20180730Johnson Direct.pdf

DAVID .J. MEYER
VICE PRESIDENT A}TD CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
14]-1 E. MISSION AVENUE
P.O. BOX 3727
SPOKANE, WASHINGTON 99220
PHONE: [phone], FAX: [phone]
RiC E IVE D
2il18 JUL 30 Alt 9: 27
q SiON
BEFORE THE IDAIIO PI'BIJIC UTIIJITIES COMMISSTON
rN THE MATTER OF THE POWER COST
AD.fUSTMENT (PCA) ANNUAL RATE
AD.]USTMENT FTLING OF AVISTA
CORPORATION
CASE NO. AVU-E-TE-07
DIRECT TESTIMONY OF
WILLIAM G. .]OHNSON
FOR AVISTA CORPORATION
I I. IN:TRODUCTION
2 Q. Please state your nElme, business address, and present
3 positiou with Avista Corporation.
4 A. My name is William G. ,fohnson. My business address
5 is 1411- East Mission Avenue, Spokane, Washington, and I am
6 employed by Avista Utilities ("Avista" or "Company") as a
7 wholesale Marketing Manager in the Energy Resources Department.
8 A. What is your educational background?
9 a. I graduated from the University of Montana in l-981
l0 wit.h a Bachelor of Arts Degree in Pol-itical Science/Economics.
l1 I obtained a Master of Arts Degree in Economics from the
12 University of Montana in 1985.
13 O. How loag have you been employed by the Company and
14 what are your duties aa a Wtrolesale Marketing Manager?
15 A. I started working for Avista in April 1990 as a
16 Demand Side Resource Analyst. I joined the Energy Resources
17 Department as a Power Contracts Analyst in June 1-996. My
l8 primary responsibilities involve power contract origination
19 and management and power supply regulat.ory issues.
20 O. What is the scope of your testimony in this
2l proceeding?
22 A. My testimony will provide a brief summary of the
23 Power Cost Adjustment (PCA) deferral-s during the review period
24 ,fu1y 201-7 through ,-Tune 20L8. I also describe new long-term
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contracts the Company entered into during the deferral period
and the supporting documentation that is provided in electronic
format.
rI. SI'MMARY OF DEFERRALS
O. Would you please summarize power supply expeoses
during the iluly 20L7 through ifurc.e 2018 rewiew period?
A. Yes. During the review period, fdaho's share of
power supply expenses was lower than the aut.horized leve1 by
$10,326,329. Under the 902 / 1-Oe" PCA sharing, the Company share
was $1,032,633, Ieaving a customer rebate balance of $9,293,696
due to the reduct.ion j-n power supply expense.
In addition, the credit for RECs used to meet Washington
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14 RPS are tracked 1002 in the PCA, per Commission Order. The
l5 credit is based on the Idaho allocati-on of RECs that were
16 retj-red to meeting Washington RPS (WA I-937) that would have
17 been otherwise soId. The credit to Idaho customers related t.o
18 retired RECs was $1,705.
19 The net impact of those two items is a net. deferral for
20 the .fuly 20L7 through June 2018 of $9,295,402. Combined with
2l interest, the total deferral balance is $9,313,625.
22 O. What factors contributed to the lower power supply
23 e:rlreD.se during the rewiew period?
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A. Overa1l, lower power supply costs were due primarily
to lower wholesale power and natural gas prices and other
contract changes, lower Colstrip and Kettle Falls fuel costs,
lower net transmission expense, and higher than expected REC
sales revenue. Partially offsetting the lower net expense was
the increased expense resulting from Palouse Wind.
Palouse Wind is currently not included in the authorized
l-evel of power supply expense (i.e., it is not included in base
rat.es). Ninety-percent of the actual Palouse Wind expense is
included in the computation of the PCA deferral.
The table below shows a summary of the major factors
driving the deferrals during the review period.
1) lncludes the change in hydro generation plus changes in Mid Columbia contract expenses.
2) lncludes the effeet of gas-fired turbine generation and optimization, power and gas price
changes and other contract expense and revenue changes.
3) This is the Palouse power purchase net expense considering the value of the power
generated, which is less than the gross expense.
4) lncludes the increased expense of higher sales net of the Load Growth Adjustrment Rate credit.
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Avist.a P. 3
to lncreased (tlecreared) Po*er Supply Expense
July 20{7 - June 2lX8 - ldaho Allocation
Change due to Hydro Generation (1)
Change due to Power and Natural Gas Prices and Contract Changes, (2)
Change due to Colstrip & Kettle Falls Generation and Fuel Expense
-$11,87s,212
-$1,232,815
-$560,307
-$362,124
$4,351,009
-$397,62
in Net Transmission Expense (Expense - Revenue)
Sale Revenue
louse Wind Purchase (3)
due to Retail Loads
-$10,326,
$1,032,
Expenses Above (Below) the Authorized Level
10% Retained by the Company
SurchTotal Power Cost
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I over the review period, hydro generation was 20 aMW above
2 the aut.horized l-eve1. Natural gas-fired generation was 78 aMW
3 higher than the authorized 1eve1. Colstrip and Kettle Falls
4 combined generation was 24 aMW above the authorized level.
5 raaho retail sales were 5 aMW above the authori-zed LeveI. The
6 table below shows the change in generation and retail loads
7 from the authorized Ievels.
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15 III. NEW I.ONG-TERM CO}iITRACTS ENTERED IMTO DI'RING THE
t6 REVIEW PERIOD
17 O. Please provide a brief description of new long-term
18 power contracts that the Company entered into during the review
19 period.
20 A. The Company ent,ered into three long-term power
2l purchase agreements during the review period. In November
22 201-7, the Company entered into a 4-year, 364-day power purchase
23 with the City of Spokane's Waste-to-Energy p1ant. The Company
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17 - Juna {t Generatitm rnd Lod Elifferenoer fron the Aufiodzed l.eid
Change Chanoe
altill %
in Hydro Generation 20 3.604
in Gasfired Generation 78 23.8o/o
in CoEtrip & Kettle Fa$s Generation 24 12.1o/o
in ldaho Retail Sales 6 1.9o/o
Change
Change
I had an existing contract with the Waste-to-Energy plant that
2 expired December 31, 201,7.
3 rhe Company also renewed two small existing PURPA
4 contracts during the last 12 months. In September and December
5 of 20L7, the Company entered into cont.racts with the Deep Creek
6 hydroelectric facility in Northport, WA (450 kW) and the Clark
7 r'ork hydroelectric facility in Clark Fork, ID (250 kW). A copy
8 of all contracts are included with supporting documentation.
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IO IV. SUPPORTING DOCI'MENTATION
O. Please provide a brief ove:nriew of the documentation
provided by the Company in this filing.
A. The Company maintains a number of documents that
record relevant factors considered at the time of a
transaction. The following is a list of documents that are
maintained. Unless noted, these documents have been provided
on a compact disc as part of this filing. Ot.her documents will
be provided on request:
Electric /eas Transaction Record: These documents record
the key details of the price, Lerms and conditions of a
transaction, the reason for the t.ransaction, and pertj-nent
transmission or other delivery issues. The Company has
provided worksheets showing the important detail-s of each
electric and natural gas Lerm transaction during the
review period. Additional documentation will be provided
on reguest.
Position Reports:These daily reports show the Company's
and t.erm purchases
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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 Electric and Natural Gas Price Curves:
This daily data shows forward market prices for
electrj-city and natural gas and is maintained in Nucleus,
the Company's el-ectronic energy transaction database
record system. Forward market prices are included in the
daily Position Reports.
Does that concLude your direct pre-fi1ed testimony?
Yes.
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