20080213reconsideration_order_no_30503.pdf

Office of the Secretary
Service Date
February 13, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO MODIFY THE
METHODOLOGY FOR DETERMINING
FUEL COSTS USED TO ESTABLISH
PUBLISHED RATES FOR PURP A
QUALIFYING FACILITIES
ORDER NO. 30503
CASE NO. IPC-07-
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 Power Company, Avista Corporation and PacifiCorp. Avoided cost rates are the
purchase price paid to QFs for purchases of QF capacity and energy.
On December 28 2007, the Commission in final Order No. 30480 in Case No. IPC-
07 -15 approved a change in methodology for calculating the fuel cost component in published
avoided cost rates. The underlying methodology for calculating the fuel cost component was
established in year 2002 in Case No. GNR-02-, Order No. 29124. Unchanged in our Order
No. 30480 was the Commission s continued use of the Northwest Power and Conservation
Council (NWPCC; Council) median 20-year forecast of natural gas prices as the source for the
fuel prices used in the computation of the published avoided cost rates.
On January 18, 2008 , Exergy Development Group of Idaho LLC (Exergy) filed a
Petition for Reconsideration of final Order No. 30480. Reference Idaho Code ~ 61-626(1);
IDAPA 31.01.01.331.01. Exergy seeks Commission reconsideration as to the reasonableness of
Idaho Power Company s use of an internally developed natural gas forecast for purposes of
determining Company-proposed retail rates in its general rate case (IPC-07-08) and use of an
external NWPCC natural gas forecast for determining published avoided cost rates calculated
pursuant to a Commission-approved methodology. Exergy notes that the Commission never
addressed the question of whether and why such inconsistent use of natural gas forecasts is fair
just and reasonable. Exergy contends that the inconsistent use of natural gas forecasts by Idaho
Power is result driven, inherently arbitrary and capricious and hence contrary to law.
ORDER NO. 30503
Commission Findings
The Commission has reviewed and considered the filings of record in Case No. IPC-
07-15 including Exergy s Petition for Reconsideration and our final Order No. 30480. We
have also reviewed our Order No. 29124 in Case No. GNR-02-1 wherein the Commission
adopted the Council's median natural gas price forecast as the source for the fuel prices used in
the computation of the published avoided cost rates.
Exergy in its Petition for Reconsideration notes that the Commission failed to assess
the reasonableness of Idaho Power s use of NWPCC as a forecast for natural gas prices for
avoided cost calculations and a different forecast for purposes of its general rate case. In
proposing use of the external NWPCC natural gas forecast in calculating the fuel cost component
of published rates, we find that Idaho Power was following the methodology established in Order
No. 29124, Case No. GNR-02-1. The NWPCC is the methodology forecast source for natural
gas prices for not only Idaho Power, but also for A vista and PacifiCorp. The Council is based in
the Northwest region and provides an externally developed and independent forecast that we find
is not subject to utility gamesmanship. We continue to have confidence in the Council'
expertise, credibility and natural gas forecast.
Idaho Power in additional reply comments filed on December 28, 2007 admits that
the Company uses other forecasts of gas prices in preparing its Integrated Resource Plan (IRP)
and general rate case. The forecasts used for those purposes were not pursuant to Commission
direction. There are and will be opportunities for public query regarding the Company s use of
these different forecasts in the IRP planning process and general rate case proceedings. The
Commission finds that Exergy in its Petition for Reconsideration presents no persuasive
argument or grounds to justify reconsideration of our Order No. 30480 or further procedure or
proceedings.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Idaho Power Company,
A vista Corporation dba A vista Utilities, and PacifiCorp dba Rocky Mountain Power, electric
utilities, pursuant to the authority and power granted it under Title 61 of the Idaho Code, and the
Public Utility Regulatory Policies Act of 1978 (PURP A).
The Commission has authority under PURP A and implementing regulations of the
Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric utilities to
ORDER NO. 30503
enter into fixed term obligations for the purchase of energy from qualified facilities, and to
implement FERC rules.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby deny Exergy Petition for
Reconsideration of final Order No. 30480 in Case No. IPC-07-15.
THIS IS A FINAL ORDER DENYING RECONSIDERATION.Any party
aggrieved by this Order or other final or interlocutory Orders previously issued in this Case No.
IPC-07-15 may appeal to the Supreme Court ofIdaho pursuant to the Public Utilities Law and
the Idaho Appellate Rules. See Idaho Code ~ 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /3 th
day of February 2008.
MACK A. REDFORD, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
l).
D. Jewel.
mmission Secretary
bls/O:IPC-07-15 sw2
ORDER NO. 30503