20050624Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:SCOTT WOODBURY
DATE:JUNE 22, 2005
RE:CASE NO. GNR-05-1 (Idaho Power, Avista, PacifiCorp)
ADJUSTABLE PORTION OF AVOIDED COST RATE
REVISED/UPDATED CALCULATION FOR EXISTING CONTRACTS.
CASE NO. PAC-05-6 (PacifiCorp)
ANNUAL VARIABLE ENERGY RATE ADJUSTMENTS -
1992 AMENDMENT QF CONTRACTS.
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 facility 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 Form 1 Colstrip Unit Coal Costs per
megawatt hour (MWh) and adding $2.00/MWh (the average variable O&M cost of Co 1st rip 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 should change from 8.88 mill/kWh to 8.
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 Sumas-based methodology is based on
annual average gas prices indexed at Sumas, Washington. As reported by A vista, the indexed gas
prices have increased by $0.61/mmbtu. The approved gas price of $5.31/mmbtu plus the $0.61/mmbtu
increase results in a gas price of $5.92/mmbtu for the 2005-2006 year. This equates to a SAR fuel cost
of 43.51 mill/kWh as used in the model.
DECISION MEMORANDUM JUNE 22, 2005
The Commission Staff by letter dated May 31 2005 , prepared by Staff Engineer Rick Sterling,
calculated changes to the annual adjustable rate portion of avoided costs for those QF contracts using
variable costs associated with Colstrip and Sumas for review by the respective utilities. A vista, Idaho
Power and PacifiCorp by letter responses (attached) indicated that Staffs calculations are correct.
In accordance with Order No. 29316, the adjustable portion of the avoided cost rate for existing
PacifiCorp contracts with year 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 , 2005 extending through June 30, 2006 has been
computed by PacifiCorp to be $11.55/MWh, an increase from $10.52 last year.
COMMISSION DECISION
Under avoided cost methodology the adjustable portion of avoided cost rates for existing
contracts is calculated annually for an effective date of July 1. A vista, Idaho Power and PacifiCorp
agree with Staff s proposed calculations. Also adjusted annually is the adjustable portion of avoided
cost rates for existing PacifiCorp contracts with year 1992 amendments. PacifiCorp for those
contracts has computed the new variable energy rate. Does the Commission agree with the proposed
changes in the variable rates?
bls/M:GNREO501 PACEO506 sw
DECISION MEMORANDUM JUNE 22, 2005
Avista Corp.
1411 East Mission PO Box 3727
Spokane, Washington 99220-3727
, Telephone [phone]
Toll Free 800-727.9170 ~~~'V'ST
Corp.
June 15,2005
State 'of Idaho Public Utilities Commission
Mr. Rick Sterling
, Statehouse Mail
West 472 Washington
Boise, ill 83720
RE:Case No. GNR-05-
Dear Mr. Sterling:
A vista is responding to the notice dated May 31 , 2005 'regarding the annual revision and
updated calculation of the adjustable portion of the avoided cost rates. The Company is
in agreement with the Colstrip adjustable rate of 8.87 mil1/kWh and the annual average
gas price of $5.92/mmbtu for the 2005-2006 year.
Thank you,
Clint Kalich
Manager of Resource Planning and Power Supply Analyses
IDAHO~POUUER ECEIVED
An IDACORP compan ~tLED
~, ". ':::,
lOAt.,iO PUBL1C
UTILITIES COMMiSSION
Randy C. Allphin
Contract Administrator
June 14, 2005
Idaho Public Utilities Commission
Attn: Scott Woodbury
PO Box 83720
Boise, ID 83720-0074
RE:CASE NOS. GNR-05-1; P AC-05-
IN THE MATTER OF THE ANNUAL REVISION AND UPDATED CALCULATION OF THE
ADJUSTABLE PORTION OF THE AVOIDED COST RATE(S) FOR EXISTING PURPA
CONTRACTS FOR A VISTA CORPORATION DBA A VISTA UTILITIES, FOR IDAHO POWER
COMPANY AND FOR PACIFICORP DBA UTAH POWER AND LIGHT COMPANY.
We have reviewed the information you have provided in your letter dated May 31 , 2005 notifying
Idaho Power of revision of the adjustable portion of the Avoided cost rate(s) for existing PURPA contracts..
Idaho Power concurs that the. model and calculations used by the IPUC staff for Idaho Power Company are
consistent with IPUC Order 28708.
Sincerely,
;2.,1 f. ad~
dRandy ~ ~I rn
Contract Administration
. '
Cc:Monica Moen (Ipco)
Bart Kline (Ipco)
Telephone: [phone] Fax: [phone] Raliphin(?gIdahopower.com
PACIFIC POWER UTAH POWER
HECEIVED
:::- 1l,.E 0
Z9Si JJN-'
. .
,-.ZO
IDAHO PUBLtC .
. .
UTtL1TlES COMM1SS10;N
825 E. Multnomah
Portland, Oregon 97232
[phone]
. PACIFICORP
June 8, 2005
Idaho Public Utilities Commission
PO Box 83730
Boise, ill 83720-0074
Attention: Scott D Woodbury
RE: Case Nos. GNR-05-1; Case No. PAC-05-
Dear Mr. Woodbury,
Thank you for your letter of May 31 , 2005 in which you provided the 2005-2006 updated
prices for the adjustable portion of the avoided costs rates under the present avoided cost
methodology. Your letter also provided an update to the adjustable rate portion of
avoided costs for QF contracts using variable costs associated with Colstrip and for
PacifiCorp contracts with 1992 amendments.
PacifiCorp has reviewed these proposed updated prices and agree that the prices have
been updated correctly. The Company accepts the new schedules as accurate.
If you have any questions please feel free to call or email me at [phone] or
Mark. Wi4mer~PacifiCorp.com
incerel y,
Mark Widmer
Director Regulatory