20110425Decision Memo.pdf

DECISION MEMORANDUM - 1 -
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KRISTINE SASSER
DEPUTY ATTORNEY GENERAL

DATE: APRIL 20, 2011

RE: UPDATE TO PACIFICORP'S PURPA AVOIDED COST RATES TO
INCORPORATE NEW UTILITY COSTS OF CAPITAL

Pursuant to the Public Utility Regulatory Policies Act of 1978 (PURPA) and the
implementing regulations of the Federal Energy Regulatory Commission (FERC), the
Commission approved a Surrogate Avoided Resource (SAR) methodology for calculation of the
avoided cost rates paid to PURPA 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 February 28, 2011, the Commission issued Order No. 32196, the final Order in
PacifiCorp’s recent general rate case (Case No. PAC-E-10-07). An Order on Reconsideration
was issued on April 18, 2011 (Order No. 32224). The conclusion of a general rate case for
PacifiCorp has triggered computation of new PURPA avoided cost rates. The conclusion of a
general rate case affects avoided cost rates because cost of capital figures established in a general
rate case are used in avoided cost computations in accordance with the approved methodology.
Past practice has been to incorporate new cost of capital figures immediately following a general
rate case.
Staff has computed revised avoided cost rates for PacifiCorp using new cost of capital
figures. The revised rates are shown on the attached tables. The effect of PacifiCorp’s new cost
of capital is a decrease in the avoided cost rates of approximately $3.83/MWh for a 20-year
levelized contract.
DECISION MEMORANDUM - 2 -
STAFF RECOMMENDATION
Staff recommends that PacifiCorp’s published avoided cost rates be adjusted to
incorporate new cost of capital figures as approved in Order No. 32196 issued in the Company’s
last general rate case. Staff recommends an effective date for the new rates of April 26, 2011.
COMMISSION DECISION
Does the Commission wish to incorporate in PacifiCorp’s PURPA avoided cost rates
the new cost of capital figures established in the Company’s recent general rate case?

M:PacifiCorp Avoided Cost Update_rs_ks