20190412Attorney General Letter.pdf

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0F{STATE OF IDAHO
OFF]CE OF THE ATTORNEY GENERAL
LAWBENCE G. WASDEN
VIA E.MAIL
April 15,2019
Avista Corporation
Michael Andrea
m ichael.andrea(Dav istacorp.com
Avista Utilities
l4l I E. Mission
PO Box 3727
Spokane, WA99220-3727
Rocky Mountain Porver
Yvonne Hogle
[e-mail]
Ted Weston
ted.weston(Doac i fi coro.com
PacifiCorp dba Rocky Mountain Power
1407 West North Temple, Suile 330
Salt Lake city, uT 84116
Idaho Power Compony
Donovan E. Walker
d wa I kerfD i d a hooower.com
ldaho Power Company
PO Box 70
Boise, ID 83707-007
Clint Kalich
[e-mail]
Avista Utilities
l4l I E. Mission
PO Box 3727
Spokane, W A 99220-3727
DanielMacNeil
daniel.macne i l@pac i fi corp.com
PacifiCorp dba Rocky Mountain Power
825 NE Multnomah Street
Portland, OR 97232
Michael Danington
M Darrineton@ idahooower.com
ldaho Power Company
PO Box 70
Boise, ID 83707-0070
Rc: UPDATES TO PUBLISHED AVOIDED COST RATES; Casc Nos. IPC-E-I9-I3,
PAC-E-I 9-05, AVU-E-I 9-05.
Pursuant to the Public Utility Regulatory Policies Act of 1978 (*PURPA") and the
implementing regulations of the Federal Energy Regulatory Commission ("FERC"), the ldaho
Public Utilities Commission ("Commission") has approved a Surrogate Avoided Resource
("SAR") methodology for calculation of avoided cost rates at which PURPA qualiffing
cogeneration and small power production facilities ("qualifying facilities" or "QFs") are paid by
Idaho Power, Avist4 and PacifiCorp. Avoided cost rates are the purchase price paid to QFs for
purchases of QF capacity and energy. The release of a new natural gas price forecast by the U.S.
Contracts & AdmlnlstraUvc Law DMslon, ldaho Publlc u{'Iltb3 Commlssbn
P.O. Box 83720, Boise, ldaho 83720.$74, Telephona: (2{,8} 334-0300, FAX: fl)Bl 3349-37s2, Emall: lpuc0puc.stat€.E.us
Locatod st 472 West Washlnglon St.. Bdre, ldaho 33702
Page2
Energy Information Administration ("EIA") triggered an updated calculation of avoided cost
rates.
In accordance with the methodology approved in Order No. 32697, the "reference case"
natural gas price forecast for the Mountain Region's Electric Power sector included in EIA's
Annual Energy Outlook serves as the basis for computing avoided cost rates. In Order No.
32697, the Commission also found that the final release of Annual Energy Outlook automatically
triggers a recalculation of the published avoided cost rates. In Order No. 32802, the Commission
clarified that an update should occur on June I or within 30 days of the final release of the
Annual Energy Outlook, whichever is later. EIA released the Annual Energy Outlook 2019 on
January 24, 2019. A copy of the relevant natural gas price forecast is attached. Staff has
incorporated this forecast into the new model.
In addition, the federal Tax Cuts and Jobs Act of 2017 changed the federal corporate ta,r
rate from 35 percent to 2l percent, effective January 1,2018. Idaho House Bill 463 changed
Idaho corporate tax rate from 7.4 percent to 6.925 percent, effective January 1,2018. Staffhas
also changed the "Federal Defened Rates" and "Federal/All State Combined Tax Rates" in the
model to reflect the ta>< changes.
Lastly, Staff updated Avista's costs of capital in the model according to the stipulation
and settlement in Avista's most recent general rate case (Case No. AVU-E-17-01). The
conclusion of the rate case has triggered an update of Avista's cost of capital figures in
accordance with the approved methodology, and Staff has incorporated the new cost of capital
figures listed below in the SAR model.
Cost of Debt 5,720/o
Cost of Common Equitl,9.50%
Overall, the combination of all the changes results in about an eight to nine percent
decrease in 2O-year levelized avoided cost rates for all three utilities.
