20260929Final_Order_No_37184.pdf

Office of the Secretary
Service Date
September 24,2026
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA ) CASE NO.AVU-E-26-06
CORPORATION'S ELECTRIC FIXED COST )
ADJUSTMENT ANNUAL RATE FILING )
ORDER NO. 37184
On July 31, 2026, Avista Corporation ("Company") applied to the Idaho Public Utilities
Commission ("Commission") requesting approval of the level of electric Fixed Cost Adjustment
Mechanism ("FCA") revenue deferred 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 proposed an increase to the surcharge rate for the
residential customers and a change from a surcharge rate to a rebate rate for non-residential
customers.Id. at 1-2.
On August 18, 2026, the Commission issued a Notice of Application and Notice of
Modified Procedure, establishing deadlines for public comments and Company reply comments.
Order No. 37141. Commission Staff("Staff')filed comments to which the Company did not reply.
One public comment was received.
Based on our review of the record,the Commission now issues this Final Order approving
the Company's Application, as filed.
BACKGROUND
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
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
parties to the Company's rate case agreed to review the program's effectiveness at the end of its
second full year, to ensure the program was functioning as intended. On June 15, 2018, the
Commission approved an addendum to the settlement that extended the term of the Company's
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FCA pilot for an additional year. Order No. 34085. On December 13, 2019, the Commission
authorized the Company to extend its FCA mechanism for both gas and electric customers through
March 31, 2025. Order No. 34502. On September 30, 2025, the Commission approved the
Company's deferrals for residential and non-residential customers for the period of July 1, 2024,
through June 30, 2025, and the Company's proposed tariff modifications to Schedule 75 of a per
kilowatt-hour ('kWh") FCA surcharge rate of 0.0180 for residential customers, and a per kWh
FCA surcharge rate of 0.0580 for non-residential customers,both with an effective date of October
1, 2025. Order No. 36784 at 4.
THE APPLICATION
The Company proposed increasing the FCA surcharge rate for residential customers from
0.0180 per kWh to 0.4050 per kWh.Application at 1-2.The proposed increase would raise charges
for customers served under Schedule 1 by approximately$5.3 million, or 3%, effective October 1,
2026.Id. at 2. For non-residential customers, the Company proposed reducing the FCA surcharge
rate from 0.0580 per kWh to a rebate rate of 0.0550 per kWh. Id. The proposed reduction would
decrease charges for customers served under Schedules 11, 12,21,22,31,and 32 by approximately
$1.3 million, or 1%, effective October 1, 2026.Id.
The Company attributed the proposed increase in the residential surcharge to lower
monthly usage per customer than the usage level incorporated into retail rates for the test year
ending June 30, 2024. Id. at 5-6. The Company explained that a warmer-than-average winter and
increased participation in its Demand Side Management programs contributed to the lower usage.
Id. at 6. For non-residential customers, the Company attributed the proposed rebate to higher
monthly usage per customer during the test year ending June 30, 2024. Id.
For the 12-month period ending June 30, 2026, the Company recorded $6,679,323 in
deferred revenue in the surcharge direction for residential customers. Id. The Company designed
the proposed residential surcharge rate of 0.4050 per kWh to recover $5,497,117 from customers
served under Schedule 1, subject to the 3%Annual Rate Increase Test.Id. During the same period,
the Company recorded $610,995 in deferred revenue in the rebate direction for non-residential
customers. Id. at 7. The Company designed the proposed rebate rate of 0.0550 per kWh to return
$617,918 to commercial and industrial customers served under Schedules 11, 12, 21, 22, 31, and
32. Id.
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The Company estimated that a residential customer using an average of 939 kWh per
month would see a $3.63 increase in the monthly bill, or approximately 3%.Id. at 10.
STAFF COMMENTS
Staff reviewed the Company's Application, FCA calculations, supporting workpapers,
production responses, deferral balances, customer counts, and related revenue and interest
calculations. Staff Comments at 2. The Company proposed increasing the residential FCA
surcharge from 0.0180 per kWh to 0.4050 per kWh and replacing the 0.0580 per kWh non-
residential surcharge with a 0.0550 per kWh rebate. Id. at 3. The residential rate would increase
revenues by approximately $5.3 million, or 3.0%, while the non-residential rebate would reduce
revenues by approximately $1.3 million, or 1.0%. Id.
The Company's residential FCA calculation produced an annual revenue increase of
approximately $6.7 million, or 3.9%. However, the Commission's 3% annual limitation reduced
the increase to approximately $5.2 million and carried approximately $1.5 million forward for
potential recovery in a future FCA period. Id. at 3. The limitation did not apply to the non-
residential rebate. Id. Staff reviewed the calculations and believed that the Company had
reasonably applied the limitation.Id.
Staff attributed the FCA deferrals primarily to differences between actual and test-year
customer usage,weather conditions, and energy-efficiency savings.Id. at 4. Residential usage fell
below the 2024 test-year level, while non-residential usage slightly exceeded that level. Id. Staff
noted that residential usage responded more significantly to weather fluctuations.Id.
The Company also proposed PCA and ResEx rate adjustments. Id. Staff calculated that
together with the FCA adjustment, the three filings would increase electric revenues by
approximately $18.3 million, or 5.3%, and increase the average residential customer's monthly
bill by approximately $7.76, or 6.5%.Id.
Staff reviewed the Company's customer notice and press release and believed that they
complied with Commission Rule 125. Id. at 5. The Company distributed the notices between
August 4 and September 1, 2026. Id. As of the September 8, 2026, comment deadline, one
customer had opposed the Application.Id. Staff recommended that the Commission consider any
late-filed comments because some customers may not have received the notice or had sufficient
time to respond.Id.
ORDER NO. 37184 3

