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-G-26-02
Natural Gas Fixed Cost Adjustment Annual Rate Filing of Avista Corporation
Dear Commission Secretary:
Enclosed for electronic filing with the Commission is Avista's natural gas 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 calculation), Exhibit C (12 months ended 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 November 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 RECEIVED
3 AVISTA CORPORATION JULY 31, 2026
4 1411 E. MISSION AVENUE IDAHO PUBLIC
5 P.O. BOX 3727 UTILITIES COMMISSION
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-G-26-02
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 natural gas Fixed Cost Adjustment Mechanism (FCA) revenue
24 deferred during 12 months ended June 30, 2026 and authorizing FCA rates for natural gas
25 service from November 1, 2026 through October 31, 2027. The FCA rate for the
26 Residential Group (Schedule 101) is proposed to change from a present surcharge rate of
27 1.7370 to a proposed surcharge rate of 4.369¢ per therm.
28 The FCA rate for the Non-Residential Group (Schedules I I I and 112) is proposed
29 to change from a present surcharge rate of 0.6770 to a proposed surcharge rate of 1.98 1¢
30 per therm. The Residential Group rate change represents a $2.0 million, or 3.0% increase
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 1

I to Schedule 101 customers, and the Non-Residential Group rate change represents a $0.4
2 million, or 2.2%, increase. The combined effect of expiring FCA rates and the proposed
3 rates are shown on the table below.
4 Expiring Present Proposed FCA Proposed FCA
FCA Revenue Revenue Increase
5 Residential $ 1,315,119 $ 3,307,860 $ 1,992,742
Non-Residential $ 185,057 $ 541,504 $ 356,447
6 The Company has requested a November 1, 2026 effective date.
7 The Company requests that this filing be processed under the Commission's
8 Modified Procedure Rules (RP 201-204). Communications referencing this Application
9 should be addressed to:
10 Anni Glogovac
11 Counsel for Regulatory Affairs
12 Avista Corporation
13 P.O. Box 3727
14 1411 E. Mission Avenue, MSC 27
15 Spokane, WA 99220-3727
16 Phone: [phone]
17 anni.glo og vac&avistacorp.com
18
19 Patrick D. Ehrbar
20 Director of Regulatory Affairs
21 Avista Utilities
22 P.O. Box 3727
23 MSC-27
24 1411 E. Mission Ave
25 Spokane, WA 99220-3727
26 Phone: [phone]
27 patrick.ehrbar(kavistacorp.com
28
29 II. BACKGROUND
30 The purpose of the natural gas FCA is to adjust the Company's Commission-
31 authorized revenues from therm sales, such that the Company's revenues will be
32 recognized based on the number of customers served under the applicable natural gas
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 2

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

I and other interested parties following the end of the third full-year. Avista may
2 seek to extend the term of the mechanism prior to its expiration.2
3
4 B. Rate Groups. There will be two rate groups established for both the electric
5 FCA and natural gas FCA:
6
7 Electric Customer Rate Groups:
8 1. Residential—Schedule 1
9 2. Commercial— Schedules 11, 12, 21, 22, 31, 32
10
11 Natural Gas Rate Groups:
12 1. Residential—Schedule 101
13 2. Commercial— Schedules 111 and 112
14
15 C. Existing Customers and New Customers. The Parties have agreed that revenue
16 related to certain items discussed below would not be included in the FCA for new
17 customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer
18 for new customers will be less than the Fixed Cost Adjustment Revenue-Per-
19 Customer for existing customers. For new electric customers added after the test
20 period, recovery of incremental revenue related to fixed production and
21 transmission costs would be excluded from the electric FCA. For new natural gas
22 customers added after the test period, recovery of incremental revenue related to
23 fixed production and underground storage facility costs would be excluded. These
24 modifications are included in Appendices B and C to the Stipulation.
25
26 D. Quarterly Reporting. Avista will file,within 45 days of the end of each quarter,
27 a report detailing the FCA activity by month.3 The reporting will also include
28 information related to the deferrals by rate group, what the deferrals would have
29 been if tracked by rate schedule, use and revenue-per-customer for existing and
30 new customers, and other summary financial information. Avista will provide such
31 other information as may be reasonably requested, from time to time, in the future
32 quarterly reports.
33
34 E. Annual Filings. On or before July 1, the Company will file a proposed rate
35 adjustment surcharge or rebate based on the amount of deferred revenue recorded
36 for the prior January through December time-period.' The rate adjustment would
37 be calculated separately for each Rate Group, with the applicable surcharge or
38 rebate recovered from each group on a uniform cents per kWh or per therm basis.
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-G-19-03,the Company altered its quarterly reporting from
45 days to 60 days from the end of each quarter.
' As stated in Order No. 34502 Case No. AVU-G-19-03, 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 NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 4

