20240731Application.pdf

11
RECEIVED
Avista Corp. 2024 July 31 AM 11:09
1411 East Mission P.O. Box 3727 IDAHO PUBLIC
Spokane. Washington 99220-3727 UTILITIES COMMISSION
Telephone [phone]
Toll Free 800-727-9170
July 31, 2024
State of Idaho
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise, ID 83714
Re: Case No. AVU-E-24-08
Electric Fixed Cost Adjustment Annual Rate Filing of Avista Corporation
Dear Commission Secretary:
Enclosed for electronic filing with the Commission is Avista's electric Fixed Cost Adjustment
(FCA) annual rate adjustment filing. This filing consists of Avista's Application, Exhibit A (the
Company's proposed tariffs), Exhibit B (rate calculations), Exhibit C (12 months ending June 30,
2024 deferral), and Exhibit D (customer communications) in support of the Application. The
Company request that the proposed tariff sheets be made effective October 1, 2024
Electronic versions of the Company's filing were emailed to the Commission,and the Service List,
on July 31, 2024.
Please direct any questions on this matter to me at(509) 495-8620 or Joel Anderson at(509)495-
2811.
Sincerely,
lsl Pat Ehrbar
Patrick D. Ehrbar
Director of Regulatory Affairs
Enclosures

I DAVID J. MEYER
2 VICE PRESIDENT AND CHIEF COUNSEL FOR
3 REGULATORY AND GOVERNMENTAL AFFAIRS
4 AVISTA CORPORATION
5 1411 E. MISSION AVENUE
6 P. O. BOX 3727
7 SPOKANE, WASHINGTON 99220
8 PHONE: [phone], FAX: [phone]
9
10 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
11
12 IN THE MATTER OF THE FIXED COST )
13 ADJUSTMENT MECHANISM (FCA) ) CASE NO. AVU-E-24-08
14 ANNUAL RATE ADJUSTMENT FILING ) APPLICATION OF AVISTA
15 OF AVISTA CORPORATION ) CORPORATION
16
17
18 I. INTRODUCTION
19 In accordance with Idaho Code §61-502, Commission Order No. 33437, and RP
20 052, Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or
21 "Company"), at 1411 East Mission Avenue, Spokane, Washington, respectfully makes
22 application to the Idaho Public Utilities Commission ("Commission") for an order
23 approving the level of electric Fixed Cost Adjustment Mechanism(FCA)revenue deferred
24 during the twelve month period from July 2023 through June 2024 and authorizing FCA
25 rates for electric service from October 1, 2024 through September 30,2025. The FCA rate
26 for the Residential Group (Schedule 1) is proposed to change from a present rebate rate of
27 0.540¢ to a proposed rebate rate of 0.1290 per kilowatt-hour. The FCA rate for the Non-
28 Residential Group (Schedules 11, 12, 21, 22, 31 and 32) is proposed to change from a
29 present rebate rate of 0.0480 to a proposed surcharge rate of 0.0040 per kilowatt-hour. The
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 1

I Residential Group rate change represents a $5.6 million, or 3.8%, increase to Schedule 1
2 customers, and the Non-Residential group rate change represents a $0.6 million, or 0.5%
3 increase. The combined effect of expiring FCA rates and the proposed 2024 rates are
4 shown on the table below.
5 Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
6 Residential $ 7,358,773 $ 1,757,929 $ 5,600,844
7 Non-Residential $ 549,565 $ 45,797 $ 595,362
8 The Company has requested an October 1, 2024 effective date.
9 The Company requests that this filing be processed under the Commission's
10 Modified Procedure Rules(RP 201-204). Communications in reference to this Application
11 should be addressed to:
12 David J. Meyer, Esq.
13 Vice President and Chief Counsel for
14 Regulatory & Governmental Affairs
15 Avista Corporation
16 P.O. Box 3727
17 MSC-10
18 1411 E. Mission Ave
19 Spokane, WA 99220-3727
20 Phone: [phone]
21 [e-mail]
22
23 Patrick Ehrbar
24 Director of Regulatory Affairs
25 Avista Utilities
26 P.O. Box 3727
27 MSC-27
28 1411 E. Mission Ave
29 Spokane, WA 99220-3727
30 Phone: [phone]
31 [e-mail]
32
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 2

