20210810Technical Hearing Transcript Vol I.pdf

BEEORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE I?S RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE FOR ELECTRIC
AND NATURAI GAS CUSTOMERS IN THE
STATE OF IDAHO
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CASE NOS. AVU-E-21-01
AVU-G-21-01
BEFORE
COMMISSIONER KRISTINE RAPER (Presiding)
COMMISSIONER PAUL KJELLANDER
COMMISSIONER ERIC ANDERSON
PLACE:Commission Hearing Room
11331 [ilest Chinden B]-vd.Building 8, Suite 201-ABoise, Idaho
DATE:August 2, 2021
VOLUME II Pages 12 149
CSB REPORTING
C e rtifwd S h ofih an d Reporterc
Post Office Box9774
Boise,Idalro 83707
qsbreportin g@.vahoo. com
Ph: 208-890-5198 Fa:r: l-888-623-6899
Reporter:
Constance Bo.y,
CSR
ORIGINAL
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208.890.5198
APPEARANCES
For the Staff:dlohn R. [larnrnosd, ifr . , Esq.
Deputy Attorney General
11331 West Chinden Blvd.Building 8, Suite 201-A
PO Box 83120Boise, Idaho 83120-0074
Eor Avista Corporation:David iI. Meyer, Esq
Avista Corporation
PO Box 3721
Spokane, Washj-ngton 99220
For Idaho Conservation
League:
Benjamin iI. Otto, Esq.Attorney at Law
Idaho Conservation League
170 N. 6th StreetBoise, Idaho 83702
For Wal*Mart:tilornan M. Semanko , Esq.
and Vicki M. Baldwin, Esq
PARSONS BEHLE & LATIMER
800 West Mai-n, Suite 1300Boise, Idaho 83702
For the Community Action
Partnership of Idaho:
( Telephonically )
Brad M. PurdyAttorney at Law
20L9 North 17th StreetBoise, Idaho 83702
Eor the Idaho Forest
Group:(Of Record)
Ronald L. Iti].].iams
WILLIAMS BRADBURY, P.C
PO Box 388
Boise, Idaho 83701
For Clearwater Paper
Corporation:(Of Record)
Peter iI. Richardson, Esq.
R]CHARDSON ADAMS, PLLC
Post Office Box 1278Boise, Idaho 83702
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APPEARANCES
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208.890. s198
INDEX
WITNESS EXAMINATION BY PAGE
Elizabeth Andrews
(Avista )
Mr. Meyer (Direct)
Prefiled Direct Testimony
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71
Patrick Ehrbar(Avista)Mr. Meyer (Direct)
Prefiled Direct Testimony
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Terri Carlock
( Staff)
Mr. Hammond (Direct)
Prefiled Direct Testimony
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Michael Louis
( Staff )
Mr. Hammond (Direct)
Prefiled Direct Testimony
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EXHIBITS
NUMBER DESCRIPTION PAGE
FOR AVISTA CORPORATION:
19.Stipulation and Settlementin Case Nos. AVU-E-21-01
and AVU-G-21-01
Premarked
Admitted t6
FOR THE STAFF:
r-01.Professional Qualificationsof Donn Englj-sh
Premarked
Admitted 97
]-02.Professional- QuaIif icationsof Michael Louis
Premarked
Admitted L24
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INDEX/EXHIBITS
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CSB REPORTING
208.890.51-98
BO]SE IDAHO MONDAY AUGUST 2 2021 9:30 A. M
COMMISSIONER RAPER: Good morning. This
is the time and place set for a technical hearing in Case
Nos. AVU-E-21-01 and AVU-c-21--01-, further identified as
in the matter of the application of Avista Corporation
for authority to increase its rates and charges for
electric and natural 9as
in
service to el-ectric and natural
gas service customers the State of Idaho.
My name is Kristine Raper. I'Il- be the
Chair of today's proceeding. To my right is Commissioner
Eric Anderson. To my left is Commissioner, President,
Commander PauI Kjellander and we. comprise the Commissj-on
that will ul-timately render a final decisj-on in this
matter.
Housekeeping matters, for anyone who
hasnrt been to our Iove1y new building, bathrooms are out
the exit door this way [indicating], quick turn to the
Ieft, quick turn to the right. There's also water there.
The wirel-ess connection is Gemstate,
G-e-m-s-t-a-t-e-8 -3- 6- 0-7 .
We'II begin this morning by taking the
appearance of the parties. I wil-l note that Mr. Brad
Purdy who represents CAPAI is on the phone. He was i11.25
1,2 COLLOQUY
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CSB REPORTING
208.890. s198
We are in a unique timer so with a fever, werve got him
on the phone. That being said, if there were cross,
which I don't anticj-pate because this is a settlement
technical hearing, if there were cross, he would not be
permitted. You have to be in the Hearing Room. That is
our practice. That has been our hi-story, but I wanted to
acknowledge that he is on the phone and is a
representative for is the lawyer for CAPAI in this
will take the appearances of theproceeding,
remainder of the parties, beginning with the Applicant.
MR. MEYER: Thank you. It's been awhile,
so I've scripted this out. Itrs David Meyer and I work
for Avi-sta.
COMMISSIONER RAPER: Nicel-y done.
MR. MEYER: Thank you.
COMMISSIONER RAPER: Commission Staff.
MR. HAMMOND: John Hammond, Deputy
Attorney General-, for the Commission Staff.
COMMISSIONER RAPER: Thank you. Idaho
Conservation League.
MR. OTTO: Hi, I'm Ben Otto. I work for
the Idaho Conservation League and f'm rememberj-ng how to
use the microphones.
COMMISSIONER RAPER: Thank you, Mr. Otto.
Nice to have you here. Wal*Mart.
so we
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208 .8 90 . 5198
MR. SEMANKO: Hear me?
COMMISSIONER RAPER: Yes.
MR. SEMANKO: Hi, I'm Norm Semanko with
Parsons Behle & Latimer, and along with Vicki Baldwinr w€
represent wal*Mart.
COMMISSIONER RAPER: ThanK
here representing
Paper Corporatj-on?
is represented by
the Idaho Forest Group?
Clearwater I wil-I note
Peter Richardson. The Idaho Forest
you. Is anyone
Or Clearwater
for the record
Group is represented by Ronald Williams. Although the
partj-es are not present in the Hearing Room, they did
both slgn on to the settl-ement agreement in this case.
Okay, as
note that the testimony
a preliminary matter, I woul-d
of Staff witness Donn
being sponsored today by Ms. Terri Carlock.
if there are any objections to that in the room. We
didn't receive any on the record. Okay, seeing no
objection, we'1I al1ow Ms. Carlock to represent Mr.
English's testimony, and with that, we're ready for
first witness.
Letrs begin with Avista.
MR. MEYER: Thank you. I call to the
stand Ms. Andrews.
English is
I will ask
the
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ELIZABETH M. ANDRET/flS,
the instance of Avistaproduced as a witness at
Corporation, havi-ng been
truth, was examined and
first duly sworn to te1I the
testif ied as f ol-lows:
DIRECT EXAMINATION
BY MR. MEYER:
o
your employer.
A
0
Eor the record, please state your name and
Elizabeth Andrews and Avista.
And have you caused to be prepared and
prefiled testimony in support of
did.
the stipulation?
A Yes,
And
I
o have you made any changes or
corrections to that?
appear in
same?
A No, I have not.
O So if I were to ask you the questions that
that document, would your answers be the
A
O
They would.
And are you also sponsoring what has been
marked for identificati-on as Exhibit No. 19?
A Yes, I am
O Is that a true and correct copy of the
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MS. ANDREWS (Di)
Avista Corporation
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settlement agreement, together with all attachments?
A Yes, it is
MR. MEYER: With that, I move the
admission of Exhibit No. 19 and ask that her testimony be
spread as if read.
COMMISSIONER RAPER: Thank you. With no
the record asobjection, we wil-I spread the
if read and enter Exhibit L9
testimony on
into the record.
