20250304APPLICATION.pdf

RECEIVED
Avista Corp. March 4, 2025
Idaho Public
1411 East Mission P.O. Box 3727 Utilities Commission
Spokane. Washington 99220-0500
Telephone [phone] AVU-ECase -25
-03
Toll Free 800-727-9170 AVU-G 25 02
March 4, 2025
Monica Barrios-Sanchez
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Building 8, Suite 201-A
Boise, ID 83714
RE: Case No. AVU-E-25-_and AVU-G-25-_
Application of Avista Corporation for an Deferred Accounting Treatment
Dear Commission Secretary:
Attached for electronic filing is Avista's Application for Deferred Accounting related to tariffs
imposed on Canadian energy imports. Please direct any questions on this matter to me at (509)
495-8620 or at Patrick.ehrbargavistacorp.com.
Sincerely,
/s/Patrick Ehrbar
Patrick Ehrbar
Director of Regulatory Affairs
Enclosures

l DAVID J. MEYER
2 VICE PRESIDENT AND CHIEF COUNSEL FOR
3 REGULATORY AND GOVERNMENTAL AFFAIRS
4 AVISTA CORPORATION
5 P.O. BOX 3727
6 1411 EAST MISSION AVENUE
7 SPOKANE, WASHINGTON 99220-3727
8 TELEPHONE: [phone]
9 EMAIL: [e-mail]
10
11
12 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
13
14
15
16 IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-25-
17 OF AVISTA CORPORATION FOR ) CASE NO. AVU-G-25-_
18 AN ACCOUNTING ORDER AUTHORIZING )
19 ACCOUNTING AND RATEMAKING ) APPLICATION OF AVISTA
20 TREATMENT OF COSTS ASSOCIATED WITH ) CORPORATION FOR
21 TARIFS LEVIED ON CANADIAN ENERGY ) DEFERRAL OF COSTS
22 IMPORTS ) ASSOCIATED WITH TARIFFS
23
24
25 I. INTRODUCTION
26 Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or
27 "Company"),at 1411 East Mission Avenue, Spokane,Washington,pursuant to Section 61-524
28 Idaho Code and Rule 52 of the Idaho Public Utilities Commission ("Commission Rules of
29 Procedure"), hereby petitions the Commission for an order authorizing it to utilize deferred
30 accounting for the potential impact to its expenses due to the levying of tariffs by the United
31 States on energy resources imported from Canada, and for electric operations to defer those
32 expenses for recovery in the PCA at 100%. As discussed below, the impact of such tariffs,
33 and how they will be paid for is unclear. As of now the Company does not know whether such
34 tariffs would be reflected in the embedded cost of the Canadian commodity(and therefore flow
35 through the Company's natural gas Purchased Gas Cost Adjustment Mechanism (PGA) or
36 electric Power Cost Adjustment Mechanism (PCA)) or would be considered something more
Application of Avista Corporation Page 1
Case Nos. AVU-E-25- and AVU-G-25-

I akin to an excise tax (such taxes are not tracked in the PGA or PCA deferrals). Therefore, the
2 Company is seeking deferral treatment of any imposed tariff(tax), which aligns the cost of
3 providing service to customers with the benefits customers receive from the Company's
4 delivered energy.2
5 Avista is a utility that provides service to approximately 420,000 electric customers
6 and 381,000 natural gas customers in northern Idaho, eastern Washington, and Oregon. The
7 largest community served by Avista is Spokane, Washington, which is the location of its
8 corporate headquarters. Pursuant to Commission Rule of Procedure 201, the Company
9 requests that this filing be processed under the Commission's rules for Modified Procedure.
10 Communications in reference to this Application should be addressed to:
11 David J. Meyer, Esq. Patrick Ehrbar
12 Vice President and Chief Counsel for Director of Regulatory Affairs
13 Regulatory & Governmental Affairs Avista Corporation
14 P. O. Box 3727 P. O. Box 3727
15 1411 E. Mission Avenue, MSC 13 1411 E. Mission Avenue, MSC 27
16 Spokane, Washington 99220-3727 Spokane, Washington 99220-3727
17 Telephone: [phone] Telephone: [phone]
18 E-mail: david.meyer(aavistacorp.com E-mail: patrick.ehrbar(aavistacorp.com
19
20 Avista Dockets (Electronic Only) -AvistaDockets(iDavistacorp.com
21
22
23 II. BACKGROUND
24 On February 1, 2025, President Trump announced his intention to impose tariffs on
25 Canadian energy imports as part of a broader strategy to address national security concerns
26 and trade imbalances. The proposed tariffs, which include a 25% tariff on all imports from
1 Requests for treatment of unforeseen changes in taxes are not new. For example,in 2017,the Company worked
with Commission Staff on deferred accounting treatment of reductions in federal taxes from the Tax Cuts and
Jobs Act(see Case No.GNR-U-18-01).
2 Given the uncertainty that exists around the imposition of tariffs,and the accounting thereof,Avista will update
this request as necessary if it learns more during the processing of this Application.Further,it is our understanding
that other utilities will also be making similar filings, and we will monitor those and adjust our request as
appropriate.
Application of Avista Corporation Page 2
Case Nos. AVU-E-25- and AVU-G-25-

