20240731Schultz Direct Testimony.pdf

DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
1411 E. MISSION AVENUE
P. O. BOX 3727
SPOKANE, WASHINGTON 99220
PHONE: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST ) CASE NO. AVU-E-24-07
ADJUSTMENT (PCA) ANNUAL RATE )
ADJUSTMENT FILING OF AVISTA ) DIRECT TESTIMONY OF
CORPORATION ) KAYLENE J. SCHULTZ
FOR AVISTA CORPORATION

I Q. Please state your name, present position with Avista Corporation, and
2 business address.
3 A. My name is Kaylene J. Schultz. I am employed by Avista Corporation as
4 Manager of Regulatory Affairs in the Regulatory Affairs Department. My business address
5 is 1411 East Mission, Spokane, Washington.
6 Q. Would you briefly describe your educational background and
7 professional experience?
8 A. Yes. I graduated from Gonzaga University in 2010 with a Bachelor of
9 Business Administration degree, majoring in both Accounting and Business
10 Administration,with a concentration in Management Information Systems. After spending
11 nearly eight years in the banking and capital markets sector, I joined Avista in September
12 2015 as a Natural Gas Analyst in the Company's Gas Supply Department, now Energy
13 Supply. In January 2019, I joined the Regulatory Affairs Department as a Regulatory
14 Affairs Analyst where I was responsible for preparing various annual filings and
15 applications. In my current role as Manager of Regulatory Affairs, my primary areas of
16 responsibility include preparation of general rate case filings, annual power supply related
17 filings, among other things.
18 Q. What is the scope of your testimony in this proceeding?
19 A. My testimony provides a summary of the accounting entries and account
20 balances related to the PCA for the 12-months ended June 30, 2024. My testimony also
21 addresses the proposed rebate to be effective October 1, 2024, which will replace the
22 existing surcharge that went into effect on October 1, 2023.
23 Q. Are you sponsoring any Exhibits?
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Avista Corporation

I A. Yes. I am sponsoring Exhibit No. KJS-1. Page 1 of that exhibit details the
2 calculation of the proposed uniform cents per kilowatt-hour PCA rebate of 0.2050, as well
3 as the impact of the proposed PCA rebate rate by rate schedule. Page 2 is the proposed
4 PCA tariff, Schedule 66.
5 Q. Would you please provide an overview of the most recent history of
6 Avista's PCA methodology that has been approved by the Idaho Public Utilities
7 Commission ("IPUC")?
8 A. Yes. On June 29, 2007, the Commission issued Order No. 30361 in Case
9 No. AVU-E-07-01. That case dealt with the review of the PCA methodology and method
10 of recovery. The Commission approved a change in the PCA methodology from a trigger
I I and cap mechanism to a single annual PCA rate adjustment filing requirement.
12 The Commission also approved a change in the method of the PCA deferral rate
13 adjustment from a uniform percentage basis to a uniform cents per kilowatt-hour basis,
14 effective with the October 1, 2007 rate change. By Order No. 32206 in Case No. GNR-E-
15 10-03 dated March 15, 2011, the Commission modified the retail revenue credit
16 methodology and approved a Load Change Adjustment Rate based on the energy-classified
17 portion of embedded production revenue requirement effective April 1, 2011.
18 The Commission approved the following procedural schedule for administering the
19 annual PCA filings:
20 August I Company filing for prior July—June deferral period
21
22 September I Review and comments by Staff and other interested
23 parties
24
25 October I Commission Order and effective date of PCA rate
26 adjustment
27
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Avista Corporation