(Avista Corporatj-on Exhibit No. 19 was
admitted in evldence. )
(The following prefiled testimony of
Ms. El-izabeth Andrews is spread upon the record. )
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MS . ANDREWS (DJ- )Avista Corporation
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I. INTRODUCTION
O. Please state your name, employer, and business
address.
A. My name is El-izabeth M. Andrews and I am
employed by Avista Corporation ("Company" or "Avista") as
Seni-or Manager of Revenue Requirements in the State and
Federal Regulation Department, at 1411 East Mission
Avenue, Spokane, Washington.
O. Have you previously provided direct testimony
in this Case?
A. Yes. I filed direct testimony in this
proceeding that covered accounting and financial data in
support of the Company's Two-Year Rate PIan for the
period September L, 202L through August 31, 2023. In that
testimony I explained pro formed operating results,
incl-uding expense and rate base adjustments made to
actual operating resul-ts and rate base for the over the
two-year period.
0. What is the scope of this testimony?
A. The purpose of this testimony is to describe
and support the electric and natural- gas revenue
requirement elements of the Stipulation and Settlement
("Stipulation") filed on June 14, 202L, ds well as
explain why the Stipulation is in the public j-nterest.
The parties to the Stipulation include the Staff of the
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fdaho Public Utilities Commission ("Staff"), Clearwater
Paper Corporation ("Clearwater"), Idaho Forest Group, LLC
("Idaho Forest"), the Community Action Partnershl-p
Association of ldaho, Inc. ("CAPAf"), the Idaho
Conservation League (*ICL"),
These entities
and Walmart Inc.
("Wa1mart').are collectively referred to
as a "Party" and
in these proceedings. All
as the "Parties"and singularly
have appeAredrepresent
Parties to
all who
this case are in support of the Stipulation.
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Company witness Mr. Ehrbar dj-scusses the
non-revenue related el-ements of the Stipulation agreed to
by the Parties, such as electric and natural gas Cost of
Service, Rate Spread and Rate Design, as well- as other
Stipulation components related to the Power Cost
Adjustment (PCA) and Eixed Cost Adjustment (FCA)
authorized leveIs, as well as agreed-upon workshops and
meetings/conferences agreed to.
0. Are you sponsoring any exhibits?
A. Yes. I am sponsorlng Exhibit No . 1,9, which is a
copy of the Stipulation and appendices filed with the
Commission on June 14, 2021.
II. SUI,II{ARY OF ORIGINAI, FILING
O. Please describe the Company's general- rate case
requestr ds filed.
A. On January
Application with the
Avista filed an
for authority to j-ncrease
2027, and September 7,
gas service in ldaho. The
Company proposed an
or 0.1% for "Rate
29, 2021,
Commission
2022, for electric
September t,
and natura]
Company proposed a "Two-Year Rate Plan" with an increase
in electric base revenue of $24.8 million or 10.1? for
"Rate Year 1", and $8.7 mil]ion or 3.22 for "Rate Year
revenue effective
2". With regard to natura1 9ds, the
increase in base revenue of $52r 000
Andrews, Di 2Avista Corporation
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Year !", and $1.0 mj-l-Ilon or 2.2% for "Rate Year 2". By
Order No. 34930, dated February 23, 2A21, the Commission
provided notice of the Application and set an
intervention deadline for lnterested persons and parti-es
to intervene in the case.
In its filed case, Avlsta proposed that these
increases would be offset by the
Andrews, Di 2aAvista Corporation
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effect of Tax Customer Credit Tariff Schedules 76
(electric) and 1,76 (natural gas). Avista stated the
proposed
electric
amortization of approxi-mately $31. 3 mill-ion 1n
tax benefits from Schedule f6, beginning on
September t, 202L,
requested electric
about November 30,
would completely offset Avista's
2022. However, Avista also represented
see an $8.7
10-year amortj-zation of $12.1 million 1n
tax benefits from Schedule 116, beginning
$1.2 million202L, would resul-t in about
The Company stated that these benefits would
base rate
proposed (as-filed) $0.1 million natural gas
increase in Rate Year 7, decreasing natural gas
bill-s by about 1. 8%.
For Rate Year 2 Avista proposed to amortize its
customers'
rate relief for Rate Year 1 until
that its Idaho electric customers would
million (3.52) bill increase for Rate Year 2, effectj-ve
September L, 2022. Avista also stated the proposed
natural- gas
September L,
j-n benefits per
year.
offset the
"Natural- Gas Deferred Depreciation Expense" bal-ance of
about $0.9 million for one-year, effective September L,
2022 through August 31, 2023. Avista also proposed
offsetting the proposed $1.0 milllon revenue requirement
increase through Schedule 117. The Company represented
that, after applj-cation of Schedule L76 and 1,77 impacts,
customers would see a 0.1% increase, effective September
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The Company used the results of the electric
and natural gas cost of service studies (sponsored by Ms.
Knox and Mr. Anderson) as a guide to spread the general
increase. In this case, for electric operations, the
study showed Residential Servj-ce Schedule 01 and
Extra-Large General Service Schedule 25 provide less than
the overall rate of return under present rates. AII of
the other service schedules provide more than the overall
rate of return under present rates to varying degrees.
For
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natural gas operations, the study indicated that the
General Service Schedule 101 (serving most residential
customers) is providlng l-ess than the overa1l rate of
return (unity), and Large General-, and Transportation
service schedules (111/L1,2 and 1,46) are providing more
than unity.
O. What are the primary factors driving the
Company's need for an electric and natural gas change in
rates ?
A. The primary factors driving the Company's
electric and natural gas revenue requirements in Rate
Year 1 (RY1) and Rate Year 2 (RY2) is an increase in
net plant j-nvestment (including return on i-nvestment,
depreciation and taxes, and offset by the tax benefit of
interest) from that currently authorized. For RY1,
electric net power supply expenses also contribute to the
incremental e1ectric revenue requirement. Other changes
irnpacting
relate to
the Company's revenue requirement requests
increases in distribution, operation and
maintenance (O&M),and administrative and general (A&G)
electrj-c and natural- gas operations,expenses
compared
for both
to current authorized 1evels.
Electric specific capital investments for the
2020/2021 period incl-ude, among other things, upgrades to
certain major generating faciJ-ities, such as the Long
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Lake Stabillty Enhancement and Upgrade, CS2 Single Phase
Transformer, Cabinet Gorge Automation and Upgrades, and
Llttl-e Fal1s Powerhouse Redevelopment, ds wel-1 as capital
investment associated with the Cl-ark Eork and Spokane
River License agreements, discussed by Company witness
Mr. Thackston.
For natural 9ds, specific capital investments
over the period 2020/2021 period include, among other
things, capital investments related to the Gas Eacilities
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Replacement (Aldyl A) and Jackson Prairie Joint Project,
as well as Gas Replacement Street and Highway Program,
discussed by Company witness Ms. Rosentrater.
For power supply, on direct, as discussed by
Company witness Mr. Kalich, the level of ldaho's share of
power supply expense for RY1 pro formed into this case
had increased by approximately $7.1 million ($21.6
million on a system basis), from the l-evel currently
included in base rates. This j-ncrease in expense was
primarily due to
gas. In addition,
$3.6 million (of
incl-usion of the
power supply expenses
the $7.1 million) as a
were higher by
result of the
the increase in the price of natural
Palouse and Rattl-esnake wind power
trackedpurchase
through
agreements (PPA), which are currently
the Company's Power Cost Adjustment (PCA) .
III. SUM}'ARY OF SETTLEMENT STIPT'I.ATION
O. Wou1d you bri-efIy summarj-ze the Stipulation?
A. Yes. Under the terms of the Stipulation, as
di-scussed further by Mr. Ehrbar, Avista would implement
revj-sed tariff schedul-es designed to j-ncrease annual
base electric revenues by $10.6 million, or 4.3eo,
effective September L, 2021, and increase base revenues
by $8.0 millionr er 3.13, effective September 1-, 2022.