I Canada and a 10%tariff specifically on energy resources, were justified by the administration
2 as necessary measures to combat the flow of illegal drugs into the United States, among other
3 reasons. These energy imports issue include natural gas and electricity. While the tariffs were
4 suspended for a period of time, on February 27, 2025 the President announced that "the
5 proposed tariffs scheduled to go into effect on March 4th will, indeed, go into effect, as
6 scheduled." On March 4, 2025, the tariffs went into effect.3
7 For natural gas operations, the Company purchases natural gas for distribution
8 customers in wholesale markets at multiple supply basins in the western United States and
9 western Canada. Purchased natural gas can be transported through six inter-connected
10 pipelines on which Avista holds firm contractual transportation rights. Approximately 10% is
11 U.S.-sourced natural gas, primarily the Rocky Mountains basin. The remaining 90% is from
12 Canadian-sourced natural gas,located in Alberta and British Columbia.The majority of natural
13 gas is purchased at AECO, which has traditionally been one of the lowest priced natural gas
14 trading hubs and is among the most liquid supply points, especially for longer-term
15 transactions. Even with the proposed tariffs, natural gas prices at AECO are still well below
16 any alternative, and is the lowest cost resource for our customers.
17 The same holds true for electric operations. To fuel its natural gas turbines, Avista
18 purchases natural gas from various supply basins. As discussed in our Integrated Resource
19 Plan, Avista transports fuel to its natural gas-fired generators using the Gas Transmission
20 Northwest (GTN) pipeline owned by TC Energy. The pipeline runs between Alberta, Canada
21 and the California/Oregon border at Malin, Oregon. Avista holds 60,592 dekatherms per day
22 of capacity from Alberta to Stanfield, Oregon. Avista's customers not only benefit from the
3 https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-proceeds-with-tariffs-
on-imports-from-canada-and-mexico/
Application of Avista Corporation Page 3
Case Nos. AVU-E-25- and AVU-G-25-

I low cost natural gas used to generate electricity, but also benefit from optimization activities
2 where low cost natural gas sourced in Canada can be sold in markets in the United States at a
3 premium, the benefits of which flow through the PCA.
4 The Company employs Commission-approved mechanisms for tracking actual natural
5 gas or power supply expenses as compared to that authorized by the Commission. The specific
6 FERC accounts(and various subaccounts)that are tracked in the PGA and PCA are as follows:
7 PGA Accounts include:
8 Account 483: Sales for Resale
9 0 Account 804: Natural Gas City Gate Purchases
10 0 Account 495: Other Gas Purchases
11 0 Account 808: Gas Delivered/Withdrawn from Storage
12 0 Account 811: Gas Used for Compression Station Fuel
13 0 Account 813: Other Gas Supply Expenses
14
15 PCA Accounts include:
16 0 Account 555: Purchased Power
17 0 Account 501: Thermal Fuel
18 0 Account 547: Natural Gas Fuel
19 0 Account 557: Other Expenses
20 0 Account 565: Transmission Expense
21 0 Account 456: Other/Transmission Revenue
22 0 Account 447: Sale for Resale
23
24 It is unclear at this point as to how those costs will appear and if they would flow
25 through the PGA or PCA, or not. It is possible that the costs associated with tariffs will be
26 absorbed or paid by Canadian producers and included in the embedded cost of the natural gas
27 or electricity commodity billed to Avista. In such an instance, the Company would report a
28 higher price for that item and have no special treatment for the excise tax that might be
29 embedded in the cost of the item. Such expenses would continue to be deferred through the
30 PCA or PGA FERC accounts noted above.
311 If,however,Avista is considered the importer,and therefore responsible for paying the
32 tariff(the excise tax), we believe such an expense would be posted to FERC Account 408
Application of Avista Corporation Page 4
Case Nos. AVU-E-25- and AVU-G-25-

