20260831APPLICATION.pdf

' 11
RECEIVED
Avista Corp.
August 31, 2026
IDAHO PUBLIC
1411 East Mission P.O. Box 3727 UTILITIES COMMISSION
Spokane, Washington 99220-0500
Telephone [phone] AVU-G-26-06
Toll Free 800-727-9170
August 31, 2026
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd.
Bldg. 8, Suite 201-A
Boise, Idaho 83714
Re: Avista Corporation Application for Determination of 2025 Natural Gas Energy
Efficiency Expenses as Prudently Incurred
Dear Commission Secretary:
Enclosed for filing with the Commission is the Application of Avista Corporation, dba
Avista Utilities (Avista or "the Company"), requesting a determination of prudence for the
Company's natural gas energy efficiency expenditures from January 1, 2025 through December
31, 2025. In support of its Application, Avista has provided Exhibit No. 1, which contains the
Company's 2025 Annual Conservation Report(ACR).
If you have any questions regarding this filing, please contact me at (509) 495-7839 or
aid 'me.stpeter(a�avistacorp.com.
Sincerely,
/j./ Pe�ue sf ;Ve&t
Jaime St Peter
Regulatory Affairs Manager
Enclosures
cc: Avista Energy Efficiency Advisory Group

I ANNIGLOGOVAC
2 ISB #13010
3 COUNSEL, LEGAL DEPARTMENT
4 AVISTA CORPORATION
5 P.O. BOX 3727, MSC 33
6 1411 EAST MISSION AVENUE
7 SPOKANE, WASHINGTON 99220-3727
8 TELEPHONE: [phone]
9 EMAIL: [e-mail]
10
11
12 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
13
14 )
15 IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-G-26-
16 OF AVISTA CORPORATION FOR A )
17 DETERMINATION OF 2025 NATURAL GAS ) APPLICATION OF
18 ENERGY EFFICIENCY EXPENSES AS ) AVISTA CORPORATION
19 PRUDENTLY INCURRED )
20 )
21 I. INTRODUCTION
22 Avista Corporation,doing business as Avista Utilities(Avista or the Company),at 1411
23 East Mission Avenue, Spokane, Washington, pursuant to Idaho Code § 61-524 and IDAPA
24 31.01.01, Rules of Procedure (RP), Rule 52 et seq., of the Idaho Public Utilities Commission
25 (IPUC or Commission), hereby respectfully requests that the Commission issue an order
26 designating Avista's natural gas energy efficiency expenditures from January 1, 2025 through
27 December 31, 2025, funded through the Company's Schedule 191 Demand Side Management
28 (DSM) Rider Adjustment (the DSM Rider), in the amount of $2,742,431, as prudently
29 incurred. This filing will hereafter be referred to as the "Application".
30 The Company also requests that this filing be processed under the Commission's
31 Modified Procedure Rules (RP 201-204)through the use of written comments.
32 Avista is a utility that provides service to approximately 423,000 retail electric
33 customers and 383,000 natural gas customers in a 30,000 square-mile service territory covering
Application of Avista Corporation Page 1
Case No. AVU-G-26-

I portions of northern Idaho, eastern Washington, and Oregon. The largest community served
2 by Avista is Spokane, Washington, which is the location of its corporate headquarters. The
3 Company requests that all correspondence related to this Application be directed to:
4 Anni Glogovac Shawn Bonfield
5 Counsel for Regulatory Affairs Sr. Manager, Regulatory Policy & Strategy
6 Avista Corporation Avista Corporation
7 P.O. Box 3727 P.O. Box 3727
8 1411 E. Mission Avenue, MSC 27 1411 E. Mission Avenue, MSC 27
9 Spokane, Washington 99220-3727 Spokane, Washington 99220-3727
10 Telephone: [phone] Telephone: [phone]
11 E-mail: anni.glo og vackavistacorp.com E-mail: shawn.bonfieldkavistacorp.com
12
13 Avista Dockets (Electronic Only) -AvistaDockets(kavistacorp.com
14 Avista has included the following attachment in support of this filing, which is also
15 referenced throughout the Application below:
16 a) Exhibit No. 1 —Avista 2025 Idaho Annual Conservation Report
17 II. BACKGROUND
18 Avista has continuously offered energy efficiency services since 1978. Through these
19 offerings, the Company seeks to provide customers with programs and information that may
20 help them manage their energy use and to utilize cost-effective energy efficiency resources to
21 meet the energy and demand needs of the Company's electrical and natural gas systems. These
22 efforts are funded through Avista's Electric and Natural Gas DSM Riders (Schedule 91 and
23 Schedule 191, respectively).
24 The Company's Energy Efficiency Program (Program) includes residential,
25 commercial and industrial, and low-income customer offerings delivered through prescriptive,
26 midstream, site-specific, regional market transformation, weatherization, and customer
27 education activities.Each offering within the natural gas energy efficiency portfolio(Portfolio)
28 is designed and administered with consideration of cost-effectiveness and is subject to
29 independent evaluation, measurement, and verification (EM&V). The results of the
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Case No. AVU-G-26-

