Current through Register Vol. 63, No. 9, September 1, 2024
(1)
(a) For amortization and levelization
calculations, an electric company must use the discount rate used in its most
recently filed or updated integrated resource plan, unless otherwise specified
by the Commission.
(b) For
amortization and levelization calculations, an electricity service supplier
must use the discount rate applicable to the electric company in whose service
area it made the most retail sales in megawatt-hours over the five calendar
years preceding the compliance year.
(c) The incremental cost under ORS
469A.100(4) for
long-term qualifying electricity is the difference between the levelized annual
cost of qualifying electricity delivered in a compliance year and the levelized
annual cost of an equivalent amount of electricity delivered from the
corresponding proxy plant.
(d) The
time horizon for long-term qualifying electricity and for the corresponding
proxy plant must be no longer than the amortization period of the qualifying
electricity and must be at least as long as the lesser of:
(A) The amortization period of the qualifying
electricity; or
(B) The period from
the beginning year of the amortization period of the qualifying electricity
until 20 years after the current compliance year.
(e) The incremental cost under ORS
469A.100(4) for
short-term qualifying electricity is the difference between the levelized
annual cost of qualifying electricity delivered in a compliance year and the
levelized annual cost of an equivalent amount of delivered market purchases
with a consistent term that is not qualifying electricity. The cost of
non-qualifying electricity must be based on published prices for a nearby
electricity trading hub. When choosing among nearby hubs, the one with
transmission costs most similar to the short-term qualifying electricity must
be used. Specific costs must be adjusted to account for the differences in all
transmission-associated costs.
(f)
Levelized annual delivered costs for qualifying electricity and non-qualifying
electricity are specific costs plus applicable shares of aggregate
costs.
(g) Aggregate and specific
costs for interstate electric companies must reflect interstate allocations of
costs.
(h) Incremental cost
estimates for an electric company must be based on the likely impacts on the
rates of its Oregon retail electricity consumers.
(i) Incremental costs are deemed to be zero
for qualifying electricity from generating facilities or contracts that became
operational before June 6, 2007 and for certified low-impact hydroelectric
facilities under ORS 469A.025(5).
(2) Each electric company must
forecast the levelized incremental cost of long-term qualifying electricity in
the following manner:
(a) For each generation
source of qualifying electricity, the electric company must estimate the
delivered cost of qualifying electricity for each year over the time horizon of
the qualifying electricity. Delivered cost includes aggregate costs and costs
specific to a generating facility or contract. Costs include, but are not
limited to, those specified in ORS
469A.100(4).
Capital costs must be amortized.
(b) The levelized annual cost of qualifying
electricity delivered in the compliance year must be based on all costs that
will be included in rates through the qualifying electricity's time
horizon.
(c) Aggregate costs must
be estimated as the incremental cost to the utility system for all qualifying
electricity.
(d) Aggregate
transmission costs must be allocated proportionately to existing and planned
generating facilities that will reasonably be served by the transmission
facilities.
(e) If an electric
company anticipates that it will have firming and shaping services available
for sale for a compliance year, the company may not use rates in its Open
Access Transmission Tariff approved by the Federal Energy Regulatory Commission
as the basis for the firming or shaping portion of aggregate costs. In such
case, the electric company should use the actual or forecasted cost of
supplying or purchasing firming and shaping services as the basis for such
costs. If an electric company anticipates it will not be able to sell firming
and shaping services due to its use of such services, the company may use its
approved Open Access Transmission Tariff as the basis for such costs.
(3) Each electricity service
supplier must forecast the cost of long-term qualifying electricity it plans to
use to serve the service areas of electric companies subject to ORS
469A.052 consistent with section
(2) of this rule.
(4) Updates of
amortization periods are required for compliance reports described in ORS
469A.170 and implementation
plans described in ORS
469A.075 under any of the
following circumstances:
(a) If a generation
facility that was previously included in a compliance report has significant
investment costs in a compliance year, all qualifying electricity from the
facility is new qualifying electricity under this rule with an amortization
period based on the expected useful life of the facility, considering such
investments. Except as provided in subsections (13)(a) and (b) of this rule,
costs for each such facility must be updated in the next regularly scheduled
compliance report and implementation plan.
(b) Except as provided in subsections (13)(a)
and (b) of this rule, if a generating facility produces qualifying electricity
after all capital costs have been amortized, the electric company must update
the next regularly scheduled compliance report and implementation plan to
establish an extended amortization period. The extended amortization period
must be based on the expected remaining useful life of the facility. Qualifying
electricity from the facility must be treated in the same manner as new
qualifying electricity. Additional extended amortization periods may be
added.
