20170616Decision Memo.pdf

DECISION MEMORAI\TDIJNI
TO:COMMIS$OIITER KIELLAI\TDER
COMIIIS$ONER RAPER
COMMISSIONER AI{DERSON
COMMIS$ON SECRETARY
COMNilISSION STAT'T
LEGAL
FROM:YAO YIN
DAPHTIE EUAI\GI I}AG
DATE: JUI\IE 13,2017
SIIBIECT:CASE NO. GNR-8"17-01 (Idaho Power, Avlste, PacifiCorp)
AT{NUAL REYISION AI{D T'PDATED CALCT'LATION OX'TIIE
ADJUSTABI,E PORTION OF IEE AVOIDED COST RATts TOR
EXISTING PTIRPA COITTRACTS
CASE NO. PAC-E-17-04 (PacifiCorp)
ANNUAL REVISTON Or Qr VARTABLE ETYERGY PRTCDS Pt RSTUANT
TO THE 1992 AIVIEIT{DME}ITS OT QX'CONTRACTS
The Idaho Public Utilities Commission in Order No. 28708, Case No. GIIR-E-99-1,
establishcd a methodologT for the anrual 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 Colsfiiprelated fuel costs and variable O&M,
futrne Colstip variable cost adjusments are to be calculated by using FERC Form I Colstip
Unit Coal Costs per megawatt hour (MWh) and adding $2.00AdWh (the average variable O&M
cost of Colstrip plus 20plMlVh for generation taxes plus a five p€rccnt (5%) adjusment for line
loss). As computed by Commission Stafl the Colstrip related adjustable rate will chmge tom
15.61 milL,/kWh to 17.61 milli&Wh. The saure cdculated rate revision under the avoided cost
methodology is used by Aviste PacifiCorp dba Rocky Mountain Power, and Idaho Power
Company. This change in the vriable rate affects existing contacts under the previous SAR
methodology.
The adjustable portion of the avoided cost rates under the Sumas-based mcthodology
is based on annual averagc gas prices indcxed at Sunras, Washiugton. As reported by Avist4 the
indexed gas prices have decreased by $0.243lMMBtu. The approved gall price of
DECISION MEMORA}.IDUM
$3.092ltIMBu minus the $0.243lMMBtu results in a gas price of $2.850/MMBtr for the 2017-
201E year. This equates to a SAR firel cost of 20.24 milukWh as used in the model.
The Commission Staff oalaularcd changes to the annual adjustable rate portion of
avoided sosts for those QF contracts, usiag variable costs associated with Colstrip and Sumas,
and provided the respective utilities with the updates for review by letter dated }vlay 12,2017.
Avista, Idaho Power, md PacifiCorp rcsponded by letterthat Staffs calculations are corrcct.
In accordance with Ordcr 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 contacts was ordered to be cqual to the average cost of
fuel for the Carbo:r, Hale, Naughton, HuntingSon, and Hunter generating plants, ircluding a
variable O&M comtr onent of $1.51 but exchuive of generation taxes and a line loss adjushent.
The variable energy rate applicable to deliveries commencing July \ 2A17 extending tbrcugh
June 30, 2018 has been computed to be $23.29lMWh, a decrease from $23.61 last year.
COMIIfiSSION DECISION
Under avoided cost methodology the adjustable pomion of avoided cost rates for
existing contracts is calculated annuatly for an effective date of July l' Avista Idaho Power, and
PacifiCorp agree with Stafs proposed calculations. AIso adjusted annually is the adjustable
portion of avoided cost rates for existing PacifiCorp contasts with year 1992 amendnreirts.
PacifiCorp for those contacts has computed the new variable en€rgf rate. Does the Commission
agree withthe proposed changes in the variable rates?
Deputy Attorney General
bls/lvtGNR-E-l 7-01_PAC-E- I 7{4 djh
2DECISION MEMORANDUM
COLSTRIP AD.IUSTABLE RATE CALCUI.ATION UNqIcd
For Perlod 71111Vffi0118
Colstrlp Fuel Coetftom Avlsta FERC Form I br GY 2016
line 12 Netconeraton (lwlt)
llne 20 Fusl
Fueloost Per ltwh
Fuel Cost per MWh
Varlable O&M, Gen. Tax,5% llrp loss perMlll/h
Total Coletrlp Adfustable Rate
ReferenaeGNR-E€9-t O,l{.28708 U17i2OO1
$15.6125
02.0000
s17,e125
Colship_l7-18
Average Gar Prlcec at Sumasr lVarhlngton from Inrlde FERC publlcation
(JIVIMBtu)
Celculattng the 2017-2018 AvoftIed Cort AdJurteble Rrte
4!5
$3.23
$2.56
$2.40
$2.15
$2.13
$2.48
n,2t
$2.43
$2.41
$2.41
$2.1I
$2.17
2.016
n.57
$2.t0
$t.4t
$r.42
$1.34
$1.46
$2.28
$2.34
$2.63
$2.64
s2.62
13.27
Jan
Feb
Mar
Apr
Moy
Jun
July
Aug
SeP
Oct
Nov
Dec
Avcrage $2.416 $2.173
Actual Annpal Adjustment:
$3.092 - ($2.416 - $2. 173) = $2.850
Note:
$6.94lI,IMBtu = 2007-08 Approved Rate
$7.18[\4MBtu = 2008-09 Approvcd Ratc
$9.00/IUMBtu = 2009-10 Approvcd Rate
$4.624{MBtu = 2010-l I Approvcd Ratc
$4.99/MMBtu = 201 l-12 Approved Rate
$4.60[vIMBru = 2012-13 Approvcd Rate
$3,45A,IMBtu = 2013-14 Approved Rate
$4.354{MBtu = 2014-15 Approvcd Ratc
$5.10/I\,IMBtu = 2015-16 Approved Rate
$3.092/MMBtu = 2016-17 Approvcd Rale
O$bqt
ProffiAorp
TotalVrrlrih Eorruy frb
for8l? rffit
t{Eudrbn l{t&frrrghm Hun&r Totdr
$ lloreqg'z i tz0,t 9i73 I t90,374,t0f l s?ooEl,mg
{,871,8S 'a,c$,m 7.W,716 1f,499fi4
Frdcsst($) $
t0llB0FQilf .Rr.iml&rto
GrmrdonGlwll)$ttmHmll.rle.a0rtl|tt
Artrye Fuslco$($fillWt0
Varbblr O!il,
Tohlv$lablr Eneryy Rds hrtrll7/2018
For dclhnilca mrvrm$dng Juty {,20,t7 ortrndtng thtorlgh .frrm 30, 2OlB
12 Padn0orprQFr contragtr wlth approvad 1992 amondment latpuqa
I
$
t
2l:t8 ,lttvvll
l.Ct JltwH
23rg /iltvuH
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