I Company's and third-parry evaluator's 2025 assessments are contained in Avista's 2025
2 Annual Conservation Report (ACR), which includes:
3 1) Appendix A—2025 Electric Impact Evaluation Report
4 2) Appendix B —2025 Natural Gas Impact Evaluation Report
5 3) Appendix C—2025 Cost-Effectiveness Tables
6 4) Appendix D—2025 Expenditures by Program
7 5) Appendix E—2025 Energy Efficiency Activity by Program
8 6) Appendix F—NEEA 2025 Annual Savings Report—Electric
9 7) Appendix G—NEEA 2025 Annual Savings Report—Natural Gas
10 8) Appendix H—NEEA 2025 Annual Savings Report Addendum
11 9) Appendix I—List of 2025 EEAG Meetings and Topics
12
13 III. NATURAL GAS PROGRAM EXPENDITURES
14 The Company requests that the Commission determine that the expenditures incurred
15 during the 2025 Program year, totaling $2,742,431 for the natural gas Program, were prudent
16 and in the public interest. Of this amount, $1,815,377 was paid as customer incentives, $446,912
17 supported non-incentive and labor activities, and $480,143 supported regional market
18 transformation, conservation potential assessment (CPA), and EM&V activities. Actual natural
19 gas expenditures were approximately 150 percent of the planned budget of$1,828,377, while
20 verified local savings reached 107 percent of the annual target.
21 As noted within the ACR, natural gas incentives increased from a planned level of
22 $1,176,065 to $1,815,377 in 2025, primarily due to the Residential Midstream and Low-
23 Income programs. Eligible incentives were paid as customer projects were completed in
24 accordance with program requirements. Completed projects also required technical review,
25 implementation support, program administration, evaluator coordination, and compliance
26 activities. These costs do not necessarily decline in direct proportion to participation,
27 particularly when savings are concentrated in a smaller number of measures or when custom
28 and midstream offerings require continuing administrative oversight.
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Case No. AVU-G-26-

I In response to continuing cost-effectiveness pressures,' Avista reduced broad
2 marketing and outreach activities in 2025,narrowed Program delivery to a more limited set of
3 offerings, and continued to screen and manage participation with cost-effectiveness
4 considerations in mind. Commercial and industrial customers also continued to face elevated
5 equipment, project, and labor costs, contractor availability constraints, tariff-related
6 uncertainty, and higher borrowing costs,which affected the cost,timing,and mix of completed
7 projects. The $480,143 expended in support of market transformation, CPA, and EM&V
8 activities includes participation in regional market transformation through the Northwest
9 Energy Efficiency Alliance (NEEA). NEEA attributed 302,207 therms of 2025 natural gas
10 savings to Idaho, with 2025 participation costs of$202,425 and an Avista 2025-2029 natural
11 gas funding share of 3.82 percent.
12 The Company reports the Schedule 191 balance on a quarterly basis to Commission
13 Staff and its Energy Efficiency Advisory Group (EEAG or Advisory Group). The natural gas
14 tariff rider began 2025 with an overfunded balance of$1,805,673. During 2025,the Company
15 collected $3,442,358 in rider revenue and incurred $2,742,431 in Program expenditures,
16 resulting in an overfunded year-end balance of$2,505,600. On July 31,2025,Avista filed Case
17 No. AVU-G-25-06 to true-up the Schedule 191 balance and requested revised rates effective
18 October 1, 2025.
19 The continued overfunded balance was primarily attributable to lower-than-expected
20 participation across residential and commercial offerings. Declining avoided-cost values
21 lengthened project payback periods and reduced the economic attractiveness of efficiency
22 investments. Site-Specific participation was particularly limited in 2025.
' See Avista's Application to temporarily suspend its natural gas DSM programs in Case No.AVU-G-26-01 for
further details regarding the timeline and specifics related to these cost effectiveness issues.
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Case No. AVU-G-26-

