20170801Johnson Direct.pdf

DAVID .J. MEYER
VICE PRESTDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVTSTA CORPORATION
1411 E. MISSION AVENUE
P.O. BOX 3727
SPOI(ANE, WASHINGTON 99220
PHONE: [phone], FAX: [phone]
BEFORE THE IDAIIO PI'BIJIC UTTIJTTIES COMMISSION
IN THE MATTER OF THE POWER COST
AD.fUSTMENT (PCA) ANNUAL RATE
AD.]USTMENT FILING OF AVISTA
CORPORATION
cASE No. AVU-E- L7 - 0rl
DIRECT TESTfMONY OF
WILLIAM G. .]OHNSON
FOR AVISTA CORPORATION
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I. INTRODUCTION
O. P1ease state your name, business address, and present
position with Avista CorporaEion.
A. My name is William G. Johnson. My business address
is 1,41,1 East Mission Avenue, Spokane, Washington, and I am
employed by Avista Utilities ("Avista" or "Company") as a
Wholesale Marketing Manager in the Energy Resources Department.
A. What is your educational background?
A. I graduated from the University of Montana in 1981
with a Bachelor of Arts Degree in Political Science/Economics.
I obtained a Master of Arts Degree in Economics from the
University of Montana in 1985.
O. How long have you been employed by the Company and
what are your duties aE a Wholegal.e Marketing Manager?
A. I started working for Avista in April L990 as a
16 Demand Side Resource Analyst. f joined the
17 Department as a Power Contracts Analyst in
Energy Resources
l8 primary responsibilities invol-ve power contract
L996. My
origination
and management and power supply regulatory issues.
O. What is the scope of your testimony in this
2l proceeding?
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A. My testimony will provide a brief summary of the
factors driving power supply expenses during the review period
new long-term,Ju1y 201-6 through ,June 20L7. I also describe
.Tohnson, Dj-
Avista P. l-
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contracts the Company entered into during the deferral period
and the supporting documentation t.hat is provided in electronic
format.
II. SI'M}fARY OF DEFERRJA,I,S
O. Wou1d you please summarize power supply expenses
during the iluly 20L6 through ilune 20L7 review period?
A. Yes. During the review period, Tdaho's share of
power supply expenses was l-ower than the authorized level- by
$7,978,L47. Under the 90? / L}Z PCA sharing, the Company share
of $7, 18 0 ,332was i797,815, leaving a customer rebate balance
due to the reduction in power supply expense.
In addition, the credit for RECs used to meet Washington
RPS are tracked l-00? in the PCA, per prior Commission Orders.
This credit is based on the Idaho allocation of RECs that were
ret.ired to meet Washington RPS (WA T-937) that would have
otherwise been soId. The credit to Idaho customers related to
retired RECs was $36,4L4.
The net impact of these two items is a net deferral- for
the ,Ju1y 20L6 through .fune 20L7 of $7 ,2L5 ,7 46 ( $7 , l-8 O ,332 plus
#36,4L4). Combj-ned with interest, the total deferral balance
is $7 ,233,933.
O. $lhat factore contributed tso the lower power supply
expense during the review period?
,Johnson, Di
Avista P. 2
I a. overall, lower power supply cosLs were due primarily
2 to better than norma1 hydro generation, Iower wholesale power
3 prices and other contract changes, Iower net transmj-ssion
4 expense due to higher than anticipated third-party transmission
5 revenue, and higher than expected REC sales revenue. Partially
6 offsetting the lower net expense was the increased expense
7 resulting from Palouse Wind.
8 palouse Wind is currently not included in the authorized
9 level of power supply expense (i.e., it. is not included in base
l0 rates) . Ninety-percent of the actual Palouse lrlind expense is
ll included in the computation of the PCA deferral, per the
12 Settlement in Case No. AVU-E-15-03.
13 The table below shows a summary of the major factors
14 driving the deferrals during the review period.
,Johnson, Di
Avista P. 3
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1) lncludes the change in hydro generation plus changes in Mid Columbia contract expenses
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2) Includes the efiect of gas-fired turbine optimization, power and gas price changes and other
contract expense and retenue changes.
t3 3) This is the Palouse power purchase net expense considering the ulue of the power
generated, which is less than the gross expense.
t4 4) lncludes the increased expense of highersales net of the Load Growth Adjustment Rate credit.
