20260908Staff Comments.pdf

RECEIVED
September 08, 2026
ERIKA K. MELANSON IDAHO PUBLIC
DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83702
[phone]
IDAHO BAR NO. 11560
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION'S ELECTRIC FIXED COST ) CASE NO. AVU-E-26-06
ADJUSTMENT ANNUAL RATE 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, 2026,Avista Corporation("Company") applied to the Commission requesting
approval for the revenue deferred through the electric Fixed Cost Adjustment Mechanism("FCA")
during the 12-month period from July 2025 through June 2026 and authorization of FCA rates for
electric service from October 1, 2026, through September 30, 2027 ("Application"). The
Application proposes an increase to the surcharge rate for the residential group and a change from
a surcharge rate to a rebate rate for the non-residential group. Id. at 1-2.
The FCA is a rate adjustment mechanism designed to separate the amount of energy a
utility sells and the revenue it collects to recover fixed costs, such as infrastructure and customer
service costs. These costs do not vary with energy use,output,or production and remain relatively
stable between rate cases. By separating utility revenues from customer energy usage, the FCA
STAFF COMMENTS 1 SEPTEMBER 8, 2026

removes the utility's incentive to increase sales to increase revenue and profits, thereby
encouraging 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
settlement states that the FCA will have two customer rate groups, the residential and commercial
rate groups. Furthermore, each rate group will be separated by new and existing customers. The
new electric customers are assigned a lower FCA Revenue-per-Customer because incremental
revenue associated with fixed production and transmission costs is excluded from the FCA
calculation for those customers. AVU-E-15-05 Stipulation and Settlement at 10.
The Company represents that the FCA surcharge rate for the residential group is proposed
to increase from 0.0180 per kWh to 0.4050 per kWh which represents a $5.3 million, or 3%
increase to Schedule 1 customers, effective October 1, 2026. Application at 1-2.
The Company represents that the FCA surcharge rate for the non-residential group is
proposed to decrease from 0.0580 per kWh to a rebate rate of 0.0550 per kWh which represents a
$1.3 million, or 1% decrease to Schedule 11, 12, 21, 22, 31, and 32 customers, effective October
1, 2026. Application at 1-2.
The Company anticipates that a residential customer using an average of 939 kWh per
month would see their monthly bill increase $3.63 or 3%per month. Id. at 10.
STAFF ANALYSIS
Staff reviewed the Company's Application, calculations of its residential and non-
residential FCA rates, supporting workpapers, and responses to Staff production requests. Based
on its review, Staff recommends that the Commission approve the Company's proposed Tariff
Schedule 75 surcharge for the residential customer group and rebate for the non-residential
customer group.
Staff reviewed the FCA deferral balances and associated rates for both the residential and
non-residential customer groups to verify the Company's calculations. Staff reviewed the
amortization of the prior deferral balance, kWh sales for the FCA year, revenue from fixed cost
collections, interest calculations, and submitted revenue reports. Staff also verified that the
authorized amounts used to calculate the deferral were consistent with those used to establish base
rates during the deferral period. Staff reviewed the new and existing customer counts, and the
STAFF COMMENTS 2 SEPTEMBER 8, 2026

Company's treatment of existing and new customers and believes the Company appropriately
applied the FCA requirements for both customer groups.
In its Application, the Company proposed a surcharge for its residential customer group
and a rebate for its non-residential customer group based on the amount of deferred revenue
recorded for each group between July 1,2025,and June 30,2026. Application at 1. For residential
customers, the Company proposed to increase the surcharge rate to 0.4050 per kWh from the
current surcharge rate of 0.0180 per kWh. Id. For the non-residential customer group, the
Company proposed changing the current surcharge rate of 0.0580 to a rebate rate of 0.0550 per
kWh. Id. at 1-2. The proposed residential rate will increase revenue collected from Schedule 1
customers by approximately $5.3 million, or a 3.0% increase, while the proposed non-residential
Rate will decrease revenue by approximately $1.3 million, or a 1.0% decrease. Id. at 2.
The Company's calculated residential FCA surcharge would result in an incremental
annual revenue increase of approximately $6.7 million, or 3.9%. However, approval of the FCA
Mechanism in Order No. 33437 established a 3% annual rate increase limitation for FCA
surcharges. Any amount exceeding the limitation is carried forward for potential recovery in a
future FCA period, while FCA rebates are not subject to the limitation. Order at 10. Therefore,
application of the 3% limitation reduces the increase to approximately $5.2 million, with
approximately $1.5 million carried forward for potential recovery in a future FCA period.
Application at 9. Staff reviewed the Company's calculation and believes the Company reasonably
applied the 3% annual rate increase limitation. The proposed non-residential FCA rebate results
in an approximately $1.3 million, or 1.0%, decrease and is not subject to the 3% limitation. Id. at
9.
The combined effect of the expiring FCA rates and the proposed 2026 FCA rates is shown
in Table No. l below.
Table No. 1: Present and Proposed Changes
Expiring Present Proposed FCA Change in FCA
FCA Revenue Revenue Revenue
Residential $244,316 $5,497,117 $5,252,801
Non-Residential $651,622 ($617,918) ($1,269,540)
STAFF COMMENTS 3 SEPTEMBER 8, 2026

