20240910Staff Comments.pdf

STAFF COMMENTS 1 SEPTEMBER 10, 2024
ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 10221

Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA
CORPORATION’S FIXED COST
ADJUSTMENT MECHANISM (FCA)
ANNUAL RATE ADJUSTMENT
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CASE NO. AVU-E-24-08

COMMENTS OF THE
COMMISSION STAFF

COMMISSION STAFF (“STAFF”) OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Adam Triplett, Deputy Attorney General, submits the following
comments.

BACKGROUND
On July 31, 2024, Avista Corporation (“Company”) applied for (1) approval of Fixed
Cost Adjustment (“FCA”) deferrals for July 1, 2023, through June 30, 2024; (2) authorization to
adjust its FCA rates for electric service from October 1, 2024, through September 30, 2025; and
(3) approval of its proposed corresponding modifications to Tariff Sheet 75.

RECEIVED
Tuesday, September 10, 2024 1:32:54 PM
IDAHO PUBLIC
UTILITIES COMMISSION
STAFF COMMENTS 2 SEPTEMBER 10, 2024
The FCA is a rate adjustment mechanism designed to break the link between the energy a
utility sells and the revenue it collects to recover fixed costs 1 of providing service, thus
decoupling the utility’s revenues from its customers’ energy usage. This decoupling removes a
utility’s incentive to increase sales to increase revenue and profits and encourages energy
conservation. The Commission originally approved a three-year pilot program of the Company’s
FCA as part of the approved settlement of the Company’s 2015 rate case. Order No. 33437 at
10. The parties to the Company’s rate case agreed to review the program’s effectiveness at the
end of its second full year, to ensure the program was functioning as intended. On June 15,
2018, the Commission approved an addendum to the settlement that extended the term of the
Company’s FCA pilot for an additional year. Order No. 34085. On December 13, 2019, the
Commission authorized the Company to extend its FCA mechanism for both gas and electric
customers through March 31, 2025. Order No. 34502.
The Company proposes a rate rebate for its Residential and a surcharge for Non-
Residential electric customer groups based on the difference between actual FCA-related
revenue collected and the amount of FCA-related revenue authorized in the Company’s last
general rate case for each group between July 2023 and June 2024. The Company mostly
attributes the proposed changes to different actual monthly use-per-customer than that predicted
during the 12 months ending June 30, 2024, driven by fluctuating heating and cooling costs and
energy efficiency savings from Demand Side Management programs.
The Company represents that it recorded $1,814,109 in the rebate direction in deferred
revenue for the electric Residential customer group for the 12 months ending June 30, 2024. The
Company stated that the proposed rebate rate of 0.129¢ per kWh is designed to rebate
$1,757,929 to the Company’s Residential electric customers served under rate Schedule 1. The
Company represented that the deferral balance for the 12 months ending June 30, 2024, plus
interest through September, and any outstanding balance approved for recovery in the prior year
FCA rate filing would be transferred into a regulatory liability balancing account, and the
balance in the account would be reduced each month by the revenue collected under the tariff.
The Company represented that it recorded $37,939 in the surcharge direction in deferred
revenue for the electric Non-Residential Group for the 12 months ending June 30, 2024. The

1 “Fixed costs” are a utility’s costs to provide service, such as infrastructure and customer service, which do not vary
with energy use, output, or production, and remain relatively stable between rate cases.
STAFF COMMENTS 3 SEPTEMBER 10, 2024
Company stated that the proposed surcharge rate of 0.004¢ per kWh is designed to recover
$45,797 from commercial and industrial customers served under rate Schedules 11, 12, 21, 22,
31, and 32. The Company represented that the deferral balance, plus interest through September,
would be transferred into a regulatory asset balancing account, and the balance in the account
would be reduced each month by the revenue collected under the tariff.

