20260731Application.pdf

I ,1
RECEIVED
Avista Corp. JULY 31, 2026
1411 East Mission P.O. Box 3727 IDAHO PUBLIC
Spokane. Washington 99220-3727 UTILITIES COMMISSION
Telephone [phone]
Toll Free 800-727-9170
July 31, 2026
State of Idaho
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise, ID 83714
Re: Case No. AVU-E-26-06
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,
2026 deferral), and Exhibit D (customer communications) in support of the Application. The
Company requests that the proposed tariff sheets be made effective October 1, 2026
Electronic versions of the Company's filing were emailed to the Commission on July 31, 2026.
Please direct any questions on this matter to Joel Anderson at(509) 495-2811.
Sincerely,
/s/Patrick Ehrbar
Patrick D. Ehrbar
Director of Regulatory Affairs
Enclosures

I ANNIGLOGOVAC
2 COUNSEL FOR REGULATORY AFFAIRS
3 AVISTA CORPORATION
4 1411 E. MISSION AVENUE
5 P.O. BOX 3727
6 SPOKANE, WASHINGTON 99220
7 PHONE: [phone]
8 [e-mail]
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-26-06
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 2025 through June 2026 and authorizing FCA
25 rates for electric service from October 1, 2026 through September 30, 2027.
26 The FCA rate for the Residential Group (Schedule 1) is proposed to change from a
27 present surcharge rate of 0.018¢ to a proposed surcharge rate of 0.4050 per kilowatt-hour.
28 The FCA rate for the Non-Residential Group (Schedules 11, 12, 21, 22, 31 and 32) is
29 proposed to change from a present surcharge rate of 0.0580 to a proposed rebate rate of
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 1

1 0.055¢per kilowatt-hour. The Residential Group rate change represents a$5.3 million, or
2 3.0% increase to Schedule 1 customers, and the Non-Residential group rate change
3 represents a $1.3 million, or 1.0% decrease. The combined effect of expiring FCA rates
4 and the proposed 2025 rates are shown on the table below.
5 Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
6 Residential $ 244,316 $ 5,497,117 $ 5,252,801
7 Non-Residential $ 651,622 $ 617,918 $ 1,269,540
8 The Company has requested an October 1, 2026 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
I I should be addressed to:
12 Anni Glogovac
13 Counsel for Regulatory Affairs
14 Avista Corporation
15 P.O. Box 3727
16 1411 E. Mission Avenue, MSC 27
17 Spokane, WA 99220-3727
18 Phone: [phone]
19 anni.glo og vackavistacorp.com
20
21 Patrick Ehrbar
22 Director of Regulatory Affairs
23 Avista Corporation
24 P.O. Box 3727
25 1411 E. Mission Ave, MSC 27
26 Spokane, WA 99220-3727
27 Phone: [phone]
28 patrick.ehrbar(cavistacorp.com
29
30 II. BACKGROUND
31 The purpose of the electric FCA is to adjust the Company's Commission-
32 authorized revenues from kilowatt-hour('kWh") sales, such that the Company's revenues
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 2