(c) Each electricity service
supplier must update amortization periods for long-term qualifying electricity
it plans to use to serve the service areas of electric companies subject to ORS
469A.052 consistent with
subsections (4)(a) and (b) of this rule.
(5) The amortization period for a generation
facility may change as provided in subsections (4)(a) or (b) or (6)(g) of this
rule. Otherwise, the amortization period of the facility may not
change.
(6) For each compliance
year, except as provided in subsections (13)(a) and (b) of this rule, each
electric company must establish a new proxy plant for use in estimating the
cost of non-qualifying electricity corresponding to new long-term qualifying
electricity with the same beginning amortization year. New proxy plant costs
must be based on relevant information in the most recently filed or updated
integrated resource plan unless there have been material changes since the most
recent of such filings. Proxy plant costs must be estimated in the following
manner:
(a) For each new proxy plant, each
electric company must provide the estimated heat rate, availability factor,
operation and maintenance costs per megawatt-hour, annualized capital
replacement costs per megawatt-hour, and the initial capital costs per
megawatt. The initial capital cost estimate must comply with the following
requirements:
(A) Adjustment must be made for
price escalation or de-escalation based on the initial year of the proxy plant
and the applicable year of the estimate. Such adjustment may be based on
applicable construction cost indexes or other published sources; and
(B) Initial capital costs must be
amortized.
(b) Each
electric company must estimate the costs of factors listed in subsection (6)(a)
of this rule and other elements of the proxy plant that affect its costs for
each year of the time horizon of the proxy plant. Estimates must account for
expected degradation of the heat rate, capacity, and other elements affecting
costs. Forecasts of fuel prices must include cost adders based on current
regulation of greenhouse gas emissions or such regulations that are known or
reasonably expected to be implemented in the relevant time frame.
(c) Each electric company must allocate
aggregate costs for proxy plants in a manner consistent with the allocation of
aggregate costs for qualifying electricity.
(d) For calculating the incremental cost for
long-term qualifying electricity from a specific generating source, annual
aggregate and specific costs for the corresponding proxy plant must be
levelized over the time horizon of the qualifying electricity.
(e) The average cost per megawatt-hour for
each year of the applicable time horizon is the levelized cost in subsection
(6)(d) of this rule divided by the expected base-load electricity production of
the proxy plant for that year.
(f)
The cost of equivalent non-qualifying electricity is the estimated average cost
per megawatt-hour of the proxy plant in subsection (6)(e) of this rule for each
year multiplied by the amount of corresponding long-term qualifying electricity
that was produced, or is expected to be produced, in each year of the
applicable time horizon.
(g) If
corresponding long-term qualifying electricity is produced or is planned to be
produced after a proxy plant's initial amortization period, a new amortization
period for the qualifying electricity must be established based on the expected
remaining useful life of the generating facility. Any remaining unamortized
investment for the facility associated with the qualifying electricity must be
amortized over the new amortization period. Qualifying electricity from the
facility must be treated in the same manner as new qualifying
electricity.
(h) If the initial
amortization period for new long-term qualifying electricity is longer than the
initial amortization period for the corresponding proxy plant, the electric
company must estimate the year-by-year replacement capital, operation and
maintenance expenditures necessary to extend the lifetime of the proxy plant to
a period equal to or greater than the amortization period of the qualifying
electricity. In such case, initial and replacement capital costs of the proxy
plant must be amortized over its extended lifetime before the proxy plant costs
are levelized in subsection (6)(d) of this rule. Fuel costs must be estimated
for each year of the extended lifetime of the proxy plant. A proxy plant whose
lifetime has been extended under this subsection may be used as the
corresponding proxy plant for all new long-term qualifying electricity with the
same beginning amortization year.
(i) Each electricity service supplier must
forecast the cost of proxy plants consistent with subsections (6)(a) through
(h) of this rule for plants corresponding to long-term qualifying electricity
it plans to use to serve the service areas of an electric company subject to
ORS 469A.052.
(7) To the extent practical, forecasts of
proxy plant fuel prices in compliance reports and implementation plans must be
based on the most recent forecast filed in an avoided cost proceeding under ORS
758.525(1) or
filed or updated in an integrated resource planning proceeding per Commission
orders. Fuel prices must include fuel transportation costs to an appropriate
location for the proxy plant. Forecasts of fuel costs made by electric
companies and electricity service suppliers for each new proxy plant must use
one of the following methods when a new proxy plant is established:
(a) Proxy plant fuel prices may be based on
financially firm, long-term fixed prices for fuel for the period such contracts
are available. After such period, the method in subsection (7)(b) of this rule
must be used; or
(b) Proxy plant
fuel prices may be based on forecasts of spot prices for fuel at an appropriate
market trading hub plus an estimate of the cost of hedging as much fuel price
risk as can be reasonably achieved for remainder of the time horizon of such
plant.
