20250731APPLICATION.pdf

11
RECEIVED
Avista Corp. July 31, 2025
1411 East Mission P.O. Box 3727 IDAHO PUBLIC
Spokane. Washington 99220-3727 UTILITIES COMMISSION
Telephone [phone]
Toll Free 800-727-9170
July 31, 2025
State of Idaho
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise, ID 83714
Re: Case No. AVU-E-25-08
Electric Fixed Cost Adjustment Annual Rate Filing of Avista Corporation
Dear Commission Secretary:
Enclosed for electronic filing with the Commission is Avista's electric Fixed Cost Adjustment
(FCA) annual rate adjustment filing. This filing consists of Avista's Application, Exhibit A (the
Company's proposed tariffs), Exhibit B (rate calculations), Exhibit C (12 months ending June 30,
2025 deferral), and Exhibit D (customer communications) in support of the Application. The
Company request that the proposed tariff sheets be made effective October 1, 2025
Please direct any questions on this matter to Joel Anderson at [phone].
Sincerely,
/s/Patrick Ehrbar
Patrick D. Ehrbar
Director of Regulatory Affairs
Enclosures

1 DAVID J. MEYER
2 VICE PRESIDENT AND CHIEF COUNSEL FOR
3 REGULATORY AND GOVERNMENTAL AFFAIRS
4 AVISTA CORPORATION
5 1411 E. MISSION AVENUE
6 P. O. BOX 3727
7 SPOKANE, WASHINGTON 99220
8 PHONE: [phone], FAX: [phone]
9
10 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
11
12 IN THE MATTER OF THE FIXED COST )
13 ADJUSTMENT MECHANISM (FCA) ) CASE NO. AVU-E-25-08
14 ANNUAL RATE ADJUSTMENT FILING ) APPLICATION OF AVISTA
15 OF AVISTA CORPORATION ) CORPORATION
16
17
18 I. INTRODUCTION
19 In accordance with Idaho Code §61-502, Commission Order No. 33437, and RP
20 052, Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or
21 "Company"), at 1411 East Mission Avenue, Spokane, Washington, respectfully makes
22 application to the Idaho Public Utilities Commission ("Commission") for an order
23 approving the level of electric Fixed Cost Adjustment Mechanism(FCA)revenue deferred
24 during the twelve month period from July 2024 through June 2025 and authorizing FCA
25 rates for electric service from October 1, 2025 through September 30, 2026. The FCA rate
26 for the Residential Group (Schedule 1) is proposed to change from a present rebate rate of
27 0.1290 to a proposed surcharge rate of 0.018¢ per kilowatt-hour. The FCA rate for the
28 Non-Residential Group (Schedules 11, 12, 21, 22, 31 and 32) is proposed to change from
29 a present surcharge rate of 0.0040 to a proposed surcharge rate of 0.0580 per kilowatt-hour.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 1

I The Residential Group rate change represents a $2 million, or 1.2%, increase to Schedule
2 1 customers, and the Non-Residential group rate change represents a $.6 million, or 0.5%
3 increase. The combined effect of expiring FCA rates and the proposed 2025 rates are
4 shown on the table below.
5 Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
6 Residential $ 1,735,832 $ 242,209 $ 1,978,041
7 Non-Residential $ 44,802 $ 649,636 $ 604,834
8 The Company has requested an October 1, 2025 effective date.
9 The Company requests that this filing be processed under the Commission's
10 Modified Procedure Rules(RP 201-204). Communications in reference to this Application
11 should be addressed to:
12 David J. Meyer, Esq.
13 Vice President and Chief Counsel for
14 Regulatory & Governmental Affairs
15 Avista Corporation
16 P.O. Box 3727
17 MSC-10
18 1411 E. Mission Ave
19 Spokane, WA 99220-3727
20 Phone: [phone]
21 [e-mail]
22
23 Patrick Ehrbar
24 Director of Regulatory Affairs
25 Avista Utilities
26 P.O. Box 3727
27 MSC-27
28 1411 E. Mission Ave
29 Spokane, WA 99220-3727
30 Phone: [phone]
31 [e-mail]
32
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 2