For natural gdsr the Parties agree that Avista shoul-d
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decrease natural gas base revenue by $1.6 miIlion, or
3.72, effective September L, 2021,, and j-ncrease natural
gas base revenue $0.9 mi1Iion, or 2.22, effective
September 1, 2022. These rate changes are designed to
provide retail revenues necessary to alIow the Company
the opportunity to earn the rate of return agreed to in
the Stipulation for RY1 and RY2.
Andrews, Di 5aAvista Corporation
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The Company would also
Tax Customer Credits avail-able of approximately $31.3
million for
9as, through
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electric and $L2.7 mill-ion for natural
Tariff Schedul-es 76 (electric) and
Parties agreed to apply the Tax
Customer Credit for electric and natura1 gas over the
Two-Year Rate
Specifically,
el-ectric, the
Plan as described by Mr. Ehrbar.l
as dj-scussed by Mr. Ehrbar, for RY1
Company would return an amount equal to the
base rate increase. Eor RY2 electric, the Company woufd
return the remainj-ng balance of the Tax Customer Credit,
offsetting the overal-l- base rate increase effective
September L, 2022. Eor natural gdsr the Company would
begin returning the Tax Customer Credit September l,
202L, over a ten-year period.2
As noted by Mr. Ehrbar, effective September t,
2027 an electric residential customer using an average of
892 kj-lowatt hours per month would see a $0.49, or
0.6?, increase per month for a revised monthly bill of
$86.L2. Effective September 7, 2022 an electric
residential customer woul-d see a $0.31, or 0.4%, increase
per month for a revised monthly bill of $86.43. For
naturaf 9ds, effective September l, 2027 a natura1 gas
resj-dentia.l- customer using an average of 63 therms per
month woul-d see a $2.30, ox 4.52, decrease per month for
return to customers the
separate
gas). The
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a revised monthly bill of $47.19. Effective September 1,
1 As described by Mr. Ehrbar, in recognition that certain rate
schedules are generally above their refative cost of service, the
Parties agree that Schedule 25P shoul-d receive 253 of the overall-
percentage base rate changes for the September 1, 2021, and September
L, 2022 base rate increases. In addition, Schedules 1-1- /12 shoul-d
receive 25* of the overall percentage base rate change for the
September 1, 2022 increase. Al-l- other schedules, except Schedufe l-,
should receive a uniform percentage of the overall- base rate revenue
increase. The remaining revenue requirement shou1d be spread to
Schedufe 1. For natural gas, the Parties agreed to a uniform
percentage of distribution margin increase on September 1, 202L and
September 1, 2022.2 Eor the Natura] Gas Tax Credit amortization, the Parties agree to
begin amortizing the Company's natural gas tax basis benefit over ten
years in this case and carrying through the Two-Year Rate Plan.
However, the amortization period of the remaining balance available
at the time of the Company's next general rate case wil-I be subject
to review and possible change of the amortization period at that
time.
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2022 a natural gas residential customer woul-d see a
$0.76, or 7.6e", i-ncrease per month for a revised monthly
bill of $47. 95.
In determining these revenue changes, the
Parties have agreed to various adjustments to the
Company's original filing, which are summarized in the
Stipulation, and described further in the testimony
bel-ow.
The Stipulation cal1s for an overall rate of
return of 7.058, determined using a capital structure
consisting of 50% common stock equity and 50% debtr drr
authorj-zed return on equity of 9.4% and cost of debt of
4.7%.
With regard to the Two-Year Rate P1an, during
the September l, 2027 - August 31, 2023 rate period
covered by this Stipulation, Avj-sta will not file another
electric or natural- gas general rate case to increase
base rates before February t, 2023, and any such rates
wil-l- not go into ef fect prior to September 1-, 2023. This
does not apply to tariff filings authorized by or
contemplated by the terms of the PCA, FCA, Purchased Gas
Cost Adjustment (PGA) , oy other miscellaneous
annual/regular tariff filings.
Lastly, the Parties agreed to certain rate
spread and rate design changes as descrj-bed by Mr. Ehrbar
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in his supporting testimony, as well as other Stipulation
components related to the PCA and FCA, as well as
agreed-upon workshops and meetings/conferences.
O. Please explain how the Parties arrived at the
Stipulation in this proceedinE.
A. The Stipulation is the product of settlement
discussions held virtually on May 19, 2027 and June 4,
202L. It represents a compromise among differing
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points of view, with concessions made by the Parties, to
reach a bal-ancing of interests. The Stipulation
represents a fair, just and reasonabl-e compromise of the
issues and is in the public interest. In addition, the
Sti-pulation is the end result of extensj-ve audit work
conducted through the discovery process3, including
various virtual conference discussions with Commission
Staff, and hard bargaining by the Parties in this
proceeding.
O. Why is the Stipulation in the public interest?
A. The Stipulation is in the "public interest" for
several reasons. The Stipulation was the product of the
give-and-take of negotiation that produced an
"end result" that is just and reasonable. In addition, it
is supported by the evidence, demonstrating the need for
rate adjustments to provide recovery of necessary
expendJ-tures and investment, the costs of which are not
of f set by a growth in sal-es margj-ns. The Stipulation
enjoys broad-based support from a variety of
constituencies, including CAPAI, Clearwater, Idaho
Forest, ICL, Walmart, and Staff.
In addition, with the use of Tax Customer
Credits to offset base rate changes over the Two-Year
Rate P1an, the Stlpulation provides no base rate change
overal-l for electric customers in RYL, effective
1_0
11
L2
13
1,4
15
16
t1
18
L9
20
2L
22
23
24
Andrews, Di 8Avista Corporation
25
31
1-
2
3
4
5
6
7
I
9
10
11
L2
13
14
15
16
1,7
18
19
20
21
22
23
24
September l, 202L, and an overall reduction
of 0.88 in RY2, effective September 7, 2022. For natural
9ds, customers will see an overall reduction of 4.5e" in
RY1, effective September L, 2021,, and an overall
increase of 1.5% in RY2, effective September 1-, 2022.
3Avista responded to over 218 production requests (including
sub-parts) from the Parties.
Andrews, Di 8aAvista Corporation
25
32
IV. ELECTRTC RE\IEMTE REQUIRB{ENT
EI,EMENTS OF THE STIPT'I,ATION
O. Pl-ease explain the derivatlon of the Electric
Revenue Requi-rement outlined in the Stipulation.
A. The Parties agreed that electric revenue
increases are necessary, effective September 7, 2021 and
September L, 2022. Whil-e Avista's filing requested
el-ectric revenue requirement increases of 24.8 million
and $8.7 mil1ion, effective September 7, 2021, and
September L, 2022, respectively, the Parties agreed-upon
adjustments, including the agreed-upon rate of return,
resul-t in recommended electrlc revenue increases of $10.6
mj-l-l-ion and $8.0 mi-11ion, respectiveJ-y. These j-ncreases
are designed to provide sufficient retail revenues for
the September L, 202L through August 31, 2023 two-year
rate period, which would provide the Company with the
opportunity to earn the return agreed to in the
Stipulation.
o.
regard to
Return on
A.
return of
Please explain the
an Authorized Rate
Equity.
The Parties have
7.05%, based on
Parties' agreement with
of Return, including the
agreed to an overall rate of
on equity of 9.42 r Errr
debt of 4.72.equity component at 50% and
By comparison, the Company's
a return
cost of
ori-gina1 filing requested an
1
2
3
4
5
6
1
B
9
10
11
L2
13
t4
15
76
71
18
19
20
2t
22
23
24
Andrews, Di 9Avista Corporation
25
33
overall
9.92, an
4.72.
a.
rate of return of 7.30?, a return on equity of
equity component of 503 and cost of debt of
Pl-ease provide an overview of the electric
revenue requj-rement adjustments agreed to by the Parties
for rates effective September t, 202L [Rate
Year 11.