I Q. Would you please summarize the filing and Order associated with the
2 existing PCA rate?
3 A. Yes. On July 31, 2023, Avista filed its annual PCA rate adjustment for the
4 period July 1, 2022, through June 30, 2023, and requested a PCA surcharge rate of 0.4990
5 per kilowatt-hour effective October 1, 2023. The Commission approved that request in
6 Case No. AVU-E-23-08, by Order No. 35937, dated September 28, 2023.
7 Q. Does the present filing conform to the requirements of the prior
8 Commission Orders regarding the PCA?
9 A. Yes. Consistent with prior years,the proposed PCA rate adjustment is based
10 on the following:
11 • Deferrals for the period July 1,2023,through June 30,2024,including interest,
12
13 • Unamortized balance remaining from the period October 1,2023,through June
14 30, 2024, including interest, and
15
16 • Forecast amortization and interest from July 1, 2024, through September 30,
17 2024.
18
19 Q. Were there additional directives in the last case, Case No. AVU-E-23-
20 08, that the Company complied with?
21 A. Yes. In Case No. AVU-E-23-08, Order No. 35937, the Company was
22 directed to submit PCA reports,which must include the Power Transaction Register(PTR)
23 and Gas Accounting Data Download(GADD) in Staff s recommended file formats, to the
24 Commission on a quarterly basis. The Company filed its first quarterly report on October
25 13,2023,beginning with Q3 2023,which included the confidential PTR and GADD reports
26 for that quarter. Subsequent quarterly filings of the alike have been made to date. The
27 quarterly filings, including Confidential Attachments A and B, for the PCA review period
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Avista Corporation

I (Q3 2023,Q4 2023, Q 12024 and Q2 2024)have been provided for ease of reference within
2 the Company's electronic workpapers of this filing.
3 Q. What were the amounts of deferrals and interest for the period July 1,
4 2023 through June 30,2024?
5 A. Table No. 1 below summarizes the charges for this period:
6 Table No. 1 —Summary of Deferral Balance
7 Deferrals (July 2023 - June 2024) $ (6,250,049)
Renewable Energy Credit Retirement Benefit $ (1,058,163)
8 Interest $ (81,720)
9 Total Deferral Balance $ 7 389 932
10 Company witness Mr. Holland discusses the components that make up the
11 $6,250,049 deferral credit balance shown above. The $1,058,163 credit for Renewable
12 Energy Credit Retirement benefits is to credit Idaho customers for benefits related to the
13 renewable energy credits (REC) retired to meet Washington's renewable portfolio
14 standards (RPS). The RECs used to meet Washington RPS are tracked 100% in the PCA.
15 The credit is based on the Idaho allocation of RECs that were retired to meet Washington
16 RPS that would have been otherwise sold. The$81,720 interest amount represents interest
17 for the twelve-month period July 1, 2023 through June 30, 2024. Interest for the 12-month
18 period was calculated using the Customer Deposit Rate of 2% for July 2023, through
19 December 2023,and 5%for January 2024,through June 2024,per prior Commission order.
20 Q. What rebate rate is the Company proposing to be effective October 1,
21 2024?
22 A. The Company is proposing a uniform cents per kilowatt-hour PCA rebate
23 rate of 0.2050 to be effective October 1, 2024. Page 1 of Exhibit No. KJS-1 shows the
Schultz, Di 4
Avista Corporation

I calculation of the proposed rate. The proposed rate is designed to rebate the following as
2 shown in Table No. 2 below:
3 Table No. 2—Amortization Balance Calculation
4 Deferrals(July 2023 -June 2024) $ (6,250,049)
Renewable Energy Credit Retirement Benefit $ (1,058,163)
5 Interest $ (81,720)
Total Deferral Balance $ (7,389,932)
6
7 Unamortized Balance from Previous Deferrals(prior to July 1,2023) $ 16,653,537
Amortization July 2023 -June 2024 $ (12,354,708)
8 Interest $ 378,217
9 Total Remaining Amortization Balance $ 4,677,046
10 Projected Amortization and Total Interest(July 2024-September 2024) $ (3,891,184)
11 TOTAL BALANCE FOR AMORTIZATION $ (6,604,070)
12 After applying the conversion factor related to Commission fees and uncollectible
13 customer accounts to the "Total Balance for Amortization" shown above, the resulting
14 credit balance of$6,629,108 is divided by forecasted kilowatt-hours to derive the proposed
15 rebate rate of 0.205¢ per kilowatt-hour.t
16 Q. What is the impact of the proposed PCA rate decrease by rate schedule?
17 A. Table No. 3 below shows the effect of the proposed PCA rate decrease by
18 rate schedule. The proposed rebate rate is 0.2050 per kilowatt-hour, which is 0.704¢ per
19 kilowatt-hour less than the existing surcharge of 0.4990 per kilowatt-hour. The overall
20 decrease in revenue is approximately 7.4%, or$22.8 million.
' Total Balance for Amortization($6,604,070)divided by conversion factor 0.996223=($6,629,108).
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Avista Corporation

