20251008Staff Comments.pdf

RECEIVED
October 08, 2025
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 11560
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 FIXED COST ADJUSTMENT) CASE NO. AVU-G-25-05
MECHANISM (FCA)ANNUAL RATE )
ADJUSTMENT FILING )
COMMENTS OF THE
COMMISSION STAFF
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission
("Commission"), by and through its attorney of record, Erika K. Melanson, Deputy Attorney
General, submits the following comments.
BACKGROUND
On July 31, 2025, Avista Corporation ("Company") applied to the Commission for
authorization of an adjustment to its Fixed Cost Adjustment("FCA") rates for natural gas service
from November 1, 2025, through October 31, 2026. If the new FCA rates are approved as filed,
an average residential customer using 66 therms per month could expect their monthly bill to
increase $0.15, or 0.2%. The Company requested a November 1, 2025, effective date.
STAFF COMMENTS 1 OCTOBER 8, 2025

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's FCA for the residential group ("Schedule 101") is proposed to increase
from a present surcharge rate of 1.5060 per therm to an updated surcharge rate of 1.7370 per
therm, representing a$0.2 million, or 0.2%, increase to Schedule 101 customers. Application at
1-2. The Company's FCA for the non-residential group ("Schedules 111 and 112") is proposed
to decrease from a present surcharge rate of 1.0060 per therm to an updated surcharge 0.6770 per
therm, representing a$0.1 million, or 0.6%, decrease for Schedules 111 and 112 customers. Id.
The Company recorded $1,195,606 of deferred revenue in the surcharge direction for its
Schedule 101 natural gas customers for the 12-month period ending on June 30, 2025. Id. at 6.
The Company stated that the proposed surcharge rate of 1.7370 per therm is designed to recover
$1,319,245 from the Company's Schedule 101 customers. Id.
The Company recorded $176,144 of deferred revenue in the surcharge direction for its
Schedule 111 and 112 natural gas customers for the 12-month period ending on June 30, 2025.
Id. at 7. The Company stated that the proposed surcharge rate of 0.6770 per therm is designed to
recover$191,431 from the Company's Schedule 111 and 112 commercial and industrial
customers. Id.
' "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 8, 2025

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, with one exception to the non-residential rate in Schedule 175 described below, effective
November 1, 2025.
The Company proposed changing the FCA rate for the Schedule 101 customers from the
current surcharge rate of 1.5060 to the proposed surcharge rate of 1.7370 per therm. Id. at 1. The
current FCA rate for Schedules I I I and 112 customers is proposed to change from a present
surcharge rate of 1.0060 to a proposed surcharge rate of 0.6770 per therm. Id. at 1. The
Schedule 101 rate change is an increase of$0.2 million, or 0.2%. The Schedules I I I and 112
rate change is a decrease of$0.1 million, or 0.6%. Id. at 2. The combined effect of expiring
FCA rates and the proposed rates are shown in Table No. 1 below.
Table No 1: Combined Effect of Present and Proposed FCA Rates
Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
Residential (Schedule $1,143,801 $1,319,245 $175,444
101)
Non-Residential $284,460 $191,431 ($93,029)
(Schedule III & 112)
Drivers of Natural Gas FCA Surcharge
The Company asserts that for the 12 months ended June 30, 2025, 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. Id. at 6.
STAFF COMMENTS 3 OCTOBER 8, 2025

Residential Group Rate Determination
For the Schedule 101, the Company recorded$1,195,606 in the surcharge direction in
deferred revenue for the 12 months ended June 30, 2025. The proposed surcharge rate of 1.7370
per therm is designed to recover$1,319,245 from the Company's Schedule 101, residential
natural gas customers. Id. at 6.
If the proposed surcharge is approved by the Commission, the deferral balance for 12
months ended June 30, 2025,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. Id. at 7. Table No. 2 summarizes the
components of the Company's request:
Table No.2: Residential Natural Gas Customer Components
July 1, 2024 - June 30,2025, Deferred Revenue $1,195,606
Prior Year Residual Balance $75,354
Interest through 10/31/2026 $41,922
Revenue Related Expense Adjustment $6,363
Total Requested Surcharge $1,319,245
Non-Residential Group Rate Determination
For Schedules I I I and 112, the Company recorded$176,144 in the surcharge direction in
deferred revenue for the 12 months ended June 30, 2025. The proposed surcharge rate of 0.6770
per therm is designed to recover$191,431 from commercial and industrial customers receiving
service under Schedules I I I and 112. Application at 7. The Company's proposed rate is based
on projected sales volumes for Schedules I I I and 112 for the November 1, 2025, through
October 31, 2026, amortization period. Id. at 8.
In reviewing the Company's Application and accompanying exhibits, Staff discovered
that the non-residential rate shown on Schedule 175 is 0.6700 per therm. See Application
Exhibit A. Staff believes this to be a typographical error, as the Application and workpapers
support a rate of 0.6770 per therm.
Staff recommends that the Company file corrected Tariff Schedule 175 with a residential
group surcharge rate of 1.7370 per therm and non-residential group surcharge rate corrected to
STAFF COMMENTS 4 OCTOBER 8, 2025

