20060517Application.pdf

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE G. WASDEN
May 17 2006
Avista Coqwration
Blair Strong
Paine, Hamblen , et al
71 7 W. Sprague Avenue, Su ite 1200
Spokane, WA 99201-3505
Clint Kalich
Avista Utilities
1411E.Mission
PO Box 3727
Spokane, W A 99220-3727
Rocky Mountain Power
Dean Brockbank
PacifiCorp dba Rocky Mountain Power
201 S. Main Street, Suite 2200
Salt Lake City, UT 84111
Mark Widmer
PacifiCorp dba Rocky Mountain Power
825 NE Multnomah Street
POIiland, OR 97232
Mark Moench
General Counsel
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Idaho Power Company
Balion L. Kline
Idaho Power Company
PO Box 70
Boise, ID 83707-007
Randy Allphin
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
RE:Case Nos. GNR-O6-1; PAC-O6-
The Idaho Public Utilities Commission in Order No. 28708 , Case No. GNR-99-, established a
methodology for the annual adjustable rate pOliion 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 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 8.87 mill/kWh to 9.38 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.
Contracts & Administrative Law Division, Idaho Public Utilities Commission
O. Box 83720, Boise, Idaho 83720-0074, Telephone: [phone], FAX: [phone], E-mail: Ipuc!g)puc.state.id.
Located at 472 West Washington St., Boise. Idaho 83702
May 17 2006
Page 2
The adj ustable pOliion of the avoided cost rates under the Sum as-based methodology is based on annual
average gas prices indexed at Sumas, Washington. As repol1ed by Avista, the indexed gas prices have
increased by $1.88/mmbtu. The approved gas price of $5.92/mmbtu plus the $1.88/mmbtu increase
results in a gas price of $7.80/mmbtu for the 2006-2007 year. This equates to a SAR fuel cost of 57.33
mill/kWh as used in the model.
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 , 2005 extending through June 30, 2006 has been computed by PacifiCorp to be
$12 .03/M Wh , an increase from $11.55 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 for the generic adjustment, Case No. GNR-06-, will read as
follows:
IN THE MA TTER OF THE ANNUAL REVISION AND UPDA TED
CALCULA TION OF THE ADJUSTABLE PORTION OF THE A VOIDED COST
RA TE(S) FOR EXISTING PURPA CONTRACTS FOR A VISTA
CORPORATION DBA A VISTA UTILITIES, 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
Case No. PAC-06-, 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
PACIFICORP.
Please file your respective responses with the Commission on or prior to June 16 2006.
Thank you for your cooperation. Please feel free to contact me, or Rick Sterling, if you have any
questions.
Sincerely,
~~'
Scott D. Woodbury
Deputy Attorney General
[phone]
Enclosures
bls/L:GNRHJ60 1-" ACEO606 _
COLSTRIP ADJUSTABLE RATE CALCULATION
For Period 7/1/06-6/30/07
Colstrip Fuel Cost from Avista FERC Form for CY 2005
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-99-1 O.28708 411712001
770,709 000
$13 068 384
$0.007380
$7.3803
$2.0000
$9.3803
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