Energy Consumption Drivers
The proposed FCA deferrals for residential electric customers are the result of a lower
monthly use-per-customer than the level embedded in the 2024 test year. The FCA deferrals for
non-residential electric customers were a result from slightly higher monthly use-per-customer
than the level embedded in the 2024 test year. Id. at 6.
Weather is a significant factor affecting customer energy consumption and the FCA
deferrals. During the FCA deferral period, the Company's service territory experienced warmer
than normal conditions and fluctuating heating and cooling periods. These conditions affected
electricity consumption for both residential and non-residential customers compared to
consumption under normal weather conditions. Id. Residential energy usage is more sensitive to
weather fluctuations than non-residential energy usage, which contributed to the larger change
experienced by the residential customer group. Id.
Additionally, following the 2024 test year used to set 2025 rates, Idaho customers have
achieved energy efficiency savings through participation in the Company's Demand Side
Management programs. Id.
Overall Impact of Three Filings (PCA, ResEx, and FCA) Effective October 1, 2026
The Company proposed three electric rate adjustments effective October 1, 2026. If
approved as filed,the proposed FCA filing,AVU-E-26-06,will increase electric revenues by about
$4.0 million (1.2% increase). The Company's Power Cost Adjustment ("PCA"), AVU-E-26-05,
if approved,will increase the Company's electric revenues by $14.6 million(4.2%increase). The
final proposed filing,Bonneville Power Administration Residential Exchange Program("ResEx"),
AVU-E-26-07, if approved, will decrease electric revenues by $0.3 million (0.1% decrease).
Avista Customer Notice at 1.
The net effect of Company's three filings (PCA, FCA, and ResEx) will increase electric
revenues by about $18.3 million (5.3% increase). The average residential electric customer's
monthly bill may increase by$7.76 or 6.5%. Id. Table No. 2 below summarizes the overall impact
to electric revenues of the three filings.
STAFF COMMENTS 4 SEPTEMBER 8, 2026

Table No. 2: Summary of Overall Impact to Electric Revenues
Filing Changes in Revenues % Change
FCA $4.0 million 1.2%
PCA 514.6 million 4.2%
ResEx Credit (S0.3 million) (0.10/0)
Total $18.3 million 5.3%
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and believes both met the requirements of Rule 125 of the
Commission's Rules of Procedure , IDAPA 31. 01. 01. 125. The notice was included with billing
statements mailed to customers from August 4 through September 1,2026. For customers enrolled
in paperless billing, the notice was e-mailed during the same period and included a link to the
digital version of the notice.
The Commission set a public comment deadline of September 8, 2026. As of September
8, 2026, one customer comment had been submitted to the Commission opposing the Company's
proposal. Customers in the later part of the billing cycle may not have received their notices or
had adequate time to submit comments before the comment deadline. Staff believes customers
should have the opportunity to file comments and have those comments considered by the
Commission. Staff recommends that the Commission consider late-filed customer comments.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company's proposed Tariff Schedule
75, as filed, with a residential surcharge rate of 0.4050 per kWh and a non-residential rebate rate
of 0.0550 per kWh for electric service from October 1, 2026, through September 30, 2027, and
consider any late-filed customer comments
STAFF COMMENTS 5 SEPTEMBER 8, 2026

Respectfully submitted this 8th day of September 2026.
Erika K. Melanson
Deputy Attorney General
Technical Staff. Laura Conilogue, Steven Verdieck
I:\Utility\UMISC\COMMENTS\AVU-E-26-06 Comments.docx
STAFF COMMENTS 6 SEPTEMBER 8, 2026

CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 81h DAY OF SEPTEMBER 2026,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE
NO. AVU-E-26-06, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
ANNI GLOGOVAC, COUNSEL FOR REGULATORY AFFAIRS
PATRICK EHRBAR, DIRECTOR OF REGULATORY AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 E. MISSION AVENUE, MSC 27
SPOKANE WA 99220
E-mail: anni.glo og vac(cavistacorp.com
Patrick.ehrbar&avi stacorp.com
avi stadockets(cry avistacorp.com
PATRICIA JORDA , SECRETARY
CERTIFICATE OF SERVICE