I II. BACKGROUND
2 The purpose of the electric FCA is to adjust the Company's Commission-
3 authorized revenues from kilowatt-hour('kWh") sales, such that the Company's revenues
4 will be recognized based on the number of customers served under the applicable electric
5 service schedules. The FCA allows the Company to: 1)defer the difference between actual
6 FCA-related revenue received from customers through volumetric rates, and the FCA-
7 related revenue approved for recovery in the Company's last general rate case on a per-
8 customer basis; and 2) file a tariff to surcharge or rebate, by rate group, the total deferred
9 amount accumulated in the deferred revenue accounts for the prior January through
10 December time period.
11 In Case Nos. AVU-E-15-05 and AVU-G-15-01, the Commission in Order No.
12 33437 approved for Avista a Fixed Cost Adjustment Mechanism. On page 10 of Order
13 No. 33437, the Commission stated:
14 The parties have also agreed upon a three-year' FCA pilot for electric and natural
15 gas operations. The FCA will compare actual FCA revenues to allowed FCA
16 revenues determined on a per-customer basis. Any differences will be deferred for
17 a rebate or surcharge. There are a number of customer safeguards, including that an
18 FCA surcharge cannot exceed a 3% annual rate adjustment. Any unrecovered
19 balances will be carried forward to recover in future years. Further,there is no limit
20 to the level of the FCA rebate. As part of the Stipulation, Staff and other interested
21 parties, will review the efficacy of the FCA after its second full year to ensure it is
22 functioning as intended. Fixed cost adjustment mechanisms are intended to
23 encourage conservation and allow customers more control over their bills. Further,
24 the proposed FCA will remove any financial disincentive of the Company to
25 encourage energy conservation.
26
27 Section 13 of the Stipulation and Settlement, as amended by Addendum to the Stipulation
' On June 15, 2018, the Idaho Public Utilities Commission approved an Addendum to the Stipulation
which extended the term of the pilot for an additional year by Order No. 34085.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 3

I approved by the Commission in Order No. 34085 on June 15, 2018, provided further
2 details, reproduced below, regarding the mechanics of the fixed cost adjustment
3 mechanism.
4 A. FCA Mechanisms Term. The Parties agree to an initial FCA term of 4 years,
5 with a review of how the mechanisms have functioned conducted by Avista, Staff,
6 and other interested parties following the end of the third full year. Avista may
7 seek to extend the term of the mechanism prior to its expiration. 2
8
9 B. Rate Groups. There will be two rate groups established for both the electric
10 FCA and natural gas FCA:
11
12 Electric Customer Rate Groups:
13 1. Residential—Schedule 1
14 2. Commercial—Schedules 11, 12, 21, 22, 31, 32
15
16 Natural Gas Rate Groups:
17 1. Residential—Schedule 101
18 2. Commercial—Schedules 111 and 112
19
20 C. Existing Customers and New Customers. The Parties have agreed that revenue
21 related to certain items discussed below would not be included in the FCA for new
22 customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer
23 for new customers will be less than the Fixed Cost Adjustment Revenue-Per-
24 Customer for existing customers. For new electric customers added after the test
25 period, recovery of incremental revenue related to fixed production and
26 transmission costs would be excluded from the electric FCA. For new natural gas
27 customers added after the test period, recovery of incremental revenue related to
28 fixed production and underground storage facility costs would be excluded. These
29 modifications are included in Appendices B and C to the Stipulation.
30
31 D. Quarterly Reporting. Avista will file,within 45 days of the end of each quarter,
32 a report detailing the FCA activity by month.3 The reporting will also include
33 information related to the deferrals by rate group, what the deferrals would have
34 been if tracked by rate schedule, use and revenue-per-customer for existing and
35 new customers,and other summary financial information. Avista will provide such
2 Review of the mechanisms took place at a workshop April 10,2024,and the Company filed a separate
application with the Commission which extended the term of the FCA Mechanisms through August
31,2029.
3 As stated in Order No. 34502 Case No. AVU-E-19-06,the Company altered its quarterly reporting
from 45 days to 60 days from the end of each quarter.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 4