Please find attached (l) EIA's 2019 natural gas forecast, (2) updated published avoided
cost rates for all three utilities, and (3) a copy of the updated SAR model. Please review these
attachments and file comments with the Commission regarding the updated SAR model and the
resulting rates as they pertain to your utility.
Staff will present a Decision Memo at the April 15, 2019 Decision Meeting
recommending the Commission issue Notices of Application and Notices of Modified Procedure
in these matters and set comment deadlines of May 16,2019 and reply cornment deadlines of
May 23,2019.
Avista Idaho Power Rockv Mountain Power
Federal/All State
Combined Tax Rates
24.6740%25.7400Yo 24.5866%
Federal Deferred Rates 21.0000%21.0000%2t.0000%
Page 3
Thank you for your cooperation. Please contact Yao Yin ([e-mail] ) if
you have any questions.
Sincerely,
->d,.^*-(.(
Edward Jewell
Deputy Attorney General
Enclosures:
Updated SAR rnodel excel spreadsheet
Updated SAR price lists
EIA's 2019 Annual Energy Outlook - Mountain Region Electric Power
AVISTA
AVOIDED COST RATES FOR WND PROJECTS
June 01 , 201 9
New Conlracts and
$vlWh
Contracts wlthout Full
Eligibility for these rates !s llmited to prolects 100 kW or smaller.
ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
1
2
3
4
5
6
7II
10
11
12
13
14
15
16
17
18
19
20
26.64
27.67
28.10
28.63
29.36
30.24
31.19
32.37
33.35
34.29
35.1 0
35.84
36.52
37.20
37.85
38.47
39.07
39.64
40.19
40.71
28.78
28.92
29.40
30.17
31.13
32.16
33.46
34.52
35.50
36.34
37.11
37.80
38.50
39.18
39.82
40.44
41 .03
41.59
42.13
42.U
29.07
29.75
30.71
31.84
33.00
34.46
35.61
36.65
37.53
38.33
39.04
39.77
40.46
41 .13
41.77
42.38
42.96
43.52
44.04
44.57
30.48
31.62
32.90
34.18
35.79
37.00
38.08
38.98
39.79
40.50
41.24
41.95
42.62
43.27
43.90
44.49
45.06
45.60
46.14
46.64
32.84
34.25
35.60
37.38
38.62
39.71
40.59
41.38
42.08
42.81
43.52
44.20
44.85
45.49
46.09
46.66
47.21
47.76
48.28
48.77
35.76
37.14
39.13
40.35
41.41
42.25
43.00
43.66
44.38
45.08
45.76
46.42
47.06
47.66
48.24
48.80
49.36
49.88
50.39
50.89
201 9
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
28.64
28.78
29.07
30.48
32.84
35.76
38.62
43.58
M.57
46.55
47.8
48.89
49.98
52.50
54.35
56.1 5
57.86
59.86
61.31
62.87
64.57
67.03
68.38
69.96
72.60
75.74
Note: These rates will be further adjusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook 201 I, released January 20 1 9. See Annual Energy Outlook 201 I, Table 3.8 Energy Prices by SectorMountain at
https ://www.eia. gov/outlooks/aeo/tables_ref.php
AVISTA Page 1
LEVELIZED NON.LEVELIZED
AVISTA
AVOIDED COST RATES FOR SOLAR PROJECTS
June 01 , 201 9
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Eliglbility for these rates is limited to projects 100 kW or smaller.
