20040628Final Order No 29537.pdf

Office of the Secretary
Service Date
June 28 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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 ANDACIFICORP.
CASE NO. P AC-O4-
ORDER NO. 29537
On July 1 , 2003 PacifiCorp dba Utah Power & Light Company (Company) in Case
No. PAC-03-10 sent a letter notifying the Idaho Public Utilities Commission (Commission) of
a July 1 , 2003 , revision to the variable energy price for Qualifying Facilities (QFs) holding
certain power sales contracts with the Company. Thirteen QFs have PURPA contracts with
PacifiCorp that include a Commission approved 1992 Amendment that outlines a methodology
that is to be used for determining the variable energy price component of the avoided cost rate.
As stated in the 1992 contract Amendment:
Beginning July 1 , 2003 and continuing throughout the term of the power
purchase agreement, including any extensions, the variable energy rate
shall be calculated in accordance with the following methodology:
a) the variable energy rate shall be the sum of the Buyer s (PacifiCorp)
fuel cost and the variable O&M cost.
b) Buyer s fuel cost shall be the average cost of fuel consumed in Buyer
Utah Division, specifically the Carbon, Hale, Naughton, Huntington and
Hunter generating plants. If any of the specified plants does not operate in
any calendar year, such plant shall be excluded from the calculation of the
average cost of fuel. The average cost of fuel shall be calculated using the
data reported in Buyer s FERC Form 1. For 1990, Buyer s fuel costs are
reported at pages 402-403, lines 12 and 21 of the FERC Form 1. In the
event that the FERC Form 1 ceases to include the cost of fuel or net
generation data, comparable data based upon Buyer s normal accounting
practices shall be used.
c) Buyer s variable O&M cost shall be calculated using the methodology
adopted by the Idaho Public Utilities Commission in Order No. 23738 for
determining the variable avoided O&M cost of the Surrogate Avoidable
Resource, excluding the State of Montana generation tax and the line loss
adjustment.
ORDER NO. 29537
ORDER NO. 29316
The variable energy component is composed of two parts, fuel costs for PacifiCorp
Utah thermal plants and variable O&M costs. Commission Order No. 28708 clarified how each
of these two parts to the variable energy component is to be calculated:
For those PacifiCorp contracts with 1992 Addendum language, we note by
way of clarification, that the fuel component calculation is to remain
unchanged, i.
, "
average fuel costs as reported in FERC Form 1 for
PacifiCorp Carbon, (Hale-presently out of service), Naughton Huntington
and Hunter plants." The variable O&M under the PacifiCorp QF contracts
while presently fixed, is to be tied to Colstrip beginning in 2003. The
Commission notes that pursuant to the '92 Addendum language in the
PacifiCorp QF contracts, generation taxes and a line loss adjustment are
specifically excluded from the calculation of any variable O&M. It is not
our intention to change this contract term. The Commission notes, as
calculated by Staff, that the exclusion of line loss (5%) and generation tax
(20t/MWh) from the variable Colstrip calculation for affected PacifiCorp
contracts (beginning in 2003) results in an adjusted O&M figure of
$I.511MWh.
In Commission Order No.29316 in Case No. PAC-03-10 the Commission
authorized and approved a new variable energy rate for PacifiCorp/QF contracts with approved
1992 amendment language and ordered the Company as follows:
Recognizing the variable rate change we approve today is the first of what
will be an annual change in the variable rate for PacifiCorp/QF contracts
with 92 Amendment language, IT IS FURTHER ORDERED and the
Commission does hereby direct PacifiCorp to make an annual filing with
the Commission on or before June 1 of each year showing its computation
of the revised variable energy costs for these contracts.
Order No. 29316
On May 26, 2004 , in accordance with Order No. 29316, PacifiCorp filed a
recomputation of the adjustable portion of the avoided cost rate for existing PacifiCorp contracts
with year 1992 amendments. 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
ORDER NO. 29537
deliveries commencing July 1 , 2004 extending through June 30, 2005 has been computed by
PacifiCorp to be $1 0.52/MWh, an increase from $10.17 last year.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case
No. P AC-04-3 and the proposed revision of the adjustable portion of the avoided cost rate for
PacifiCorp QF contracts with 1992 amendment language. We have reviewed the Company
supporting workpapers and have also considered the recommendations of Commission Staff.
The methodology that this Commission has approved for determining the variable
energy cost for these affected PacifiCorp QF contracts is similar to our annual revision of the
variable avoided cost rate associated with Colstrip and is relatively simple arithmetic
recalculation that is based on data contained in PacifiCorp FERC Form 1 filings. We find the
annual revised variable energy cost calculation, as computed by PacifiCorp, for existing QF
power purchase contracts with the 1992 amendment to be correct. We find the resulting
adjustable rate to be fair, just and reasonable and we find it reasonable to approve same for an
effective date of July 1 , 2004.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over PacifiCorp dba Utah
Power & Light Company, an electric utility, pursuant to the authority and power granted it under
Title 61 of the Idaho Code and the Public Utility Regulatory Policies Act of 1978 (PURPA).
The Commission has authority under PURP A and the implementing regulations of
the Federal Energy Regulatory Commission (FERC) to set avoided costs, to order electric
utilities to 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 authorize and approve a new variable
energy rate of $1 0.52/MWh for deliveries commencing July 01 , 2004 extending through June 30
2005 , for those PacifiCorp/QF contracts with approved 1992 amendment language.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
ORDER NO. 29537
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;l g
day of June 2004.
ATTEST:
vld/O:P ACE0403
ORDER NO. 29537