I II. BACKGROUND
2 The purpose of the electric FCA is to adjust the Company's Commission-
3 authorized revenues from kilowatt-hour("kWh") sales, such that the Company's revenues
4 will be recognized based on the number of customers served under the applicable electric
5 service schedules. The FCA allows the Company to: 1)defer the difference between actual
6 FCA-related revenue received from customers through volumetric rates, and the FCA-
7 related revenue approved for recovery in the Company's last general rate case on a per-
8 customer basis; and 2) file a tariff to surcharge or rebate, by rate group, the total deferred
9 amount accumulated in the deferred revenue accounts for the prior January through
10 December time period.
11 In Case Nos. AVU-E-15-05 and AVU-G-15-01, the Commission in Order No.
12 33437 approved for Avista a Fixed Cost Adjustment Mechanism. On page 10 of Order
13 No. 33437, the Commission stated:
14 The parties have also agreed upon a three-year' FCA pilot for electric and natural
15 gas operations. The FCA will compare actual FCA revenues to allowed FCA
16 revenues determined on a per-customer basis. Any differences will be deferred for
17 a rebate or surcharge. There are a number of customer safeguards,including that an
18 FCA surcharge cannot exceed a 3% annual rate adjustment. Any unrecovered
19 balances will be carried forward to recover in future years. Further,there is no limit
20 to the level of the FCA rebate. As part of the Stipulation, Staff and other interested
21 parties, will review the efficacy of the FCA after its second full year to ensure it is
22 functioning as intended. Fixed cost adjustment mechanisms are intended to
23 encourage conservation and allow customers more control over their bills. Further,
24 the proposed FCA will remove any financial disincentive of the Company to
25 encourage energy conservation.
26
27 Section 13 of the Stipulation and Settlement, as amended by Addendum to the Stipulation
1 On June 15, 2018, the Idaho Public Utilities Commission approved an Addendum to the Stipulation
which extended the term of the pilot for an additional year by Order No. 34085.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 3

I approved by the Commission in Order No. 34085 on June 15, 2018, provided further
2 details, reproduced below, regarding the mechanics of the fixed cost adjustment
3 mechanism.
4 A. FCA Mechanisms Term. The Parties agree to an initial FCA term of 4 years,
5 with a review of how the mechanisms have functioned conducted by Avista, Staff,
6 and other interested parties following the end of the third full year. Avista may
7 seek to extend the term of the mechanism prior to its expiration. 2
8
9 B. Rate Groups. There will be two rate groups established for both the electric
10 FCA and natural gas FCA:
11
12 Electric Customer Rate Groups:
13 1. Residential— Schedule 1
14 2. Commercial— Schedules 11, 12, 21, 22, 31, 32
15
16 Natural Gas Rate Groups:
17 1. Residential— Schedule 101
18 2. Commercial— Schedules I I I and 112
19
20 C. Existing Customers and New Customers. The Parties have agreed that revenue
21 related to certain items discussed below would not be included in the FCA for new
22 customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer
23 for new customers will be less than the Fixed Cost Adjustment Revenue-Per-
24 Customer for existing customers. For new electric customers added after the test
25 period, recovery of incremental revenue related to fixed production and
26 transmission costs would be excluded from the electric FCA. For new natural gas
27 customers added after the test period, recovery of incremental revenue related to
28 fixed production and underground storage facility costs would be excluded. These
29 modifications are included in Appendices B and C to the Stipulation.
30
31 D. Quarterly Reporting. Avista will file,within 45 days of the end of each quarter,
32 a report detailing the FCA activity by month.3 The reporting will also include
33 information related to the deferrals by rate group, what the deferrals would have
34 been if tracked by rate schedule, use and revenue-per-customer for existing and
35 new customers,and other summary financial information. Avista will provide such
2 Review of the mechanisms took place at a workshop March 27, 2019, and the Company filed a
separate application with the Commission which extended the term of the FCA Mechanisms through
March 31,2025. See also discussion starting at page 6 of this application.
3 As stated in Order No. 34502 Case No. AVU-E-19-06,the Company altered its quarterly reporting
from 45 days to 60 days from the end of each quarter.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 4