I will be recognized based on the number of customers served under the applicable electric
2 service schedules. The FCA allows the Company to: 1)defer the difference between actual
3 FCA-related revenue received from customers through volumetric rates, and the FCA-
4 related revenue approved for recovery in the Company's last general rate case on a per-
5 customer basis; and 2) file a tariff to surcharge or rebate, by rate group, the total deferred
6 amount accumulated in the deferred revenue accounts for the prior January through
7 December time period.
8 In Case Nos. AVU-E-15-05 and AVU-G-15-01, the Commission in Order No.
9 33437 approved for Avista a Fixed Cost Adjustment Mechanism. On page 10 of Order
10 No. 33437, the Commission stated:
11 The parties have also agreed upon a three-year' FCA pilot for electric and natural
12 gas operations. The FCA will compare actual FCA revenues to allowed FCA
13 revenues determined on a per-customer basis. Any differences will be deferred for
14 a rebate or surcharge. There are a number of customer safeguards, including that an
15 FCA surcharge cannot exceed a 3% annual rate adjustment. Any unrecovered
16 balances will be carried forward to recover in future years. Further,there is no limit
17 to the level of the FCA rebate. As part of the Stipulation, Staff and other interested
18 parties, will review the efficacy of the FCA after its second full year to ensure it is
19 functioning as intended. Fixed cost adjustment mechanisms are intended to
20 encourage conservation and allow customers more control over their bills. Further,
21 the proposed FCA will remove any financial disincentive of the Company to
22 encourage energy conservation.
23
24 Section 13 of the Stipulation and Settlement, as amended by Addendum to the Stipulation
25 approved by the Commission in Order No. 34085 on June 15, 2018, provided further
26 details, reproduced below, regarding the mechanics of the fixed cost adjustment
27 mechanism.
'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 A. FCA Mechanisms Term. The Parties agree to an initial FCA term of 4 years,
2 with a review of how the mechanisms have functioned conducted by Avista, Staff,
3 and other interested parties following the end of the third full year. Avista may
4 seek to extend the term of the mechanism prior to its expiration. 2
5
6 B. Rate Groups. There will be two rate groups established for both the electric
7 FCA and natural gas FCA:
8
9 Electric Customer Rate Groups:
10 1. Residential—Schedule 1
11 2. Commercial— Schedules 11, 12, 21, 22, 31, 32
12
13 Natural Gas Rate Groups:
14 1. Residential—Schedule 101
15 2. Commercial— Schedules 111 and 112
16
17 C. Existing Customers and New Customers. The Parties have agreed that revenue
18 related to certain items discussed below would not be included in the FCA for new
19 customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer
20 for new customers will be less than the Fixed Cost Adjustment Revenue-Per-
21 Customer for existing customers. For new electric customers added after the test
22 period, recovery of incremental revenue related to fixed production and
23 transmission costs would be excluded from the electric FCA. For new natural gas
24 customers added after the test period, recovery of incremental revenue related to
25 fixed production and underground storage facility costs would be excluded. These
26 modifications are included in Appendices B and C to the Stipulation.
27
28 D. Quarterly Reporting. Avista will file,within 45 days of the end of each quarter,
29 a report detailing the FCA activity by month.3 The reporting will also include
30 information related to the deferrals by rate group, what the deferrals would have
31 been if tracked by rate schedule, use and revenue-per-customer for existing and
32 new customers, and other summary financial information. Avista will provide such
33 other information as may be reasonably requested, from time to time, in the future
34 quarterly reports.
35
36 E. Annual Filings. On or before July 1, the Company will file a proposed rate
37 adjustment surcharge or rebate based on the amount of deferred revenue recorded
38 for the prior January through December time period.' The rate adjustment would
z 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.
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 4

I be calculated separately for each Rate Group, with the applicable surcharge or
2 rebate recovered from each group on a uniform cents per kWh or per therm basis.
3 The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas)
4 included with that filing would include a rate adjustment that recovers/rebates the
5 appropriate deferred revenue amount over a twelve-month period effective on
6 October 1 for electric (to match with Power Cost Adjustment and Residential
7 Exchange annual rate adjustments time period) and November 1st for natural gas
8 (to match with the annual Purchased Gas Cost Adjustment rate adjustment time
9 period). The deferred revenue amount approved for recovery or rebate would be
10 transferred to a balancing account and the revenue surcharged or rebated during the
11 period would reduce the deferred revenue in the balancing account. After
12 determining the amount of deferred revenue that can be recovered through a
13 surcharge (or refunded through a rebate) by Rate Group, the proposed rates under
14 Schedules 75 and 175 would be determined by dividing the deferred revenue to be
15 recovered by Rate Group by the estimated kWh sales (Electric FCA) or therm sales
16 (Natural Gas FCA) for each Rate Group during the twelve-month recovery period.
17 Any deferred revenue remaining in the balancing account at the end of the
18 amortization period would be added to the new revenue deferrals to determine the
19 amount of the proposed surcharge/rebate for the following year.
20
21 F. Interest. Interest will be accrued on the unamortized balance in the FCA
22 balancing accounts at the Customer Deposit Rate.
23
24 G. Accounting. Avista will record the deferral in account 186 — Miscellaneous
25 Deferred Debits. The amount approved for recovery or rebate would then be
26 transferred into a Regulatory Asset or Regulatory Liability account for
27 amortization. On the income statement, the Company would record both the
28 deferred revenue and the amortization of the deferred revenue through Account 456
29 (Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub-
30 accounts. The Company would file quarterly reports with the Commission showing
31 pertinent information regarding the status of the current deferral. This report would
32 include a spreadsheet showing the monthly revenue deferral calculation for each
33 month of the deferral period (January - December), as well as the current and
34 historical monthly balance in the deferral account.
35
36 H. 3% Rate Increase Cap. An FCA surcharge, by rate group, cannot exceed a 3%
37 annual rate adjustment, and any unrecovered balances will be carried forward to
38 future years for recovery. There is no limit to the level of the FCA rebate.
39
40
41 III. DRIVERS OF ELECTRIC FCA DEFERRALS
42 The FCA surcharge deferrals for residential customers for 12 months ended June
43 30,2026 were the result of lower monthly use-per-customer than the use-per-customer that
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 5

