20241001Final_Order_No_36339.pdf

Office of the Secretary
Service Date
October 1,2024
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 ) ORDER NO. 36339
CORPORATION )
On July 31, 2024, Avista Corporation, doing business as Avista Utilities ("Company"),
filed its annual Power Cost Adjustment ("PCA") application ("Application"). The PCA is a
mechanism used to track changes in revenues and costs associated with variations in hydroelectric
generation, secondary prices, thermal fuel costs, and changes in power contract revenues and
expenses. The present PCA surcharge is a rate of 0.499¢ per kilowatt-hour, based on an overall
surcharge of approximately $15.7 million, which was approved by the Commission in Order No.
35937, dated September 28, 2023, and is effective October 1, 2023, through September 30, 2024.
The Company requested that the Commission issue an order approving the level of power
costs deferred in the rebate direction for the period of July 1, 2023, through June 30, 2024, and
approving a PCA rebate rate of 0.205¢ per kilowatt-hour to be effective October 1, 2024.
Application at 1.
The Company represented that the proposed PCA rate adjustment of 0.2050 per kilowatt-
hour would rebate approximately$6.6 million to customers effective October 1,2024.Id. at 3. The
Company stated that the rebate is primarily associated with power supply costs that were lower
than those included in retail rates, due to lower wholesale electric and natural gas prices, and that
the net effect of the expiring surcharge, and the proposed rebate, is an overall decrease in revenue
of approximately 7.4 percent, or$22.8 million. Id.
STAFF COMMENTS
Commission Staff("Staff')reviewed the Company's Application,testimonies of Company
witnesses Kevin Holland and Kaylene Schultz, and additional information provided in responses
to production requests. Staff Comments at 2. Staff also reviewed Energy Imbalance Market
("EIM")benefits,Washington Climate Commitment Act("CCA") allowance costs,Palouse Wind
and Rattlesnake Flat Wind stipulated adjustments from the previous general rate case, Clearwater-
related items, and Chelan Hydro and Columbia Basin Hydro ("CBH") stipulated adjustments from
the previous general rate case.Id.
ORDER NO. 36339 1

Based on its review, Staff believed the requested PCA is generally prudent and
recommended approval of the Company's Application updating Schedule 66, Temporary Power
Cost Adjustment—Idaho with some adjustments. Id.
Table No. 1: Summary of Power Supply and Deferrals for Current PCA Year - Idaho
Idaho Power Cost Deferral Amount
LCA1—Idaho Sales Adjustment $ (1,160,814)
Net Power Supply—Actual Minus Authorized (3,458,527)
Clearwater Adjustment(Without Sharing) (823,962)
REC2 Revenues (2,226,028)
Schedule 25P Net Cost (478,630)
EIM3 Incremental O&M 379,503
Total Cost(Subject to Company Sharing) $ (7,768,458)
Sharing Percentage over Authorized 90%
Total Idaho Deferral Amount(W/out Clearwater Adjustment) $ (6,991,612)
Balancing Account
Beginning Balance as of July 2023 16,653,537
Incremental Deferral (6,991,612)
Amortizations (12,354,708)
Projected Amortization July 2024 through September 2024 (3,839,850)
Chelan Adjustment (581,315)
RPS4 Compliance(REC Retirement Benefit)Adjustment (1,058,163)
Interests 227,309
Projected Ending Balance through September 2024 (7,944,802)
1 Load Change Adjustment
z Renewable Energy Credit
3 Energy Imbalance Market
'Renewable Portfolio Standards—Washington WA I-937
5 Calculated using the Authorized Customer Deposit Rate of 2%over a 6-month period and 5%over a 6-month period.
Clearwater-related Items
Staff noted that in removing Clearwater's actual expenses, the Company mistakenly
calculated them using the incorrect avoided cost rates for January through June of 2024. Id. at 6.
Staff represented that by using the correct avoided cost rates, it resulted in a reduction in actual
system Purchased Power expense of$2,390,366(Idaho Allocation is$823,962),and after applying
the authorized jurisdictional allocation factor and customer sharing, Idaho customers would see an
additional rebate of$741,566.Id. at 6-7.
ORDER NO. 36339 2

