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Home My WebLink About20261013Staff Comments.pdf RECEIVED October 13, 2026 KELSEA E. ROSS IDAHO PUBLIC DEPUTY ATTORNEY GENERAL UTILITIES COMMISSION IDAHO PUBLIC UTILITIES COMMISSION PO BOX 83720 BOISE, IDAHO 83702 (208) 334-0318 IDAHO STATE BAR NO. 12050 Attorney for the Commission Staff BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF AVISTA ) CORPORATION'S GAS FIXED COST ) CASE NO. AVU-G-26-02 ADJUSTMENT MECHANISM (FCA) ) ANNUAL RATE ADJUSTMENT FILING ) COMMENTS OF THE COMMISSION STAFF COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission ("Commission"),by and through its attorney of record,Kelsea E. Ross,Deputy Attorney General, submits the following comments. BACKGROUND On July 31, 2026, Avista Corporation, doing business as Avista Utilities ("Company"), applied to the Commission requesting approval to recover the Company's natural gas fixed cost adjustment mechanism ("FCA") deferrals for the period of July 1, 2025, to June 30, 2026 ("Application"). Application at 10. Specifically,the Company requested approval of a"per therm FCA surcharge rate of 4.3690"for its natural gas residential group("Residential Group Rate") and "a per therm FCA surcharge rate of 1.981¢" for its natural gas non-residential group ("Non- Residential Group Rate"). Id. The Company requested the natural gas surcharge rates be effective from November 1, 2026, through October 31, 2027. Id. at 1. STAFF COMMENTS 1 OCTOBER 13, 2026 The FCA is a rate adjustment mechanism designed to break the link between the energy a utility sells and the revenue it collects to recover fixed costs' of providing service,thus decoupling the utility's revenues from its customers' energy usage. This decoupling removes a utility's incentive to increase sales to increase revenue and profits and encourages 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 groups, the residential and commercial rate groups. Furthermore, each rate group will be separated by new and existing customers. The new natural gas customers are assigned a lower FCA revenue-per-customer because incremental revenue associated with fixed production and underground storage facility costs are excluded from the FCA calculation for those customers. AVU-E-15-05 Stipulation and Settlement at 10. On June 15,2018,the Commission approved an addendum to the settlement that extended the terms of the Company's FCA pilot for an additional year. Order No. 34085. In 2019, the Commission authorized the Company to extend its FCA mechanism for both gas and electric customers through March 31, 2025. Order No. 34502. The Company represents that the proposed Residential Group Surcharge would be an increase of$2.0 million, or 3.0%, to its Schedule 101 customers and the Non-Residential Group Surcharge would be an increase of$0.4 million, or 2.2%, to its Schedule I I I and Schedule 112 customers. Application at 1-2. The Company explained that the monthly bill for residential natural gas customers who use approximately 66 therms per month would increase from$59.28 to $61.02, or$1.74 per month. Id. at 9. STAFF ANALYSIS Staff reviewed the Company's Application, calculations of its residential and non- residential FCA rates, supporting workpapers, and the proposed FCA Schedule 175. Staff confirmed that the Company's FCA natural gas deferral balances and rates were correctly calculated, and therefore, Staff recommends that the Commission approve the Company's Application and proposed FCA Schedule 175, as filed. ' "Fixed costs"are a utility's cost to provide service, such as infrastructure and customer service,which do not vary with energy use,output,or production,and remain relatively stable between rate cases. STAFF COMMENTS 2 OCTOBER 13, 2026 The Company proposed changing the FCA rate for the Schedule 101 customers from the current surcharge rate of 1.7370 per therm to the proposed surcharge rate of 4.3690 per therm. Id. at 1. The FCA rate for Schedules I I I and 112 customers is proposed to change from a surcharge rate of 0.677¢ per therm to a proposed surcharge rate of 1.98 1¢per therm. Id. at 1. The Schedule 101 rate change is an increase of approximately $2.0 million, or 3.0%. Id. The Schedules I I I and 112 rate change is an increase of approximately$0.4 million, or 2.2%. Id. at 2. The Company's calculated residential FCA surcharge would result in an incremental annual revenue increase of approximately $3.4 million, or 5.1%. Id at 8. 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 No. 33437 at 10. Therefore, application of the 3% limitation reduces the increase to approximately $2.0 million, with approximately $1.4 million carried forward for potential recovery in a future FCA period. Application at 8. Staff reviewed the Company's calculation and believes the Company reasonably applied the 3% annual increase limitation. The proposed non-residential FCA results in an approximately $0.4 million, or 2.2%, increase and is not subject to the 3% limitation. Id. The combined effect of the expiring FCA rates and the proposed rates is shown in Table No. 1 below. Table No. 1: Combined Effect of Present and Proposed FCA Rates Expiring Present FCA Proposed FCA Change in FCA Revenue Revenue Revenue Residential $1,315,119 $3,307,860 $1,992,742 Non-Residential $185,057 1 $541,504 $356,447 Drivers of Natural Gas FCA Surcharge The Company asserts that for the 12 months that ended June 30, 2026, the FCA deferral for residential and non-residential customers was the result of lower monthly use-per-customer than was embedded in the 2024 test year, which was caused by a warmer than normal winter. Id at 