20250228AVU to Staff 5 Attachment A - 2024 OR 3rd Qtr - Order No. 24-228 7-10-24.pdf

ORDER NO. 24-228
ENTERED Jul 10 2024
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UM 2254(1)
In the Matter of
AVISTA CORPORATION, dba AVISTA ORDER
UTILITIES,
Application for Reauthorization to Defer
the Costs of Compliance with the Climate
Protection Pro am(CPP).
DISPOSITION: STAFF'S RECOMMENDATION ADOPTED
At its public meeting on July 9, 2024,the Public Utility Commission of Oregon adopted
Staff s recommendation in this matter. The Staff Report with the recommendation is
attached as Appendix A.
BY THE COMMISSION:
�XLITY oo Alison Lackey
Chief Administrative Law Judge
a. W ; o
� z
of*OREGOls
A party may request rehearing or reconsideration of this order under ORS 756.561. A
request for rehearing or reconsideration must be filed with the Commission within 60 days
of the date of service of this order. The request must comply with the requirements in
OAR 860-001-0720. A copy of the request must also be served on each parry to the
proceedings as provided in OAR 860-001-0180(2).A party may appeal this order by filing
a petition for review with the Circuit Court for Marion County in compliance with
ORS 183.484.

ORDER NO. 24-228
ITEM NO. CA12
PUBLIC UTILITY COMMISSION OF OREGON
STAFF REPORT
PUBLIC MEETING DATE: July 9, 2024
REGULAR CONSENT X EFFECTIVE DATE N/A
DATE: June 3, 2024
TO: Public Utility Commission
FROM: Kathy Zarate
THROUGH: Bryan Conway and Russell Beitzel SIGNED
SUBJECT: AVISTA UTILITIES:
(Docket No. UM 2254(1))
Requests reauthorization of Deferred Accounting of Costs Associated with
the Climate Protection Program
STAFF RECOMMENDATION:
Staff recommends the Commission approve Avista Corporation, dba Avista Utilities'
(Avista or Company) request for the authorization of deferred accounting for Climate
Protection Program (CPP) costs, for the time period beginning on September 22, 2023
through December 20, 2023.
DISCUSSION:
Issue
Whether the Commission should approve the Company's request for reauthorization of
deferred accounting of costs associated CCP for the time period beginning on
September 22, 2023 through December 20, 2023.
Applicable Law
In accordance with ORS 757.259 and OAR 860-027-0300, Avista Utilities hereby
submits for electronic filing an Application for Reauthorization of Deferred Accounting
for all costs associated with the Climate Protection Program.
Pursuant to ORS 757.259(2)(e) and OAR 860-027-0300, the Company hereby applies
to the Public Utility Commission of Oregon for an order reauthorizing deferred
APPENDIX A
Page 1 of 4

ORDER NO. 24-228
Docket No. UM 2254(1)
June 3, 2024
Page 2
accounting treatment for all costs associated with the Company's compliance with the
Climate Protection Program.
The Company respectfully requested that the deferral be effective for the 12- month
period commencing on September 22, 2023.
Analysis
Background
On December 16, 2021, the Oregon Department of Environmental Quality (ODEQ)
adopted the CPP, which are administrative rules that set GHG reduction targets.' The
CPP sets a declining limit, or cap, on greenhouse gas emissions from fossil fuels used
throughout the state of Oregon, including diesel, gasoline, natural gas and propane,
used in transportation, residential, commercial and industrial settings (the program is
not inclusive of fossil fuel used in electric generation).2
The CPP also regulates site-specific greenhouse gas emissions at large stationary
sources, such as emissions from industrial processes. The program baseline is set at
average greenhouse gas emissions from covered entities from years 2017-2019.
Reductions from this baseline are set at 50 percent by 2035 and 90 percent by 2050.
The Company is a "covered fuel supplier" under the CPP and is the point of regulation
for the emissions associated with natural gas used by its sales and transport customers.
Transport customers purchase the commodity they use directly from marketers and
suppliers and have historically only paid Avista for delivery via the distribution system.
Covered entities' emissions are reported annually through the existing ODEQ
greenhouse gas reporting program and compliance will be demonstrated by each
covered entity at the end of each three-year compliance period.
The Company can work to reduce natural gas usage through efficiency measures,
introduce renewable and low carbon alternative fuels, trade for additional compliance
instruments with other covered entities, or purchase a limited amount of Community
Climate Investments (CCIs).3
OAR 340-271-0010—9000.
2 OAR 340-271-0110.
3 OAR 340-271-0450.
APPENDIX A
Page 2 of 4

