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Home My WebLink About20041123Comments.pdf'- ' . i~ r.. " " '" ' '' .',- "l_"t~fYl ,,",~"" SCOTT WOODBURY DEPUTY ATTORNEY GENERAL IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83720-0074 (208) 334-0320 BAR NO. 1895 il,., 2m)!; f'HJ\! 23 At,) 9~ 31 " .' '. ': ; ',z ," Li' ,-;"~! ; ,'., "': "-"~"'' , t; 'I " '' .., .-, """"'"., u ii_ic_'0 !IIJJ Street Address for Express Mail: 472 W. WASHINGTON BOISE, IDAHO 83702-5983 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE REVISION AND UPDATED CALCULATION OF THE AVOIDED COST RATES FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER) COMPANY AND FOR P ACIFICORP DBA UTAH) POWER AND LIGHT COMPANY. CASE NO. A VU-O4- IPC-O4- P A C- E-O4- COMMENTS OF THE COMMISSION STAFF COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to Order No. 29628, Notice of Avoided Cost Recalculations, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on November 4 2004 in Case Nos. A VU-04-, IPC-04- and PAC-04-, submits the following comments. BACKGROUND Pursuant to the Public Utility Regulatory Policies Act of 1978 (PURP A) and the implementing regulations of the Federal Energy Regulatory Commission (FERC), the Idaho Public Utilities Commission (Commission) has approved a methodology for calculation of the avoided cost rates paid to PURP A qualifYing cogeneration and small power production facilities (QFs) by Idaho STAFF COMMENTS NOVEMBER 23 , 2004 Power Company, A vista Corporation and PacifiCorp. Avoided cost rates are the purchase price paid to QFs for purchases of QF capacity and energy. Three recent events have triggered consideration of computation of new PURP A avoided cost rates, i., the conclusion of general rate cases for Idaho Power and A vista, and the release of a new natural gas price forecast by the Northwest Power and Conservation Council (NPCC) 1 The conclusion of a general rate case affects avoided cost rates because cost of capital figures are used in avoided cost computations in accordance with the approved methodology. The Commission, in Order No. 29628 , found that the appropriate time to incorporate new cost of capital figures is following a general rate case. A final Order in Idaho Power s general rate case was issued on May , 2004 (Order No. 29505) and a Reconsideration Order was issued on September 28 , 2004 (Order No. 29601). A final Order in Avista s general rate case was issued on October 8, 2004 (Order No. 29602). On September 24 2004, the Northwest Power and Conservation Council released a new natural gas price forecast. Because the new forecast was released at about the same time as the Idaho Power and A vista rate cases were concluded, the Commission has found that both the new cost of capital figures and the new natural gas prices should be incorporated in the computation of new avoided cost rates. Reference Order No. 29628. The Commission is not proposing to revise the cost of capital figures used for PacifiCorp. The practice of updating avoided cost rates due to new fuel price forecasts can be traced to Commission Order No. 29124, Case No. GNR-02-1. In that Order, the Commission adopted a fuel price forecast from the draft Fifth Northwest Conservation and Electric Power Plan, April 25 2002 of the Northwest Power Planning Council (NWPPC) as a reasonable method