20240213Decision Memo.pdf

DECISION MEMORANDUM
DECISION MEMORANDUM

TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: YAO YIN
MICHAEL DUVAL, DEPUTY ATTORNEY GENERAL

DATE: FEBRUARY 13, 2024

RE: IN THE MATTER OF THE JOINT PETITION OF AVISTA
CORPORATION AND CLEARWATER PAPER CORPORATION FOR
APPROVAL OF AMENDMENT NO. 1 TO POWER PURCHASE AND
SALE AGREEMENT; CASE NO. AVU-E-23-15.

On October 2, 2023, Avista Corporation d/b/a Avista Utilities (“Company”) and
Clearwater Paper Corporation (“Clearwater”) (collectively as “Parties”) entered into Amendment
No. 1 to amend the Power Purchase and Sale Agreement (“Agreement”) to extend the Term for
three additional years.
On November 26, 2023, the Parties entered into Amendment No. 2 to (i) correct references
to Amendment No. 1 to the Renewable Energy Certificate (“REC”) Agreement, (ii) replace Exhibit
F with Revised Exhibit F, and (iii) update the definition of “REC Agreement.”
On December 29, 2023, the Commission issued Order No. 36046 extending the Agreement
through December 31, 2026, subject to further compliance filing. Specifically, the Order required
the Company to update avoided cost rates according to Section II of the Order, include the 90/110
Rule, update Exhibit B, update Schedule 25P, include language to address modifications to the
Facility, and include language that Commission approval is required when the Agreement is
modified.
On January 19, 2024, the Parties entered into Amendment No. 3 to comply with Order No.
36046.
On February 2, 2024, the Parties entered into Amendment No. 4 to correct Revised Exhibit
B contained in Amendment No. 3.

DECISION MEMORANDUM
STAFF ANALYSIS
Staff has reviewed the Company’s compliance filings and believes that the Company has
complied with Order No. 36046 with one exception. Staff does not believe that the Company has
complied with Order No. 36046 in determining avoided cost rates. Specifically, the Company did
not use the first capacity deficiency date authorized when the original Agreement was signed.
However, Staff recommends approval of the avoided cost rate, because the rate will be offset by
the Schedule 25P Block 2 Generation Load rate Clearwater pays Avista.
Order No. 36046 required the Company to determine avoided costs using the first capacity
deficiency date authorized when the original Agreement was executed. The original Agreement
was executed on November 20, 2018. The authorized first capacity deficiency period at that time
was December of 2026. Order No. 33958. Therefore, the Company should have included capacity
payments for December of 2026, the last month of the extended contract term. However, the
Company failed to include any capacity payments in its avoided cost rates, because the Company
believes “the contract is not in a capacity deficit period.” Amendment No. 3 Letter at 2. Despite
this error, Staff recommends approval of the avoided cost rate, because the rate will be offset by
the Schedule 25P Block 2 Generation Load rate Clearwater pays Avista. Staff also believes
capacity payments should start immediately if the Parties renew the Agreement beyond 2026.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Company’s Amendment Nos. 1, 2, 3, and
4.
COMMISSION DECISION
Does the Commission wish to approve the Company’s Amendment Nos. 1, 2, 3, and 4?

_____________________________
Michael Duval
Deputy Attorney General

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