I Table No. 1 -Schedule 191 Tariff Rider Activity for 2025
2 Month Tariff Rider Collections
Expenditures
January $667,506 $213,326
3 February $725,360 $300,931
March $521,425 $290,999
4 Aril $375,484 $284,892
May $202,850 $204,332
5 June $133,198 $184,867
J $95.769 $65,263
6 August $86,536 $243,367
September $78.685 $204.311
7 October $157,656 $155,034
November $226,053 $252.675
8 December $171,836 $342,542
Total $3 442 58 $2 742 431
9 IV. 2025 PROGRAM PERFORMANCE
10 The Company's energy efficiency targets are established annually through its natural
11 gas Integrated Resource Plan (IRP) and annual business planning processes. In 2025, local
12 natural gas programs achieved 203,384 therms against a planned target of 189,434 therms, or
13 107 percent of target. Residential programs produced 168,408 therms, Commercial/Industrial
14 programs produced 31,143 therms, and the Low-Income Program produced 3,833 therms.
15 NEEA added 302,207 therms, bringing total 2025 natural gas savings, including regional
16 market transformation, to 505,591 therms. Table No. 2 summarizes local verified savings by
17 sector.
18 Table No. 2 -2024 Natural Gas Savings by Program Sector
I (therms) (therms) Plan
Commercialftdastrial 28,130 31,143 111%
20 Residential 157,066 168,408 107%
Low Income 4.239 3,833 90%
21 Total Local Program 189,434 203,394 107%
22 Natural gas savings were concentrated in a limited number of high-volume programs,
23 with Residential Midstream and Commercial/Industrial Midstream being the largest
24 contributors to verified local savings in 2025. Residential Midstream was responsible for the
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Case No. AVU-G-26-

I majority of verified local natural gas savings, delivering 142,775 therms from 1,891 projects,
2 achieving 102 percent of plan, and producing a 97 percent realization rate.
3 Commercial/Industrial Midstream delivered 28,137 therms. Residential Shell contributed
4 21,209 therms. Site-Specific participation was limited to two projects producing 2,838 therms.
5 Strong performance in Midstream and Residential Shell allowed the Portfolio to exceed its
6 overall planned savings target.
7 Avista evaluates the effectiveness of its natural gas Portfolio using the Utility Cost Test
8 (UCT), Total Resource Cost (TRC), Participant Cost Test (PCT), and Ratepayer Impact
9 Measure (RIM). The UCT assesses cost-effectiveness from the utility perspective, while the
10 TRC considers total resource costs and benefits regardless of who pays. For 2025, the natural
11 gas Portfolio achieved a UCT ratio of 0.84, a TRC ratio of 0.64, a PCT ratio of 1.49, and a
12 RIM ratio of 0.80 based on verified savings. While the Company quantifies all of these cost
13 tests for Portfolio evaluation,the primary measurement of cost-effectiveness for its Idaho DSM
14 Program is the UCT.
15 Table No. 3—2025 Natural Gas Cost-Effectiveness
16 Benefit/Cost
I I - I 1 I 1 1
Ratio
17 Utift Cost Test C S1,892,976 52,254,067 0.84
Total Resource Cost C $1,892,976 S2,937,888 0.64
Participant Cost Test $3,700,569 $2,491,413 1.49
18 Ratepayer Impact Measure $1 892 976 $2 372 664 0.80
19 The Company developed the 2025 natural gas Portfolio to be cost-effective under the
20 planning assumptions available at the time, although only marginally so. During the year,
21 declining avoided-cost values, costs that remained high relative to natural gas benefits, lower-
22 than-expected verified savings for certain measures, and limited participation in programs
23 capable of delivering larger savings reduced final Portfolio cost-effectiveness. More granular
24 Regional Technical Forum (RTF) verification methods reduced savings for certain measures
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Case No. AVU-G-26-