I other information as may be reasonably requested, from time to time, in the future
2 quarterly reports.
3
4 E. Annual Filings. On or before July 1, the Company will file a proposed rate
5 adjustment surcharge or rebate based on the amount of deferred revenue recorded
6 for the prior January through December time period.4 The rate adjustment would
7 be calculated separately for each Rate Group, with the applicable surcharge or
8 rebate recovered from each group on a uniform cents per kWh or per therm basis.
9 The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas)
10 included with that filing would include a rate adjustment that recovers/rebates the
11 appropriate deferred revenue amount over a twelve-month period effective on
12 October 1 for electric (to match with Power Cost Adjustment and Residential
13 Exchange annual rate adjustments time period) and November 1 st for natural gas
14 (to match with the annual Purchased Gas Cost Adjustment rate adjustment time
15 period). The deferred revenue amount approved for recovery or rebate would be
16 transferred to a balancing account and the revenue surcharged or rebated during the
17 period would reduce the deferred revenue in the balancing account. After
18 determining the amount of deferred revenue that can be recovered through a
19 surcharge (or refunded through a rebate) by Rate Group, the proposed rates under
20 Schedules 75 and 175 would be determined by dividing the deferred revenue to be
21 recovered by Rate Group by the estimated kWh sales (Electric FCA)or therm sales
22 (Natural Gas FCA) for each Rate Group during the twelve-month recovery period.
23 Any deferred revenue remaining in the balancing account at the end of the
24 amortization period would be added to the new revenue deferrals to determine the
25 amount of the proposed surcharge/rebate for the following year.
26
27 F. Interest. Interest will be accrued on the unamortized balance in the FCA
28 balancing accounts at the Customer Deposit Rate.
29
30 G. Accounting. Avista will record the deferral in account 186 — Miscellaneous
31 Deferred Debits. The amount approved for recovery or rebate would then be
32 transferred into a Regulatory Asset or Regulatory Liability account for
33 amortization. On the income statement, the Company would record both the
34 deferred revenue and the amortization of the deferred revenue through Account 456
35 (Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub-
36 accounts. The Company would file quarterly reports with the Commission showing
37 pertinent information regarding the status of the current deferral. This report would
38 include a spreadsheet showing the monthly revenue deferral calculation for each
39 month of the deferral period (January - December), as well as the current and
40 historical monthly balance in the deferral account.
41
4 As stated in Order No. 34502 Case No.AVU-E-19-06,The company altered the deferral period of
its FCA extension to July through June by using a one-time 18-month deferral period of January 1,
2020 through June 30,2021. See also discussion starting at page 6 of this application.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 5

I H. 3% Rate Increase Cap. An FCA surcharge, by rate group, cannot exceed a 3%
2 annual rate adjustment, and any unrecovered balances will be carried forward to
3 future years for recovery. There is no limit to the level of the FCA rebate.
4
5
6 III. DRIVERS OF ELECTRIC FCA DEFERRALS
7 The FCA rebate deferrals for residential customers for 12 months ended June 30,
8 2024 were the result of higher monthly use-per-customer than the use-per-customer that
9 was embedded in the 2022 test year(i.e., the FCA base). The FCA surcharge deferrals for
10 non-residential customers for 12 months ended June 30, 2024 were the result of slightly
11 lower monthly use-per-customer than the use-per-customer that was embedded in the 2022
12 test year(i.e., the FCA base).
13 The primary driver for the change in use-per-customer was a colder than normal 12
14 months ended June 30, 2024, fluctuating with offsetting impacts from heating and cooling
15 throughout the period. Also, since the 2022 test year used to set 2023 rates, Idaho
16 customers have achieved energy efficiency savings from participation in the Company's
17 Demand Side Management programs.
18
19 IV. RESIDENTIAL GROUP RATE DETERMINATION
20 The Company recorded $1,814,109 in the rebate direction in deferred revenue for
21 the electric residential customer group for 12 months ended June 30, 2024. The proposed
22 rate of 0.129 cents per kWh is designed to rebate $1,757,929 to the Company's residential
23 electric customers served under rate Schedule 1. The following table summarizes the
24 components of the Company's request for rebate:
25
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 6

I Summary
07.2023- 06.2024 Deferred Revenue ($1,814,109)
2 Add Prior Year Residual Balance $126,364
Add Interest through 09/30/2025 ($63,105)
3 Add Revenue Related Expense Adj. ($7,079)
Total Requested Recovery ($1,757,929)
4 Customer Rebate Revenue ($1,757,929)
Carryover Deferred Revenue _ $0
5
6 Exhibit B,page 1 shows the derivation of the proposed rate to rebate revenue of$1,757,929
7 based on projected sales volumes for Schedule 1 customers during the rebate/amortization
8 period (October 2024 through September 2025). As identified on tariff Sheet 75B under
9 Step 7 of"Calculation of Monthly FCA Deferral", interest on the deferred balance accrues
10 at the Customer Deposit Interest Rate.5 If the proposed rebate is approved by the
11 Commission, the 12 months ended June 30, 2024 deferral balance, plus interest through
12 September, and any outstanding balance approved for recovery in the prior year FCA rate
13 filing will be transferred into a regulatory liability balancing account. The balance in the
14 account will be reduced each month by the revenue collected under the tariff.
15
16 V. NON-RESIDENTIAL GROUP RATE DETERMINATION
17 The Company recorded $37,939 in the surcharge direction in deferred revenue for
18 the electric Non-Residential Group for 12 months ended June 30, 2024. The proposed
19 surcharge rate of 0.004 cents per kWh is designed to recover $45,797 from commercial
20 and industrial customers served under rate Schedules 11, 12, 21, 22, 31, and 32. The
21 following table summarizes the components of the Company's request for recovery:
5 The Customer Deposit Interest Rate was 2.00%beginning January 2023 and 5.00%beginning January
2024. The current rate of 5.00%has been used as an estimate for purposes of this rate determination.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 7

