20140620Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
__________
DEPUTY ATTORNEY GENERAL
DATE:JUNE 20,2014
—
--SUBJECT:CASE NO.GNR-E-1441 (Idaho Power,Avista,PadiliCorp
ADJUSTABLE PORTION OF AVOIDED COST RATE
REVISED/IJPDATED CALCULATION FOR EXISTING CONTRACTS.
CASE NO.PAC-E-14-04 (PacifiCorp)
ANNUAL VARIABLE ENERGY RATE ADJUSTMENT -
1992 AMENDMENT QF CONTRACTS.
The Idaho Public Utilities Commission in Order No.28708,Case No.GNR-E-99-l,
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.For those QF contracts with Coistrip-related fuel costs and variable O&M,
future Coistrip 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 Coistrip 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 should change
from 15.12 mill/kWh to 16.08 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.As reported by Avista,the
indexed gas prices have increased by $0.9/MMBtu.The approved gas price of $3.45/MMBtu
DECISION MEMORANDUM 1
plus the $0.9/MMBtu increase results in a gas price of $4.35/MMBtu for the 2014-2015 year.
This equates to a SAR fuel cost of 30.89 mill/kWh,using a heat rate of 7,100 BtUJkWh as used in
the model for potential future contracts in accordance with Order No.29124.For existing
contracts signed under an assumed heat rate of 7,350 btu/kWh,this equates to a SAR fuel cost of
31.97 mill/kWh.
The Commission Staff calculated changes to the annual adjustable rate portion of
avoided costs for those QF contracts,using variable costs associated with Coistrip and Sumas,
-ded the respective utilities with theupdaf reewby iefferdated June 3,20-
Avista,Idaho Power,and PacifiCorp responded by letter that Staff’s calculations are correct.
In accordance with Order No.29316,the adjustable portion of the avoided cost rate
eontraets—with-•year 199-2amendrnents has—aiso been-reeomputed----------------
Beginning on July 1,2003,the adjustable portion for these contracts was ordered to be equal to
the average cost of fuel for the Carbon,Hale,Naughton,Huntington,and Hunter generating
plants,including a variable O&M component of $1.51 but exclusive of generation taxes and a
line loss adjustment.The variable energy rate applicable to deliveries commencing July 1,2014
extending through June 30,2015 has been computed by PacifiCorp to be $20.47/MWh,an
increase from $19.17 last year.
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.Also adjusted annually is the adjustable
portion of avoided cost rates for existing PacifiCorp contracts with year 1992 amendments.
PacifiCorp for those contracts has computed the new variable energy rate.Does the Commission
agree with the proposed changes in the variable rates?
‘4
Krihfie A.Sasser
Deputy Attorney General
blsfM:GNR-E-14-0 1_PAC-E-14-04_ks
DECISION MEMORANDUM 2
STATE OF IDAHO
OFRCE OF THE ATTORNEY GENERAL
LAWRENCE G,WASDEN
RE CE!V F:
2mJUN-3 PM 2:29
IDAHO (i1U1!UT1ES COMMISSION
June 3,2014
AvistaCorpratin —____
Michael Andrea Clint Kalich
Avista Utilities Avista Utilities
141 1 E.Mission 141 1 E,Mission
POBox3727 POBox3727
Spokane,WA 99220-3727 Spokane,WA 99220-3727
Rocky Mountain Power
Daniel Solander
Ted Weston
PacifiCorp dba Rocky Mountain Power
One Utah Center
201 S.Main Street,Suite 2300
Salt Lake City,UT 84111
Idaho Power Company
Donovan E.Walker
Idaho Power Company
P0 Box 70
Boise,ID 83707-007
Re:Case Nos.GNR-E-14-O1;PAC-E-14-04
Greg Duvall
Hui Shu
Laren Hale
PacifiCorp dba Rocky Mountain Power
825 NE Multnomah Street
Portland,OR 97232
Randy Aliphin
Idaho Power Company
P0 Box 70
Boise,ID 83707-0070
The Idaho Public Utilities Commission in Order No.28708,Case No.GNR-E-99-1,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 0&M,future Coistrip 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 20Ø/MWh for generation taxes plus a five
percent (5%)adjustment for line loss).As computed by Commission Staff,the Coistrip related adjustable
rate will change from 15.12 mill/kWh to 16.08 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 the Sumas-based methodology is based on annual
average gas prices indexed at Sumas,Washington.As reported by Avista,the indexed gas prices have
Contracts &Adrmnistratjve Law Dvison,Idaho Pubto UtWes Commission
P.O.Etox 83720,0oa,Idaho 837200374 ThIephon2:[phone],FAX:[phone],E-ma:[e-mail]
Located at 472 Wast Washington St.,Boo,Idaho 83702
June 3,2014
Page 2
increased by $0.9/MMBtu.The approved gas price of $3.45/MMBtu plus the $0.9IMMBtu increase
results in a gas price of $4.35/MMBtu for the 2014-2015 year.This equates to a SAR fuel cost of 30.89
mill/kWh as used in the model.
In accordance with Order No.29316,the adjustable portion of the avoided cost rate for PacifiCorp
contracts with 1992 amendments has also been recomputed.Beginning on July 1,2003,the adjustable
portion for these contracts was ordered to be equal to the average cost of fuel for the Carbon,Hale,
Naughton,Huntington,and Hunter generating plants,including a variable O&M component of $1.51 but
exclusive of generation taxes and a line loss adjustment.The variable energy rate applicable to deliveries
commencing July 1,2014 extending through June 30,2015 has been computed to be $20.47/MWh,an
increase from $19.17 last year.
