20250930Final_Order_No_36784.pdf

Office of the Secretary
Service Date
September 30,2025
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA ) CASE NO. AVU-E-25-08
CORPORATION'S FIXED COST )
ADJUSTMENT (FCA) MECHANISM )
ANNUAL RATE ADJUSTMENT FILING ) ORDER NO. 36784
On July 31, 2025, Avista Corporation ("Company") applied to the Idaho Public Utilities
Commission ("Commission") requesting approval of fixed cost adjustment ("FCA") deferrals for
the period of July 1, 2024 through June 30, 2025, a per kilowatt-hour ("kWh") FCA surcharge of
0.0180 for the Residential Group(Schedule 1 customers),and a per kWh FCA surcharge of 0.0580
for the Non-Residential Group (Schedule 11, 12, 21, 22, 31 and 32 customers) to be effective
October 1,2025 ("Application"). If the new FCA rates are approved as filed, an average residential
customer using 939 kWh of electricity a month would expect their monthly bill to increase by
$1.38, or about 1.3 percent.
On August 20,2025,the Commission issued a Notice of Modified Procedure,setting public
comment and Company reply deadlines. Order No. 36299. Staff filed the only comments.
Based on our review of the record,the Commission now issues this Final Order approving
the Company's Application.
BACKGROUND
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—such as infrastructure and customer
service, which do not vary with energy use, output, or production, and remain relatively stable
between rate cases—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
ORDER NO. 36784 1

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. On September 27,2024,the Commission granted the Company
authorization to adjust its FCA rates for electric service from October 1, 2024,through September
30, 2025. Order No. 36335 at 5.
THE APPLICATION
The Company proposed changing the FCA rate for the Residential Group from a present
rebate rate of 0.1290 to a surcharge rate of 0.0180 per kWh, representing a $2 million, or 1.2
percent increase to Schedule 1 customers. Application at 1-2. The Company stated that the
proposed surcharge for the Residential Group is designed to recover$242,209 from customers.Id.
at 6.
The Company proposed changing the FCA rate for the Non-Residential Group from a
present surcharge rate of 0.0040 to a surcharge rate of 0.0580 per kWh representing a$0.6 million,
or 0.5%, increase to the Non-Residential Group customers.Id at 1-2. The Company stated that the
proposed surcharge for the Non-Residential Group is designed to recover $649,636 from
customers. Id. at 7.
The Company represented that it recorded $185,886 in the surcharge direction in deferred
revenue for the electric Residential customer group for the 12 months ending June 30, 2025.Id. at
6. The Company represented that the deferral balance for the 12 months ending June 30, 2025,
plus interest through September, and any outstanding balance approved for recovery in the prior
year FCA rate filing would be moved into a regulatory liability balancing account, and the balance
in the account would be reduced each month by the revenue collected under the tariff. Id. at 7.
The Company represented that it recorded $623,266 in the surcharge direction in deferred
revenue for the electric Non-Residential Group for the 12 months ending June 30, 2025. Id. The
Company represented that the deferral balance,plus interest through September, would be moved
into a regulatory asset balancing account, and the balance in the account would be reduced each
month by the revenue collected under the tariff. Id.
Included with its Application,the Company submitted its Residential and Non-Residential
rate calculations, support for its deferrals, and its proposed FCA Schedule 75.
ORDER NO. 36784 2

STAFF COMMENTS
Staff analyzed the Company's Application, the calculations of its residential and non-
residential FCA rates, and the Company's workpapers. Staff Comments at 3. Staff believed the
Company accurately calculated the FCA deferral balances and associated rates for both classes.
Id. Additionally, Staff reviewed the amortization from the prior deferral balance, the kWh sales
for the FCA year, new and existing customer counts, the revenue from fixed costs collections, the
interest calculations, and the submitted revenue reports. Id. Staff also verified that the authorized
amounts used to calculate the deferral were consistent with the amounts used to determine base
rates authorized during the deferral period. Id. Based on these reviews, Staff recommended that
the Commission approve the Company's FCA application.Id.
Staff s Comments included the following table that presents the effect of expiring FCA
rates and the proposed 2025 rates. Id.
Table No. 1: Present and Proposed FCA Surcharge Changes
Expiring Present Proposed FCA Change in FCA
FCA Revenue Revenue Revenue
Residential ($1,735,832) $242,209 $1,978,041
Non-Residential $44,802 $649,636 $604,834
Staff stated that the residential customer FCA deferrals were due to lower monthly use-
per-customer ("UPC") than what was embedded in the 2022 test year. Id. The FCA deferrals for
non-residential customers were also the result of slightly lower monthly UPC than what was
embedded in the 2022 test year.Id.
As a main energy consumption driver, Staff noted that weather has a consequential effect
on the FCA. Id. at 4. During the relevant FCA deferral period, temperatures were warmer than
normal across the Company's service territory. Id. The service territory also experienced
fluctuating heating and cooling periods.Id. Additionally, Staff observed that Idaho customers have
generated energy efficiency savings by participating in the Company's Demand-Side Management
programs. Id.
Staff reviewed the combined impact of the FCA proposed in this case, the Company's
proposed Power Cost Adjustment("PCA") filing(Case No. AVU-E-25-07), its Bonneville Power
Administration Residential Exchange Program("ResEx") filing(Case No. AVU-E-25-09), and its
Schedule 91, Energy Efficiency Rider Adjustment("EE Rider") filing(AVU-E-25- 10) filing.Id.
ORDER NO. 36784 3

Staffs Comments included Table No. 2, which summarizes the overall impact on electric
revenues, assuming the four filings are approved as submitted. Id. at 5.
Table No. 2: Summary of Overall Impact to Electric Revenues
Filing Change in Revenues % Change
PCA $2.6 million 0.8%
FCA ($1.8 million) -0.6%
ResEx Credit $1.9 million 0.6%
EE Rider $3.6 million 1.2%
Total $6.3 million 2.0%
Staff also reviewed the Company's press release and customer notice that were included
with its Application. Id. The notice was included with bills mailed to customers between August
1, 2025, and August 29, 2025.Id. Staff believed that both met the requirements of Rule 125 of the
Commission's Rules of Civil Procedure.Id.
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 all submitted materials,the
Commission finds it fair,just, and reasonable to approve the Application as filed.
ORDER
IT IS HEREBY ORDERED that the Company's FCA deferrals for the Residential and
Non-Residential Groups for the period of July 1, 2024, through June 30, 2025, are approved as
filed.
IT IS FURTHER ORDERED that the Company's proposed tariff modifications to
Schedule 75 of a per kWh FCA surcharge rate of 0.0180 for the Residential Group, and a per kWh
FCA surcharge rate of 0.0580 for the Non-Residential Group, both with an effective date of
October 1, 2025, are approved as filed.
ORDER NO. 36784 4

THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one(21) days of the service date of 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. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30t'day of
September, 2025.
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DWARD LODGE, RE 'I ENT
9s:'2=
N R. HAMMOND JR., COMMISSIONER
DAYN HARDI , COMMISSIONER
ATTEST:
A
Laur"Ttalderon Robles
Interim Commission Secretary
IALega1\ELECTRIC\AVU-E-25-08_FCA\orders\AVUE2508_FO jl.docx
ORDER NO. 36784 5