commission issued a Notice of
Application and Notice of Modified Procedure. Order No. 33643. Staff timely filed comments.
Neither Avista nor Stimson Lumber filed a reply.
BACKGROUND
PURP A was enacted in 1978 "to lessen the country's dependence on foreign oil and
to encourage the promotion and development of renewable energy technologies as alternatives to
fossil fuels." Order No. 32580 at 3, citing FERC v. Mississippi, 456 U.S. 742, 745-46 (1982).
PURP A and its implementing regulations require electric utilities to purchase the power
produced by qualifying facilities (QFs), such as Stimson Lumber's Facility here. 16 U.S.C. §
824a-3(b); 18 C.F.R. § 292.303(a). Avista's Agreement with Stimson Lumber is a PURPA
contract, and Stimson Lumber's Facility is a QF. Application at 2.
The rate that a QF receives for the sale of its power to a utility, referred to as the
"avoided cost" rate, is approved by the Commission, and represents "the 'incremental cost' to the
purchasing utility which, but for the purchase of power from the QF, such utility would either
generate itself or purchase from another source." Order No. 33419 at 3, citing Rosebud
Enterprises v. Idaho PUC, 128 Idaho 624, 627, 917 P.2d 781, 784 (1996); 18 C.F.R. §
292.101 (b )( 6) ( defining "avoided cost").
ORDER NO. 33678 1
For QFs such as Stimson Lumber's thermal wood waste facility, generating less than
l O average megawatts ( aMW) of energy, 1 the Commission calculates and publishes rates with a
Surrogate A voidable Resource (SAR) methodology, using long-term natural gas price forecasts.2
Order No. 31092 at 3; Application at 2. These published avoided cost rates are periodically
updated as new natural gas price forecasts are issued. Id. at 9.
THE AGREEMENT
Avista and Stimson Lumber's Agreement was first approved by the Commission in
2007. Order No. 32436 at 1. The First Amendment extends the term of Avista and Stimson
Lumber's Agreement through December 31, 2019, using applicable Idaho rates as in effect June
15, 2016.3 Application at 3-4; Supplemental Attachment A to Amendment. Avista and Stimson
Lumber jointly requested that the Commission issue an Order with an effective date of January
15, 2017, approving their First Amendment, and finding that all payments made by A vista for
energy purchases under the Agreement be allowed as prudently incurred expenses for ratemaking
purposes.
STAFF COMMENTS
Staff confirmed that, with A vista's Supplemental Attachment A filed on November 4,
2016, all rates are correct. Staff further determined that all other terms and conditions in the
proposed Amendment and Agreement are consistent with prior Commission Orders. Staff
recommended that the Commission approve the Amendment and Agreement and find that all
payments from A vista to Stimson Lumber be allowed as prudently incurred expenses for
ratemaking purposes.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Avista, an electric utility,
and the issues raised in this matter under the authority and power granted it under Title 61 of the
Idaho Code and PURPA. The Commission has authority under PURPA and Federal Energy
1 The Facility is capable of generating up to about 6.5 MW of energy. Application at 2.
2 The published rate eligibility limit for wind and solar QFs is I 00 kilowatts (kW). Order No. 31092 at 3; Order No.
32176 at 11-12 (reducing eligibility cap for small wind and solar QFs to l 00 kW); Order No. 32262 (affirming
reduced eligibility cap for small wind and solar QFs).
3 Commission Staff noted that the filing included an error associated with the light load hours rate for the period
from March 2019 to June 2019. Staff Comments at 2. Avista filed a Supplemental Attachment A on November 4,
2016, correcting the error.
ORDER NO. 33678 2
Regulatory Commission (FERC) regulations to set avoided costs, to order electric utilities to
enter into fixed-term obligations for the purchase of energy from QFs, and to implement FERC
rules.
The Commission has reviewed the record in this case, including the Application, the
Amendment and Supplemental Attachment, and the comments and recommendations of
Commission Staff. We find that Stimson Lumber's Facility is qualified to receive the published
avoided cost rates contained in the Supplemental Attachment. We further find that the proposed
Amendment and Agreement contain acceptable contract provisions consistent with PURP A,
FERC regulations, and this Commission's prior Orders. We therefore approve the Amendment
and Agreement without change or condition. Finally, we find it reasonable to allow payments
made under the Agreement as prudently incurred expenses for ratemaking purposes.
ORDER
IT IS HEREBY ORDERED that Avista and Stimson Lumber's Application 1s
approved as set forth above.
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. 33678 3
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of December 2016.
PA
ERIC ANDERSON, COMMISSIONER
ATTEST:
O:A VU-E-I 6-08 _ djh2
ORDER NO. 33678 4