I The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas)
2 included with that filing would include a rate adjustment that recovers/rebates the
3 appropriate deferred revenue amount over a twelve-month period effective on
4 October 1 for electric (to match with Power Cost Adjustment and Residential
5 Exchange annual rate adjustments time period) and November 1st for natural gas
6 (to match with the annual Purchased Gas Cost Adjustment rate adjustment time
7 period). The deferred revenue amount approved for recovery or rebate would be
8 transferred to a balancing account and the revenue surcharged or rebated during the
9 period would reduce the deferred revenue in the balancing account. After
10 determining the amount of deferred revenue that can be recovered through a
11 surcharge (or refunded through a rebate) by Rate Group, the proposed rates under
12 Schedules 75 and 175 would be determined by dividing the deferred revenue to be
13 recovered by Rate Group by the estimated kWh sales (Electric FCA) or therm sales
14 (Natural Gas FCA) for each Rate Group during the twelve-month recovery period.
15 Any deferred revenue remaining in the balancing account at the end of the
16 amortization period would be added to the new revenue deferrals to determine the
17 amount of the proposed surcharge/rebate for the following year.
18
19 F. Interest. Interest will be accrued on the unamortized balance in the FCA
20 balancing accounts at the Customer Deposit Rate.
21
22 G. Accounting. Avista will record the deferral in account 186 — Miscellaneous
23 Deferred Debits. The amount approved for recovery or rebate would then be
24 transferred into a Regulatory Asset or Regulatory Liability account for
25 amortization. On the income statement, the Company would record both the
26 deferred revenue and the amortization of the deferred revenue through Account 456
27 (Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub-
28 accounts. The Company would file quarterly reports with the Commission showing
29 pertinent information regarding the status of the current deferral. This report would
30 include a spreadsheet showing the monthly revenue deferral calculation for each
31 month of the deferral period (January - December), as well as the current and
32 historical monthly balance in the deferral account.
33
34 H. 3% Rate Increase Cap. An FCA surcharge,by rate group, cannot exceed a 3%
35 annual rate adjustment, and any unrecovered balances will be carried forward to
36 future years for recovery. There is no limit to the level of the FCA rebate.
37
38 III. DRIVERS OF NATURAL GAS FCA DEFERRALS
39 The FCA deferral for Residential and Non-Residential customers for 12 months
40 ended June 30, 2026 was the result of lower monthly use-per-customer than was embedded
41 in the test year ending June 30,2024(i.e.,the FCA base).The primary driver for the change
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 5

I in use-per-customer was a warmer than normal winter.Also,since the test year ending June
2 30, 2024, used to set 2025 rates, Idaho customers have achieved energy efficiency savings
3 from participation in the Company's Demand Side Management programs.
4 IV. RESIDENTIAL GROUP RATE DETERMINATION
5 The Company recorded $4,418,468 in the surcharge direction in deferred revenue
6 for the natural gas residential customer group for 12 months ended June 30, 2026. The
7 proposed rate of 4.369 cents per therm is designed to recover $3,307,860 from the
8 Company's residential natural gas customers served under rate Schedule 101, due to the
9 3% Annual Rate Increase Test discussed later. The following table summarizes the
10 components of the Company's request:
11 Summary
07.2025- 06.2026 Deferred Revenue $4,418,468
12 Add Prior Year Residual Balance $124,091
Add Interest through 10/31/2027 $158,200
13 Add Revenue Related Expense Adj. $14,353
Total Requested Recovery $4,715,112
14 Customer Surcharge Revenue $3,307,860
15 Carryover Deferred Revenue $1,407,252
16 Exhibit B, page 1 shows the derivation of the proposed rate to recover revenue of
17 $3,307,860 based on projected sales volumes for Schedule 101 customers during the
18 amortization period(November 2026 through October 2027). As identified on tariff Sheet
19 175B under Step 6 of"Calculation of Monthly FCA Deferral", interest on the deferred
20 balance accrues at the Customer Deposit Interest Rate.5 If the proposed surcharge is
21 approved by the Commission, the 12 months ended June 30, 2026 deferral balance, plus
5 The Customer Deposit Interest Rate was 5.00%beginning January 2025 and was 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 NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 6

I interest through October, will be transferred into the regulatory asset balancing account.
2 The balance in the account will be reduced each month by the surcharge received from
3 customers under the tariff.
4
5 V. NON-RESIDENTIAL GROUP RATE DETERMINATION
6 The Company recorded$509,535 in the surcharge direction in deferred revenue for
7 the natural gas Non-Residential Group for 12 months ended June 30, 2026. The proposed
8 surcharge rate of 1.981 cents per therm is designed to recover $541,504 from the
9 Company's commercial and industrial customers served under rate Schedules I I I and 112.
10 The following table summarizes the components of the Company's request for recovery:
11 Summary
07.2025-06.2026 Deferred Revenue $509,535
12 Add Prior Year Residual Balance $14,024
Add Interest through 10/31/2027 $15,339
13 Add Revenue Related Expense Adj. $2,606
Total Requested Recovery $541,504
14 Customer Surcharge Revenue $541,504
15 Carryover Deferred Revenue $0
16 Exhibit B, page 3 shows the derivation of the proposed rate to recover revenue of
17 $541,504 based on projected sales volumes for Schedules 111 and 112 during the
18 amortization period (November 2026 through October 2027). As identified on the tariff
19 Sheet 175B under Step 6 of "Calculation of Monthly FCA Deferral", interest on the
20 deferred balance accrues at the Customer Deposit Interest Rate. If the proposed surcharge
21 is approved by the Commission,the deferral balance,plus interest through October will be
22 transferred into the regulatory asset balancing account. The balance in the account will be
23 reduced each month by the surcharge received by customers under the tariff.
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 7

