20020909_261.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
DON HOWELL
RANDY LOBB
KATHY STOCKTON
TERRI CARLOCK
KEITH HESSING
DAVE SCHUNKE
TONY A CLARK
BEV BARKER
GENE FADNESS
WORKING FILE
FROM:LISA NORDSTROM
DATE:SEPTEMBER 6, 2002
RE:IN THE MATTER OF THE APPLICATION OF A VISTA CORPORATION
FOR A MODIFICATION TO THE RESIDENTIAL AND SMALL FARM
ENERGY RATE ADJUSTMENT CREDIT, CASE NO. AVU-02-
On August 30, 2002, A vista Corporation filed an Application seeking modification
of the Residential and Small Farm Energy Rate Adjustment Credit. A vista proposes that the
credit be increased from 337t per kilowatt-hour (kWh) to 0.347t/kWh effective October 12
2002. Avista states that the purpose of the energy rate adjustment credit is to pass through the
estimated benefits of the Residential Exchange Settlement Agreement between A vista and the
Bonneville Power Administration (BP A) to qualifying electric residential and small farm
customers. The proposed rate credit of 0.347t/kWh is based on estimated benefits for the second
contract year of the ten-year Agreement, which covers the period October 1 , 2002 through
September 30 2003, as well as an estimated true-up for the first contract year.
DECISION MEMORANDUM
THE RESIDENTIAL EXCHANGE SETTLEMNT AGREEMENT
The Northwest Regional Power Act establishes a Residential Exchange Program to
provide benefits to residential and small farm consumers of Pacific Northwest utilities. The
Settlement Agreement between A vista and BP A settles the parties ' rights and obligations for the
Residential Exchange Program for the ten-year term of the Agreement, October 1 2001 through
September 30, 2011. Under the Settlement Agreement, Avista received rights to 90 average
megawatts (aMW) of benefits from the federal hydropower system beginning October 1 , 2001.
Avista receives the 90 aMW in the form of both monetary and firm power sale benefits that are
expected to total $3 310 988.
Monetary Benefit:Avista receives 42 aMW (29 aMW Washington, 13 aMW Idaho)
of the 90 aMW of benefits in the form of a monthly monetary payment. The amount of the
payment is determined by taking the difference between BPA's Forward Flat-Block Price
Forecast ($38/MWh) and the residential load base rate at 100 percent load factor ($19.71/MWh)
multiplied by the annual amount of energy. The energy amount of the monetary benefit is fixed
for the first five years of the contract, October 2001 through September 2006. BP A shall, no
later than October 1 2005 , notify Avista of the amount of monetary benefit expressed in annual
aMW, for which payments will be made to Avista during the period October 2006 through
September 2011.
Firm Power Sale Benefit:The Settlement Agreement gives Avista 48 aMW (33
aMW Washington, 15 aMW Idaho) of firm power benefits. In September 2001 , Avista elected
to terminate the Firm Power Sale Agreement and convert it to monetary benefit for the first five
years.
A vista notes that the benefits credited to customers are different than the actual
benefits received from BP A under the Settlement Agreement due to differences in actual and
estimated retail loads. Also, BP A has a Cost Recovery Adjustment Clause (CRAC) that has
three components: "load-based" CRAC
, "
financial-based" CRAC, and "safety-net" CRAC. The
initial 42 aMW of monetary benefit is subject only to the safety-net CRAC component. If the
safety-net component is triggered, the amount of benefit received from BP A is reduced.
Furthermore, BP A has determined that a terminated Firm Power Sale Agreement converted to
monetary benefit (as Avista has done) is subject to all three CRAC components. Avista proposes
a true-up adjustment in its filing to true-up the difference between the benefits credited to
DECISION MEMORANDUM
customers and the actual benefits received from BP A during the first contract year, October 1
2002 through September 30, 2002.
ENERGY RATE ADJUSTMENT CREDIT
A vista proposes to pass through the estimated second contract year benefit and first
contract year true-up amounts on a uniform cents per kilowatt-hour basis to all qualifying
customers served under Schedules 1 , 12, 22, 32, and 48. When factoring this modified credit
into customer rates, the bill of a residential customer using 1 000 kWh per month would decrease
by 5.54%, or $3.47 per month. The percentage decrease for a customer using 600 kWh per
month would be 5.62%, or $2.08 per month. The decrease for a customer using 1 400 kWh per
month would be 5.50%, or $4.86 per month. The Company proposes an effective date of
October 12, 2002, which is 12 months from the date that the rate credit was initiated on October
, 2001.
STAFF RECOMMENDATION
Staff recommends that this case be processed under Modified Procedure with a
standard 21-day comment period.
COMMISSION DECISION
Does the Commission wish to process A vista s request to modify the Residential and
Small Farm Energy Rate Adjustment Credit under Modified Procedure with a 21-day comment
period?
M:A VUEO207 In
DECISION MEMORANDUM