20240927Final_Order_No_36335.pdf

Office of the Secretary
Service Date
September 27,2024
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA ) CASE NO. AVU-E-24-08
CORPORATION'S FIXED COST )
ADJUSTMENT MECHANISM(FCA) ) ORDER NO. 36335
ANNUAL RATE ADJUSTMENT )
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 Schedule 75. The Company
requested that the proposed FCA rates have an October 1, 2024, effective date and that the
Commission process the request via Modified Procedure.
On August 21, 2024, the Commission issued a Notice of Application and Notice of
Modified Procedure, setting public comment and Company reply deadlines. Order No. 36299.
Staff filed the only comments.
Having reviewed the record, the Commission now issues this Order approving the
Company's Application.
BACKGROUND
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
' "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.
ORDER NO. 36335 1

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 APPLICATION
The Company proposed changing the FCA rate for the Residential Group (Schedule 1)
from a present rebate rate of 0.5400 per kilowatt-hour("kWh")to a rebate rate of 0.1290 per kWh
and changing the rate for the Non-Residential Group (Schedules 11, 12, 21, 22, 31 and 32) from a
present rebate rate of 0.0480 per kWh to a proposed surcharge rate of 0.0040 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. If approved, the monthly bill of residential customers
using an average of 927 kWh per month would increase by $3.81.
The Company represented that it recorded$1,814,109 in the rebate direction in deferred
revenue for the electric Residential Group for the 12 months ending June 30, 2024. The Company
stated that the proposed rate of 0.1290 per kWh is designed to rebate$1,757,929 to the Company's
Schedule 1 customers. 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 Company stated that the proposed surcharge rate of 0.0040 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.
The Company also submitted its Residential and Non-Residential rate calculations,
support for its deferrals, and its proposed FCA Schedule 75 with its Application.
ORDER NO. 36335 2

STAFF COMMENTS
Staff reviewed the Company's Application, the calculations of its residential and non-
residential FCA rates, and the Company's workpapers. Staff confirmed the accuracy of the
Company's calculations of the FCA deferral balances and associated rates for both classes.
Additionally, 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 also verified that the authorized
amounts used to calculate the deferral were the same amounts used to determine base rates
authorized during the deferral period. Based on these reviews, Staff recommended that the
Commission approve the Company's FCA application.
The following table presents the effect of expiring FCA rates and the proposed 2024
rates.
Table No. 1: Present and Proposed FCA Surcharge Changes
Expiring Present Proposed FCA Change in FCA
FCA Revenue Revenue Revenue
Residential ($7,358,773) ($1,757,929) $5,600,844
Non-Residential ($549,565) $45,797 $595,362
With respect to energy consumption, the residential customer FCA deferrals, for the
FCA deferral period, were the result of higher monthly use-per-customer("UPC") than what was
embedded in the 2022 test year. The FCA deferrals for non-residential customers were the result
of slightly lower monthly UPC than what was embedded in the 2022 test year.
Staff noted that weather has a significant effect on the FCA. During the FCA deferral
period at issue in this case, temperatures were colder than normal across the Company's service
territory. Additionally, Staff observed that Idaho customers have generated energy efficiency
savings by participating in the Company's Demand-Side Management programs.
Staff reviewed the combined impact of the FCA proposed in this case and the
Company's proposed Power Cost Adjustment("PCA") filing, Case No. AVU-E-24-07. Table No.
2 summarizes the overall impact to electric revenues of the four filings.
ORDER NO. 36335 3

Table No. 2: Summary of Overall Impact to Electric Revenues
Filing Change in Revenues % Change
PCA $6.2 million 2.0%
FCA ($22.8 million) -7.4%
Total ($16.6 million) -5.4%
Staff also reviewed the Company's press release and customer notice that were
included with its Application. The notice was included with bills mailed to customers between
August 2, 2024, and August 30, 2024. Staff believed that both met the requirements of Rule 125
of the Commission's Rules of Procedure, but that some customers would not have adequate time
to submit comments before the September 10, 2024 comment deadline. Accordingly, Staff
recommended that the Commission consider late filed comments by customers.
STAFF RECOMMENDATION
Staff recommended that the Commission approve the Company's Application, as filed.
Specifically, Staff recommended Commission approval of the Company's proposed Schedule 75,
as filed, with a Residential rebate rate of 0.1290 per kWh and Non-Residential surcharge rate of
0.0040 per kWh for electric service from October 1, 2024, through September 30, 2025.
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company and this matter pursuant to Idaho
Code §§ 61-502 and 61-503. The Commission has the express statutory authority to investigate
rates, charges, rules, regulations, practices, and contracts of public utilities and to determine
whether they are just, reasonable, preferential, discriminatory, or in violation of any provision of
law, and may fix the same by order. Idaho Code §§ 61-502 and 61-503.
The Commission has reviewed the record and finds the Company's requested FCA
Residential Group (Schedule 1) rebate rate of 0.1290 per kWh, and FCA Non-Residential Group
(Schedules 11, 12, 21, 22, 31, and 32) surcharge rate of 0.0040 per kWh to be fair, just, and
reasonable. The Commission finds the Company correctly calculated its deferral balances. The
Commission thus approves the Company's Application and proposed revisions to Schedule 75, as
filed, effective October 1, 2024.
ORDER
IT IS HEREBY ORDERED that the Company's FCA deferrals for the period of July
1, 2023, through June 30, 2024, are approved.
ORDER NO. 36335 4

IT IS FURTHER ORDERED that the Company's request for a FCA rebate rate of
0.1290 per kWh for the Residential Group, and a FCA surcharge rate of 0.0040 per kWh for the
Non-Residential Group is approved.
IT IS FURTHER ORDERED the Company's proposed modifications to Schedule 75
are approved as filed, effective October 1, 2024.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code §§ 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 27t1i day
of September 2024.
ERIC ANDERSON, PRESIDENT
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R. HAMMOND JR., COMMISSIONER
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EDWARD LODGE, OM SIGNER
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Commission Sec etary
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