I Summary
07.2023- 06.2024 Deferred Revenue $37,939
2 Add Prior Year Residual Balance $6,727
Add Interest through 09/30/2025 $1,582
3 Add Revenue Related Expense Adj. ($451)
Total Requested Recovery $45,797
4 Customer Surcharge Revenue $45,797
5 Carryover Deferred Revenue $0
6 Exhibit B, page 3 shows the derivation of the proposed surcharge rate to recover
7 revenue of$45,797 based on projected sales volumes for Schedules 11, 12,21, 22, 31, and
8 32 during the surcharge/amortization period(October 2024 through September 2025). As
9 identified on tariff Sheet 75B under Step 7 of"Calculation of Monthly FCA Deferral",
10 interest on the deferred balance accrues at the Customer Deposit Interest Rate. If the
11 proposed surcharge is approved by the Commission, the deferral balance, plus interest
12 through September, will be transferred into the regulatory asset balancing account. The
13 balance in the account will be reduced each month by the revenue collected under the tariff.
14 Support showing the monthly calculation of the deferral balances for both the
15 Residential and Non-Residential Groups is provided as Exhibit C. These calculations were
16 also provided to the Commission in quarterly reports(except April through June which will
17 be provided in the Q2 report by the end of August).
18
19 VI. 3% ANNUAL RATE INCREASE TEST
20 FCA rate adjustment surcharges are subject to a 3%annual rate increase limitation.
21 There is no limit to rebate rate adjustments, therefore the reversal of any rebate rate is not
22 included in the incremental surcharge test. As described in tariff Schedule 75 (see First
23 Revision Sheet 75C),the 3%annual rate increase limitation will be determined by dividing
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 8

I the incremental annual revenue to be collected (proposed surcharge revenue less present
2 surcharge revenue)under this Schedule by the total"normalized"revenue for the two Rate
3 Groups for the most recent January through December time-period. Normalized revenue
4 is determined by multiplying the weather-corrected usage for the period by the present rates
5 in effect. If the incremental amount of the proposed surcharge exceeds 3%, only a 3%
6 incremental rate increase will be proposed, and any remaining deferred balance will be
7 carried over to the following year.
8 Exhibit B, page 6 shows the 3% test for the two rate groups. The incremental
9 change from the existing rebate to the proposed rebate for the residential group is an
10 increase of $5.6 million or approximately 3.8%. However, because this incremental
11 increase is the effect of going from a larger rebate to a smaller rebate,the 3%test does not
12 apply. For the Non-Residential group, the incremental change from the existing rebate to
13 the proposed surcharge is an increase of$0.6 million or approximately 0.5%. There will
14 be no proposed carry over for either rate class.
15
16 VII. EXISTING CUSTOMERS AND NEW CUSTOMERS
17 The mechanism approved by the Commission requires that electric customers that
18 have been added since the test year are subject to an FCA Revenue-Per-Customer that
19 excludes incremental revenue related to fixed production and transmission costs. Separate
20 calculations for new versus existing customers are clearly identified in the FCA base that
21 was approved in Order No. 35909 for rates effective since September 1, 2023.
22 Due to this segregation, Avista tracks the usage of new customers since January 1,
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 9