Columbia Basin Hydro ("CBH")/Chelan Hydro Purchase Power Agreements
Staff represented that the Settlement approved through Order No. 35909 in Case No.AVU-
E-23-01, stipulated that the cost of CBH and Chelan Hydro would be included in the PCA using
the "lesser of market or contract cost, and to allow the Company to recover all or some of the
approximately $1.007 million in transmission cost to the extent that market prices are higher than
the cost of CBH generation with the cost of transmission included. Id. at 7.
However, when Staff reviewed the application of the mechanism designed to meet that
agreement, Staff believed the mechanism may be unfairly accounting for the cost of the contract
relative to the benefits by using unit cost"lower of monthly comparisons.Id. Based on that, Staff
believed that an adjustment amount of$581,315 instead of the $1,399,513 was more reasonable
for the current circumstances in this case and that the mechanism should be re-evaluated prior to
the next PCA. Id. at 7-8.
Staff recommended an adjustment of$581,315 and that the Company, Staff, and interested
parties meet after the case is closed to re-evaluate the mechanism to ensure it protects Idaho
customers while balancing benefits the contract may provide prior to filing the next PCA.Id. at 8.
CCA Allowance Costs
Staff represented that although all the CCA allowance expenses associated with the
Boulder Park generation are excluded from NPC, Staff was concerned that the Company included
Idaho's portion of CCA allowance costs in Boulder Park's dispatch costs. Id. at 6. Staff did not
recommend a specific adjustment for this case; however, Staff recommended that the Company
track the cost impact of using a Boulder Park dispatch cost without the cost of allowances over the
remaining PCA year to be reported in next year's PCA filing.Id.
Staff Recommendation
Staff recommended the Commission approve a deferral balance recovery amount of
$7,944,802, and the resulting rates with an effective date of October 1, 2024. Staff also
recommended the Commission:
1. Approve the adjustment for Clearwater Purchased Power Cost reducing the
deferral by an incremental $741,566;
2. Approve the adjustment for Chelan Hydro purchased power cost reducing the
deferral by $581,315;
3. Order the Company to file conforming tariffs for Schedule 66 Temporary Power
Cost Adjustment—Idaho, reflecting the Commission-approved rates;
ORDER NO. 36339 3

4. Order the Company, Staff, and interested parties to meet after the case is closed
to re-evaluate the"lesser of market or contract"mechanism to ensure it protects
Idaho customers while balancing benefits the contract may provide, prior to
filing the next PCA;
5. Order the Company to track the cost impact of using a Boulder Park dispatch
cost without the cost of allowances over the remaining PCA year to be reported
in next year's PCA filing; and
6. Consider late-filed comments from customers.
Id. at 10-11.
PUBLIC COMMENTS
The Commission received four (4) public comments in this case. The comments voiced
concerns regarding the increase in energy prices to consumers in recent years, and about grid
technology and reliability.
COMPANY REPLY COMMENTS
The Company represented that it supported the tariff changes and annual reporting
recommendation proposed by Staff, and that the Company will submit updated tariff sheets upon
approval of the updated PCA rates as noted by Staff. Company Reply Comments at 1.
The Company agreed with the adjustment to the Clearwater expense due to an incorrect
avoided cost rate for January through June of 2024, resulting in an additional rebate to Idaho
customers of$741,566, after the 90/10 sharing. Id.
The Company also supported the Chelan Hydro recommendation as detailed by Staff,
noting that the Company and Staff met on numerous occasions over the past several weeks to
discuss the mechanics of the Chelan Hydro adjustment.Id. The Company committed to meet with
Staff and interested parties after the case is closed to re-evaluate the mechanism to ensure it
protects Idaho customers while balancing benefits the contract may provide prior to filing the next
PCA. Id.
With respect to CCA Allowance Costs, the Company was supportive of Staffs
recommendation and the Company committed to the additional reporting to track the cost impact
of using a Boulder Park dispatch cost without the cost of allowances over the remaining PCA year
to be reported in next year's PCA filing.Id. at 2.
ORDER NO. 36339 4

COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company's Application and the issues in this
case under Title 61 of the Idaho Code including Idaho Code §§ 61-301 through 303. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order. Idaho Code
§§ 61-501 through 503.
Having reviewed the Application,all submitted comments,and the record,the Commission
finds it fair,just, and reasonable to approve a deferral balance recovery amount of$7,944,802, and
the resulting rates with an effective date of October 1, 2024. This approval incorporates the
adjustments for the Clearwater Purchased Power Cost and Chelan Hydro Purchased Power Cost
as outlined by Staff and agreed to by the Company. The Commission appreciates the work done
by both Staff and the Company in this case.
With respect to the mechanism developed as a result of Order No. 35909 in Case No.AVU-
E-23-01, the Company, Staff, and any interested parties shall meet prior to the filing of the next
PCA to reevaluate the mechanism to ensure it protects Idaho customers while balancing any
benefits provided. Additionally, the Company shall track the cost impact of using a Boulder Park
dispatch cost without the cost of allowances over the remaining PCA year and submit that data in
next year's PCA filing.
ORDER
IT IS HEREBY ORDERED that the Company's Application is approved as adjusted by
this Order.
IT IS FURTHER ORDERED that the Company, Staff,and any interested parties shall meet
prior to the filing of the next PCA to reevaluate the mechanism used for CBH and Chelan Hydro
as discussed above.
IT IS FURTHER ORDERED that the Company shall track the cost impact of using a
Boulder Park dispatch cost without the cost of allowances over the remaining PCA year and submit
that data in next year's PCA filing.
IT IS FURTHER ORDERED that the Company shall submit a compliance filing with
tariffs conforming with this order.
ORDER NO. 36339 5

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. Idaho Code §§ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this V day of
October 2024.
1him-'Kil-,
ERIC ANDE SON, PRESIDENT
JO R. HAMMOND JR., COMMISSIONER
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EDWARD LODGE, COMWSSIONER
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Commission Secreta
IALega1\ELECTRIC\AW-E-24-07_PCA\orders\AW E2407_FO_cb.docx
ORDER NO. 36339 6