Accompanying this letter are worksheets showing the computation of the updated adjustable rates for the
various affected contracts.If you accept the updated rates after reviewing them as accurate,please
indicate your approval by letter (or other filing)directed to the Commission in the reserved case docket
numbers identified above,The case heading for the generic adjustment,Case No.GNR-E-14-01,will
-
-
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION
OF THE ADJUSTABLE PORTION OF THE AVOIDED COST RATE(S)FOR
EXISTING PURPA CONTRACTS FOR AVISTA CORPORATION DBA AVISTA
UTILITIES,FOR IDAHO POWER COMPANY,AND FOR PACIFICORP DBA
ROCKY MOUNTAIN POWER.
The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment language,
Case No.PAC-E-1 4-04,is as follows:
IN THE MATTER OFTI-IE ANNUAL REVISION OF QF VARIABLE ENERGY
PRICES IN ACCORDANCE WITH TERMS OF THE 1992 AMENDMENTS TO
POWER PURCHASE AGREEMENTS BETWEEN IDAHO QFS AND PACIFICORP.
Please file your respective responses with the Commission on or prior to June 17,2014.
Thank you for your cooperation.Please feel free to contact Yao Yin if you have any questions.
Sincerely,
./
r
Kristine A.Sasser
Deputy Attorney General
Enclosures
blsfL:GNR-E-I4-0 I_PAC-E-1 4-04_avoided cost
COLSTRIP ADJUSTABLE RATE CALCULATION Updated
For Period 7/1/14-6/30/15
Co!strp Fuel Cost from Avista FERC Form I for CV 2013
Net Generation (kwh)
Fuel
Fuel cost per kwh
1,227,151,000
$17,275,865
$0.01 4078
Fuel Cost per MWh $14.0780
.Variable O&M,Geri.Tax,5%line loss per MWh $2.0000
Total Colstrip Adjustable Rate S16.0780
Reference GNR-E-99-1 O.N.28708 411712001
Colstripl 4-15
line 12
line 20
Average Gas Prices at Sumas,Washington from Inside FERC publication
(S/MMBtu)
Calculating the 2014-2015 Avoided Cost Adjustable Rate
2012 2013
Jan $3.47 $3.58
Feb $2.78 $3.58
Mar $2.47 $3.46
Apr $1.96 $3.93
May $1.82 $3.91
$235 394
July $2.44 $3.46
Aug $2.74 $3.27
Sep $2.44 $3.19
Oct $2.91 $3.24
Nov $3.94 $4.27
Dec $4.03 $4.31
Average $2.78 $168
Actual Annual Adjustment:
$3.45 ($2.78—$3.68)$4.35
Note:
$6.94/MMl3tu 2007-08 Approved Rate
$7.I 8/MMF3tu 2008-09 Approved Rate
$9.00/MMl3tu 2009-10 Approved Rate
$4.62/MMBtu 20 10-I I Approved Rate
$4.99/MMBtu 2011-12 Approved Rate
$4.60/MMBtu =2012-13 Approved Rate
$3.45/MMBtu 2013-14 Approved Rate
Pa
c
i
f
i
C
o
r
p
I
To
t
a
l
Va
r
i
a
b
l
e
En
e
r
g
y
Ra
t
e
fo
r
20
1
4
1
2
0
1
5
Ca
r
b
o
n
Na
u
g
h
t
o
n
Hu
n
t
i
n
g
t
o
n
Hu
n
t
e
r
To
t
a
l
s
Fu
e
l
Co
s
t
($
)
FE
R
C
Fo
r
m
1
-
Pa
g
e
40
2
,
li
n
e
20
$
26
,
0
5
5
,
9
3
2
$
11
6
,
9
3
5
,
3
0
8
$
11
1
,
0
5
8
,
7
2
1
$
15
4
,
8
3
6
,
5
3
$
40
8
,
8
8
6
,
5
0
0
Ge
n
e
r
a
t
i
o
n
(M
W
h
)
FE
R
C
Fo
r
m
1
-
Pa
g
e
40
2
,
li
n
e
12
1,
1
9
7
,
7
6
5
5,
5
3
3
,
8
9
5
6,
7
6
8
,
6
2
5
8,
0
6
7
,
8
8
9
$
21
,
5
6
8
,
1
7
4
Av
e
r
a
g
e
Fu
e
l
Co
s
t
(
$
!
M
W
h
)
$
21
.
7
5
$
21
.
1
3
$
16
.
4
1
$
19
.
1
$
18
.
9
6
IM
W
h
Va
r
i
a
b
l
e
O&
M
IP
U
C
Or
d
e
r
No
.
28
7
0
9
$
1.
5
1
IM
W
h
To
t
a
l
Va
r
i
a
b
l
e
En
e
r
g
y
Ra
t
e
fo
r
20
1
4
1
2
0
1
5
$
20
.
4
7
IM
W
h
Fo
r
de
l
i
v
e
r
i
e
s
co
m
m
e
n
c
i
n
g
Ju
l
y
1,
2
0
1
4
ex
t
e
n
d
i
n
g
th
r
o
u
g
h
Ju
n
e
30
,
2
0
1
5
13
Pa
c
i
f
i
C
o
r
p
OF
co
n
t
r
a
c
t
s
wi
t
h
19
9
2
ap
p
r
o
v
e
d
am
e
n
d
m
e
n
t
la
n
g
u
a
g
e
I 11
Pa
c
i
f
i
C
o
r
p
_
1
4
-
1
5