20070424final_order_no_30307.pdf

Office of the Secretary
Service Date
April 24, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION REQUESTING
APPROV AL OF A NATURAL GAS
TRANSPORTATION SERVICE
AGREEMENT ORDER NO. 30307
CASE NO. A VU-07-
On February 20, 2007, Avista Corporation ("Avista" or "Company ) filed an
Application with the Commission requesting approval of a Natural Gas Transportation Service
Agreement (the "Agreement") between the Company and Potlatch Forest Products Corporation
Potlatch"
On March 13 , 2007, the Commission issued a Notice of Application and Modified
Procedure and solicited comments from interested parties.
comments submitted were filed by Staff.
Order No. 30271.The only
THE APPLICATION
According to the Application, A vista has been providing natural gas transportation
service to Potlatch's Lewiston, Idaho plant under an existing agreement since 1993. During that
time, Potlatch has increased its efficiency and reduced its annual natural gas consumption from
64 million therms to 38 million therms. In addition, Avista has seen considerable load growth in
the Moscow/Lewiston area and an increased need for pipeline capacity. Avista and Potlatch
negotiated a capacity release agreement, and Potlatch expressed its desire to negotiate a new gas
distribution agreement as well.
The initial term of the Agreement is ten years, beginning the day following
Commission approval and ending November 30, 2016. The parties have agreed on charges
based upon Potlatch's desire to pay Avista for distribution service in the future that more
reasonably reflect the alternative cost of connecting directly to a different pipeline, and Avista
desire to retain a reasonable level of distribution charges. Based on Potlatch's usage in 2006, its
annual bill under the existing agreement is $264 000. Under the Agreement, Potlatch would pay:
$185 000 through November 2007; $150 000 from December 2007 through November 2008;
$111 000 from December 2008 through November 2009; and $74 000 per annum from
December 2009 through the end of the Agreement. The Company believes that the current and
ORDER NO. 30307
projected rate of growth it is experiencing in north Idaho should offset a portion of the lost
revenue/margin received from Potlatch under the existing agreement.
STAFF COMMENTS
Staff reviewed the contract to determine any consequences beyond the servIces
provided to Potlatch. The Company s costs to serve as well as the existing contract were also
reviewed. After evaluating the information regarding the fixed and variable costs involved, as
well as other technical issues, Staff believes this contract is in the best interest of both the
Company and its customers. Staff recommended that the Commission approve the contract as
proposed.
FINDINGS
We find that we have jurisdiction over this matter pursuant to Idaho Code 99 61-307
61-622 and 61-623. We further find that we have jurisdiction over the Company pursuant to
Idaho Code 99 61-117 and 61-129.
In addition, we find that the provisions of the Agreement are reasonable. Considering
the surrounding circumstances, the Company has negotiated an acceptable net contribution to
fixed costs. We are satisfied that the Company s applicable liabilities to the Northwest Pipeline
NWPL") are assumed by Potlatch under the capacity release agreement that is ancillary to the
Agreement, which will mitigate any fees owed to the NWPL for the capacity, as well as
remarketing if the capacity is not used. We find that the Application should be approved.
ORDER
IT IS HEREBY ORDERED that the Application of Avista Corporation, Case No.
A VU-07-01 is approved.
THIS IS A FINAL ORDER. Any person interested in 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 after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code 9 61-
626.
ORDER NO. 30307
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this .2lfP'
day of April 2007.
~ /J 6wL
MARSHA H. SMITH, COMMISSIONER
ATTEST:
O:A VU-07-cg2
ORDER NO. 30307