20080804_2318.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
DATE:JULY 30, 2008
SUBJECT:CASE NO. A VU-08-05 (Avista)
REQUEST FOR APPROVAL OF 0.610~/kWh PCA SURCHARGE
On July 28, 2008 , Avista Corporation dba Avista Utilities (Avista; Company) filed an
Application with the Idaho Public Utilities Commission (Commission) for an order approving a
Power Cost Adjustment (PCA) surcharge of 0.610~/kWh to be effective October 1 2008. Tariff
Schedule 66 (Temporary Power Cost Adjustment).
Avista s PCA mechanism is used to track changes in revenues and costs associated
with variations in hydroelectric generation, secondary prices, thermal fuel costs, and changes in
power contract revenues and expenses. The Company s existing PCA methodology and method
of recovery were approved in 2007 in Case No. A VU-07-01 (Order No. 30361). In that case
the Commission approved a change in the PCA methodology from a trigger and cap mechanism to
a single annual PCA rate adjustment filing requirement. The Commission also approved a change
in the method of PCA deferral recovery from a uniform percentage basis to a uniform cents per
kWh basis.
A vista is requesting that the Commission issue an order approving recovery of power
costs deferred by the Company for the period July 1 , 2007 through June 30, 2008. The proposed
610~/kWh PCA surcharge will replace an existing 0.267~/kWh surcharge that expires on
September 30, 2008. Order No. 30429. The proposed surcharge will recover approximately $21.
million in deferrals. The principal factors contributing to the higher power supply expense during
the deferral period are reduced hydro-generation and high natural gas fuel costs.
DECISION MEMORANDUM
Under the Company s proposal, the surcharge rate for residential customers will
Increase from 0.267~/kWh to 0.610~/kWh, or an increase of 0.343~/kWh.F or an average
residential customer using 1 000 kWh per month, the monthly increase will be $3.43. Under
present rates , a residential bill for 1 000 kWh amounts to $63.44. With the proposed surcharge in
place, the monthly bill would be $66., or about 5.4% higher.
The actual percentage increase for individual customers will depend on the rate
schedule that the customer receives service under and on how much energy a customer uses. The
proposed surcharge is spread on a uniform cents per kilowatt hour basis. The percentage increases
will vary by rate schedule as shown below.
Customer Group
(Schedule)Percentage Change
Residential Schedule 1 35%
General Service Schedules 11 , 12 29%
Large General Service Schedules 21 , 22 54%
Extra Large General Service Schedule 25 84%
Extra Large General Service Schedule 25P 38%
Pumping Service Schedules 31 , 32 29%
Street and Area Lights Schedules 41-78%
The Company s Application is supported by the testimony of William G. Johnson
Wholesale Marketing Manager, and Ronald L. McKenzie, Manager of Regulatory Accounting and
related workpapers.
COMMISSION DECISION
Avista has filed an Application requesting approval of a PCA surcharge of 0.61 O~/kWh
for an effective date of October 1 , 2008. A vista recommends that its Application be processed
pursuant to Modified Procedure, i., by written submission rather than by hearing. Reference
Commission Rules of Procedure, IDAPA 31.01.01.201-204. Staff concurs in the Company
proposed procedure for processing its Application. Does the Commission agree that Modified
Procedure is appropriate?
Scott Woodbury
Deputy Attorney General
bls/M:A VU-O8-
DECISION MEMORANDUM