20150624final_order_no_33327.pdf

Office of the Secretary
Service Date
June 24,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ANNUAL REVISION )
AND UPDATED CALCULATION OF THE )CASE NO.GNR-E-15-O1
ADJUSTABLE PORTION OF THE AVOIDED-)
COST RATE(S)FOR EXISTING PURPA )
CONTRACTS FOR AVISTA CORPORATION )
DBA AVISTA UTILITIES,FOR IDAHO POWER )ORDER NO.33327
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 Colstrip,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 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 Colstrip-related adjustable rate for the 2015-2016 year should change
from 16.08 mill/kWh to 16.68 mill/kWh.The same calculated rate update 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/WC-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 increased by
ORDER NO.33327 1
$0.75/MMBtu.The approved gas price of $4.35/MMBtu plus the $0.75/MMBtu increase results
in a gas price of $5.10/MMBtu for the 2015-2016 year.This,by Staffs calculation,equates to a
SAR fuel cost of 36.21 mill/kWh for existing contracts signed under an assumed heat rate of
7,100 BtulkWh.’Under the Commission-approved Sumas-based SAR methodology,the
adjustable portion of avoided-cost rates is the same for all of Idaho’s major electric utilities.
The Commission Staff calculated changes to the annual adjustable rate portion of
avoided costs for those QF contracts using variable costs associated with Colstrip and Sumas,
and provided the respective utilities with the updates for review by letter dated May 29,2015.
Avista,Idaho Power and PacifiCorp responded by letter that Staffs calculations are correct for
existing contracts under Colstrip-based and Sumas-based methodologies.
FINDINGS AND CONCLUSIONS
The Idaho Public Utilities Commission has jurisdiction over Avista Corporation dba
Avista Utilities,Idaho Power Company,and PacifiCorp dba Rocky Mountain Power pursuant to
the authority and power granted it under Title 61 of the Idaho Code and the Public Utility
Regulatory Policies Act of 197$(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.
Pursuant to its authority,the Commission has reviewed and considered the filings of
record in Case No.GNR-E-15-01.We find that the accuracy of the variable rate methodology
figures submitted by Avista (Sumas)and calculated by Staff (Coistrip)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.
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.
ORDERNO.33327 2
ORDER
IT IS HEREBY ORDERED that the Colstrip-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 1,2015.
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 2015.
PAUL KJELL’J ER,PRESIDENT
Out of the Office this sate
MACK A.REDFORD,COMMISSIONER
KRI INE RAPER,COMMISSIONER
ATTEST:
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Jhn D.JeweIJ
C6mmission Secretary
O:GNR-E-15-Oldjh
ORDER NO.33327 3