STAFF ANALYSIS
Staff reviewed the Company’s Application and calculations of its residential and non-
residential FCA rates, along with the Company’s workpapers. After an examination of all
documents, Staff recommends that the Commission approve the Company’s proposed Tariff
Schedule 75 rebate for the Residential customer class and the surcharge for the Non-Residential
customer class.
Staff reviewed the FCA deferral balances and associated rates for both residential and
non-residential classes to confirm they have been calculated correctly by the Company. Staff
reviewed the amortization from the prior deferral balance, the kWh sales for the FCA year, new
and existing customer counts, the revenue from fixed costs collections, the interest calculations,
and the submitted revenue reports. Staff verified the authorized amounts used to calculate the
deferral were the same used to determine base rates authorized during the deferral period.
In its Application, the Company proposed changing the FCA rate for both its Residential
Group (Schedule 1) from a present rebate rate of 0.540¢ to a rebate rate of 0.129¢ per kilowatt-
hour (“kWh”) and changing the rate for the Non-Residential Group (Schedules 11, 12, 21, 22, 31
and 32) from a present rebate rate of 0.048¢ to a proposed surcharge rate of 0.004¢ per kWh.
According to the Company, the Residential Group rate change represents a $5.6 million, or
3.8%, increase to Schedule 1 customers, and the Non-Residential group rate change represents a
$0.6 million, or .5% increase, to the remaining schedules. The combined effect of expiring FCA
rates and the proposed 2023 rates are shown on Table No. 1 below:

STAFF COMMENTS 4 SEPTEMBER 10, 2024
Table No. 1: Present and Proposed Changes
Expiring Present
FCA Revenue
Proposed FCA
Revenue
Change in FCA
Revenue
Residential ($7,358,773) ($1,757,929) $5,600,844
Non-Residential ($549,565) $45,797 $595,362

Energy Consumption Drivers
The proposed FCA deferrals for residential electric customers are the result of higher
monthly use-per-customer than the use-per-customer that was embedded in the 2022 test year.
The FCA deferrals for non-residential electric customers were also due to slightly lower monthly
use-per-customer than the use-per-customer that was embedded in the 2022 test year.
Weather is a significant factor in the FCA. During the FCA deferral period, Avista’s
service territory experienced a colder than normal 12 months ended June 30, 2024, and a
fluctuating heating and cooling periods. This caused residential and non-residential customers to
use differing amounts of electricity during normal weather.
Also, since the 2022 test year used to set 2023 rates, Idaho customers have achieved
energy efficiency savings from participating in the Company’s Demand Side Management
programs.

Overall Impact of Electric Filings Effective October 1, 2024
The Company proposed two electric rate adjustments effective October l, 2024. In this
case, the proposed FCA, if approved, will increase electric revenues by about $6.2 million or
2.0%. The Company’s Power Cost Adjustment (“PCA”), if approved, will decrease the
Company’s electric revenues by $22.8 million or -7.4%. The net effect of Company’s filings
will decrease electric revenues by about $16.6 million or -5.4%. The average residential electric
customer’s monthly bill may decrease by $2.72 or 2.6%. Table No. 2 summarizes the overall
impact to electric revenues of the filings:

STAFF COMMENTS 5 SEPTEMBER 10, 2024
Table No. 2: Summary of Overall Impact to Electric Revenues
Filing Change in Revenues % Change Case No.
FCA $6.2 million 2.0% AVU-E-24-08
PCA ($22.8 million) -7.4% AVU-E-24-07
Total ($16.6 million) -5.4%

CUSTOMER NOTICE AND PRESS RELEASE
The Company’s press release and customer notice were included with its Application.
Each document addresses the following cases: (1) this case (AVU-E-24-08); (2) electric PCA
(AVU-E-24-07); (3) the natural gas FCA (AVU-G-24-01); and (4) the natural gas PGA (AVU-
G-24-02). Staff reviewed the documents, and both meet the requirements of Rule 125 of the
Commission’s Rules of Procedure. See IDAPA 31.01.01.125. The notice was included with
bills mailed to customers beginning August 2, 2024, and ending August 30, 204.
The Commission set a comment deadline of September 10, 2024. Some customers in the
last billing cycles will not have had adequate time to submit comments before the deadline.
Customers should have the opportunity to file comments and have those comments considered
by the Commission. Staff recommends that the Commission consider late filed comments from
customers. As of September 9, 2024, no customer comments had been filed.

STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company’s FCA application.
Specifically, Staff recommends that the Commission approve the Company’s proposed Tariff
Schedule 75, as filed, with a Residential rebate rate of 0.129¢ per kWh and Non-Residential
surcharges rate of 0.004¢ per kWh for electric service from October 1, 2024, through September
30, 2025.