ORDER NO. 24-228
Docket No. UM 2254(1)
June 3, 2024
Page 3
On September 13, 2022, Avista's filed an application seeking authorization of deferred
accounting for CPP costs, for the 12-month period beginning on September 13, 2022.
On April 21, 2023, the Commission approved Avista's request per Order No. 23-145.
The rules were invalidated by the Oregon Appeals Court on December 23, 2023, as the
Court found that the rules did not comply with ORS 468A.315(1). Avista was one of the
petitioners in the suit challenging the CPP administrative rules.
Because the Court of Appeals ruled the CPP rules as invalid, Staff does not support the
full time period of the Avista deferral request. Rather, Staff supports deferral of costs
that were incurred during the period that the CPP rules were in effect. Avista was
making efforts to comply with the CPP rules even though Avista was also challenging
the rules in court. Therefore, since the rules were ruled invalid on December 20, 2023,
Staff recommends the deferral end (and include) December 20, 2023. At time of
amortization, Staff will ensure to include only those costs incurred up to the December
date.
Reason for Deferral
In its original application, Avista stated that it will seek amortization of the amounts
deferred in a tariff rider filing in 2023, for a rate adjustment that coincides with other
annual tariff rider adjustments. Because deferred amounts were not significant for much
of 2023, the Company did not seek to recover any deferred amounts. The Company
anticipates seeking amortization of the deferred amounts in a tariff rider filing in 2024.
Proposed Accounting
The Company records CPP compliance costs to FERC Account 182.3 (Other
Regulatory Assets), crediting FERC Account 407.4 (Regulatory Credits). Interest does
not accrue on this balancing account.
Estimate of Amounts
As of October 27, 2023, the total balance in the Regulatory Asset for the CPP account
was $403,638. The deferred amounts incurred were for payments made to the Energy
Trust of Oregon for an interruptible customer energy efficiency program. Staff supports
Avista's efforts with regard to this program.
Information Related to Future Amortization
• Earnings review — Cost recovery for costs associated with the costs of
compliance with the Climate Protection Plan will be subject to an earnings review
in accordance with ORS 757.259(5).
APPENDIX A
Page 3 of 4

ORDER NO. 24-228
Docket No. UM 2254(1)
June 3, 2024
Page 4
• Prudence Review— A prudence review will be performed by the OPUC Staff no
later than the proceeding to authorize amortization of the costs associated with
the costs of compliance with the CPP.
• Sharing — No Sharing mechanism.
• Rate Spread/Design — The rate spread/rate design will be determined during the
proceeding to authorize amortization of the costs associated with the deferral.
• Three Percent Test (ORS 757.259(6)) — Amortization of the deferred costs will be
subject to a three percent test in accordance with ORS 757.259(7) or possible six
percent test in accordance with ORS 757.259(8) and with Commission
authorization. These tests limit aggregated deferral amortizations during a
12-month period to no more than three or six percent of the utility's gross
revenues for the preceding year.
Conclusion
After Staff's review of Avista's application requesting authorization to defer, for future
inclusion in customer rates and, because the application also meets the requirements of
ORS 757.259 and OAR 860-027-0300, Staff recommends Avista's application be
approved with the modification that the deferral be effective through
December 20, 2023.
The Company has reviewed this memo and agrees with or expresses no objections to
Staff's recommendation.
PROPOSED COMMISSION MOTION:
Approve Avista's application for authorization to use deferred accounting for Climate
Protection Program costs, for the time period beginning on September 22, 2023 through
December 20, 2023.
AVA UM 2254(1)CPP Deferral
APPENDIX A
Page 4 of 4