20150909AVU to Staff 112.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 09/04/2015
CASE NO.: AVU-E-15-05/AVU-G-15-01 WITNESS: Don Kopczynski
REQUESTER: IPUC RESPONDER: Shawn Bonfield
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff - 112 TELEPHONE: [phone]

REQUEST:

The Company’s vendor, Kubra, charges a significantly higher transaction fee ($3.50) than other vendors used by other energy utilities serving Idaho customers. Does the Company have a contractual agreement with Kubra to provide this payment service to its customers? If so, what time period does that contract cover? Has the Company considered negotiating lower transaction fees or using other lower cost vendors? Please explain.

RESPONSE:

To clarify, the convenience fee currently assessed to Avista customers when making payment is only slightly higher than that of other energy utilities serving Idaho customers. The following table represents transaction fees and caps for the energy utilities in Idaho.

Avista Idaho Power Intermountain Gas Rocky Mountain Power Transaction Fee $3.50 $2.85 $2.75 $1.95 (Res)/$4.95(Bus) Transaction Cap $3,000 $2,500 $600 $600 (Res)/$1,000 (Bus)
Avista does have a contractual agreement with Kubra for payment processing services of payments made on the Company’s website, through its IVR, and over the phone with a Customer Service Representative. Kubra determines the amount of the fee based on historical average payment amounts and the transaction cap requested by the Company.

The transaction fee and cap is applicable to all Avista customers. If the fee was broken apart so that there was a separate residential and commercial fee, the residential fee would be lower and the commercial higher, due in part to the average payment by each customer class. For ease of use and customer communications the Company made the decision to offer a single fee and cap to all customers. If Avista were to request a lower cap from Kubra it would result in a reduction of the fee. However, Avista prefers to keep the cap at $3,000 in order to allow small and medium commercial customers to make payments with a small transaction fee. It is important to note that any changes in the fee or cap requested by Avista would require contract negotiations and possibly a contract extension beyond the current expiration date.

Avista’s current agreement with Kubra is set to expire on July 17, 2016. In May of 2015 the Company sent out a Request for Proposals (RFP) for a payment processing partner. Kubra participated in this RFP. The intent of the RFP was to see if there were any other providers in the marketplace that could provide the same services as Kubra at a lower cost or with better options for our customers. The RFP is still in progress.

As part of the RFP, Avista sought proposals for the elimination of convenience fees to residential customers all together. With this model the Company would pay any processing fees on behalf of the customer and request from the Commission to recover the costs through rates. For utilities that offer a program such as this, the processing fees are much cheaper as Visa and MasterCard offer a Utility Pay program. With this program Avista estimates the fee for debit and credit card payments would cost the utility approximately $1.50/transaction. Avista is in the process of putting together an accounting petition with support for the program to share with Commission Staff prior to making a filing.

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