A. The Parties agreed to an electric revenue
requi-rement effective
1
2
3
4
5
6
7
8
9
10
11
12
13
L4
15
16
77
18
19
20
2L
22
23
24
Andrews, Di 9aAvista Corporation
25
34
September 7,
below in the
202L, that reflects the adjustments shown
excerpted tabl-e from the Stipulation:
Table No. 1: Electric Revenue Requirement- RYl
As can be seen by a review of the individual
line descriptions provided within the summary table
above, the adjustments accepted for settlement purposes
cover a broad range of revenue and cost categories,
including the authorized rate of return. The indivj-dual
adjustments shoul-d not be vj-ewed in isolation; rather,
Andrews, Di 10Avista Corporation
a)
b.)
SUMMARY TABLE OF ADJUSTMENTS TO ELECTRIC REVENUE REQUIREMENT
EFFECTTVE SEPTEMBER I, 2O2I
. (000s ofDollars)
Revcnue
Requirement
Amount as Filed:
Adjustments:
Cost of Capital
Company 2020/2021Net Rate Base Updates
Miscelhneow Company Updates: Compass Reguhtory Amortizatiorl
Reguhtory Assessmant Fee, ColstrilCs2 Major Maintenance, Insurance and
Conversion Factor
Restate Incentives and Officer Labor to 2019 Test Year Actuals
Remove 2020 Non-Union and202l Labor Increases
Remove Certain 2021 Captal Projects
Remove AMA2022 Capital Additions
Adjwt Wildfne Expenses
Delay EIM Investment Recovery to September 1,2022
Update Net Pro Forma Power Supply Expense and Transmission Revenues
t) Uf,ate Pro Forma Gas Prices
ii.) Include Palouse and Rattbsnake Wind PPA Contracts in PCA
iii) Remove BPA Contract
iv.) Revise Transmission Revenues
Restate Uncollectibles
Fee Free Amortization
Miscelhneous Adjwtnents: Board of Director Expenses, Injubs and Damages,
Legal and Internal Auditing expenses, Cnins on Sale of Property, Information
Services expense and reclassification of other administrative and general
Adjusted Amounts Etrective Se ptembe r l,2O2l
$ 24,783 $ 864,166
(22341
$ 10,599 $
$
$
s
Rete Basc
2.816
)
)
$
$
$
$
$
$
$
$
$
s
s
$
$
(2,881)
640$
(s22)
(426)
(rj66)
(1,010) $
(1,438) $
(7?J)
(e22) $
1,878
(394e)
(383)
(2,s29)
(2e)
(58)
@a)
r)
m.)
35
1
2
3
4
5
6
7
I
9
10
11
72
13
1,4
15
16
17
18
t9
20
2L
22
23
24
25
they should be viewed in total- as part of the entire
Stipulation and are the result of hard bargaining and
compromise.
/
Andrews, Di 10aAvista Corporation
36
a. Wou1d you please elaborate on the individual
line items contained within Table No. l?
A. Yes. A description of the adjustments resulting
in the electric revenue requirement, effective September
l, 2027, follows.
Cost of Capital (line a. ) The overalL revenue
requirement
reduces the
reduction related to the cost of capital
$ 2.881 miIlion. The
revenue requirement for el-ectric by
agreed-upon cost of capital
in the tabl-e below:components are shown
Capital Weigh
CommonEquity
Total
Companv 202012021 Net Rate Base Updates - (line b. )
The 2020 and 2021 filed electri-c capJ-tal additions were
updated by Avista
to update informa
to reflect adjustments to net rate base
tion related Lo 2020 and 2021 (January
L, 2020 through August 3L, 202L) capital additions,
incl-uding related depreciation expense, ds well as the
impact on Accumulated Depreciation and Accumulated
Deferred Federal Income Taxes, to reflect balances as of
overall
Cost
50%
1
2
3
4
5
6
1
8
9
10
11
t2
13
74
15
16
17
18
1-9
20
2t
22
23
24
Andrews, Di 11-Avista Corporation
25
37
l_
2
3
4
5
6
1
I
9
10
11
L2
13
14
15
L6
t1
18
1,9
20
21-
22
23
24
August
revenue
base by
31, 2021. This adjustment increases the overall
requirement by $640r 000 and increases net rate
$2.816 mi11ion.4
4Included in this adjustment were updated information associated with
Avista's investment in its Colstrip Unit 3 and 4 generating
facilities for the period 2020 and 202!, resulting in a reduction to
net rate base of $2.081 mil-lion and reduced revenue requirement of
$36,000 in RY1. The Parties otherwise accept the Col-strip Regulatory
Amortization adjustment as fj-.1-ed by the Companyrincluding approval of
the Col-strip capi-tal- additions included in the Regulatory Asset
through 202L, and the removal of Col-strip transmission assets from
the cafculation of the Regulatory Asset and amortization. The
resulting regulatory amortization beginning September 1, 2021 totals
approximately $887r 000 annua1ly. See discussion on revised
depreciation rates bel-ow associated with the Colstrip Transmission
assets.
Andrews, Di 11aAvista Corporation
25
38
1
2
3
4
5
6
1
B
Y
10
11
L2
13
l4
15
1,6
t1
1B
79
20
2L
22
23
24
Miscellaneous Company Updates (line c. ) This
adjustment reflects adjustments to expenses to update
informatj-on rel-ated to removal of the expiring Project
Compass regulatory amortization, to correct the
regulatory fee expense calculation and update for the
current IPUC 202L regulatory assessment fee, including
its impact on the Revenue Conversion Factorr ds well as
adjustments to reflect actual major maintenance expense
associated with the Company's Col-strip generation plant
and actual- insurance expense. This adjustment decreases
the overal-l- revenue requirement by $522, 000.
Restate Incentives and Officer Labor to 2079 Test
Year Actual-s (l-ine d. ) This adjustment refl-ects the
sj-x-year average incentives as proposed
and 2020 incremental officer labor. Thisby the Company
adjustment refl-ects actual incentive and officer l-abor at
2019 test period l-evels. This adjustment decreases the
overal-l revenue requirement by $426,000.
Remove 2020 Non-Union and 202L Labor Increases -
removaf of the
(line e. ) This adjustment
union and non-union labor
Company, reflecting only
non-unj-on employees and
adjustment decreases the
$1. 365 mill-ion.
removes 2020 non-union and 202L
increases inc1uded by the
labor salary levels of 20L9 for
2020 for union employees. This
overal1 revenue requirement by
Andrews, Di 12Avista Corporation
25
39
1
2
3
4
5
6
7
8
9
10
11
L2
13
74
15
t6
77
18
19
20
2t
22
23
24
Remove Certain 202L Capltal Projects (Iine f. )
This adjustment removes certain capital investment.s
related to: 1) Rattlesnake F1ats Interconnection and
Transmission,/Substation projects; 2) 5? of certain 1S/IT
investments; and 3) 508 of the Customer Faci-ng Technology
projects. Eor settlement purposes, these projects
have been removed from this rate case and will be
reviewed in the Company's next
Andrews, Di 1,2aAvlsta Corporation
25
40
1
2
3
4
5
6
1
I
9
10
11
72
13
74
15
16
L7
18
19
20
2T
22
23
24
general rate case.5 This adjustment decreases the
overal-I revenue requirement by $1.01 million and reduces
net rate base by $4.613 mill-ion.
Remove 2022 AMA CapitaL Additions (l-ine q. ) This
adjustment removes the Company's capital additions beyond
August 3L, 202L, included by the Company for Rate Year t,
reflecting only plant investment prior to the September
7, 202L, effective date. This adjustment decreases the
overall revenue requirement by $1.438 million and reduces
net rate base by $22.341 million.
Adjust Wildfire Expenses (line h. ) This adjustment
reflects actual wildfire expenses for the period
September 2020 through December 2020, ds well- as expected
amounts from January 2021, through August 2027. The
agreed-upon wildfire expense amount of $1.471 million
estabLishes the "base" wil-dfire expense level- for
Rate Year 1. This adjustment decreases the overall
revenue requirement by $121,000.