for calculating a starting gas price in the avoided cost methodology. In doing so , the Commission expressed confidence in the source and the use of a medium forecast, which it continues to believe is reasonable. In Order No. 29124, the Commission stated that "natural gas prices can be updated when a new NWPPC forecast becomes available." The Commission has since approved updated gas prices based on an April 22, 2003 NWPPC forecast in December 2003. Order No. 29391. Formerly the Northwest Power Planning Council (NWPPC). STAFF COMMENTS NOVEMBER 23, 2004 STAFF REVIEW Staff has computed new rates using the Council's September 24, 2004 natural gas price forecast and Idaho Power s and Avista s revised costs of capital. The new rates are approximately 5 mills/kWh higher than the rates currently in effect for all three utilities. Computation of the rates is a ministerial task done in accordance with prior Commission orders; nevertheless, Staff s computation of the rates has been reviewed by the utilities to insure mathematical accuracy. In its review of the draft rate computations, Idaho Power pointed out to Staff that an updated general inflation rate of 2.9% had been used in the spreadsheet that calculates the initial gas price and the gas price escalation rate. Idaho Power contends that updating the general inflation rate is outside the scope of the fuel price and cost of capital changes outlined by the Commission in establishing these dockets. Moreover, the general inflation rate is also one of many other variables used in the avoided cost spreadsheet, yet none of those other variables are being updated in these proceedings. Staff agrees with Idaho Power that the general inflation rate should not have been changed. Staff has re-computed the avoided cost rates using a general inflation rate of2.7%, which was used previously and as established in Order No. 29124. A copy of the re-computed avoided cost rates is attached for each of the three utilities. No other errors or corrections were identified or recommended by any of the utilities following their reviews. RECOMMENDATION Staff recommends that the Commission adopt the avoided cost rates that are attached to these comments. These rates reflect incorporation of the NPCC's September 24, 2004 natural gas price forecast, in addition to the newly adopted cost of capital figures for Idaho Power and A vista as determined in their recently concluded rate cases. Respectfully submitted this ~3 vJ'day of November 2004. ~~~ Scott Woodbury Deputy Attorney General Technical Staff: Rick Sterling i:umisc:comments/avueO4.5 et al swrps ST AFF COMMENTS NOVEMBER 23 , 2004 AVISTA UTILITIES AVOIDED COST RATES FOR NON-FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NON-LEVELIZED 2004 2005 2006 2007 2008 2009 YEAR RATES 50.51.52.53.54.56.2004 50. 50.51.53.54.55.56.2005 51. 51.52.48 53.54.56.57.48 2006 52. 51.53.54.55.49 56.58.2007 53. 52.53.54.56.57.58.2008 54. 52.54.55.56.57.59.2009 56. 53.54.55.57.58.46 59.2010 57. 53.55.56.57.59.60.2011 58. 54.55.56.58.59.60.2012 60. 54.56.57.58.60.61.43 2013 61. 55.56.57.59.60.61.2014 63. 55.57.58.59.61.62.45 2015 64.48 56.57.4 7 58.60.61.62.2016 65. 56.57.59.60.61.63.42 2017 67.48 57.58.59.61.62.45 63.2018 69. 57.42 58.60.61.47 62.64.2019 70. 57.59.60.61.63.64.2020 72. 58.59.60.62.63.65.2021 73. 58.59.61.62.64.65.2022 75. 