20160527Decision Memo.pdf

DECISION MEMORANDI]M
TO: COMMISSIONERIilELLAT{DER
COMMISISIONER RAPER
COMMISSIOIIIER AI\IDERSON
COM1IflSSION SECRETARY
COMMISSION STAX'X'
LEGAL
FROM: DAPHIIIE IfUAIYG
DEPUTY ATTORTYEY GENERAL
DATE: MAY 19,2016
SUBJECT: CASE NO. GNR-E-16-01 (Idaho Power, Avista, PacffiCorp)
ANNUAL REVISION AND UPDATED CALCTILATION OT'TIIE
ADJUSTABLE PORTION OX'TIM AVOIDED COST RATE X'OR
EXISTING PURPA COI{TRACTS
CASE NO. PAC-E-16-09 @acifrCorp)
AI{I\ruAL REVISION OT QT VARIABLE EI\TERGY PRICES PT'RSUAIYT
TO TIIE 1992 AMENDMENTS OF QX'CONTRACTS
The Idaho Public Utilities Commission in Order No. 28708, Case No. GI{R-E-99-1,
established a methodology for the annual adjustable rate portion of avoided costs for those QF
contracts using variable costs associated with Colstip, a coal-fired generating facility in
southeast Montana. For those QF contracts with Colstrip-related fuel costs and variable O&M,
firture Colstrip variable cost adjusfinents are to be calculated by using FERC Form I Colstip
Unit Coal Costs per megawatt hor:r (MWh) and adding $2.00AdWh (the average variable O&M
cost of Colstrip plus 2O1lIvIWh for generation tanes plus a five percent (5%) adjustnent for line
loss). As computed by Commission Staff, the Colstip related adjustable rate will change from
16.68 mill,/kWh to 15.61 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 Avist4 the
indexed gas prices have decreased by $2.0084{MBtu. The approved gas price of $5.10/MMBtu
DECISION MEMORAI{DI,JM
minus the $2.008/ltdMBtu results in a gas price of $3.092/IvIMBtu for the 2016A0n year. This
equates to a SAR fuel cost of 21.95 mill/kWh as used in the model.
The Commission Staff calculated changes to the annual adjustable rate portion of
avoided costs for those QF contracts, using variable costs associated with Colstip and Sumas,
and provided the respective utilities with the updates for review by letter dated May 12,2016.
Avista, Idaho Power, and PacifiCorp responded by letter ttrat Staffs calculations are correct.
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 l,
2003, the adjustable portion for these cotrtrasts was ordered to be equal to the average cost of
fuel for the Carbon, Hale, Naughtoq Huntingon, and Hunter generating plants, including a
variable O&M component of $1.51 but exclusive of generation tanes and a line loss adjusmtent.
The variable energy rate applicable to deliveries corrmencing July 1,2016 extending through
June 30, 2017 has been computed to be $23.61/MlVlu an increase from $2I.75 last year.
COMIVtrSSION DECISION
Under avoided cost methodology the adjustable portion of avoided cost rates for
existing contracts is calculated annually for an ef[ective date of July l. Avista,Idaho Power, and
PacifiCorp agree with Staffs proposed calculations. Also adjusted anrually is the adjustable
portion of avoided cost rates for existing PacifiCorp contacts with year 1992 artendments.
PacifiCorp for those contracts has computed the new variable energy rate. Does the Commission
agree with the proposed changes in the variable rates?
bls/I\4:GNR-E- t 6-0 I _PAC-E- I ffi g_djh
DECISION MEMORANDUM
COLSTRIP ADJUSTABLE RATE CALCULATION
For Period 7finA-AB0l17
Colstrlp Fuel Costfrom Avista FERC Form 1 for CY 2015
line 12 Net Generation (kwh)
line 20 Fuel
FuEl cost per kwh
1.689,s86,000
$22,992,450
$0.013805
$13.6051
$2.0000
$15.6051
Fuel Cosl per MWh
Variable O&M, Gen. Tax, 5% llne loss per MWh
Totat Colstrlp Adjustable Rate
Reference GNR-E-99-1 O.N.28708 411712001
colEtrip_16-17
Avorage Gas Prices nt Sumas, Washington from Inside FERC publication
(S/MMBtu)
Calculating the 2016-2017 Avoided Cost Adjushbte Rate
Jan
Feb
Mar
Apt
May
Jun
July
AuB
sep
Oct
Nov
Dec
Avcrage
2014
$4.89
$5.t2
$s.78
$4.37
$4.s3
$4.28
$4.37
$3.6e
s3.8s
$3.91
$3.62
$4.6E
s4.424
2015
$3.23
$2.s6
$2,40
$2.t 5
$2.13
$2.48
$2.2r
$2.43
$2.41
$2.4r
$2.1r
$2.47
$2.4t6
A$tual Annual Adiustment:
$s. I 0 - ($4,424- $2.41 6) = $1092
Note:
$6.94/MMBtu = 2007-08 Approved Rate
$7.l8A,IMBtu = 2008-09 Approved Rute
$9.00/MMBtu = 2009-10 Approved Rate
$4.62lMMBtu = 2010-l I Approvcd Ratc
$4.99/MMBtu = 201l-12 Approved Ratc
$4.60/MMBtu = 2012-13 Approved Ratc
$3.45/MMBtu = 2013-14 Approved Rate
$4.35/MMBtu = 2014-15 Approved ltate
$5.1O/MMBtu = 2015-16 Approved Ratc
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