ON-LINE YEAR
LENGTH CONTRACT NON.LEVELIZED
1
2
3
4
5
6
7I
9
10
1l
12
13
14
15
16
17
18
19
20
26.64
27.67
28.10
28.63
29.36
30.24
31.19
32.50
33.60
34.61
37.1 I
39.42
40.00
40.59
41.17
41.74
42.28
42.81
43.32
€.80
28.78
28.92
29.40
30.1 7
31.13
32.1 6
33.62
34.80
35.87
38.74
41.18
41.74
42.32
42.90
43.46
44.01
44.il
45.05
45.U
46.01
29.07
29.75
30.71
31.84
33.00
34.65
35.94
37.08
40.31
43.00
43.52
44.08
44.65
45.20
45.74
46.28
46.79
47.28
47.76
48.98
30.48
31.62
32.90
34.1 I
36.03
37.40
38.60
42.23
45.1 I
45.63
46.1 5
46.67
47.20
47_72
4.24
48.74
49.23
49.70
51.00
51.43
32.84
34.25
35.60
37.69
39.12
40.34
M.46
47.71
8.02
48.M
48.90
49.37
49.85
50.35
50.82
51.29
51.75
53.1 3
53.55
53.97
35.76
37.14
39.56
41.00
42.20
46.94
50.53
50.62
50.90
51.25
51.64
52.06
52.51
52.96
53.40
53.83
55.29
55.70
56.1 1
56.52
201 I
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
26.64
28.78
n.o7
30.48
32.84
35.76
38.62
44.98
45.99
47.98
76.69
78.53
51.218
u.02
55.89
57.71
59.46
61.47
62.95
64.U
66.25
101 .34
70.12
71.73
74.39
77.56
Note: These rates will be further adiusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook2019,releasedJanuary2019. SeeAnnualEnergyOutlook2019,Table3.8EnergyPricesbySector-Mountainat
https://www.eia.gov/outlooks/aeo/tables_relphp
AVISTA page 2
LEVELIZED NON.LEVELIZED
AVISTA
AVOIDED COST RATES FOR NON-SEASONAL HYDRO PROJECTS
June 01,2019
$/MWh
New Contracts and Replacement Contracts without Full Capacity Payments
Ellgibility for these rates ls limlted to projects smaller than 10 aMW.
ON-LINE YEAB
LENGTH CONTRACT NON-LEVELIZED
1
2
3
4
5
6
7
8
I
10
1t
12
13
14
15
16
17
18
19
20
26.64
27.67
28.10
28.53
29.36
30.24
31 .19
33.12
34.70
36.1 0
38.42
40.42
41.28
42.12
42.92
€.67
44.38
45.06
45.70
46.30
28.78
28.92
29.40
30.1 7
31.13
32.16
34.35
36.08
37.59
40.14
42.32
43.1 9
44.04
44.85
45.61
46.33
47.03
47.8
48.29
48.88
29.07
29.75
30.71
31.84
33.00
35.54
37.47
39.1 0
41.93
44.30
45.17
46.02
46.84
47.61
48.33
49.04
49.70
50.32
50.92
51.99
30.48
31.62
32.90
34.1 I
37.14
39.26
41.00
44.13
46.70
47.52
218.35
49.1 5
49.90
50.62
51.31
51.97
52.59
53.1 8
54.31
54.85
32.84
34.25
35.60
39.13
41.43
43.25
46.72
49.48
50.21
50.97
51.71
52.42
53.1 1
53.78
54.42
55.03
55.61
56.79
57.32
57.U
35.76
37.14
41.56
44.01
45.83
49.69
52.63
53.1 I
53.82
54.47
55.12
55.75
56.38
56.98
57.56
58.1 2
59.34
59.86
60.37
60.87
201 I
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
26.64
28.78
29.O7
30.48
32.84
35.76
38.62
51.42
52.53
54.62
73.85
75.65
58.42
61.06
63.03
64.96
66.81
58.94
70.52
72.22
74.05
98.01
78.1 5
79.88
82.66
85.95
Note: These rates will be further adjusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook2019,releasedJanuary2019. SeeAnnualEnergyOutlook20l9,Table3.SEnergyPricesbySector-Mountainat
https ://www.eia. gov/outlooks/aeo/tables_ref .php
AVISTA Page 3
LEVELIZED NON.LEVELIZED
AVISTA
AVOIDED COST RATES FOR SEASONAL HYDRO PROJECTS
June 01 , 201 9
$/MWh
New Contracts and Replacement Contracts without Full Capaclty Payments
Ellglbility for these rates ls llmlted to proiects smaller than 10 aMW,
ON-LINE YEAR
LENGTH CONTRACT
YEAR
NON.LEVELIZED
1
2
3
4
5
5
7II
10
11
12
'13
14
'15
16
17
18
'19
20
26.64
27.67
28.10
28.63
29.36
30.24
3'l .19
32.08
32.85
33.s9
37.28
40.44
40.74
4l .10
41.47
41 .86
42.24
42.63
43.01
43.38
28.78
28.92
29.40
30.1 7
31.13
32.1 6
33.1 1
33.91
34.69
38.84
42.33
42.57
42.89
43.23
43.59
43.96
44.U
44.71
45.08
45.44
29.07
29.75
30.71
31.84
33.00
34.04
34.89
35.70
40.42
44.32
44.47
44.72
45.O2
45.35
45.69
46.05
46.41
46.77
47.12
48.82
30.48
31.62
32.90
34. t8
35.27
36.1 3
36.96
42.37
46.72
46.72
46.87
47.O9
47.36
47.66
47.99
48.32
€.66
49.00
50.82
51.13
32.84
34.25
35.60
36.70
37.53
38.34
M.62
49.50
49.28
49.27
49.38
49.56
49.79
50.07
50.36
50.66
50.98
52.93
53.22
53.52
35.76
37.14
38.1 I
38.93
39.70
47.14
52.66
52.09
51.86
51.80
51.85
51.99
52.20
52.44
52.69
52.97
55.07
55.34
55.61
55.91
201 I
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
26.64
28.78
29.O7
30.48
32.84
35.76
38.62
40.55
41.50
43.42
93.73
95.82
46.72
49.1 I
s0.99
52.74
54.41
56.35
57.75
59.26
60.90
121 .36
64.61
66.1 3
68.72
71.80
Note: A "seasonal hydro poect' is delined as a generation facility which produces at least 55% ol its annual generation during the
months ol June, July, and August. Ordet 32802.