1 2021 as compared with existing customers.' In general, the average usage of new
2 customers is lower compared to the average usage of existing customers. Avista has found
3 that new customer meters, on average, have less usage in the first six to 12 months after
4 meter installation, then generally see increases in their usage until their usage is more in
5 line with the average usage of existing customers after 12 months of service. This is due,
6 in part, to the lag that occurs between when a meter is installed and billing commences,
7 and when a customer moves into the premises. Avista will continue to track the usage of
8 new customers over the Fixed Cost Adjustment term.
9
10 VIII. PROPOSED RATES TO BE EFFECTIVE OCTOBER 1, 2024
11 The Company is proposing a per kilowatt-hour FCA rebate rate of 0.1290 for the
12 Residential Group, and a per kilowatt-hour FCA surcharge rate of 0.004¢ for the Non-
13 Residential Group,both to become effective October 1,2024. Exhibit B to this Application
14 provides the Residential and Non-Residential Rate Calculation, and Exhibit C provides the
15 support for the deferrals for the July 1,2023 through June 30,2024 deferral period. Exhibit
16 A is a copy of the proposed tariff, Schedule 75, which contains the proposed FCA rates.
17 Exhibit A also includes the proposed changes to Schedule 75 in strike/underline format.
18 Residential customers using an average of 927 kilowatt-hours per month would see
19 their monthly bills increase from $104.18 to $107.99, an increase of$3.81 per month, or
20 3.6%.
6 "Existing customers"were part of the test year used to set the September 1,2023 rates(2022 calendar
year). "New customers"consist of all new hookups after the test year.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 10

I IX. COMMUNICATIONS AND SERVICE OF APPLICATION
2 In conformance with RP 125, this Application will be brought to the attention of
3 the Company's customers. First, the Company has served a copy of this Application upon
4 the service list in Case Nos. AVU-E-15-05 and AVU-G-15-01, the cases that gave rise to
5 the FCA mechanisms. Second, a copy of Company's news release and customer notice is
6 provided as Attachment D. The news release will be issued in July,and the customer notice
7 will be inserted in customer bills starting in August and will run for a full billing cycle.
8
9 X. REQUEST FOR RELIEF
10 The Company requests that the Commission issue an order approving FCA
11 deferrals for the period July 1, 2023 through June 30, 2024 and approve a per kilowatt-
12 hour FCA rebate rate of 0.129¢ for the Residential Group, and a per kilowatt-hour FCA
13 surcharge rate of 0.0040 for the Non-Residential Group,both to become effective October
14 1, 2024. The Company also requests that the Commission approve the proposed tariff
15 modifications to tariff Sheet 75. The Residential Group rebate represents a $5.6 million,
16 or 3.8% incremental increase to Schedule 1 customers, and the Non-Residential group
17 surcharge results in a $0.6 million, or 0.5%, incremental increase. The Company requests
18 that the matter be processed under the Commission's Modified Procedure rules through
19 use of written comments.
20 Dated at Spokane, Washington this 31 st day of July 2024.
21 AVISTA CORPORATION
22
23 BY /s/Patrick Ehrbar
24 Patrick D. Ehrbar
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 11

I Director of Regulatory Affairs
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 12

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 3 1" day of July, 2024, served the Application of Avista
Corporation — Fixed Cost Rate Adjustment, upon the following parties, by mailing a copy
thereof,properly addressed with postage prepaid to:
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise,ID 83714
Karl Klein Peter J. Richardson
Brandon Karpen Greg M.Adams
Deputy Attorneys General Richardson Adams
Idaho Public Utilities Commission 515 N. 27t' Street
472 W.Washington PO Box 7218
Boise,ID 83702-0659 Boise, ID 83702
karLklein(c,puc.idaho.gov petergrichardsonadams.com
Brandon.karpen(&puc.idaho.gov gregArichardsonsdams.com
Bradley R. Mullins Andrew Moratzka
Principal Consultant MW Analytics Stoel Rives LLP
Tietotie 2, Suite 208 33 S. Sixth Steet Springs
Oulunsalo,Finland FI-90460 Minneapolis,MN 55402
brmullinskmnanalytics.com andrew.moratzka&stoel.com
Larry A. Crowley Marie Callaway Kellner
The Energy Strategies Institute,Inc. Brad Heusinkveld
3738 S. Harris Ranch Ave. Idaho Conservation League
Boise,ID 83716 710 N. 6th St.
crowleylakaol.com Boise, ID 83702
mkellnergidahoconservation.org
bheusinkveld(c�idahoconservation.org
Dr. Don Reading Clearwater Paper
280 S. Silverwood Way carol.haugen(&clearwaterpaper.com
Eagle,Idaho 83616 nathan.smith(c�r�,clearwaterpaper.com
dreadinggmindspring com Jamie.mcdonald(c-r�,clearwaterpaper.com
/s/Paul Kimball
Paul Kimball
Manager of Discovery& Compliance