As discussed in paragraph 71 of the Stipulation, the
Parties agree to a two way Wildfire O&M Expense Balancing
Account to defer the difference in actual O&M Wildfi-re
expenses, uP
approved in
2 of $1.836
or down, from the authorized "base" l-eve1
Rate Year 1 of $1.471 million (and Rate Year
mil-lion discussed below) . The bal-ance in the
deferral will be included for review and recovery i-n
Andrews, Di 13Avista Corporation
25
4t
1
2
3
4
5
6
7
8
9
10
11
L2
13
14
15
76
77
18
19
20
21
22
23
24
future general rate cases.
Del-ay EIM Recovery to September L, 2022 (Iine i. )
This adjustment removes Energy Imbal-ance Market (EIM)
invesLment expected to be in service by the
21 March L, 2022 "Go-Live" date. This investment is
delayed for recovery until September 7, 2022. This
adjustment decreases the overall revenue requirement by
5 Each of the identified projects were descrj-bed in the direct
testimonies of Company witnesses Ms. Rosentrater, Mr. Kensok and Mr
Magalsky.
Andrews, Di 13aAvista Corporation
25
42
1
2
3
4
5
6
1
I
9
10
11
72
13
74
15
t6
77
18
L9
20
27
22
23
24
i922,000 and reduces net rate base by $3.891 million.
Power Supply and Transmission Related Net Expenses
(Iine j. ) This item updates net Pro Forma Power Supp1y
Expense and Transmission Revenues as follows:
Update Pro Eorma Gas Prices (l-ine i. ) Thisa
a
o
o
adjustment restates pro forma power supply net
expenses to reflect updated natural gas
forward prices for September 2027 through
August 2022 contract months. This adjustment
increases the overall revenue requirement by
$1.878 mi11ion.
Palouse and Rattlesnake Flats Wind - (line ii.)
This adjustment refl-ects the removal of the
Palouse Wind and Rattlesnake Wind Power
Purchase Agreements ("PPA") net expenses from
base power supply expense but alIows actualcosts to be refl-ected in the PCA. This
adjustment decreases the overa1l revenue
requirement by $3.949 million. See further
discussion at Exhibit No. L9, Paragraphs 10
(Pal-ouse) and 11 (Rattlesnake) for further
information.
Remove BPA Contract (Iine iii. ) This
adjustment reduces power supply expenses toref1ect not having contracted with BPA for anadditional 50 MW of firm transmission rightsfor Coyote Springs 2. The Company was recentlynotified by BPA that they retracted theiroffer for transmission services, indicating a
l-ack of avaj-labi1ity over that path. This
adjustment decreases the overal-l- revenue
requirement by $383, 000.
Revise Transmission Revenues (line iv. ) This
adjustment revi-ses transmission revenues torefl-ect Idaho's share of : 1) a long-term firmpoint-to-point transmission servj-ce agreementwith Idaho Power for 100 MW of service
commencing on May 7, 2021,, and continuing
through April 30, 2026 ($829,000 Idaho) ; 2)
Andrews, Di t4Avista Corporation
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43
1
2
3
4
5
6
7
8
9
four (4) months of a second long-term firmpoint-to-point transmission service agreementwith Idaho Power for 100 MW of servi-ce
commencing on May L, 2022, and continuing
through April 30, 2027 ($276,000 Idaho); 3)j-nclusion of the Company's FERC Transmission
General Rate Case revenue increase expected to
begin October L, 2021- ($1.399 million ldaho);
and 4) a correction to transmissj-on revenue
from the original Application ($25,000 Idaho).
These resultlng changes in transmission
revenues will also be reflected in the PCAauthorized base effective September t, 202t.
This adjustment decreases the overall revenue
requirement by $2.529 mill-ion.
10
11
1-2
13
1,4
15
t6
L7
18
L9
20
21
22
23
24
Andrews, Di !4a
Avj-sta Corporation
25
44
1
2
3
4
5
6
1
B
Y
10
11
t2
13
t4
15
16
L1
1B
19
20
27
22
23
24
Restate Unco]l-ectibl-es (1ine k. ) Avista has
to defer uncol-lectibleauthority
embedded in current rates i-nto a
expense
covrD-1 9
sets the
above the amount
Regulatory
uncollectible
the previous
overall- revenue
Asset Account.6 This adjustment
expense amount at the amounts approved in
rate case. This adjustment
requirement by $29, 000.
Fee Eree Amortization (Iine 1. )This adjustment
Fee Free deferralrevises the amortization expense of the
bal-ance ($297,000) to refl-ect a three-year amortization,
beginning September L, 202L, of approximateJ-y $91,000
annual1y.7 This adjustment decreases the overall- revenue
requirement by $58,000.
Miscellaneous Adjustments (line m. ) This
adjustment reflects the net change in operating expenses
related to: 1) removing Board of Director expenses and
fees ($189,000) ; 2) removing 1ega1 expenses allocated to
Idaho electric ($50,000) ; 3) including Idaho's share of
the gains on the sal-e of el-ectrj-c property in 2079
($22,000); 4) removing internal audit expenses ($49,000);
5) removing injury and damages expenses from the six-year
average ($4,000); 6) removing IS/IT expenses to refl-ect
actual expenses in 2020 ($86,000); and 7) removing other
miscellaneous A&G expenses ($26,000). The net effect of
this adjustment decreases the overall revenue requirement
decreases the
Andrews, Di 15Avista Corporation
25
45
1
2
3
4
5
6
1
I
9
t_0
11
L2
13
t4
15
t6
77
18
1,9
20
2t
22
23
24
by $ 462,000 .
a. Please summarize
adjustments on the el-ectric
the impact of these
revenue requirement agreed to
l, 2027 [Rateby the Parties effective September
2l Year 11.
6 See Case No. GNR-U-20-03, including Consolidated Avista Case Nos.
AVU-E-20-03 and AVU-G20-03.
7 The Fee Free program allows customers to make payments by credit or
debit card without payi-ng a service fee. This program was approved in
Commission Order No. 33494, Case Nos. AVU-E-16-01
and AVU-G-16-01 and implemented in February 201,7.
Andrews, Di 15aAvista Corporation
25
46
A. The adjustments discussed above, and agreed to
by the Partj-es, reduce Avista's proposed RY1
$24.8 million
electric
revenue requirement increase of to an
electric revenue requirement
resulting in an overall 4.3%
effective September L, 2027.
by the Parties for electric
increase of $10.6 miIlion,
electric base rate increase,
The net rate base agreed to
services is $836.1 million.
Mr. Ehrbar discusses the overall net bill
impact to
Schedul-e
customers in RY1 after the effect of Tariff
76 "Tax Customer Creditr" whi-ch returns an
the baSe rate increase of $10.6 mi11ion,amount equal
resulting in
to
an overall 0.0% bill impact to customers
September
o.
electric
t, 202L.
Pl-ease provide an overview of the incremental
revenue requirement
September 1
components agreed
, 2022 lRate Year
to an incremental
to by the
Parties effective 2)
A. The Parties agreed el-ectric
revenue increase effective September t, 2022 (RY2), that
reflects the adjustments shown below in the excerpted
table from the Stipulation:
1
2
3
4
5
6
1
8
9
10
11
12
13
74
15
15
l7
18
19
20
2t
22
23
24
Andrews, Di 16Avista Corporation
25
47
1_
2
3
4
5
6
1
o
9
10
11
72
13
t4
15
16
71
18
19
20
27
22
23
24
25
SUMMARY TABLE OF ADJUST}TENTS TO ELECTRIC REVENUE REQUIREMENT
ETFECTIVE SEPTEMBER I, 2022
(000s of Dollen)
Reveuue
Requirement Rete Base
$ 836,077Rate Base Amount Efrective September 1,7021
Incremental Revenue Adjustment to September lr 202l Rate Change
(see Tabel No. 1):
a.) AddElMlnvestment
b.) Add Increrpntall0 DAZ Relaad Capital and Expenses:
i capital Additions
ii Property Tax Expense on 2021 Pbnt Additions
in 202012021 Labor Increase
iv. ISAT Expenses
v. Wildfire Expenses
vi Colsnip/CS2 Major Maintenance
vii. ColstipAmortization
September l,2022Incrcmental Revenue Adlustment and Rate Base
Amount (above Septemberl,202l Rate Change - see Table No. 1)
$
$ 8,ooo
$ 3,891
$ 27948
$ I,E90
$ 869,E06
922
4266
786
924
20t
365
381
155
Table No.2: Electric Revenue Requirement- RY2
O. P1ease elaborate on the individual l-ine i-tems
contained within Table No. 2.