Note: These rates will be turther adjusted with the applicable integration charge.
Note: The rates shown in this table have been computed using the U.S. Energy lnformation Administration (ElA)'s Annual Energy
Outlook2019,releasedJanuary2019. SeeAnnualEnergyOutlook20l9,Table3.SEnergyPricesbySector-Mountainat
https ://www.eia. gov/outlooks/aeo/tables-ref.php
AVISTA Page 4
LEVELIZED NON-LEVELIZED
AVISTA
AVOIDED COST RATES FOR OTHER PROJECTS
June 01, 2019
$/MWh
New Contracts and Replacement Contracts wlthout Ful! Capacity Payments
Ellglbllity lor these rates is limited to projects smaller than 10 aMW.
ON-LINE YEAR
LENGTH CONTRACT NON-LEVELIZED
'I
2
3
4
5
6
7
8I
10
11
12
13
14't5
16
17
18
19
20
26.64
27.67
28.10
28.63
29.36
30.24
3l .19
34.08
36.41
38.41
40.12
41 .61
42.93
.U.16
45.30
46.36
47.34
8.26
49.1 1
49.91
28.78
28.92
29.40
30.17
3l.13
32.16
35.49
38.08
40.27
42.09
43.67
45.05
46.33
47.51
48.60
49.62
50.56
51.45
52.27
53.04
29.O7
29.75
30.71
31.84
33.00
36.92
39.85
42.24
44.19
45.85
47.28
48.62
49.83
50.96
51.99
52.97
53.87
54.71
55.50
56.26
30.48
31.62
32.90
34.1 I
38.86
42.15
44.73
46.78
48.49
49.95
51.30
52.53
53.67
54.71
55.69
56.60
57.44
58.24
59.01
59.74
32.84
34.25
35.60
41.37
45.04
47.78
49.86
51.58
53.01
54.35
55.56
56.68
57.71
58.68
s9.58
60.41
61.21
61.98
62.70
63.38
35.76
37.14
44.66
48.69
51.48
53.50
55.13
56.47
57.74
58.89
59.96
60.94
6r.88
62.75
63.56
64.33
65.09
65.80
66.47
67.1 3
201 9
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
26.64
28.78
29.07
30.48
32.84
35.76
38.62
61.46
62.72
64.95
66.1 6
67.U
69.22
72.02
74.15
76.24
78.26
80.55
82.31
84.18
86.1 I
88.97
90.65
92.56
95.53
99.01
Note: "Other projects" relers to projects other than wind, solar, non-seasonal hydro, and seasonal hydro projects. These "Other
projects" may include (but are not limited to): cogeneration, biomass, biogas, landlill gas, or geothermal proiects.
Note: The rates shown in this table have been computed using the U.S. Energy lnlormation Administration (ElA)'s Annual Energy
Outlook 20 1 9, released January 201 9. See Annual Energy Outlook 201 9, Table 3.8 Energy Prices by Seclor-Mountain at
https ://www.eia. gov/outlooks/aeoltables_ref .php
AVISTA Page 5
LEVELIZED NON.LEVELIZED
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