20060629final_order_no_30079.pdf

Office of the Secretary
Service Date
June 29, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL REVISION
AND UPDATED CALCULATION OF THE
ADJUSTABLE PORTION OF THE AVOIDED
COST RATE FOR EXISTING PURPA
CONTRACTS FOR A VISTA CORPORATION
DBA A VISTA UTILITIES, FOR IDAHO POWER
COMPANY, AND P ACIFICORP DBA ROCKY
MOUNTAIN POWER
CASE NO. GNR-06-
ORDER NO. 30079
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. The Colstrip adjustments apply only to contracts executed between
September 28, 1990 and January 30, 1995. 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 for the 2005-2006 year should change from 8.87 mill/kWh to 9.38 mill/kWh. The
same calculated rate revision under the avoided cost methodology is used by Avista, PacifiCorp
dba Rocky Mountain Power 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 Sumas-based methodology is
based on annual average gas prices indexed at Sumas, Washington. Reference Order No. 26135
Case Nos. WWP-95-3/IPC-95-7/UPL-95-2. The purpose of including an adjustable
component in the avoided cost rates is to capture annual changes in natural gas fuel costs. The
Sumas adjustments apply to all SAR methodology contracts executed since January 31 , 1995.
As reported by Avista, the indexed gas prices have increased by $1.88/mmbtu. The approved
gas price of $5.92/mmbtu plus the $1.88/mmbtu increase results in a gas price of $7.80/mmbtu
for the 2006-2007 year. This by Staffs calculation equates to a SAR fuel cost of 57.
milllkWh as used in the model. Under the Commission-approved Sumas-based SAR
ORDER NO. 30079
methodology, the adjustable portion of avoided cost rates is the same for all of Idaho s major
electric utilities.
The Commission Staff by letter dated May 17, 2006, prepared by Staff Engineer Rick
Sterling, calculated changes to the annual adjustable rate portion of avoided costs for those QF
contracts using variable costs associated with Colstrip and Sumas for review by the respective
utilities.Avista, Idaho Power and PacifiCorp by letter responses indicated that Staffs
calculations are correct.
Commission Findings
The Commission has reviewed and considered the filings of record in Case No.
GNR - E-06-1. We find that the accuracy of the variable rate methodology figures submitted by
A vista (Sumas) and calculated by Staff (Colstrip) in this case have not been challenged.
The methodology that this Commission has approved for determining the variable
components of the avoided cost rates is a relatively simple arithmetic re-calculation. We find
based upon our review of the calculations of both Colstrip and Sumas updates, that the resulting
adjustable rates for existing contracts are fair, just and reasonable.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
A vista Utilities, Idaho Power Company and PacifiCorp dba Rocky Mountain Power, electric
utilities, pursuant to the authority and power granted it under Title 61 of the Idaho Code and the
Public Utility Regulatory Policies Act of 1978 (PURP A).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to enter into fixed term obligations for the purchase of energy from qualified facilities
and to implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED that the Colstrip-related and Sumas-related adjustable portions of the
avoided cost rates for existing PURP A contracts for A vista, Idaho Power, and PacifiCorp are
changed effective July 1 , 2006 as detailed above.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
ORDER NO. 30079
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this oZ'jrJ...
day of June 2006.
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
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Commission Secretary
bls/O:GNR-06-01 sw
ORDER NO. 30079