A. A descri-ption of the adjustments resulting in
the el-ectric revenue requj-rement, effective September t,
2022 for RY2, fo1lows.
Add EIM fnvestment (Iine a. ) Effective September
1, 2022, this adjustment
will be in service by the
refl-ects the EIM investment that
March 7, 2022, "Go-Live"
date. This adjustment increases the overall- revenue
requirement by $922,000, and increases net rate base by
$3.891 million in Rate Year 2, above Rate Year 1 levels.8
Add Incremental- 2021/2022 Rel-ated Capital and
Andrews, Di 71Avista Corporation
4B
1
2
3
4
5
6
7
8
9
10
t6
11
t2
13
74
15
1,1
18
19
20
2L
22
23
24
Expenses to Rate Year 2 (incremental above Rate Year 1)
(line b. ) This item incl-udes certain i-ncremental
increases tn 202! and 2022 related to capital and
expenses in RY2, above RY1
SSee further discussion regarding EIM at paragraph 18of the
Stipulation. Currently fdaho's share of its incremental EIM O&M
expenses are being deferred per Order No. 34606 in Case No.
AVU-E-20-01 until- the expected "go l-ive" date March 1, 2022. The
Parties agree that effective with the expected "glo Iive" March 1,
2022 dafe, the Company will begin to refLect Idaho's share of
incremental EIM O&M expenses through the PCA up to Idaho's share of
EIM benefits that al-so wil-1 fl-ow through the PCA. Any incrementaf EIM
O&M expenses exceeding EIM benefits would continue to be deferred for
review and determination of recovery in a future proceeding.
levels r ds f oll-ows :
Andrews, Dl 71aAvista Corporation
25
49
1
2
3
4
5
6
1
8
9
10
11
72
13
74
15
16
L1
18
79
20
21-
22
23
24
a Capital Additions (line i. ) This adjustment
202t capital additions from
through August 31, 2022,
September L, 2022, effective
incl-udes certain
September 7, 2027
prior to the RY2
date. This adjustment increases the overall
revenue requirement by $4.266 million and
increases net rate base by $27.948 milIion.
a Property Tax Expense on 2027 Capital Additions
a
(Iine ii.) This adjustment includes
incremental property tax expense associated
with 2021 capital additions at exi-sting levy
rates. This adjustment increases the overall
revenue requirement by $786,000.
2020/2021 Labor Increases - (1ine iii.) This
adjustment includes 2020 non-union annualized
non-executive l-abor increases and 2021, union
annual-ized labor increases. This adjustment
increases the overall revenue requirement by
$924, 000.
a IS/IT Expenses (line iv. ) This adjustment
reflects i-ncremental 2021,/2022 increases
primarily associated with changes in
contractual agreements, pre-paid costs, or the
continuation of costs for products and services
that will increase beyond the RY1 levels.
Andrews, Di 18Avista Corporation
25
50
This adjustment j-ncreases the overalL revenue
requirement by $201-, 000.
a Wildfire Expenses (line v. ) This ad j ustment
reflects incremental 2027/2022 expected
wildfire expense increases. As noted above, the
Parties agree to a two-way Wildfire O&M Expense
Balancing
1
2
3
4
5
6
7
8
9
10
11
t2
13
14
15
16
11
18
19
20
2L
22
23
24
Andrews, Di 18aAvista Corporation
25
51
1
2
3
4
5
6
1
8
9
t_0
11
1-2
13
1,4
15
1-6
t1
18
19
20
2!
22
23
24
a
o
Account to defer the difference in actual O&M
Wildfire expensesr up or down, from the
authorj-zed "base" Ieve1, revised t.o $1.836
mill-ion for RY2. This adjustment increases the
overal-l revenue requirement by $365,000. The
balance in the deferral will be included for
review and recovery in future general rate
CASCS.
Colstrip /CSz Major Maintenance (l-ine vi. )
This adjustment revises the Colstrip/CS2
Maintenance expense l-evel- included in RY1 to
reflect the revised expense for RY2. This
adjustment adjusts the Colstr,.p/CS2 Maintenance
expense to one-third of each amount deferred
for calendar years 2019 through 2027. This
adjustment increases the overall revenue
requirement by $381, 000.
Colstrip Amorti4ation - (l-ine vii. ) This
adjustment refl-ects the recovery of Avista's
investment 1n the Colstrip Units 3 and 4
generating facilities (reflecting an
accelerated depreciation rate of 2027),
including the Colstrip capital- additions
between September 1-, 2022 and August 31, 2023
on an AMA basj-s in the Colstrip Regulatory
Andrews, Di 19Avista Corporation
25
52
1
2
3
4
5
6
7
8
9
10
11
72
13
L4
15
1,6
t7
18
19
20
27
22
23
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Asset, for recovery over its authorized
amortization perj-od. This adjustment increases
the overall revenue requirement by $1551 000 and
increases net rate base by $f.89 miI1ion.9
9 Included in this adjustment were updated information associated
with Avista's investment in its CoJ-strip Unit 3 and 4 generating
facil-ities for the period September 2022 through August 2023,
resulting in an increase in RY2 net rate base from that as fiLed of
$591r000, and a reductj-on to as-filed revenue requirement of $12r000.
As noted above, the Parti-es otherwise accept the Colstrip Regulatory
Amortization adjustment as filed and updated by the Company,
including a pproval of the Colstrj-p capital additions incLuded in the
Regulatory Asset through August 2023. The resul-ting regulatory
amortization beginning September L, 2022 Lotals 9929,000 annualIy.
See afso discussion on revised depreciation rates, j-mmediately below,
associated with the Col-strip Transmission assets.
Andrews, Di 19aAvista Corporation
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adjustments on
by the Parties
Year 2).
requirement of $8.7 mil-l-ion to $8.0
a 3.1% el-ectric base rate i-ncrease,
1 2022. The Net rate base agreed to
a. Pfease summarize the impact of these
the electric revenue requirement agreed to
effective September 7, 2022 [Rate
A. The adjustments discussed above, and agreed to
by the Parties, reduces Avista's RY2 electric revenue
million, resulting in
effective September
by the Parties for
electric is $869.8 mi11ion.
Mr. Ehrbar di-scusses the overa]I net bil-l-
impact
Tariff
percentage
Schedul-e 7 6
to customers in RY2 after the effect of
"Tax Customer Creditr " which returns
the total base rate increase from RYl
RY2 ($8.0 mil]ion) , totaling $18.6
in an overall- RY2 rate decrease for
an amount equal to
($10.6 mil-l-ion) and
mi11ion, resulting
customers of 0.8%.
V. COLSTRIP ACCOT'NTING
CEA}IGE IN TRAI{SMISSION DEPRECIATION RATES
O. Please describe the Colstrip Unit 3 and 4 Pro
Forma Amortization Adjustment and the change of
accounting for Col-strip transmission assets agreed to by
the Parties.
A. As a part of the Stipulation the Parties agreed
Andrews, Di 20Avlsta Corporatj-on
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to Avista's Colstrj-p Unit 3 and 4 account j-ng for capital
additions and arnortization of the regulatory assetr ds
filed by the Company and pro formed j-n eLectric
Adjustments (3.1-4) and (22.07 ) "Pro Forma Colstrip
Amortj-zation" for RYL and RY2. The Company's as-filed
adjustments were reduced by agreed-upon Colstrip capital
and expense updates
/
Andrews, Di 2Aa
Avl-sta Corporation
55
reflecting actual 2020 capital- additions and 2021/2022
capital addition updates provided during the process of
the case.