I was embedded in the test year ending June 30, 2024 (i.e.,the FCA base). The FCA rebate
2 deferrals for non-residential customers for 12 months ended June 30, 2026,were the result
3 of higher monthly use-per-customer than the use-per-customer that was embedded in the
4 test year ending June 30, 2024 (i.e.,the FCA base).
5 The primary driver for the change in use-per-customer for residential customers
6 was a warmer than normal winter, fluctuating with offsetting impacts from heating and
7 cooling throughout the period. Also, since the test year ending June 30, 2024, used to set
8 2025 rates, Idaho customers have achieved energy efficiency savings from participation in
9 the Company's Demand Side Management programs. The small rebate for non-residential
10 customers was the result of slightly higher use-per-customer over the deferral period.
I I IV. RESIDENTIAL GROUP RATE DETERMINATION
12 The Company recorded $6,679,323 in the surcharge direction in deferred revenue
13 for the electric residential customer group for 12 months ended June 30, 2026. The
14 proposed rate of 0.405 cents per kWh is designed to recover $5,497,117 from the
15 Company's residential electric customers served under rate Schedule 1, due to the 3%
16 Annual Rate Increase Test discussed later. The following table summarizes the
17 components of the Company's request for recovery:
18 Summary
07.2025- 06.2026 Deferred Revenue $6,679,323
19 Add Prior Year Residual Balance $64,071
Add Interest through 09/30/2027 $226,107
20 Add Revenue Related Expense Adj. $23,852
Total Requested Recovery $6,993,353
21 Customer Surcharge Revenue $5,497,117
22 Carryover Deferred Revenue $1,496,236
23 Exhibit B, page 1 shows the derivation of the proposed rate to recover revenue of
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 6

1 $5,497,117 based on projected sales volumes for Schedule 1 customers during the
2 amortization period(October 2026 through September 2027). As identified on tariff Sheet
3 75B under Step 7 of "Calculation of Monthly FCA Deferral", interest on the deferred
4 balance accrues at the Customer Deposit Interest Rate.S If the proposed surcharge is
5 approved by the Commission, the 12 months ended June 30, 2026 deferral balance, plus
6 interest through September,and any outstanding balance approved for recovery in the prior
7 year FCA rate filing will be transferred into a regulatory liability balancing account. The
8 balance in the account will be reduced each month by the revenue collected under the tariff.
9
10 V. NON-RESIDENTIAL GROUP RATE DETERMINATION
11 The Company recorded$610,995 in the rebate direction in deferred revenue for the
12 electric Non-Residential Group for 12 months ended June 30, 2026. The proposed rebate
13 rate of 0.055 cents per kWh is designed to rebate $617,918 to commercial and industrial
14 customers served under rate Schedules 11, 12, 21, 22, 31, and 32. The following table
15 summarizes the components of the Company's request for recovery:
16 Summary
07.2025- 06.2026 Deferred Revenue ($610,995)
17 Add Prior Year Residual Balance $13,160
Add Interest through 09/30/2027 ($18,289)
18 Add Revenue Related Expense Adj. ($1,793)
Total Requested Recovery ($617,918)
19 Customer Rebate Revenue ($617,918)
20 Carryover Deferred Revenue $0
21 Exhibit B, page 3 shows the derivation of the proposed rate to rebate revenue of
s The Customer Deposit Interest Rate was 5.00%beginning January 2025 and 4.00%beginning January
2026. The current rate of 4.00%has been used as an estimate for purposes of this rate determination.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 7

1 $617,918 based on projected sales volumes for Schedules 11, 12,21,22, 31, and 32 during
2 the amortization period (October 2026 through September 2027). As identified on tariff
3 Sheet 75B under Step 7 of"Calculation of Monthly FCA Deferral",interest on the deferred
4 balance accrues at the Customer Deposit Interest Rate. If the proposed rebate is approved
5 by the Commission, the deferral balance, plus interest through September, will be
6 transferred into the regulatory asset balancing account. The balance in the account will be
7 reduced each month by the revenue collected under the tariff.
8 Support showing the monthly calculation of the deferral balances for both the
9 Residential and Non-Residential Groups is provided as Exhibit C. These calculations were
10 also provided to the Commission in quarterly reports(except April through June which will
11 be provided in the Q2 report by the end of August).
12
13 VI. 3% ANNUAL RATE INCREASE TEST
14 FCA rate adjustment surcharges are subject to a 3%annual rate increase limitation.
15 There is no limit to rebate rate adjustments, therefore the reversal of any rebate rate is not
16 included in the incremental surcharge test. As described in tariff Schedule 75 (see First
17 Revision Sheet 75C),the 3%annual rate increase limitation will be determined by dividing
18 the incremental annual revenue to be collected (proposed surcharge revenue less present
19 surcharge revenue)under this Schedule by the total"normalized"revenue for the two Rate
20 Groups for the most recent January through December time-period. Normalized revenue
21 is determined by multiplying the weather-corrected usage for the period by the present rates
22 in effect. If the incremental amount of the proposed surcharge exceeds 3%, only a 3%
23 incremental rate increase will be proposed, and any remaining deferred balance will be
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 8