58.60.61.63.64.66.2023 77. 2024 79. 2025 80. 2026 82. 2027 84. 2028 86. 2029 88. Attachment to Staff Comments Case No. A VU-04- IPC-04- P AC-04- 11/23/04 Page 1 of 6 AVISTA UTILITIES AVOIDED COST RATES FOR FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NON-LEVELIZED 2004 2005 2006 2007 2008 2009 YEAR RATES 14.14.14.14.15.15.2004 14. 14.14.47 14.15.15.15.2005 14. 14.14.14.15.15.16.2006 14. 14.45 14.15.15.47 15.16.2007 14. 14.14.15.15.15.16.2008 15. 14.15.15.42 15.16.16.2009 15. 14.15.15.15.16.16.2010 16. 15.15.15.16.16.45 16.2011 16.41 15.15.15.16.16.16.2012 16. 15.28 15.15.16.16.17.2013 17. 15.41 15.16.16.16.17.2014 17. 15.15.16.16.17.17.41 2015 17. 15.16.16.16.17.17.2016 18. 15.16.16.16.17.17.2017 18. 15.16.16.17.17.41 17.2018 19. 16.16.16.17.17.17.2019 19. 16.16.49 16.17.17.18.2020 20. 16.16.16.17.17.18.2021 20. 16.16.17.17.48 17.18.2022 21. 16.43 16.17.17.17.18.41 2023 21. 2024 22. 2025 22. 2026 23. 2027 23. 2028 24. 2029 24. EFFECTIVE DATE ADJUSTABLE COMPONENT 12/1/2004 36. The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables above. Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates: Years Rate 16.80 + 36.42 16.80 + Adjustable component in each year Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates: Years Rate 14.32 + 36.42 14.65 + Adjustable component in year 2006 14.98 + Adjustable component in year 2007 15.33 + Adjustable component in year 2008 Attachment to Staff Comments Case No. A VU-04- IPC-04- P AC-04- 11/23/04 Page 2 of 6 IDAHO POWER COMPANY AVOIDED COST RATES FOR NON-FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NON-LEVELIZED 2004 2005 2006 2007 2008 2009 YEAR RATES 49.50.51.52.53.55.2004 49. 49.50.52.53.54.55.2005 50. 50.51.45 52.53.55.56.2006 51. 50.52.53.54.42 55.56.2007 52. 51.52.53.54.56.57.2008 53. 51.53.54.55.56.58.2009 55. 52.53.54.56.57.58.2010 56.41 52.54.55.56.57.59.2011 57. 53.54.55.57.58.4 7 59.2012 59. 53.55.56.57.59.60.2013 60.40 54.55.56.58.59.60.2014 61. 54.56.57.58.60.61.44 2015 63. 55.56.57.59.60.61.2016 64. 55.57.58.59.61.62.46 2017 66. 56.57.48 58.60.61.62.2018 67. 56.57.59.60.62.63.45 2019 69. 57.58.59.61.62.49 63.2020 70. 57.4 7 58.60.61.62.64.40 2021 72.49 57.59.60.61.63.40 64.2022 74. 58.59.60.62.40 63.65.2023 75. 2024 77. 2025 79.41 2026 81. 2027 83. 2028 85. 2029 87. Attachment to Staff Comments Case No. A VU-04- IPC-04- P AC-04- 11/23/04 Page 3 of 6 IDAHO POWER COMPANY AVOIDED COST RATES FOR FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NON-LEVELIZED 2004 2005 2006 2007 2008 2009 YEAR RATES 13.13.13.13.14.14.2004 13. 13.13.45 13.14.14.40 14.2005 13. 13.13.13.14.23 14.14.2006 13. 13.43 13.14.14.14.15.2007 13. 13.13.14.14.14.15.2008 14. 13.14.14.14.15.15.2009 14. 13.14.14.49 14.15.15.2010 14. 13.14.14.14.15.15.2011 15. 14.14.43 14.15.15.46 15.2012 15. 14.14.14.15.15.15.2013 15. 14.14.15.15.15.16.2014 16. 14.49 14.15.15.15.16.2015 16. 14.14.15.15.16.16.2016 17. 14.15.15.42 15.16.16.2017 17. 14.15.15.15.16.16.2018 17. 14.15.15.16.16.40 16.2019 18. 15.15.43 15.16.16.16.2020 18. 15.15.15.16.16.17.2021 19. 15.15.16.16.16.17.2022 19. 15.41 15.16.16.16.17.2023 20. 2024 20. 2025 21. 2026 21. 2027 22. 2028 22. 2029 23. EFFECTIVE DATE ADJUSTABLE COMPONENT 12/1/2004 36. The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables above. Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates: Years Rate 15.76 + 36.42 15.76 + Adjustable component in each year Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates: Years Rate 13.30 + 36.42 13.61 + Adjustable component in year 2006 13.92 + Adjustable component in year 2007 14.24 + Adjustable component in year 2008 Attachment to Staff Comments Case No. A VU-04- IPC-04- P AC-04- 11/23/04 Page 4 of 6 PACIFICORP AVOIDED COST RATES FOR NON-FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NON-LEVELIZED 2004 2005 2006 2007 2008 2009 YEAR RATES 50.51.41 52.53.55.56.2004 50. 50.51.53.54.55.56.2005 51.41 51.52.53.54.56.57.2006 52. 51.53.54.55.56.58.2007 53. 52.53.54.56.57.58.2008 55. 52.54.55.56.57.59.2009 56. 53.54.55.57.58.46 59.2010 57. 53.55.56.57.58.60.2011 58. 54.55.56.58.59.60.2012 60. 54.56.57.58.60.61.2013 61. 55.56.49 57.59.60.48 61.2014 63. 55.56.58.59.60.62.2015 64. 56.57.58.60.61.40 62.2016 66. 56.4 7 57.59.60.45 61.63.2017 67. 56.58.59.60.62.63.2018 69. 57.58.59.61.62.64.2019 70. 57.58.60.61.63.64.2020 72. 57.59.60.62.63.46 64.2021 73. 58.59.60.62.40 63.65.2022 75. 58.59.61.62.64.65.2023 77.42 2024 79. 2025 81. 2026 82. 2027 84. 2028 86. 2029 88. Attachment to Staff Comments Case No. A VU-O4- IPC-04- P AC-O4- 11/23/04 Page 5 of 6 PACIFICORP AVOIDED COST RATES FOR FUELED PROJECTS SMALLER THAN TEN MEGAWATTS December 2004 mills/kWh ON-LINE YEAR CONTRACT NO N-LEVE LlZE 0 2004 2005 2006 2007 2008 2009 YEAR RATES 14.14.14.15.15.15.2004 14. 14.14.14.15.15.15.2005 14. 14.14.15.15.15.16.2006 14. 14.49 14.15.15.15.16.2007 15. 14.14.15.15.16.16.40 2008 15. 14.15.15.46 15.16.16.2009 15. 14.15.15.15.16.16.2010 16. 15.15.15.16.16.48 16.2011 16.46 15.15.15.16.16.17.2012 16. 15.15.16.16.16.17.2013 17. 15.43 15.16.16.16.17.2014 17. 15.15.16.16.17.17.42 2015 18. 15.16.16.16.17.17.2016 18. 15.16.16.16.17.17.2017 18. 15.16.16.17.17.40 17.2018 19. 15.16.16.17.17.17.2019 19. 16.16.46 16.17.17.18.2020 20. 16.16.16.17.17.18.2021 20. 16.16.17.17.43 17.18.2022 21. 16.16.17.17.17.18.2023 21. 2024 22. 2025 22. 2026 23. 2027 23. 2028 24. 2029 24. EFFECTIVE DATE ADJUSTABLE COMPONENT 12/1/2004 36. The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables above. Example 1. A 20-year levelized contract with a 2005 on-line date would receive the following rates: Years Rate 16.75 + 36.42 16.75 + Adjustable component in each year Example 2. A 4-year non-Ievelized contract with a 2005 on-line date would receive the following rates: Years Rate 14.36 + 36.42 14.69 + Adjustable component in year 2006 15.03 + Adjustable component in year 2007 15.38 + Adjustable component in year 2008 Attachment to Staff Comments Case No. A VU-04- IPC-04- P AC-04- 11/23/04 Page 6 of 6 CERTIFICATE OF SERVICE HEREBY CERTIFY THAT I HAVE THIS 23RD DAY OF NOVEMBER 2004 SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE NOS. A VU-04-05/ IPC-04-25/ P AC-04-, BY MAILING A COpy THEREOF POSTAGE PREPAID TO THE FOLLOWING: H DOUGLAS YOUNG VISTA CORP PO BOX 3727 SPOKANE W A 99220-3727 R BLAIR STRONG PAINE HAMBLEN ET AL 717 W SPRAGUE AVE STE 1200 SPOKANE W A 99201 BARTON L KLINE MONICA B MOEN IDAHO POWER COMPANY PO BOX 70 BOISE ID 83707-0070 RANDY ALLPHIN IDAHO POWER COMPANY PO BOX 70 BOISE ID 83707-0070 MARK WID MER ACIFICORP 825 NE MUL TNOMAH ST PORTLAND OR 97232 JAMES C PAINE JAMES FELL STOEL RIVES LLP 900 S W FIFTH AVE S TE 2600 PORTLAND OR 97204 ft~SECRETAR CERTIFICATE OF SERVICE