6. Additionally, Idaho customers have achieved energy efficiency savings from participating in the Company's Demand Side Management programs. Id. STAFF COMMENTS 3 OCTOBER 13, 2026 Residential Group Rate Determination For Schedule 101,the Company recorded$4,418,468 in the surcharge direction in deferred revenue for the 12 months that ended June 30, 2026. Id. The proposed surcharge rate of 4.3690 per therm is designed to recover$3,307,860 from the Company's Schedule 101,residential natural gas customers. Id. If the proposed surcharge is approved by the Commission, the deferral balance for the 12 months that ended June 30, 2026, plus interest through October, will be transferred to the regulatory asset balancing account. Id at 5. The balance in the regulatory asset balancing account will be reduced each month by the surcharge received from customers under the tariff. Id. at 6. Table No. 2 below summarizes the components of the Company's request: Table No. 2: Residential Natural Gas Customer Components July 1, 2025 - June 30, 2026, Deferred Revenue $4,418,468 Prior Year Residual Balance $124,091 Interest through 10/31/2027 $158,200 Revenue Related Expense Adjustment $14,353 Total FCA Deferral $4,715,112 Non-Residential Group Rate Determination For Schedules I I I and 112, the Company recorded$509,535 in the surcharge direction in deferred revenue for the 12 months that ended June 30,2026.Id. at 7. The proposed surcharge rate of 1.9810 per therm is designed to recover $541,504 from commercial and industrial customers receiving service under Schedules I I I and 112. Id. The Company's proposed rate is based on projected sales volumes for Schedules I I I and 112 during the November 1,2026,through October 31, 2027, amortization period. Id. If the proposed surcharge is approved by the Commission, the deferral balance, plus interest,through October,will be transferred to a regulatory asset balancing account. Id at 8. The balance in the account will be reduced each month by the surcharge received from customers under the tariff. Id. at 7. Table No. 3 below summarizes the components of the Company's request: STAFF COMMENTS 4 OCTOBER 13, 2026 Table No. 3: Non-Residential Natural Gas Customer Components July 1, 2025 -June 30, 2026,Deferred Revenue $509,535 Prior Year Residual Balance $14,024 Interest through 10/31/2027 $15,339 Revenue Related Expense Adjustment $2,606 Total Requested Surcharge $541,504 Overall Impact of Three Filings (FCA, EE Rider, and PGA) Effective November 1, 2026 The Company filed two other applications with rate adjustments and requested effective dates of November 1,2026. The Company's natural gas Purchased Gas Cost Adjustment("PGA"), Case No.AVU-G-26-03,was filed on July 31,2026, and amended on September 21,2026, ("PGA Application") and requests a decrease in natural gas revenues of approximately $3.0 million, or 3.6%. PGA Application at 1. The Company's Gas Energy Efficiency Rider ("EE Rider"), Case No. AVU-G-26-05 (`BE Rider Application"), was filed on July 31, 2026, which requests a decrease in the Company's overall natural gas revenues of approximately $1.4 million, or 1.6%. EE Rider Application Customer Notice at 1. Staff calculates that the net effect of Company's three filings(FCA, EE Rider Application, and PGA Application) would decrease natural gas revenues by approximately $1.5 million, or 1.8%. The average residential natural gas customer's monthly bill may decrease by$0.90 or 1.5%. Application at 2. Table No. 4 summarizes Staff's calculations of the overall impact of all three filings if approved as filed. Table No. 4: Summary of Overall Impact to Natural Gas Revenues Filing Changes in Revenues % Change FCA $2.4 million 2.8% PGA ($2.5 million) (3.0%) EE Tariff ($1.4 million) (1.6%) Total $1.5 million (1.8%) STAFF COMMENTS 5 OCTOBER 13, 2026 CUSTOMER NOTICE AND PRESS RELEASE The Company's press release and customer notice were included with its Application. Staff reviewed the documents and determined 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 October 13, 2026,which Staff believes provides customers with a reasonable opportunity to file timely comments. As of October 13, 2026, no customer comments have been submitted to the Commission. STAFF RECOMMENDATION Staff recommends that the Commission approve the Application and proposed FCA Schedule 175 as filed, with a Residential Group Surcharge rate of 4.3690 per therm and a Non- Residential Group Surcharge rate of 1.98 1¢ per therm, effective November 1, 2026. Respectfully submitted this 13th day of October 2026. Kelsea E. Ross Deputy Attorney General Technical Staff. Laura Conilogue I:\Utility\UMISC\COMMENTS\AVU-G-26-02 Comments.docx 2 The press release and customer notice addressed the following cases. Electric: AVU-E-26-05 Power Cost Adjustment (PCA), AVU-E-26-06 Fixed Cost Adjustment (FCA), and AVU-E-26-07 Bonneville Power Administration Residential Exchange (ResEx). Natural Gas: AVU-G-26-02 Fixed Cost Adjustment(FCA),AVU- G-26-05 Energy Efficiency,and AVU-G-26-03 Purchased Gas Cost(PGA). STAFF COMMENTS 6 OCTOBER 13, 2026 CERTIFICATE OF SERVICE I HEREBY CERTIFY THAT I HAVE THIS 131h DAY OF OCTOBER 2026, SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF , IN CASE NO. AVU-G-26-02, BY E-MAILING A COPY THEREOF TO THE FOLLOWING: ANNI GLOGOVAC PATRICK D. EHRBAR COUNSEL FOR REGULATORY DIRECTOR OF REGULATORY AFFAIRS AFFAIRS AVISTA CORPORATION AVISTA CORPORATION PO BOX 3727 PO BOX 3727 SPOKANE WA 99220-3727 SPOKANE WA 99220-3727 E-mail: patrick.ehrbargavistacorp.com E-mail: anni.glo og vac(cavistacorp.com avistadocketskavistacorp.com PATRICIA JORDA1q, SECRETARY CERTIFICATE OF SERVICE