20241010Staff Comments .pdf

RECEIVED
Thursday, October 10, 2024 9.04.41 AM
IDAHO PUBLIC
UTILITIES COMMISSION
MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11714
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 ANNUAL FIXED COST ) CASE NO. AVU-G-24-01
ADJUSTMENT MECHANISM (FCA) RATE )
ADJUSTMENT )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its Attorney of record, Michael Duval, Deputy Attorney
General, submits the following comments.
BACKGROUND
On July 31, 2024, Avista Corporation("Company") applied for authorization to adjust
the Fixed Cost Adjustment("FCA") rates for natural gas service from November 1, 2024,
through October 31, 2025. The Company stated the current FCA rates as well as the proposed
changes as illustrated below:
Current Rate Proposed Rate Proposed Rate
Per Therm Per Therm Change
Residential Group
Schedule 101 Rebate of 1.219¢ Surcharge of 1.506¢ 2.3% increase
Non-Residential Group
Schedules 111 and 112 Rebate of 0.632¢ 1 Surcharge of 1.006 ¢ 1 1.7% increase
STAFF COMMENTS 1 OCTOBER 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' 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 submitted its Residential and Non-Residential rate calculations, support
for its deferrals, and its proposed FCA tariff Schedule 175 with its Application and supplemental
materials.
STAFF ANALYSIS
Staff reviewed the Company's Application, supporting workpapers, and the proposed
FCA Schedule 175. This review provided Staff with reasonable assurance that the Company's
FCA natural gas deferral balances and rates were correctly calculated. Therefore, Staff
recommends the Commission approve the Company's Application and proposed FCA Schedule
175 as filed effective November 1, 2024.
The Company proposed changing the FCA rate for the Residential group (Schedule 101)
from the current rebate rate of 1.2190 to the proposed surcharge rate of 1.5060 per therm. The
current FCA rate for the Non-Residential groups (Schedules 111 and 112) is proposed to change
from a present rebate rate of 0.632¢ to a proposed surcharge rate of 1.0060 per therm. The
Residential group rate change is an increase of$2.0 million, or 2.3%. The Non-Residential
group rate change is an increase of$0.5 million, or 1.7%. The combined effect of expiring FCA
rates and the proposed rates are shown in Table No. 1 below.
' "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 2 OCTOBER 10, 2024

Table No 1: Combined Effect of Present and Proposed FCA Rates
Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
Residential ($900,745) $1,112,815 $2,013,559
Non-Residential ($174,520) $277,795 $452,315
Drivers of Natural Gas FCA Rebate
For the 12 months ended June 30, 2024, the FCA deferral for Residential customers was
the result of lower monthly use-per-customer than was embedded in the 2022 test year.
Additionally, Idaho customers have achieved energy efficiency savings from participating in the
Company's Demand Side Management programs.
Residential Group Rate Determination
For the Residential customer group, the Company recorded $1,085,515 in the surcharge
direction in deferred revenue for the 12 months ended June 30, 2024. The proposed surcharge
rate of 1.5060 per therm is designed to recover$1,112,815 from the Company's Schedule 101,
Residential natural gas customers.
If the proposed surcharge is approved by the Commission, the deferral balance for the 12
months ended June 30, 2024,plus interest through October will be transferred into the regulatory
asset balancing account. The balance in the liability account will be reduced each month by the
surcharge received from customers under the tariff.
Table No. 2 summarizes the components of the Company's request:
Table No.2: Residential Natural Gas Customer Components
July 1, 2023 - June 30,2024, Deferred Revenue $1,085,515
Add: Prior Year Residual Balance ($13,999)
Add: Interest through 10/31/2025 $36,493
Add: Revenue Related Expense Adjustment $4,806
Total Requested Surcharge $1,112,815
STAFF COMMENTS 3 OCTOBER 10, 2024

Non-Residential Group Rate Determination
For the Non-Residential group, the Company recorded $299,626 in the surcharge
direction in deferred revenue for the 12 months ended June 30, 2024. The proposed surcharge
rate of 1.0060 per therm is designed to recover$277,795 from commercial and industrial
("C&I") customers receiving service under Schedules I I I and 112. The Company's proposed
rate to recover$277,795 from C&I customers is based on projected sales volumes for Schedules
I I I and 112 for the November 1, 2024, through October 31, 2025, amortization period.
If the proposed surcharge is approved by the Commission, the deferral balance,plus
interest, through October will be transferred into a regulatory asset balancing account. The
balance in the account will be reduced each month by the surcharge received by customers under
the tariff.
Table No. 3 summarizes the components of the Company's request:
Table No.3: Non-Residential Natural Gas Customer Components
July 1, 2023-June 30, 2024, Deferred Revenue $299,626
Add: Prior Year Residual Balance ($30,424)
Add: Interest through 10/31/2025 $4,084
Add: Revenue Related Expense Adjustment $4,509
Total Requested Surcharge $277,795
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Each document addresses the following cases: this case (AVU-G-24-01), the purchased gas
adjustment(AVU-G-24-02), the electric power cost adjustment (AVU-E-24-07), and the electric
FCA (AVU-E-24-08). Staff reviewed the documents and determined it meets 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 between August 2, 2024, and August 30, 2024,providing
customers with a reasonable opportunity to file timely comments with the Commission by the
October 10, 2024, deadline. As of October 9, 2024, no customer comments had been filed.
STAFF COMMENTS 4 OCTOBER 10, 2024

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 175, as filed, with a residential surcharge rate of 1.5060 per kWh and Non-Residential
surcharge rate of 1.0060 per kWh effective November 1, 2024.
Respectfully submitted this loth day of October 2024.
Michael Duval
Deputy Attorney General
Technical Staff. Travis Culbertson
Laura Conilogue
Curtis Thaden
I:\Utility\UMISC\COMMENTS\AVU-G-24-01 Comments.docx
STAFF COMMENTS 5 OCTOBER 10, 2024

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I01h DAY OF OCTOBER 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF IN CASE
NO. AVU-G-24-01, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
PATRICK EHRBAR DAVID J MEYER
DIR OF REGULATORY AFFAIRS VP & CHIEF COUNSEL
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail: patrick.ehrbargavistacorp.com E-mail: david.meyergavistacorp.com
dockets(aavistacorp.com
PATRICIA JORDAN, SECRETARY
CERTIFICATE OF SERVICE