Based on its review, Staff recommended that the Commission approve Tariff Schedule 75
as filed, with a residential surcharge of 0.4050 per kWh and a non-residential rebate of 0.0550 per
kWh for service from October 1, 2026, through September 30, 2027, and consider any late-filed
customer comments. Id.
PUBLIC COMMENTS
One public comment was filed in opposition to the Application.The customer was opposed
to a 6.4% increase after the Company was granted a 17% increase 4-5 years ago. Customer
Comment at 1.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company's Filing and the issues in this case
under Title 61 of the Idaho Code including, Idaho Code §§ 61-501, -502, and -503. The
Commission is empowered to investigate rates, charges,rules,regulations,practices, and contracts
of all public utilities and to determine whether they are just, reasonable, preferential,
discriminatory, or in violation of any provisions of law, and to fix the same by order.Idaho Code
§§ 61-501, -502, and-503.
The Commission has reviewed the Company's Application, all submitted materials, Staff
comments, and public comments. Based on our review of the record, we find it fair, just, and
reasonable to approve the Company's Application, as filed.
In the Application,the Company proposes to continue the FCA mechanism and modify the
rates in Schedule 75 for the period October 1, 2026, through September 30, 2027. The Company
proposes increasing the residential FCA surcharge from 0.0180 per kWh to 0.4050 per kWh. The
Company also proposes replacing the existing non-residential surcharge of 0.058¢ per kWh with
a rebate of 0.0550 per kWh.
The proposed residential adjustment results primarily from residential usage during the test
year ending June 30, 2024, being lower than the usage level incorporated into retail rates. The
Company attributed the difference to, among other factors, warmer-than-average winter weather
and increased participation in its Demand Side Management programs. For non-residential
customers,the Company attributed the proposed rebate to usage during the test year exceeding the
level incorporated into rates.
For the twelve-month period ending June 30, 2026, the Company recorded approximately
$6.68 million in deferred residential revenue in the surcharge direction. The Company calculated
ORDER NO. 37184 4

a residential FCA adjustment that would otherwise produce an annual revenue increase of
approximately $6.7 million, or 3.9%. The Commission's 3%Annual Rate Increase Test limits the
amount that may be recovered through the residential FCA adjustment during the current period.
Applying that limitation, the Company designed the proposed 0.4050 per kWh surcharge to
recover approximately$5.50 million from Schedule 1 customers,with approximately$1.5 million
carried forward for potential recovery in a future FCA period.
For non-residential customers,the Company recorded approximately$611,000 in deferred
revenue in the rebate direction. The proposed 0.0550 per kWh rebate is designed to return
approximately $618,000 to customers served under Schedules 11, 12, 21, 22, 31, and 32.
The Commission finds that the proposed FCA rates are supported by the record. The
residential surcharge reflects the difference between actual customer usage and the usage level
incorporated into the Company's rates, while the non-residential rebate reflects the corresponding
difference for non-residential customers. The record also demonstrates that the residential
adjustment has been appropriately limited pursuant to the Commission's 3%Annual Rate Increase
Test, with the amount exceeding the limitation carried forward rather than recovered through the
current FCA rate.
Accordingly, the Commission approves the Company's proposed modifications to
Schedule 75. Effective October 1, 2026, through September 30, 2027, the FCA surcharge for
residential customers served under Schedule 1 shall be 0.4050 per kWh, and the FCA rebate for
non-residential customers served under Schedules 11, 12, 21, 22, 31, and 32 shall be 0.0550 per
kWh.
ORDER
IT IS HEREBY ORDERED that the Company's FCA deferrals for residential customers
and non-residential customers for the period of July 1, 2025, through June 30, 2026, are approved
as filed.
IT IS FURTHER ORDERED that the Company's proposed tariff modifications to
Schedule 75 of a per kWh FCA surcharge rate of 0.4050 for residential customers, and a per kWh
FCA rebate rate of 0.0550 for the non-residential customers,both with an effective date of October
1, 2026, are approved as filed.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within 21 days of the service date of this Order regarding any matter decided in
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this Order. Within 7 days after any person has petitioned for reconsideration, any other person may
cross-petition for reconsideration.Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 24"' day of
September 2026.
G
EDWARD LODGE, PR IDENT
JO_ R. HAMMOND JR., COMMISSIONER
DAMN HA IE, COMMISSIONER
ATTEST:
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Commission Secretary
I ALegal\ELECTRIC\A V U-E-26-06_FCA\orders\A V UE2606_final_em.docx
ORDER NO. 37184 6