I carried over to the following year.
2 Exhibit B, page 6 shows the 3% test for the two rate groups. The incremental
3 change from the existing surcharge to the proposed surcharge for the residential group is
4 an increase of $6.7 million or approximately 3.9%. This increase was reduced by $1.5
5 million to$5.2 million or 3.0%for purposes of the 3%test. For the Non-Residential group,
6 the incremental change from the existing surcharge to the proposed rebate is a decrease of
7 $1.3 million or approximately 1.0%.
8
9 VII. EXISTING CUSTOMERS AND NEW CUSTOMERS
10 The mechanism approved by the Commission requires that electric customers that
11 have been added since the test year are subject to an FCA Revenue-Per-Customer that
12 excludes incremental revenue related to fixed production and transmission costs. Separate
13 calculations for new versus existing customers are clearly identified in the FCA base that
14 was approved in Order No. 35909 for rates effective since September 1, 2025.
15 Due to this segregation, Avista tracks the usage of new customers since June 30,
16 2024, as compared with existing customers.6 In general, the average usage of new
17 customers is lower compared to the average usage of existing customers. Avista has found
18 that new customer meters, on average, have less usage in the first six to 12 months after
19 meter installation, then generally see increases in their usage until their usage is more in
20 line with the average usage of existing customers after 12 months of service. This is due,
21 in part, to the lag that occurs between when a meter is installed and billing commences,
6 "Existing customers"were part of the test year used to set the September 1,2025,rates(test year
ended June 30,2024). "New customers"consist of all new hookups after the test year.
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 9

I and when a customer moves into the premises. Avista will continue to track the usage of
2 new customers over the Fixed Cost Adjustment term.
3
4 VIIL PROPOSED RATES TO BE EFFECTIVE OCTOBER 1, 2026
5 The Company is proposing a per kilowatt-hour FCA surcharge rate of 0.4050 for
6 the Residential Group, and a per kilowatt-hour FCA rebate rate of 0.0550 for the Non-
7 Residential Group,both to become effective October 1,2026. Exhibit B to this Application
8 provides the Residential and Non-Residential Rate Calculation, and Exhibit C provides the
9 support for the deferrals for the July 1,2025 through June 30,2026 deferral period. Exhibit
10 A is a copy of the proposed tariff, Schedule 75, which contains the proposed FCA rates.
11 Exhibit A also includes the proposed changes to Schedule 75 in strike/underline format.
12 Residential customers using an average of 939 kilowatt-hours per month would see
13 their monthly bills increase from $119.52 to $123.15, an increase of$3.63 per month, or
14 3.0%.
15 IX. COMMUNICATIONS AND SERVICE OF APPLICATION
16 In conformance with RP 125, this Application will be brought to the attention of the
17 Company's customers through a news release and customer notice,which has been
18 provided as Attachment D. The news release will be issued in July and the customer
19 notice will be inserted in customer bills starting in August and run for a full billing cycle.
20 X. REQUEST FOR RELIEF
21 The Company requests that the Commission issue an order approving FCA
22 deferrals for the period July 1, 2025 through June 30, 2026 and approve a per kilowatt-
23 hour FCA surcharge rate of 0.4050 for the Residential Group,and a per kilowatt-hour FCA
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 10

I rebate rate of 0.0550 for the Non-Residential Group, both to become effective October 1,
2 2026. The Company also requests that the Commission approve the proposed tariff
3 modifications to tariff Sheet 75. The Residential Group surcharge represents a$5.2 million
4 or 3.0% incremental increase to Schedule 1 customers, and the Non-Residential group
5 rebate results in a$1.3 million, or 1.0%, incremental decrease. The Company requests that
6 the matter be processed under the Commission's Modified Procedure rules through use of
7 written comments.
8 Dated at Spokane, Washington this 31 st day of July 2026.
9 AVISTA CORPORATION
10
11 BY /s/Patrick Ehrbar
12 Patrick D. Ehrbar
13 Director of Regulatory Affairs
AVISTA'S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 11