20030529Staff letter.pdf

STATE OF IDAHO
May 29 2003
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE G. WASDEN
Blair Strong
Paine, Hamblen, et al
717 W. Sprague Avenue, Suite 1200
Spokane, WA 99201-3505
Rodger Weaver
P acifi Corp
825 NE Multnomah, Suite 600
Portland, OR 97232
Doug Young
Avista Utilities-WWP
1411 E. Mission
PO Box 3727
Spokane, W A 99220-3727
Barton L. Kline
Idaho Power Company
PO Box 70
Boise, ill 83707-0070
John M. Eriksson
Stoel Rives LLP
One Utah Center
201 S. Main Street, Suite 1100
Salt Lake City, UT 84111-4904
Mark Widmer
PacifiCorp
825 NE Multnomah Street
Portland, OR 97232
RE:Case No. GNR-O3-
The Idaho Public Utilities Commission in Order No. 28708, Case No. GNR-99-, established
a methodology for the annual adjustable rate portion of avoided costs for those QF contracts
using variable costs associated with Colstrip, a coal-fired generating facility in southeast
Montana. For those QF contracts with Colstrip-related fuel costs and variable O&M, future
Colstrip variable cost adjustments are to be calculated by using FERC Form 1 Colstrip Unit Coal
Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of
Colstrip plus 20~/MWh for generation taxes plus a five percent (5%) adjustment for line loss).
As computed by Commission Staff the Colstrip related adjustable rate will change from 8.
mill/kWh to 8.64 mill/kWh. The same calculated rate revision under the avoided cost
methodology is used by Avista, PacifiCorp dba UP&L and Idaho Power Company. This change
in the variable rate affects existing contracts under the previous SAR methodology.
The adjustable portion of the avoided cost rates under the Sumas-based methodology is based on
annual average gas prices indexed at Sumas, Washington. As reported by A vista, the indexed
gas prices have decreased by $1.90/mmbtu. The approved gas price of $5.23/mmbtu plus the
$1.90/mmbtu decrease results in a gas price of $3.33/mmbtu for the 2003-2004 year. This
equates to a SAR fuel cost of 24.48 mill/kWh as used in the model.
Contracts & Administrative Law Division, Idaho Public Utilities Commission
O. Box 83720, Boise, Idaho 83720-0074, Telephone: [phone], FAX: [phone], E-mail: IpucC1!lpuc.state.id.
Located at 472 West Washington St., Boise, Idaho 83702
May 29 2003
Page 2
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED
CALCULATION OF THE ADJUSTABLE PORTION OF THE AVOIDED
COST RATES FOR AVISTA CORPORATION DBA AVISTA UTILITIES
FOR EXISTING PURP A CONTRACTS, FOR IDAHO POWER
COMPANY, AND FOR PACIFICORP DBA UTAH POWER & LIGHT
COMP ANY.
Please file your respective responses with the Commission on or prior to June 16 2003.
Thank you for your cooperation, please feel free to contact me or Rick Sterling if you have any
questions.
Sincerely,
c4~,
Scott D. Woodbury
Deputy Attorney General
[phone]
Enclosure
bls/L:GNREO302 sw
COLSTRIP ADJUSTABLE RATE CALCULATION
For Period 7/1/03-6/30/04
Colstrip Fuel Cost from Avista FERC Form 1 for CY 2002
line 12
line 19
Net Generation (kwh)
Fuel
Fuel cost per kwh
Fuel Cost per MWh
Variable O&M , Gen. Tax, 5% line loss per MWh
Total Colstrip Adjustable Rate
Reference GNR-99-1 O.N. 28708 4/17/2001
397 105 000
276 929
$0.006640
$6.6401
$2.0000
$8.6401
Sumos 99-00 rote.xls
03-27-2003 sw
Average Gas Prices at Sumas , Washington from Inside FERC publication
$/MMBtu
Calculating the 2003-2004 Avoided Cost Adjustable Rate
2001 2002
Jan $14.$2.
Feb $6.$1.
March $5.$2.
April $5.$3.
May $5.$2.
June $3.$2.
July $2.$1.
Aug $2.42 $1.
Sept $2.$2.
Oct $1.$3.
Nov $2.$3.
Dec $2.$3.
Average $4.$2.
Actual Annual Adjustment:
$5.23 - ($4.58 - $2.68) =
NOTE:
$2.00/MMBtu = 1997-98 Approved Rate.
$2.35/MMBtu = 1998-99 Approved Rate.
$2.26/MMBtu = 1999-00 Approved Rate.
$2.80/MMBtu = 2000-01 Approved Rate.
$4.82/MMBtu = 2001-02 Approved Rate
$5.23/MMBtu = 2002-03 Approved Rate