Over the review period, hydro generation was 33 aMW abovel5
16 the authorized level. Gas-fired generation was 7L aMW lower
17 than the aut.horized Ievel. Colstrip generation was 21 aMW
18 below the authorized level and Kettle Fa1ls generation was 6
19 aMW above the authorized IeveIs. Idaho ret.ail sales were 0.2
20 aMW above the authorized level.
2l The table below shows the change in generation and retail
22 loads from the authorized IeveIs.
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,Johnson, Di
Avista P. 4
Factons Contributing to lncreased (Decreased) Power Supply brpense
July 2016 - June 2017 - ldaho Allocation
Change due to Hydro Generation (1)
Change due to Power and Natural Gas Prices and Contract Changes, (2)
Change due to Colstrip Generation and Fuel Expense
Change due to Kettle Falls Generation and Fuel Expense
Change in Net Transmission Expense (Expense - Rewnue)
REC Sale Rerenue
Palouse Wind Purchase (3)
Change due to Retail Loads (4)
-$2,802,496
-$7,219,019
$390,050
-$324,925
-$1,197,120
-$1,034,526
$4,123,239
$86,651
Total Expenses Aborc (Below) the Authorized Lercl
10% Company Share
Total Power Cost Defenals, Surcharge (Rebate)
-$7,978,147
$797,815
-$7,180,332
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III. NEW I.ONG.TERM CONTRACTS ENTERED INTO DI'RING THE
REVIEW PERIOD
A. Pleaee provide a brief deseription of new long-term
power contracts that the Company entered into during the review
period.
A. The Company entered into two new long-term power
purchase contracts with Mid-Columbia hydro plant owners Douglas
PUD and Chelan PUD. In March 20L7, the Company entered into
an approximately 1-0-year (September 2018 through September
2028) power purchase with Douglas PUD for a share of the Wells
hydroelectric facility. The current legacy contract for the
Wells facitity expires August 3L, 201,8.
In .Tune 201-7, the Company entered into a 10-year (,January
2021- through December 2030) power purchase with Chel-an PUD for
a share of the Rocky Reach and Rock Island hydroelectric
facilities. The Company has an existing contract. for an equal
Johnson, Di
Avista P. 5
Change in Ftydro Generation
Change in Gas-Fired Generation
Change in Colstrip Generation
Change in Kettle Falls Generation
Change in ldaho RetailSales
Chanqe
aMW
33.1
-71.0
-21.4
5.5
0.2
Chanqe
To
6.0%
-18.9%
-12.0%
19.4%
0.0o/o
16 - June 17 Generation and Load the Authorized Level
I percentage share of Rocky Reach and Rock Island that expires
December 31, 2020.
The Company also renewed two small- existing PURPA
contracts during the last 12 months. fn ,January of 2017, the
Company entered into new contracts with the Stimpson wood-fired
cogeneration facility (S.e MW) in Plummer, Idaho and the Deep
Creek hydro facility (41-0 kW) in Washington. A copy of all
contracts are included with support.ing documentation.
IV. SUPPORTTNG DOCI'MENTATION
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O. Pleaee provide a brief overwiew of the documentation
provided by the Company in this filing.
A. The Company maintains a number
record relevant factors considered at
transaction. The following is a list of
maintained. Unless noted, these documents
of documents that
the time of a
documents that are
t6 have been provided
17 on a compact disc as part of this filing. Other documents will
18 be provided on request:
El-ectric Gas TransacLion Record: These documents record
the key details of the price, terms and conditions of a
transaction, the reason for the transaction, and pertinent
transmission or other delivery issues. The Company has
provided worksheets showi-ng the important details of each
electric and natural gas term transaction during the
review period. Additional documentation will be provided
on request.
Position Reports These daily reports show the Company's
and term purchases
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Avista P. 6
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29 forward load/resource position, daily
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each business day and forward market power and natural
gas prices.
Forward Market El-ectric and Natural Gas Price Curves:
This daily data shows forward market prices for
electricity and natural gas and is maintained in Nucl-eus,
the Company's electronic energy transaction database
record system. Forward market prices are included in the
daily Position Reports.
Does that conclude your direct pre-filed testimony?
Yes.
.Tohnson, Di
Avista P. 7