20151202AVU to Staff 4.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 12/02/2015
CASE NO: AVU-G-15-03 WITNESS: N/A
REQUESTER: IPUC RESPONDER: Mike Dillon
TYPE: Production Request DEPARTMENT: DSM
REQUEST NO.: Staff-04 TELEPHONE: [phone]

REQUEST:

Please explain in detail why the Company believes the demand portion of the PGA is a more accurate representation of the total costs to deliver natural gas from the wellhead to the customer meter than variable transmission costs.

RESPONSE:

Avista locks in enough firm transmission capacity for a peak day and thus has very little variable natural gas transmission costs, approximately 0.1% of total retail cost. This does not accurately represent all of the costs of transporting gas from wellhead to the customer meter. Energy efficiency represents a long-term resource which will, in the long-term, reduce the amount of firm transmission capacity needed to serve customers. The Company believes that the demand portion of schedule 150 is a more accurate representation of the total costs to deliver natural gas from the wellhead to the customer meter and therefore that should be a component of the natural gas avoided cost calculation.

For example, in Idaho, Washington, and Oregon in 2014 Avista delivered about 317,600,000 therms of natural gas to retail customers and collected approximately $328,698,000 in retail revenue. The variable transmission to deliver the 317,600,000 therms of natural gas would be about $329,000. However, the actual costs to deliver that gas from well to meter is significantly more than that. Avista is paying approximately $111,665/day (349,674 Dth) to hold the transmission reservations on a winter day and $71,918/day(233,651 Dth) during the summer before flowing any natural gas to serve the north portion of Avista’s natural gas system. The demand portion of schedule 150 is a variable cost to customers which encompasses the fixed costs for Avista to deliver natural gas to customer’s meters.