I other information as may be reasonably requested, from time to time, in the future
2 quarterly reports.
3
4 E. Annual Filings. On or before July 1, the Company will file a proposed rate
5 adjustment surcharge or rebate based on the amount of deferred revenue recorded
6 for the prior January through December time period.4 The rate adjustment would
7 be calculated separately for each Rate Group, with the applicable surcharge or
8 rebate recovered from each group on a uniform cents per kWh or per therm basis.
9 The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas)
10 included with that filing would include a rate adjustment that recovers/rebates the
11 appropriate deferred revenue amount over a twelve-month period effective on
12 October 1 for electric (to match with Power Cost Adjustment and Residential
13 Exchange annual rate adjustments time period) and November 1 st for natural gas
14 (to match with the annual Purchased Gas Cost Adjustment rate adjustment time
15 period). The deferred revenue amount approved for recovery or rebate would be
16 transferred to a balancing account and the revenue surcharged or rebated during the
17 period would reduce the deferred revenue in the balancing account. After
18 determining the amount of deferred revenue that can be recovered through a
19 surcharge (or refunded through a rebate) by Rate Group, the proposed rates under
20 Schedules 75 and 175 would be determined by dividing the deferred revenue to be
21 recovered by Rate Group by the estimated kWh sales (Electric FCA)or therm sales
22 (Natural Gas FCA) for each Rate Group during the twelve-month recovery period.
23 Any deferred revenue remaining in the balancing account at the end of the
24 amortization period would be added to the new revenue deferrals to determine the
25 amount of the proposed surcharge/rebate for the following year.
26
27 F. Interest. Interest will be accrued on the unamortized balance in the FCA
28 balancing accounts at the Customer Deposit Rate.
29
30 G. Accounting. Avista will record the deferral in account 186 — Miscellaneous
31 Deferred Debits. The amount approved for recovery or rebate would then be
32 transferred into a Regulatory Asset or Regulatory Liability account for
33 amortization. On the income statement, the Company would record both the
34 deferred revenue and the amortization of the deferred revenue through Account 456
35 (Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub-
36 accounts. The Company would file quarterly reports with the Commission showing
37 pertinent information regarding the status of the current deferral. This report would
38 include a spreadsheet showing the monthly revenue deferral calculation for each
39 month of the deferral period (January - December), as well as the current and
40 historical monthly balance in the deferral account.
41
4 As stated in Order No. 34502 Case No.AVU-E-19-06,The company altered the deferral period of
its FCA extension to July through June by using a one-time 18-month deferral period of January 1,
2020 through June 30,2021.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 5

I H. 3% Rate Increase Cap. An FCA surcharge, by rate group, cannot exceed a 3%
2 annual rate adjustment, and any unrecovered balances will be carried forward to
3 future years for recovery. There is no limit to the level of the FCA rebate.
4
5
6 III. DRIVERS OF ELECTRIC FCA DEFERRALS
7 The FCA rebate deferrals for residential customers for 12 months ended June 30,
8 2025 were the result of lower monthly use-per-customer than the use-per-customer that was
9 embedded in the 2022 test year(i.e.,the FCA base). The FCA surcharge deferrals for non-
10 residential customers for 12 months ended June 30, 2025 were the result of lower monthly
11 use-per-customer than the use-per-customer that was embedded in the 2022 test year(i.e.,
12 the FCA base).
13 The primary driver for the change in use-per-customer was a warmer than normal
14 12 months ended June 30, 2025, fluctuating with offsetting impacts from heating and
15 cooling throughout the period. Also, since the 2022 test year used to set 2024 rates, Idaho
16 customers have achieved energy efficiency savings from participation in the Company's
17 Demand Side Management programs.
18
19 IV. RESIDENTIAL GROUP RATE DETERMINATION
20 The Company recorded$185,886 in the surcharge direction in deferred revenue for
21 the electric residential customer group for 12 months ended June 30, 2025. The proposed
22 rate of 0.018 cents per kWh is designed to recover $242,209 from the Company's
23 residential electric customers served under rate Schedule 1. The following table
24 summarizes the components of the Company's request for recovery:
25
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 6