I Table No. 3—Revenue Impact by Rate Schedule
2 Schedule Percent change
3 Type of Service Number on Billed Revenue
Residential 1 -6.5%
4 General Service 11,12 -7.8%
Large General Service 21,22 -6.8%
5 Extra Large General Service 25 -10.7%
6 Clearwater 25P -11.7%
Pumping Service 31,32 -6.0%
7 Street&Area Lights 41-49 -1.8%
Total -7.4%
8
9 Q. What will be the impact of the proposed change on an average
10 residential customer?
11 A. Residential customers using an average of 927 kilowatt-hours per month
12 would see their monthly bills decrease from $104.18 to $97.66, a decrease of$6.52 per
13 month, or 6.3%. This bill impact does not consider the effects of other filings Avista has
14 made that will go into effect on October 1, 2024.
15 Q. What programs are in place to help Avista customers pay or manage
16 their bills?
17 A. The Company has several programs available to assist customers with
18 managing their utility bills.Avista's Comfort Level Billing (CLB)plan,based on historical
19 charges or an estimate of future charges,2 approximates a monthly average of the
20 customer's estimated annual billings. The concept of this plan is to help the customer
21 budget for their Avista bill throughout the year by leveling out the seasonal highs and lows
22 of their monthly bills. Additionally, the Company's Customer Assistance Referral and
2 Estimates of future charges are only used when the premise does not have adequate usage history to
determine approximate annual average use.
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Avista Corporation

I Evaluation Services (CARES) program provides specialized assistance to customers
2 encountering medical crises,unemployment, or other personal or financial hardships. This
3 program offers customers access to specifically-trained CARES representatives who
4 provide support to the customer by way of payment arrangements, medical certificates, or
5 referrals to local Community Action Agencies (CAAs, or Agencies) or other organizations
6 for help with—among other things—housing,utilities, and medical assistance.
7 Idaho customers who have children, elderly or infirmed persons living in the
8 household may also qualify for Winter Moratorium between the months of December
9 through February each year. From December 1 through February 28, customers are not
10 required to pay their bills in-full and can instead opt to defer payment throughout these
11 winter months or make partial payments. The Winter Payment Plan, offered from
12 November 1 through March 31 annually, provides for lower winter bill payments by
13 allowing customers to make monthly payments equal to one-half of the levelized bill
14 amounts, with the balance then due in-full, or a new payment arrangement established on
15 the balance, by April 1st. In addition, the Company also offers flexible due dates and both
16 short-term as well as long-term payment arrangements for customers having difficulty
17 paying their bills.
18 Avista also has many convenient billing and payment options available for its
19 customers. For billing purposes, all customers have the opportunity to designate their
20 preferred communication method for their billing and associated reminders—such options
21 include paper copy, e-mail, or even text messaging. For payments, the Automatic Payment
22 Service (APS) allows customers to opt to have their monthly utility bill deducted directly
23 from their checking account or credit card automatically each month. Other payment
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Avista Corporation

I services include debit and credit card service, check-by-phone or over the web, preferred
2 due date, electronic billing, pay-by-text, as well as many local drop boxes or pay stations
3 for cash or check payments.
4 For Avista's low-income customers, the Federal Low-Income Home Energy
5 Assistance Program (LIHEAP)provides funding to assist them in paying their electric and
6 natural gas bills. These funds are distributed through local CAAs. Additionally, Idaho's
7 Housing Preservation Program offers emergency assistance for utility and/or rental
8 payments for qualifying low-income households.3 Lastly, Avista's Project Share is a
9 voluntary contribution option allowing customers to contribute donations that are then
10 distributed through local Agencies to customers experiencing financial hardship.
11 Q. Does that conclude your pre-filed direct testimony?
12 A. Yes, it does.
s The Housing Preservation Program,offered by Idaho Housing and Finance Association(by award from the
U.S.Department of the Treasury),can provide up to 15 months of utility and/or rental payment assistance for
Idaho renters who earn less than 80%of the Area Median Income(AMI).www.idahohousing.comjmp/
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Avista Corporation