(8) To the extent
practical, forecasts of biomass fuel prices in compliance reports and
implementation plans must be based on the most recently filed or updated
integrated resource plan. Fuel costs for long-term qualifying electricity from
biomass sources specified in ORS
469A.025(2)
must be forecast in a manner that reduces fuel price risk as much can be
reasonably achieved though long-term contracts, hedging, or other mechanisms
for the time horizon of the generation resource.
(9)
(a) If
fuel prices for a proxy plant or biomass plant were forecasted based on a
method similar to the method in subsection (7)(b) of this rule, an electric
company must update plant costs for actual spot fuel prices, including actual
cost adders from regulation of greenhouse gas emissions, in each implementation
plan and compliance report.
(b) If
fuel prices are updated as described in subsection (9)(a) of this rule, actual
fuel costs must include hedging costs as described in subsection (7)(b) or
section (8) of this rule.
(c) For
the period fuel prices for a proxy plant or biomass plant were forecasted based
on a method similar to the method in subsection (7)(a) of this rule, fuel costs
are not updated, except fuel costs are updated for additional actual costs from
regulation of greenhouse gas emissions if such costs were not included in the
contract referenced in subsection (7)(a) of this rule.
(d) In its implementation plans and
compliance reports, an electric company must update for amounts of actual
qualifying electricity.
(e) To the
extent that forecasts of the amount of qualifying electricity are used in a
compliance report, such forecasts, to the extent practicable, should be based
on the most recently filed implementation plan, unless section (10) or (11) of
this rule applies.
(f) In its
compliance reports, an electricity service supplier must include updated
estimates of the incremental cost of long-term qualifying electricity at least
every two years consistent with subsections (9)(a) through (e) of this rule for
qualifying electricity it plans to use to serve the service areas of an
electric company subject to ORS
469A.052.
(10) If an electric company or electricity
service supplier discovers a significant error in its incremental cost
estimates, it must update incremental cost estimates in the next applicable
filing.
(11) If the number of
renewable energy certificates used for compliance or the amount of alternative
compliance payments is reduced due to a cost limit in ORS
469A.100, the electric company
or electricity service supplier must review the methodologies used to estimate
the levelized costs of proxy plants and long-term qualifying electricity. If a
systematic error is discovered, all such errors must be corrected in estimates
of the incremental costs of qualifying electricity in the applicable compliance
report. If such a correction is made, the correct total number of certificates
and amount of alternative compliance payment, if any, must be used for the
compliance year.
(12) If the cost
limit specified in ORS
469A.100(1) is
expected to reduce the number of renewable energy certificates used for
compliance or the amount of alternative compliance payments for any forecasted
compliance year covered by an implementation plan, the electric company must
review the methodologies used to estimate the levelized costs of proxy plants
and long-term qualifying electricity. If a systematic error is discovered, all
such errors must be corrected in estimates of the incremental cost of
qualifying electricity in the applicable implementation plan.
(13)
(a)
Except as provided in section (11) of this rule, if new long-term qualifying
electricity in a compliance year, including qualifying electricity treated in
the same manner as new qualifying electricity in subsections (4)(b) and (6)(g)
of this rule, totals less than 20 megawatts of capacity, the incremental cost
for such long-term qualifying electricity is not required to be included in
compliance reports or implementation plans. Such long-term qualifying
electricity may be included in a compliance report for purposes of determining
compliance with the applicable renewable portfolio standard under ORS
469A.052 or ORS
469A.065.
(b) When the capacity of qualifying
electricity described in subsection (13)(a) of this rule equals or exceeds 20
megawatts in a compliance year or the cumulative capacity of qualifying
electricity in subsection (13)(a) of this rule exceeds 50 megawatts, the
incremental cost of all such qualifying electricity must be included in the
compliance report for the compliance year and in compliance reports and
implementation plans filed after such compliance report.
(c) The amortization periods for the
qualifying electricity in subsections (13)(a) and (b) of this rule must begin
at the same time as the latest operational date for the qualifying electricity.
Costs must be adjusted for price escalation or de-escalation based on the
beginning amortization year and actual initial years for such qualifying
electricity. Adjustments may be based on applicable construction costs indexes
or other published sources.
(d) A
new proxy plant with the same beginning amortization year as the qualifying
electricity in subsection (13)(c) of this rule must be used to estimate the
non-qualifying costs corresponding to such qualifying
electricity.
Stat. Auth.: ORS
756.040,
757.659 &
469A.065
Stats. Implemented: ORS
469A.100