I Summary
07.2024- 06.2025 Deferred Revenue $185,886
2 Add Prior Year Residual Balance $46,849
Add Interest through 09/30/2026 $7,585
3 Add Revenue Related Expense Adj. $1,889
Total Requested Recovery $242,209
4 Customer Surcharge Revenue $242,209
Carryover Deferred Revenue $0
5
6 Exhibit B,page 1 shows the derivation of the proposed rate to recover revenue of$242,209
7 based on projected sales volumes for Schedule I customers during the amortization period
8 (October 2025 through September 2026). As identified on tariff Sheet 75B under Step 7
9 of"Calculation of Monthly FCA Deferral", interest on the deferred balance accrues at the
10 Customer Deposit Interest Rate.5 If the proposed surcharge is approved by the
11 Commission, the 12 months ended June 30, 2025 deferral balance, plus interest through
12 September, and any outstanding balance approved for recovery in the prior year FCA rate
13 filing will be transferred into a regulatory liability balancing account. The balance in the
14 account will be reduced each month by the revenue collected under the tariff.
15
16 V. NON-RESIDENTIAL GROUP RATE DETERMINATION
17 The Company recorded$623,266 in the surcharge direction in deferred revenue for
18 the electric Non-Residential Group for 12 months ended June 30, 2025. The proposed
19 surcharge rate of 0.058 cents per kWh is designed to recover $649,636 from commercial
20 and industrial customers served under rate Schedules 11, 12, 21, 22, 31, and 32. The
21 following table summarizes the components of the Company's request for recovery:
5 The Customer Deposit Interest Rate was 5.00%beginning January 2024 and 5.00%beginning January
2025. The current rate of 5.00%has been used as an estimate for purposes of this rate determination.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 7

I Summary
07.2024- 06.2025 Deferred Revenue $623,266
2 Add Prior Year Residual Balance $4,406
Add Interest through 09/30/2026 $23,839
3 Add Revenue Related Expense Adj. ($1,875)
Total Requested Recovery $649,636
4 Customer Surcharge Revenue $649,636
5 Carryover Deferred Revenue $0
6 Exhibit B, page 3 shows the derivation of the proposed surcharge rate to recover
7 revenue of$649,636 based on projected sales volumes for Schedules 11, 12, 21, 22, 31,
8 and 32 during the amortization period (October 2025 through September 2026). As
9 identified on tariff Sheet 75B under Step 7 of"Calculation of Monthly FCA Deferral",
10 interest on the deferred balance accrues at the Customer Deposit Interest Rate. If the
1 1 proposed surcharge is approved by the Commission, the deferral balance, plus interest
12 through September, will be transferred into the regulatory asset balancing account. The
13 balance in the account will be reduced each month by the revenue collected under the tariff.
14 Support showing the monthly calculation of the deferral balances for both the
15 Residential and Non-Residential Groups is provided as Exhibit C. These calculations were
16 also provided to the Commission in quarterly reports(except April through June which will
17 be provided in the Q2 report by the end of August).
18
19 VI. 3% ANNUAL RATE INCREASE TEST
20 FCA rate adjustment surcharges are subject to a 3%annual rate increase limitation.
21 There is no limit to rebate rate adjustments, therefore the reversal of any rebate rate is not
22 included in the incremental surcharge test. As described in tariff Schedule 75 (see First
23 Revision Sheet 75C),the 3%annual rate increase limitation will be determined by dividing
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 8

