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Home My WebLink About20030618Decision Memo.pdfDECISION MEMORANDUM TO:COMMISSIONER KJELLANDER COMMISSIONER SMITH COMMISSIONER HANSEN COMMISSION SECRETARY COMMISSION STAFF LEGAL FROM:SCOTT WOODBURY DATE:JUNE 18, 2003 RE:CASE NO. GNR-03-2 (Avista, PacifiCorp and Idaho Power) ADJUSTABLE PORTION OF AVOIDED COST RATE REVISEDIUPDATED CALCULATION FOR EXISTING CONTRACTS 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 Staffthe Colstrip related adjustable rate should change from 52 mill/kWh to 8.64 milllkWh. 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 milllkWh as used in the model. The Commission Staffby letter dated May 29 2003 , prepared by Staff Engineer Rick Sterling, calculated changes to the annual adjustable rate portion of avoided costs for those QF DECISION MEMORANDUM contracts using variable costs associated with Colstrip and Sumas for review by the respective utilities. Avista, Idaho Power and PacifiCorp by letter responses (attached) indicate that Staff's calculations are correct. Commission Decision Under avoided cost methodology the adjustable portion of avoided cost rates for existing contracts is calculated annually for an effective date of July 1. Avista, Idaho Power and PacifiCorp agree with Staff's proposed calculations. Does the Commission agree with the proposed changes in the variable rate? Scott Woodbury VldJM:GNREO302 DECISION MEMORANDUM ,'r-\/r ( (: L. i:. '~, 1; !:' p: 1:...1 r-;L__ 825 E, Multnomah Portland, Oregon 97232 (503) 813-5000 2003 JUN II At-11O: PACIFICORP ,,- :. !"" i l.::xiC UTILlT~ES COHMISSION PAClAC: POWER UTAH POWER June 10, 2003 Idaho Public Utilities Commission POBox 83720 Boise, ill 83720-0074 Attention: Scott D Woodbury RE: Case No. GNR-03-2 - Idaho Avoided Cost Dear Mr. Woodbury: Thank you for your letter of May 29 2003 in which you provided the 2003-2004 updated prices for the adjustable portion of the avoided costs rates under the present avoided cost methodology. PacifiCorp has reviewed the proposed updated prices and agree that the prices have been updated coITectly. The Company accepts the new schedule as accurate. If you have any questions please feel free to call or email me at 503.813.5541 or Mark. Widmer~acifiCorp.com. Sincerely, 7?7 k-- Mark Widmer Regulatory Manager Avista Corp. 1411 East Mission PO Box3727 Spokane, Washington 99220-3727 Telephone 509-489-0500 Toll Free 800-727-9170 Lfj) vi! (f erd) Ia?? ~;J'--':'J:"!'"'!-" 1 ..".~"'-,. L'-ill ,-. ~~~'V'STA~ Corp. " ""'" f" i L r. u 2ufi3 JUi~ - 5 PM 3. 59 lU Fe, r,(j PUitUC UTIliTiES COMM:iS8J€J:N June 3 , 2003 Rick Sterling Idaho Public Utility Commission Statehouse Mail West 472 Washington Boise, ill 83720 RE:Case No. GNR-03- Dear Rick: Avista is responding to the notice dated May 29 , 2003 regarding the annual revision and updated calculation of the adjustable portion of the avoided cost rates. The Company is in agreement with th.e Colstrip adjustable rate of 64 )JlilllkWh !LTld the !LTlnual average gas price of $3.33/mmbtu. '-- H. Douglas Young Contracts a..1'J.d Resource AcLTinistrator BARTON L. KLINE ISB #1526 Idaho Power Company P. O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-2682 FAX Telephone: (208) 388-6936 REeE1VED FiLED !Xj i ! ZGD3.JUN i!