I relative to planning assumptions, and some claimed measures did not meet required
2 documentation or efficiency standards. These cost-effectiveness pressures are further
3 discussed in Avista's Application to Suspend Natural Gas Demand-Side Management
4 Programs in Case No. AVU-G-26-01 as well as within the "Natural Gas Cost-Effectiveness"
5 section of this Application.
6 V. PROGRAM EVALUATION
7 In addition to the cost-effectiveness analyses conducted by the Company for the
8 Program, Avista also contracts with independent third-party consultants to provide Program
9 EM&V activities each year. These EM&V activities are used to validate and report verified
10 energy savings related to the Company's energy efficiency measures and Program offerings,
11 as well as provide viable recommendations to improve Program performance, enact changes
12 to Program components, and decide whether and when to phase out measures.
13 For the 2025 Program year, ADM, a Qualus Company, was retained by Avista to
14 perform the impact evaluation for Avista's natural gas Program, including residential,
15 commercial and industrial, and low-income components.2 The impact evaluation validates
16 gross natural gas savings and identifies opportunities to improve savings calculations,Program
17 tracking, documentation, and evaluation methods.
18 The 2025 natural gas impact evaluation concluded that the Portfolio achieved a 95 percent
19 realization rate and 203,384 therms in annual verified savings. Program-level results included
20 realization rates of 97 percent for Residential Midstream, 100 percent for
21 Commercial/Industrial Midstream, 95 percent for Site-Specific, 74 percent for Residential
22 Appliances, and 27 percent for Commercial/Industrial Prescriptive Shell. Recommendations
2 Avista's EM&V contractors assess its Program on an annual basis,with the exception of low-income,which
undergoes EM&V every two years.
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I focused on improving alignment with RTF inputs and strengthening measure-level
2 documentation and tracking. Low-Income Program recommendations focused on
3 standardizing measure-specific fields, capturing key inputs, and adding eligibility checks to
4 reduce assumptions in future evaluations. Avista will consider and implement applicable
5 recommendations through its ongoing program planning, documentation, and quality-control
6 processes.
7 VI. NATURAL GAS COST-EFFECTIVENESS
8 Natural gas Portfolio cost-effectiveness was affected by declining avoided-cost values,
9 increasing program delivery costs, and the concentration of savings in a limited number of
10 programs and measures. Although local programs achieved 107 percent of planned therm
11 savings, the value of those savings was not sufficient to offset all Portfolio costs under the
12 UCT. The resulting 0.84 UCT does not, by itself, demonstrate that the expenditures were
13 imprudent. Avista planned the Portfolio using the information then available, reduced
14 discretionary activities, narrowed offerings, screened participation, exceeded the therm-
15 savings target, and responded to changing avoided-cost conditions and evaluation findings.
16 Residential Midstream remained the largest source of local natural gas savings and achieved a
17 97 percent realization rate for 2025. As provided in Case No. AVU-G-26-01, the Company
18 had hoped to bolster its ability to provide a cost-effective natural gas Portfolio through the use
19 of a treatment-only billing-data regression analysis that better suited its particular service area;
20 this approach was ultimately unsupported by Commission Staff and denied by the
21 Commission,resulting in the residential furnace evaluation method reverting to a post-program
22 regression analysis that considered program participants and statistically similar non-
23 participants, which produced a slight decrease in verified savings per furnace. Evaluator
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Case No. AVU-G-26-

