20160722AVU to Staff 62.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/20/2016
CASE NO: AVU-E-16-03 WITNESS: E. Andrews/B. Johnson/
P. Ehrbar/K. Schuh
REQUESTER: IPUC RESPONDER: L. Andrews
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-062 TELEPHONE: [phone]

REQUEST:
Please describe and quantify the impact of using 2017 weather-normalized forecasted loads in place of 2015 weather-normalized loads used in this filing. Please include impacts to retail rates, the overall revenue requirement, and net power costs. Please provide all AURORA files and workpapers reflecting the calculations (with formula intact) using forecasted loads.

RESPONSE:
Please see Avista's response 062C, which contains TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and exempt from public view and is separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code, and pursuant to the Protective Agreement between Avista and IPUC Staff dated June 1, 2016.

If the Company had included the use of 2017 forecasted loads, rather than 2015 historical loads, in determining its requested revenue requirement in this case, the resulting revenue requirement, based on limited adjustments to the 2017 rate period, is $13,025,000. This is a reduction of $2.4 million compared to the revenue requirement requested by the Company of $15,433,000 using 2015 historical test period loads.

To calculate this revenue requirement, the Company has limited this update to the following adjustments:

Updated Capital Adjustments (1.03) “Restate Capital 2015 EOP”; (3.06) “Planned Capital Additions 2016 EOP”; and (3.07) “Planned Capital Additions 2017 AMA,” to include growth capital (new revenue capital) additions, excluded within the Company’s direct filed case to match the use of historical load and billing determinants. (Impact: revenue requirement increase: $1.3 million)
Updated Pro Forma Power Supply Adjustment (3.01) to reflect 2017 pro forma power supply net costs using forecasted loads. (Impact: revenue requirement increase: $2.8 million)
Updated Revenue Normalization Adjustment (2.07) to reflect 2017 general business revenue using forecasted loads. (Impact: revenue requirement decrease: $6.5 million)

The revised 2017 Pro Forma Electric Revenue Requirement model, AURORA files and the adjustments noted above, under this requested scenario per Staff_PR_062 have been provided in electronic workpapers only accompanying this response. See folders Staff_PR_062 – Attachment A and Staff_PR_062C – Confidential Attachment A.

However, not all expected 2017 increases in costs have been included in the revised pro forma revenue requirement model requested within this production request. To limit the issues in this proceeding, the Company limited its increases in expenses to increases associated with cost of capital, labor and benefits, net power supply and transmission expenses, property tax expenses and expenses associated with increased capital additions (through 2017 AMA). The company has not included expected increases in 2017 expenses associated with other increased (non-labor) administrative and general (A&G) or operating and maintenance (O&M) expenses. For example increases in Information Services / Information Technology (IS/IT) expenses is expected to increase approximately $1.2 million (ID share) from 2015 to 2017. Increases in O&M expenses associated with the Company’s hydro and thermal generation facilitates is expected to increase approximately $1.2 million (ID share) from 2015 to 2017. Neither of these increased expenses, totaling $2.4 million, have been included in the Company’s direct filed case, but, among other expenses, would be necessary to consider to determine a fully forecasted 2017 test period, thus matching the use of forecasted loads.

For purposes of determining rate spread, the Company used a pro-rata allocation of the proposed rate spread allocation from the Company’s original filing. Please see Staff_PR_062 Attachment B for the impact of using forecasted loads on rate spread and rate design for the individual rate schedules.