20120606final_order_no_32563.pdf

Office of the Secretary
Service Date
June 6,2012
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL REVISION )
AND UPDATED CALCULATION OF THE )CASE NO.GNR-E-12-02
ADJUSTABLE PORTION OF THE AVOIDED-)
COST RATE FOR EXISTING PURPA )
CONTRACTS FOR AVISTA CORPORATION )
DBA AVISTA UTILITIES,FOR IDAHO POWER )ORDER NO.32563
COMPANY,AND PACIFICORP DBA ROCKY )
MOUNTAIN POWER )
The Idaho Public Utilities Commission establishes purchase rates for energy
generated by cogeneration and small power production facilities that are qualifying facilities
(QFs)under Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978
(PURPA).In Order No.28708,Case No.GNR-E-99-1,the Commission established a
methodology for the annual adjustable rate portion of avoided costs for those QF contracts using
variable costs associated with Coistrip,a coal-fired generating facility in southeast Montana.
The Colstrip adjustments apply only to contracts executed prior to 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 Coistrip Unit Coal Costs per megawatt
hour (MWh)and adding $2.00/MWh (the average variable O&M cost of Colstrip plus 20Ø/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 2012-2013 year should change
from 11.38 mill/kWh to 14.80 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-E-95-3/IPC-E-95-7/UPL-E-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 between January 31,1995
and September 26,2002.As reported by Avista,the indexed gas prices have decreased by
ORDERNO.32563 1
$0.39/MMBtu.The approved gas price of $4.99/MMBtu plus the $0.39/MMBtu increase results
in a gas price of $4.60/MMBtu for the 2012-2013 year.This by Staff’s calculation equates to a
SAR fuel cost of 33.81 mill/kWh for existing contracts signed under an assumed heat rate of
7,350 Btu/kWh.’Under the Commission-approved Sumas-based SAR 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 14,2012,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 responses by letter indicated that Staff’s calculations are correct for existing contracts
under Coistrip-based and Sumas-based methodologies.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No.
GNR-E-12-02.We find that the accuracy of the variable rate methodology figures submitted by
Avista (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 Avista Corporation dba
Avista 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 (PURPA).
The Commission has authority under PURPA 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.
The heat rate used to compute the variable portion was changed from 7,350 to 7,100 in Order No.29124 on
September 26,2002.New fueled contracts should use a heat rate of 7,100 Btu/kWh to convert gas price to the
adjustable portion.Idaho Power’s Vaagen Bros.contract should use a heat rate of 7,350 for the conversion because
it was the approved heat rate at the time the contract was signed.
ORDER NO.32563 2
ORDER
In consideration of the foregoing and as more particularly described above,IT IS
HEREBY ORDERED that the Coistrip-related and Sumas-related adjustable portions of the
avoided-cost rates for existing PURPA contracts for Avista,Idaho Power,and PacifiCorp are
changed effective July 1,2012 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)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of June 2012.
\
MACK A.REDFORD,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
7
JØan D.Jewell
Commission Secretary
bls/O:GNR-E-1 2-02_ks
PA PRESIDENT
ORDER NO.32563 3