I Support showing the monthly calculation of the 12 months ended June 30, 2026
2 deferral balances for both the Residential and Non-Residential Groups is provided as
3 Exhibit C. These calculations were also provided to the Commission in quarterly reports
4 (except April through June which will be provided in the Q2 report by the end of August).
5
6 VL 3% ANNUAL RATE INCREASE TEST
7 FCA rate adjustment surcharges are subject to a 3%annual rate increase limitation.
8 There is no limit to rebate rate adjustments. As described in tariff Schedule 175, the 3%
9 annual rate increase limitation will be determined by dividing the incremental annual
10 revenue to be collected(proposed surcharge revenue less present surcharge revenue)under
I I this Schedule by the total"normalized"revenue for the two Rate Groups for the most recent
12 January through December time-period. Normalized revenue is determined by multiplying
13 the weather-corrected usage for the period by the present rates in effect. If the incremental
14 amount of the proposed surcharge exceeds 3%,only a 3%incremental rate increase will be
15 proposed, and any remaining deferred balance will be carried over to the following year.
16 Exhibit B,page 6 shows the 3%test for the two rate groups.The incremental change
17 from the existing surcharge to the proposed surcharge for the residential group is an
18 increase of$3.4 million or approximately 5.1%. This increase was reduced by$1.4 million
19 to $2.0 million or 3.0% for purposes of the 3% test. For the Non-Residential group, the
20 incremental change from the existing surcharge to the proposed surcharge is an increase of
21 $0.4 million or approximately 2.2%. As the Non-Residential deferral is less than 3%, it is
22 not subject to the 3% incremental surcharge test.
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 8

I VII. EXISTING CUSTOMERS AND NEW CUSTOMERS
2 The Settlement Stipulation approved by the Commission requires that natural gas
3 customers that have been added since the test year are subject to an FCA Revenue-Per-
4 Customer that excludes incremental revenue related to fixed production and underground
5 storage facility costs. Separate calculations for new versus existing customers are clearly
6 identified in the FCA base that was approved in Order No. 35909 for rates effective since
7 September 1, 2025. Due to this segregation,Avista tracks the usage of new customers since
8 June 30, 2024 as compared with existing customers.6 In general,the average usage of new
9 natural gas customers is comparable to the average usage of existing customers.Avista will
10 continue to track the usage of new customers over the Fixed Cost Adjustment term.
11
12 VIIL PROPOSED RATES TO BE EFFECTIVE NOVEMBER 1, 2026
13 The Company is proposing a per therm FCA surcharge rate of 4.3690 for the
14 Residential Group, and a per therm FCA surcharge rate of 1.981¢ for the Non-Residential
15 Group,both to become effective November 1,2026. Exhibit B to this Application provides
16 the Residential and Non-Residential Rate Calculation, and Exhibit C provides the support
17 for the deferrals for the July 1, 2025 through June 30, 2026 deferral period. Exhibit A is a
18 copy of the proposed tariff, Schedule 175,which contains the proposed FCA rates. Exhibit
19 A also includes the proposed changes to Schedule 175 in strike/underline format.
20 Residential customers using an average of 66 therms per month would see their
21 monthly bills increase from $59.28 to $61.02, an increase of$1.74 per month, or 2.9%.
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 NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 9

I IX. COMMUNICATIONS AND SERVICE OF APPLICATION
2 In conformance with RP 125, this Application will be brought to the attention of
3 the Company's customers through a news release and customer notice, which has been
4 provided as Attachment D. The news release will be issued in July and the customer notice
5 will be inserted in customer bills starting in August and run for a full billing cycle.
6
7 X. REQUEST FOR RELIEF
8 The Company requests that the Commission issue an order approving recovery of
9 FCA deferrals for the period July 1, 2025 through June 30, 2026 and approve a per therm
10 FCA surcharge rate of 4.3690 for the Residential Group, and a per therm FCA surcharge
11 rate of 1.9810 for the Non-Residential Group,both to become effective November 1,2026.
12 The Residential Group surcharge represents a $2.0 million, or 3.0% incremental increase
13 to schedule 101 customers, and the Non-Residential Group surcharge represents a $0.4
14 million, or 2.2% incremental increase to Schedule I I I and 112 customers. The Company
15 requests that the matter be processed under the Commission's Modified Procedure rules
16 through use of written comments.
17 Dated at Spokane, Washington this 31 st day of July 2026.
18 AVISTA CORPORATION
19
20 BY /s/Patrick Ehrbar
21 Patrick D. Ehrbar
22 Director of Regulatory Affairs
AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE 10