20040601Application.pdf

STATE OF IDAHO
May 28 , 2004
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE G. WASDEN
Blair Strong
Paine, Hamblen, et al
717 W. Sprague Avenue, Suite 1200
Spokane, WA 99201-3505
Doug Young
A vista Utilities
1411 E. Mission
PO Box 3727
Spokane, W A 99220-3727
James C. Paine
James Fell
Stoel Rives LLP
900 SW Fifth Avenue Suite 2600
Portland, OR 97204
Mark Widmer
PacifiCorp
825 NE Multnomah Street
Portland, OR 97232
Barton L. Kline
Idaho Power Company
PO Box 70
Boise, ill 83707-0070
RE:Case Nos. GNR-O4-1; PAC-O4-
The Idaho Public Utilities Commission in Order No. 28708, Case No. GNR-99-, 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 facUity in southeast
Montana. 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 ~orm 1 Colstrip Unit Coal
Costs per megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of
Colstrip plus 20~/MWh for generation taxes plus a five percent (5%) adjustment for line loss).
. As computed by Commission Staff the Colstrip related adjustable rate will change from 8.
mill/kWh to 8.88 mill/kWh. The same calculated rate revision under the avoided cost
methodology is used by Avista, PacifiCorp dba UP&L 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 Avista, the indexed
gas prices have increased by $ 1. 98/mmbtu. The approved gas price of $3.33/mmbtu plus the
$1.98/mmbtu increase results in a gas price of $5.31/mmbtu for the 2004-2005 year. This
equates to a SAR fuel cost of 39.03 mill/kWh as used in the model.
Contracts & Administrative Law Division, Idaho Public Utilities Commission
G. Box 83720, Boise, Idaho 83720-0074, Telephone: [phone], FAX: [phone], E-mail: Ipuc~puc.state.id.
Located at 472 West Washington St., Boise, Idaho 83702
May 28 , 2004
Page 2
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 1
2003, the adjustable portion for these contracts was ordered to be equal to the average cost of
fuel for the Carbon, Hale, Naughton Huntington and' Hunter generating plans, including a
variable O&M component of $1.51 but exclusive of generation taxes and a line loss adjustment.
The variable energy rate applicable to deliveries commencing July 1 , 2004 extending through
June 30, 2005 has been computed by PacifiCorp to be $10.52/MWh, an increase from $10.17 last
year.
Accompanying this letter are worksheets showing the computation of the revised adjustable rates
for the various affected contracts. If after reviewing the revisions, you accept them as accurate
please indicate your approval by letter (or other filing) directed to the Commission in the
reserved case docket numbers identified above. The case heading in this matter will read as
follows:
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED
CALCULATION OF THE ADmSTABLE PORTION OF THE AVOIDED
COST RATES FOR AVISTA CORPORATION DBA AVISTA UTILITIES
FOR EXISTING PURP CONTRACTS, FOR IDAHO POWER
COMPANY, AND FOR PACIFICORP DBA UTAH POWER & LIGHT
COMPANY.
The case heading in the PacifiCorp case for PacifiCorp QF contracts with 1992 Amendment
language is as follows:
IN THE MATTER OF THE ANNUAL REVISION OF QF VARIABLE
ENERGY PRICES IN ACCORDANCE WITH TERMS OF THE 1992
AMENDMENTS TO POWER PURCHASE AGREEMENTS BETWEEN
IDAHO QFS AND P ACIFICORP.
Please file you respective responses with the Commission on or prior to June 15 , 2004.
Thank you for your cooperation, please feel free to contact me or Rick Sterling if you have any
questions.
. Sincerely,
~~~b
Deputy Attorney General
[phone]
Enclosures
bls/L:GNREO401 PACEO403sw
COLSTRIP ADJUSTABLE RATE CALCULATION
For Period 7/1/04-6/30/05
Colstrip Fuel Cost from Avista FERC Form 1 for CY 2003
line 12
line 20
Net Generation (kwh)
. Fuel
Fuel cost per kwh
Fuel Cost per MWh
Variable O&M, Gen. Tax, 5% line loss per MWh
Total Colstrip Adjustable Rate
Reference GNR-99-N. 28708 4/17/2001
593 135 000
$10 959,960
$0.006879
$6.8795
$2.0000
$8.8795
Sumas 99-00 rate.xls 4/812004 sw
Average Gas Prices at Sumas, Washington from Inside FERC publication
$/MMBtu
Calculating the 2004-2005 Avoided Cost Adjustable Rate
NOTE:
$2.00/MMBtu = 1997-98 Approved Rate.
$2.35/MMBtu = 1998-99 Approved Rate.
$2.26/MMBtu =1999-00 Approved f1ate.
$2.80/MMBtu = 2000-01 Approved Rate.
$4.82/MMBtu = 2001-02 Approved Rate
$5.23/MMBtu = 2002-03 Approved Rate
$3.33/MMBtu = 2003-04 Approved Rate
2002 2003
Jan $2.$4.
Feb $1.$4.
March $2.$7.
April $3.$4.
May $2.$4.
June $2.42 $4.
July $1.$4.
Aug $1.$3.
Sept $2.$4.
Oct $3.$4.
Nov $3.$4.
Dee $3.$4.
Average $2.$4.
Actual Annual Adjustment:
$3.33 - ($2.68 - $4.66) =
Ca rbon
PacifiCorp
Total Variable Energy Rate
for 2004 2005
Naughton Huntington Hunter Totals
Fuel Cost ($)
FERG FORM 1 - -Page 402 Line 20
$ 10,521 512 $ 52,243 371 $ 57 956 997 $ 76 503,852 $ 197,225 732
G eneralion (MW H)
FERG FORM 1 - Page 402 Line 12
Average Fuel Cost ($/~WH)
Variable O&M
IPUG Order 28709
371 293
Total Variable Energy Rate for 2004 12005
4,799 139 213,219
Ijh Id AC June 2004 - Update Variable Coal Energy Rate.xls (2004)
8,494 782 878,433
01 IMWH
51 IMWH
10.52 IMWH
5/24/2004 3:17 PM