20240904AVU to Staff 32 Supplemental.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 09/04/2024
CASE NO: AVU-E-24-07 WITNESS: K. Holland/K. Schultz
REQUESTER: IPUC RESPONDER: R.Finesilver/K. Schultz
TYPE: Production Request DEPARTMENT: Energy Supply
REQUEST NO.: Staff – 032 Supplemental TELEPHONE: [phone]
REQUEST:
Please explain why the power purchase expense that Avista pays Clearwater is not recorded in the
IPUC Deferral Analysis.
SUPPLEMENTAL RESPONSE (09/04/2024):
Through the discovery process, the Company has identified an inadvertent error in the accounting
for the Clearwater purchased power included in Account 555 Purchased Power, specific to the
accompanying offset “Clearwater Adjustment” for the months January through June 2024 of the
PCA review period. The intent of the accounting adjustment is to fully remove the impact of the
Clearwater purchased power so that the net impact is zero. With the most recent Schedule 25P rate
change, the Company inadvertently missed updating the rate from $24.50 to $36.17, effective
January 1, 2024, for the offset adjustment. The impact of this was that the Company’s general
ledger recorded volumes in 555380 at the updated $36.17 correctly, but the offsetting monthly
adjustment remained at the $24.50, resulting in an overstatement of expenses in the PCA.
As filed, the PCA review period (07.2023-06.2024) expense in 555380 was $12,902,337 (system),
partially offset by the Clearwater adjustment of $10,511,973 (system), resulting in $2,390,364
(system) of higher expenses included in the review period that should have been fully offset, as
shown in Staff_PR_032 Supplemental Attachment A. Staff_PR_032 Supplemental Attachment A
provides detail of account 555 along with a table showing the power purchase agreement (PPA)
MWh volumes and the applicable rates.
While account 555380 is recorded as Electric Direct, Idaho (ED.ID), it is historically combined
with the fully offset adjustment to net to zero. The impact of this adjustment reduces expense by
$823,960 (Idaho share), prior to the 90%/10% customer/Company sharing, plus interest.
Additionally, as a part of the 2023 Avista Idaho general rate case (Case No. AVU-E-23-01), the
parties agreed to a methodology related to how, for the rate plan, the Chelan Hydro contract of
2024 would be handled. On September 4, 2024, Commission Staff and Avista met to discuss our
mutual understanding of what the settlement agreement meant, and what the proper accounting
should be, given that this settlement agreement for this contract was new. After a collaborative
discussion with Staff and Avista, the parties reached a compromise, resulting in an additional
rebate to Idaho customers of $627,516, as discussed in detail in Staff_PR_032 Supplemental
Attachment B. Staff_PR_032 Supplemental Attachment C provides the excel workpaper
supporting the calculations of the Chelan Hydro proposed adjustment.
Provided as Staff_PR_032 Supplemental Attachment D are updated Schultz workpapers reflecting
the impact of the two adjustments (Clearwater and Chelan Hydro) described above, which results
in an updated deferral of $7.999 million ($8.036 million after applying the conversion factor
RECEIVED
Wednesday, September 4, 2024
IDAHO PUBLIC
UTILITIES COMMISSION
related to commission fees and uncollectible customer accounts) and a PCA rebate rate of 0.248¢
per kilowatt-hour to be effective October 1, 2024.

Further, per the request of Staff, for transparency purposes the Company has broken out the two
slices of the Chelan contract, as well as the adjustments related to Chelan and Columbia Basin
Hydro (CBH) as shown in Staff_PR_032 Supplemental Attachment E (previously provided as
Staff_PR_014 Attachment A).

ORIGINAL RESPONSE (08/26/2024):

The Clearwater power purchase expense is recorded in Account 555380 ED.ID, which is included
in the IPUC Deferral Analysis under 555 Purchased Power. Please see tabs “Review Period
Actual”, “2023”, and “2024” of Staff_PR_029 Attachment A for the detailed actual expenses for
555 Purchased Power which includes account 555380.