I the incremental annual revenue to be collected (proposed surcharge revenue less present
2 surcharge revenue)under this Schedule by the total"normalized"revenue for the two Rate
3 Groups for the most recent January through December time-period. Normalized revenue
4 is determined by multiplying the weather-corrected usage for the period by the present rates
5 in effect. If the incremental amount of the proposed surcharge exceeds 3%, only a 3%
6 incremental rate increase will be proposed, and any remaining deferred balance will be
7 carried over to the following year.
8 Exhibit B, page 6 shows the 3% test for the two rate groups. The incremental
9 change from the existing rebate to the proposed surcharge for the residential group is an
10 increase of $2 million or approximately 1.2%. For the Non-Residential group, the
11 incremental change from the existing surcharge to the proposed surcharge is an increase of
12 $0.6 million or approximately 0.5%. There will be no proposed carry over for either rate
13 class.
14
15 VII. EXISTING CUSTOMERS AND NEW CUSTOMERS
16 The mechanism approved by the Commission requires that electric customers that
17 have been added since the test year are subject to an FCA Revenue-Per-Customer that
18 excludes incremental revenue related to fixed production and transmission costs. Separate
19 calculations for new versus existing customers are clearly identified in the FCA base that
20 was approved in Order No. 35909 for rates effective since September 1, 2024.
21 Due to this segregation, Avista tracks the usage of new customers since January 1,
22 2022 as compared with existing customers.6 In general, the average usage of new
6 "Existing customers"were part of the test year used to set the September 1,2024 rates(2022 calendar)
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 9

I customers is lower compared to the average usage of existing customers. Avista has found
2 that new customer meters, on average, have less usage in the first six to 12 months after
3 meter installation, then generally see increases in their usage until their usage is more in
4 line with the average usage of existing customers after 12 months of service. This is due,
5 in part, to the lag that occurs between when a meter is installed and billing commences,
6 and when a customer moves into the premises. Avista will continue to track the usage of
7 new customers over the Fixed Cost Adjustment term.
8
9 VIII. PROPOSED RATES TO BE EFFECTIVE OCTOBER 1, 2025
10 The Company is proposing a per kilowatt-hour FCA surcharge rate of 0.0180 for
11 the Residential Group, and a per kilowatt-hour FCA surcharge rate of 0.0580 for the Non-
12 Residential Group,both to become effective October 1,2025. Exhibit B to this Application
13 provides the Residential and Non-Residential Rate Calculation, and Exhibit C provides the
14 support for the deferrals for the July 1,2024 through June 30,2025 deferral period. Exhibit
15 A is a copy of the proposed tariff, Schedule 75, which contains the proposed FCA rates.
16 Exhibit A also includes the proposed changes to Schedule 75 in strike/underline format.
17 Residential customers using an average of 939 kilowatt-hours per month would see
18 their monthly bills increase from $104.30 to $105.68, an increase of$1.3 8 per month, or
19 1.3%.
20 IX. COMMUNICATIONS AND SERVICE OF APPLICATION
21 In conformance with RP 125, this Application will be brought to the attention of
22 the Company's customers. First, the Company has served a copy of this Application upon
year). "New customers"consist of all new hookups after the test year.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 10

I the service list in Case Nos. AVU-E-15-05 and AVU-G-15-01, the cases that gave rise to
2 the FCA mechanisms. Second, a copy of Company's news release and customer notice is
3 provided as Attachment D. The news release will be issued in July,and the customer notice
4 will be inserted in customer bills starting in August and will run for a full billing cycle.
5
6 X. REQUEST FOR RELIEF
7 The Company requests that the Commission issue an order approving FCA
8 deferrals for the period July 1, 2024 through June 30, 2025 and approve a per kilowatt-
9 hour FCA surcharge rate of 0.0180 for the Residential Group, and a per kilowatt-hour FCA
10 surcharge rate of 0.0580 for the Non-Residential Group,both to become effective October
11 1, 2025. The Company also requests that the Commission approve the proposed tariff
12 modifications to tariff Sheet 75. The Residential Group surcharge represents a $2 million
13 or 1.2% incremental increase to Schedule 1 customers, and the Non-Residential group
14 surcharge results in a $0.6 million, or 0.5%, incremental increase. The Company requests
15 that the matter be processed under the Commission's Modified Procedure rules through
16 use of written comments.
17 Dated at Spokane, Washington this 31st day of July 2025.
18 AVISTA CORPORATION
19
20 BY /s/Patrick Ehrbar
21 Patrick D. Ehrbar
22 Director of Regulatory Affairs
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 11