0.6770 per therm effective November 1, 2025.
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. Id. at 8. Table No. 3 summarizes the components of the Company's request:
Table No.3: Non-Residential Natural Gas Customer Components
July 1, 2024-June 30, 2025, Deferred Revenue $176,144
Prior Year Residual Balance $7,647
Interest through 10/31/2025 $6,662
Revenue Related Expense Adjustment $977
Total Requested Surcharge $1911431
Overall Impact of Three Filings (FCA, EE Rider, and PCA) Effective November 1, 2025
The Company filed two other applications with rate adjustments and requested effective
dates of November 1, 2025. The Company's natural gas Purchased Gas Cost Adjustment
("PGA"), Case No. AVU-G-25-07, was filed on July 31, 2025, which requests a decrease in
natural gas revenues of approximately $6.5 million, or 7.2%. The Company's Gas Energy
Efficiency Rider("EE Rider"), Case No. AVU-G-25-06, was filed on July 31, 2025, which
requests a decrease in the Company's overall natural gas revenues by $3.1 million, or 3.5%.
Customer Notice at 1.
The net effect of Company's three filings (FCA, EE Rider, and PCA)will decrease
natural gas revenues by about $9.5 million(10.6% decrease). The average residential natural gas
customer's monthly bill may decrease by$6.18 or 9.5%. Id at 2. Table No. 2 summarizes the
overall impact to electric revenues of the four filings.
Table No. 4 below shows the effect of all three cases if approved as filed.
STAFF COMMENTS 5 OCTOBER 8, 2025

Table No. 4: Summary of Overall Impact to Electric Revenues
Case $ Revenue Change % Revenue Change
FCA $80,000 0.1%
EE Tariff ($3.1 million) (3.5%)
PGA ($6.5 million) (7.2%)
Total ($9.5 million) (10.6%)
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and believes that both met the requirements of Rule 125 of the
Commission's Rules of Procedure2. See IDAPA 31.01.01.125. The notice was included with
bills mailed to customers beginning August 1, 2025, and ending August 29, 2025.
As of October 8, 2025, no customer comments had been filed. The Commission set a
comment deadline of October 8, 2025, providing customers with a reasonable opportunity to file
timely comments.
STAFF RECOMMENDATION
Staff recommends that the Commission order the Company to file corrected Tariff
Schedule 175 with a residential group surcharge rate of 1.7370 per therm and non-residential
group surcharge rate corrected to 0.677¢ per therm effective November 1, 2025.
Respectfully submitted this 8th day of October 2025.
a—Y,J" 01,AJ:�,­—
Erika K. Melanson
Deputy Attorney General
Technical Staff. Laura Conilogue, Curtis Thaden, Michael Ott
I:\Utility\UMISC\COMMENTS\AVU-G-24-0I Comments.docx
2 The press release and customer notice addressed the following cases. Electric: AVU-E-25-07 Power Cost
Adjustment(PCA),AVU-E-25-08 Fixed Cost Adjustment(FCA),AVU-E-25-09 Bonneville Power Administration
Residential Exchange(ResEx),and AVU-E-25-10 Energy Efficiency. Natural Gas:AVU-G-25-05 Fixed Cost
Adjustment(FCA),AVU-G-25-06 Energy Efficiency, and AVU-G-25-07 Purchased Gas Cost(PGA).
STAFF COMMENTS 6 OCTOBER 8, 2025

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8ch DAY OF OCTOBER 2025,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-G-25-05, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
DAVID J MEYER PATRICK D. EHRBAR
VP & CHIEF COUNSEL DIRECTOR OF REGULATORY AFFAIRS
AVISTA CORPORATION AVISTA UTILITIES
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail: david.me er&avistacorp.com E-mail: patrick.ehrbar(a),avistacorp.com
avistadockets(a�avistaeop2 com
PATRICIA JORD , SECRETARY
CERTIFICATE OF SERVICE