Pro Forma Colstrip Amortization Adjustments and
the accounting
below, reflects
agreed to by the Partiesr ds descrj-bed
modification for
the approved treatment (with one
transmission assets) by the IPUC to
investment in the Colstrip Units 3 and 4recover Avista's
generating facilities after refl-ecting an accelerated
depreciation rate of 2021. This adjustment also reflects
the recovery of Colstrip capital additions between
January L, 2020 and August 31, 2023r oD an AMA basis for
RY1 and RY2 within the Colstrip Regulatory Asset.
In the Company's filed case, it explained that
the Commission' s prior approval of the Colstrip Unit 3
and 4 accounting, per Order 34216 in Case No. AVU12
E-18-03, included the deferral- of Colstrip generation and
transmission assets with acceferated depreciation to
2027, and the deferral of the excess amount of
depreciation not included in customers' rates, be
deferred in the Colstrip Regulatory Asset, with an
amortization recovery over 30 years. After the accounting
had been approved by the IPUC in Case No. AVU-E-18-03,
the Company determined that the Col-strip transmission
assets woul-d have other uses after the Colstrip
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Andrews, Di 2lAvista Corporation
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generating facility was no longer operational for
Therefore, in this case theAvista's purposes
Company proposed,and the Partj-es support, removing the
transmission assets from the accelerated
depreciation,/deferral accounting that has been approved
by the Commission to date.
To accomplish this change in accounti-ng, the
Company adjusted the depreciation expense to be
calculated on the Colstrip Transmissj-on assets using the
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Andrews, Di 27aAvista Corporation
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approved depreciation rates on non-Colstrip transmission
assets. Due to the length of
amortizati-on
depreciation rates versus
the regulatory period belng simJ-1ar, there
j-s little impact of this change on the annuaf revenue
requj-rement recovered from customers, but for moving
expense from an amortization expense back to a
depreciation expense. This a1lows for the Colstrip
transmission assets to be useful- and depreciated after
2021 .
The Parties, therefore, request that the
Commission approve the depreciation rates provided in
Table No. 3 below, with the approval of the Stipulatj-on,
thereby allowing Avista to properly record depreciation
expense on its books for the Colstrip transmission assets
as agreed to by the parties. lo
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Table No.3 -llsnsmissionAssets
Colstrip
TransrnissionAssets
Asset (etegory
ED.AN.350300
ED.AN,3504txl
ED.4N.352000
E0.4N.353000
ED.AN.353100
E0.4N.354000
ED.4N.355000
ED.AN.356000
ED.AN.359000
Edsting
Depreciation
Rates
6.02o/o
6.02o/o
'11 19%
5 69%
5 69%
6.75%
8.070/o
8.25o/o
5.620/o
New
Depreciatlon
Rates (1|
1.07o/o
1 199o
1 63%
2.410t;
2.41o/o
1,51Yo
1.93%
1.9070
1.41%
(1)Transmission asset depreciation rates above v,/ere
approved in Docket AVU-E-18{3 for all non'Colstrap
transmission assets.
10 rhe revised depreciation rates in Table
specifically ca1led out in the Stipulation
acknowledged and agreed to by the Parties.
specifically addressed and approved in any
Stipulation.
No. 3 were not
but were subsequently
This change should be
Order approving the
Andrews, Di 22aAvista Corporation
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vr. NATURAT GAS REVENTTE REQUTREMENT ELEMENTS
OF TEE STIPT'I.ATION
O. Please explain the derivation of the Natural-
Gas Revenue Requirement outlined in the Stipulation.
A. The Parties agreed that natural gas revenue
changes are necessary, effectj-ve September t, 2021 and
September l, 2022. While Avista's filing requested
natural gas revenue requi-rement increases of $52r000 and
$950,000, effective September L, 2021, and September L,
2022, respectively, the Partj-es agreed-upon adjustments,
incl-uding the agreed-upon rate of return, resu1t in a
naturaf gas revenue decrease of $L.621 million effective
September 7, 2027, and a natural gas revenue increase of
$0.939 million effective September t, 2022. These changes
in revenue are designed to provide sufficient retail
revenues for the September l, 2021 through August 3L,
2023 two-year rate period, which woul-d provide the
Company with the opportunity to earn the return agreed to
in the Stipulation.
O. Is the Authorized Rate of Return, including the
Return on Equity the same as that explained above for
electric?
A. Yes. Consistent wlth that for electric, the
Partles have agreed to an overall rate of return of
7.05%, based on a return on equity of 9.42, dh equity
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Avj-sta Corporation
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component at 50?
O. Please
and cost of debt of
provide an overview
4.12.
of the natural gas
revenue requirement adjustments
for rates effective September I
A. The Parties agreed to
requirement effective
agreed to by
, 2021 [Rate
the Parties
Year 11.
a natural gas revenue
Andrews, Di 23aAvista Corporation
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September 7,
bel-ow in the
the adjustments shown
the Stipulation:
Table No. 4: Natural Gas Revenue Requirement - RYl
O. Wou1d you please elaborate on the individual
l-ine items contained within Table No. 4?
A. Yes. A description of the adjustments resulting
in the natural gas revenue requirement, effective
September I, 202L, fol1ows.
Cost of Capital- (Iine a. )As previously
reduces thedescribed (see above). This adjustment
overall revenue requirement by $578r000.
Company 202012021 Net Rate Base Updates - (line
b. ) The 2020 and 2021 filed natural gas capital additions
2021, that reflects
excerpted table from
b.)
c.)
d.)
e.)
r)
c.)
h.)
i.)
SUMMARY TABLE OF ADJfTSTMENTS TO NATURAL GAS REVENUE REQTTTREMENT
EFFECTIVE SEPTEMBER I, 2O2I
(000s ofDollan)
Rcvcnue
Requiremcnt Rate Base
Amount as Filed:
Adjustments:
Cost of Capital
Company 2020/2021Net Rate Base Updates
Miscellaneous Company Updates: Regulatory Assessmant Fee, Insurance and
Conversion Factor.
Restate Incentives and Officer Labor to 2019 Test Year Actuals
Remove 2020 Non-Unbn and202l Labor Increases
Remove Certan 2021 Capital Projects
Remove AMA 2022 Capital Addft bns
Restate Uncolbctibhs
Fee Free Amortization
Mbcelhneous Adjustnents: Board of Dtector Expenses. Lrgal Intemal
Auditing and Informatlm Services expemes, and recbssificatbn of other
adminisrative and general expenses
Adjusted Amounts Eftctive Scptcmber 1,2021
52 $ 173,485
(14r
(l,l I
$ (1,521) $ 17
s
$
$
$
$
$
$
$
$
$
$
(578)
(17) $
7
(l0e)
(436)
(345) $(os
56
(7e)
(166)
(
Andrews, Di 24Avista Corporation
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were updated by Avista to reflect adjustments to net rate
base to update information related to 2020 and 2021
(January 1, 2020 through August 31, 202!) capital
additions, including related depreciation expense,
Andrews, Di 24aAvista Corporation
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as well- as the impact on Accumulated Depreciation and
Accumulated Deferred Federal Income Taxes, to ref1ect
balances as of August 31, 2021. This adjustment decreases
the overall revenue requirement by $17r 000 and decreases
net rate base by $141,000.
Mlscellaneous Company Updates (line c. ) This
adjustment refl-ects adjustments to expenses to correct
the regulatory fee expense calcul-ation and update
for the current IPUC 2021 regulatory assessment fee,
including its impact on the Revenue Conversion Factorr €IS
well- as adjustments to reflect actual- insurance expense.
This adjustment j-ncreases the overall revenue requirement
by $7,000.
Restate Incenti-ves and Officer Labor to 20L9
Test Year Actuals (line d ) This adjustment reflects
average incentives as
2020 incremental officer
the removal of the six-year
proposed by the Company and
1abor.
officer
This adjustment
fabor at 2019
refl-ects actual- incentive and
test period l-evels.
decreases the overal-l- revenue requirement
Remove 2020 Non-Uni-on and 202L
This adjustment
by $109,000.