~4 -." c::-., o"li. " ..; ii',',I:;. fU'(i ;:' UTiLITIES COf'U,;;t'SSION Attorney for Idaho Power Company Street Address for Express Mail: 1221 West Idaho Street Boise, Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE ANNUALREVISION AND UPDATED CALCULATION OF THE ADJUSTABLE PORTION OF THE AVOIDED COST RATES FOR A VISTA CORPORATION DBA AVISTA UTILITIES FOR EXISTING PURPA CONTRACTS, FOR IDAHO POWER COMPANY, AND FOR PACIFICORP DBA UTAH POWER & LIGHT COMPANY. CASE NO. GNR-03- IDAHO POWER COMPANY'S ACCEPTANCE OF UPDATED CALCULATION OF PUBLISHED AVOIDED COST RATES COMES NOW Idaho Power Company ("Idaho Power" or "the Company and hereby accepts the annual revisions and updated calculation of the adjustable portion of avoided cost rates as proposed by IPUC Staff in the May 29, 2003 letter from Scott Woodbury. Idaho Power Company s acceptance in this case is based on the following: IDAHO POWER COMPANY'S ACCEPTANCE, Page Rate Adjustments Based On Colstrip Costs. The proposal presented by Staff in its May 29, 2003 letter revises the variable cost components of the rates paid under certain contracts signed by Idaho Power during the late 1980's and early 1990's. These contracts provide that a portion of the rate paid by Idaho Power will be adjusted annually based on changes in fuel and variable operating costs at the Colstrip coal-fired generating plant in Montana. As a result, the discussion and computation of the Colstrip-related fuel costs and variable O&M costs described in the May 29 , 2003 letter only apply to a specific group of existing contracts. No new contracts containing rates tied to Colstrip operating costs are being signed. For contracts of that vintage , Idaho Power accepts the computation of the revised Colstrip-related fuel costs and variable O&M costs as specified in the May 29, 2003 letter. Changes To Variable Rates Based On Gas Prices At Sumas Washington. The second part of the May 29, 2003 letter addresses changes in certain OF purchase rates based on changes in gas prices as measured at Sumas Washington. As in the case of the Colstrip-related variable cost component, there isa group of OF contracts where a portion of the rate paid to the OFs will be adjusted annually based on changes in the cost of natural gas as measured at Sumas Washington. Idaho Power has only one contract that utilizes the changes in the Sumas gas price to adjust a portion of the price paid to the existing OF seller. For purposes of adjusting the rates in that one contract, Idaho Powe~ accepts the changes in the cost IDAHO POWER COMPANY'S ACCEPTANCE , Page 2 component based on changes in gas prices at Sumas as presented in the May 29 , . 2003 Letter. DATED This 16th day of June, 2003. t~cWiL- BART . KLINE Attorney for Idaho Power Company --- IDAHO POWER COMPANY'S ACCEPTANCE, Page 3 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 16th day of June, 2003, I caused a true and correct copy of the within and foregoing IDAHO POWER COMPANY' ACCEPTANCE OF UPDATED CALCULATION OF PUBLISHED AVOIDED COST RATES to be served upon the following named parties by the method indicated below and addressed to the following: Scott D. Woodbury Deputy Attorney General Idaho Public Utilities Commission 472 W. Washington Street O. Box 83720 Boise, Idaho 83720-0074 Blair Strong Paine , Hamblen , et al 717 W. Sprague Avenue, Suite 1200 Spokane , W A 99201-3505 Doug Young Avista Utilities-WWP 1411 E. Mission , P.O. Box 3727 Spokane, W A 99220-3727 --1L John M. Eriksson Stoel Rives LLP One Utah Center 201 S. Main Street, Suite 1100 Salt Lake City, UT 84111-4904 Rodger Weaver PacifiCorp 825 N.E. Multnomah, Suite 600 Portland , OR 97232 Hand Delivered S. Mail Overnight Mail FAX Hand Delivered S. Mail Overnight Mail FAX Hand Delivered S. Mail Overnight Mail FAX Hand Delivered S. Mail Overnight Mail FAX Hand Delivered S. Mail Overnight Mail FAX Hand Delivered S. Mail Overnight Mail ClE. fU:- BARTON L. KLINE Mark Widmer PacifiCorp 825 N.E. Multnomah Street Portland, OR 97232 CERTIFICATE OF SERVICE