I (Taxes Other Than Income Taxes)and the payable would be posted to a 236 account(Taxes
2 Accrued). These accounts are not included in the accounts tracked in the PGA or PCA, as
3 shown above. Avista does not believe that it should absorb such unexpected expenses/taxes
4 that are beyond its control. Further, while Avista will seek to procure commodity resources
5 at the lowest reasonable cost from producers in the United States, as discussed earlier
6 Canadian natural gas that Avista has access to is the lowest in the region, even with levied
7 tariffs. As such, it is reasonable that the costs associated with the tariffs be deferred and
8 recovered from customers just like any other cost that is directly related to the underlying
9 commodity which customers benefit from. In the end, these tariff costs should be included
10 in the PCA from a deferral and recovery perspective (at 100%).
112 What is also clear is that these tariffs were not contemplated by the Company,nor any
12 party, in the Company's last general rate case where the power supply base was set.4 As
13 such, absent regulatory relief here,the Company would absorb a portion of those tariff costs
14 even while it is doing its duty to source electricity and natural gas at the lowest reasonable
15 costs. It is still probable that the lowest reasonable cost for natural gas for electricity
16 generation, in particular, will be from natural gas sourced in Canada. Customers will still
17 benefit from such low cost natural gas, but at the same time it is not reasonable that Avista
18 should be penalized because of a tariff it could not have reasonably known about.
19
20 III. PROPOSED ACCOUNTING TREATMENT
21
22 To the extent any costs associated with tariffs imposed on Canadian imports do not
23 otherwise flow through the various FERC accounts tracked in the PGA or PCA, they are
24 charged to FERC Accounts 408.1 and 408.2, which reflect amounts of ad valorem, gross
a Case No.AVU-E-23-01.
Application of Avista Corporation Page 5
Case Nos. AVU-E-25- and AVU-G-25-

I revenue or gross receipts taxes, state unemployment insurance, franchise taxes, Federal
2 excise taxes, social security taxes, and all other taxes assessed by Federal, state, county,
3 municipal, or other local governmental authorities, except income taxes. These accounts are
4 charged in each accounting period with the amounts of taxes which are applicable to each
5 account, with concurrent credits to FERC Account 236, Taxes accrued, or FERC Account
6 165, Prepayment, as appropriate. When it is not possible to determine the exact amounts of
7 taxes, the amounts shall be estimated and adjustments made in current accruals as the actual
8 tax levies become known. For the reasons discussed above, Avista proposes to defer those
9 amounts to FERC Account 182.3 (Regulatory Asset). The monthly accounting entries would
10 be as follows:
11 Accounting Entry to Record the Deferral of Tariffs -Recorded Monthly
12 Account Description FERC Account Debit Credit
Regulatory Asset- Deferred Costs 182.3XX xxx
13 Regulatory Credit- Deferred Costs 407AXX xxx
14 The Company proposes, for electric operations, that any deferred costs charged to the
15 accounts above be recovered at 100%, and not be subject to the deadband nor sharing bands.
16 Further,the Company requests that any direct,identifiable tariff costs that flow through normal
17 PCA FERC accounts be separately tracked and likewise be deferred at 100%, for the reasons
18 discussed earlier.
19 Interest would accrue in the same manner as is authorized for the PGA or the PCA.
20
21 IV. MODIFIED PROCEDURE
22 Avista does not believe that a hearing is necessary to consider the issues presented
23 herein, and respectfully requests that this Application be processed under Modified Procedure;
24 i.e., by written submissions rather than by hearing. RP 201, et seq.
Application of Avista Corporation Page 6
Case Nos. AVU-E-25- and AVU-G-25-

I V. REQUEST FOR RELIEF
2 WHEREFORE, Avista respectfully requests that the Commission issue an Order
3 approving the requested deferred accounting treatment, as described above, for the effects of
4 tariffs placed on energy imports from Canada (to the extent they are not already deferred
5 through the PGA or PCA), and process the request under Modified Procedure.
6 DATED at Spokane, Washington, this 4t1i day of March 2025.
7 AVISTA CORPORATION
8
9 By PC&A.
10 Patrick Ehrbar
11 Director of Regulatory Affairs
Application of Avista Corporation Page 7
Case Nos. AVU-E-25- and AVU-G-25-