I recommendations also adjusted baseline and expected full-load-hour values for residential
2 boilers to account for boiler size.
3 Limited Site-Specific participation also affected Portfolio cost-effectiveness. Two
4 natural gas projects produced 2,838 verified therms and $10,509 in incentives. Although the
5 projects achieved a 95 percent realization rate, the limited pipeline reduced the savings
6 available to offset ongoing administrative, implementation, and evaluation costs.
7 Avista discussed natural gas cost-effectiveness with Commission Staff and the EEAG
8 during 2025 and continued evaluating cost controls. Responsive actions included reducing
9 discretionary implementation activities, narrowing offerings, screening participation,
10 coordinating with the evaluator and implementer, and planning measure and incentive
11 adjustments. Having been unable to achieve a cost-effective Portfolio for 2025 or plan for
12 future years with appropriate levels of cost-effectiveness, Avista filed in 2026 to temporarily
13 suspend its natural gas DSM Program—with the exception of continued support for NEEA and
14 its Low-Income Program contracts —until such time that cost effectiveness could be achieved
15 (Case No. AVU-G-26-01).
16 VII. ADDITIONAL PROGRAM ACTIVITIES
17 Commercial/Industrial Sector
18 Avista's Commercial/Industrial natural gas Portfolio achieved 31,143 therms, or I11
19 percent of its 2025 planned savings. Midstream delivered 28,137 therms from 79 projects and
20 achieved 142 percent of planned savings with a 100 percent realization rate. Site-Specific
21 delivered 2,838 therms from two projects with a 95 percent realization rate.
22 Commercial/Industrial Prescriptive Shell delivered 169 therms and had a 27 percent realization
23 rate because of differences between expected and verified savings methodologies.
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I Avista worked with its Midstream implementer and evaluator during 2025 to improve
2 alignment between expected and verified savings. Commercial insulation projects were
3 transitioned from Prescriptive Shell to Site-Specific to provide greater flexibility for project-
4 specific conditions and savings calculations.Account Executives,trade allies,and the Business
5 Partner Program conducted targeted efforts to identify qualifying opportunities, including
6 support through the Trade Ally Bid program.
7 Residential Sector
8 The residential natural gas Portfolio achieved 168,408 therms, or 107 percent of its
9 2025 planned savings. Residential Midstream produced 142,775 therms from 1,891 projects
10 and accounted for more than 87 percent of verified residential natural gas savings. Residential
11 Shell delivered 21,209 therms, or 125 percent of plan. Appliances delivered 4,123 therms,
12 although the evaluation produced a 74 percent realization rate. ENERGY STAR/NEEM
13 Manufactured Homes contributed 301 therms.
14 Residential program management included discontinuing the smart thermostat measure
15 and evaluating revised eligibility and documentation requirements for clothes washer and dryer
16 rebates. Avista also evaluated transitioning the Manufactured Home Rebate program to an
17 electric-only structure. Home energy audits remained available during 2025, but Avista
18 determined that continuing the offering for Idaho natural gas-heated homes would not be cost-
19 effective and notified customers that the offering would end beginning in March 2026.
20 The Low-Income Program served 134 natural gas projects and delivered 3,833 therms,
21 or 90 percent of planned savings,with$499,974 in natural gas rider spending. Avista provided
22 the Community Action Partnership (CAP) agency with $875,000 in weatherization funding
23 and $75,000 for conservation education and customer outreach across the electric and natural
24 gas programs. The agency dedicated approximately 1,150 hours to conservation education and
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Case No. AVU-G-26-

I customer engagement and reached more than 3,700 community members. CAP maintained
2 flexibility to allocate funds between electric and natural gas measures based on customer needs
3 and available program capacity. The funding structure supported approved weatherization
4 measures, program administration, conservation education, eligible health and safety
5 improvements, and necessary home repairs that enabled installation of energy-efficiency
6 measures.
7 VIII. CONCLUSION AND REOUEST FOR RELIEF
8 As described above and in the 2025 ACR, Avista respectfully requests that the
9 Commission issue an Order designating Avista's 2025 total natural gas Energy Efficiency
10 Program expenditures of $2,742,431 as prudently incurred and in the public interest. The
11 expenditures supported 203,384 therms in independently verified local savings, equal to 107
12 percent of the annual target, and the Portfolio achieved a 95 percent realization rate. Most
13 expenditures were associated with customer incentives and the technical, administrative,
14 implementation,regional market transformation, and evaluation activities necessary to deliver
15 and verify completed projects.
16 Although the 2025 natural gas Portfolio achieved a UCT below 1.00,Avista developed
17 the Portfolio using then-current planning assumptions, actively managed costs and
18 participation,reduced discretionary activities,narrowed offerings, screened projects,exceeded
19 its therm-savings target, consulted with IPUC Staff and the EEAG, and responded to updated
20 avoided-cost conditions and evaluation findings. The final UCT result reflects changing
21 avoided-cost values, program delivery costs,participation patterns, and verification outcomes
22 and does not establish that the underlying expenditures were imprudently incurred.
23 The Company also requests that this Application be processed under the Commission's
24 Modified Procedure Rules through written comments.
Application of Avista Corporation Page I I
Case No. AVU-G-26-

I Dated this 3 1'day of August 2026.
2 AVISTA CORPORATION
3
4 By ?CL
5 Patrick Ehrbar
6 Director of Regulatory Affairs
7 Avista Corporation
Application of Avista Corporation Page 12
Case No. AVU-G-26-