Labor Increases
(l-ine e. )
2021, union
This adjustment removes 2020 non-union and
and non-union labor increases inc1uded by the
of 2019 forCompany, reflecting
non-union employees
l-abor salary levels
and 2020 for uni-on employees. This
Andrews, Di 25Avista Corporation
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adjustment decreases the overall revenue requirement by
$436,000.
Remove Certain 202! Capital Projects (line
f. ) This adjustment removes certain capital investments
related to: 1) 5% of certain IS/IT investments; 2) 508 of
the Customer Facing Technology projects; 3) ER 3002
Regulator Station Replacement investment; 4) ER 3005
Non-Revenue (Eailed Equipment) investment;
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5) ER 3007 Isolated Steel Replacement investment; 6) ER
3055 PMC Program investment. Eor settLement
these projects have been removed from this
purposes,
rate case and
will be reviewed in the Company's next
decreases the overall
reduces net rate base
general rate case.
revenue requirement
by $1.117 million.
This adjustment
by $345,000 and
Remove 2022 AMA Capital Additions (line q.)
This adjustment removes the Company's capital addltions
beyond August 37, 2027, included by the Company for Rate
Year 2, reflecting only plant investment prior to the
September L, 2022 effective date. This adjustment
decreases the overall- revenue requi-rement by $6r000
and reduces net rate base by $1.079 mil-l-ion.
Restate Unco]lectibles (1ine h. ) Avista has
authority to defer uncollectible expense above the amount
embedded in current rates into a COVID-19 Regulatory
Asset Account. This adjustment sets the uncollectible
expense amount at the amounts approved in
increases the
the previous
overal-l- revenuerate case. This
requirement by
Fee
adj ustment
$56,000.
Free Amortization (line i. ) This
adjustment revj-ses the amortization
Free deferral balance ($475,000) to
amortization, beginning September l-
approximately $158, 000 annualIy. 11
expense of the Fee
reflect a three-year
2027, of
This adjustment
,
Andrews, Di 26Avista Corporation
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decreases the overall revenue requirement by $79r000.
Miscellaneous Adjustments (Iine j. ) Thj.s
adj ustment
rel-ated to
reflects the net change in operating expenses
Board of Director expenses and1) removing
fees ($48,000); 2) removing 1ega1 expenses allocated to
Idaho natural gas ($13,000) ; 3)
11 the Fee Free program all-ows customers to make payments by credit
or debit card without paying a service fee. This program was approved
in Commission Order No. 33494, case Nos. AVU-E-16-01 and AVU-G-16-01-
and implemented in Eebruary 201,7.
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removing internal audit expenses ($13,000) ; 4) removing
ISlIT expenses to reflect actual expenses in 2020
($22,000); and 5) removing other miscell-aneous A&G
expenses ($10,000) . The net effect of this adjustment
decreases the overa1l- revenue requirement by $166r000.
O. Pl-ease summarize the impact of these
adjustments on the natural gas revenue requirement agreed
to by the Parties effective September L, 2021 [Rate Year
11.
A. The adjustments discussed above, and agreed to
by the Parties, reduce Avista's proposed RY1 natural- gas
revenue requirement increase of $52,000 to a natura1 gas
revenue requirement decrease of $1.6 miIIion, resulting
1n an overal-l 3.12 natura1 gas base rate decrease,
effective September 7, 2027. The net rate base agreed to
by the Parti-es for natural gas services is $171.1
mi1lion.
Mr. Ehrbar discusses the overall net bill
impact to customers in RY1 after the effect of Tariff
Schedule 116 "Tax Customer Credit," which returns the
natural gas Tax Customer Credit of $t.2.1, million over ten
years begi-nning September 1-, 2021,, resulting in an
overall decrease in bill-ed rates of 4.52.12
O. Please provide an overview of the incremental-
naturaf gas revenue requirement components agreed to by
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the Parties effective September
agreed to
effective
!, 2022 [Rate Year 2).
an incremental natural-A. The Parties
gas
that
revenue increase September
shown below
1 ,2022 (RY2),
reflects the adjustments in the
12 rhe Parties agree to begin amortizing the Company's natural gas
tax basis benefit over ten years in this case and carrying through
the Two-Year Rate Pl-an. However, the amortization period of the
remaining bafance available at the time of the Company's next general
rate case wiLl be subject to review and possible change of the
amortization period at that time. See paragraph L6 of Stipulation.
Andrews, Di 27a
Avj-sta Corporation
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excerpted table from the Stipulation:
Table No. 5: Natural Gas Revenue Requirement - RY2
O. Pl-ease elaborate on the individual- Line items
contained within Table No. 5.
A. A description of the adjustments resultJ-ng in
the natural gas revenue requirement, effective September
7, 2022 for RY2, foIlows.
Add fncremental- 2021/2022 Related CapitaL and
Expenses to Rate Year 2 (incremental above Rate Year l- )
SUMMARYTABLE OF ADJUSTMENTS TO NATURAL GAS REVENUE REQUIREMENT
(000s of Dollers)
Revenue
Requirement Rate Base
Rate Base Amount Effective September 1,2021
Incremental Revenue Adjustment to September 1,2021 Rate Change
(see Tabel No. l):
a.) Add Incremental202ll2022 Rclarcd Capital and E:cpenses:
i Capital Additions
ii Property Tax Expense on202l Phnt Additbns
iii 202012021 Labor Increase
iv. ISAT Expenscs
September 1,2022 Incrementd Revenue AdJustment and Rate Base
Amount (above Septemberl,202l Rate Changc - see Table No. l)
$ 171,I48
$ 1,163
$ 939 $ t72,3ll
$
$
$
$
458
134
297
50
(l-ine a. ) This item incl-udes certain j-ncremental-
increases in 2021 and 2022 related to capital- and
expenses in RY2, above RY1 l-evels, ds foll-ows:
. Capital- Additions (Line i. ) This
adjustment includes certain 202! capital
additions from September L, 202L through August
3L, 2022, prior to the RY2 September L, 2022,
effective date. This adjustment increases the
Andrews, Di 28Avista Corporation
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overall revenue requirement by $458r000 and
increases net rate base by $f.163 milIion.
Property Tax Expense on 2021, Capital Additions
(1ine ii.) This
/
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Andrews, Di 28aAvista Corporation
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adjustment includes incremental property tax
expense associated with 2021
at existing levy rates. This
capital additions
adj ustment
requJ-rement bythe overall revenuel-ncreases
$134, 000.
2020 /202L Labor Increases - (1ine
adjustment incLudes 2020 non-union
non-executive labor increases and
annualized labor increases. This adjustment
increases theoverall revenue requirement by
$291,000.
IS/IT Expenses (1ine iv. ) This adjustment
iii. ) This
annualized
202L union
t
reflects i-ncremental 2027/2022 increases
primarily assocj-ated with changes in
contractual agreements, pre-paid costs, or the
continuation of costs for products and servj-ces
that will increase beyond the RY1 Ievels. This
adjustment increases the overall revenue
requirement by $50, 000.
O. Please summarize the impact of these
adjustments on the natura1 gas revenue requirement agreed
to by the Parties effective September L, 2022 [Rate Year
21 .
A. The adjustments discussed above, and agreed to
by the Parties, decreases Avista's RY2 natural gas
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revenue requlrement
a 2.22 natural- gas
September t, 2022.
Parties for natural
of $950,000 to $939,000, resulting in
base rate increase, effecti-ve
The net
gas is
rate base agreed to by the
Ehrbar$L12.3 million. Mr.
discusses the overal-1 net bill impact to customers in
RY2t effective September Lt 2022, is 1.5%.
Andrews, Di 29aAvista Corporation
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VII. CONCLUSIOII
O. In conclusion, why is this Stipulatj-on in the
public interest?
A. This Stipulation strikes a reasonable balance
between the j-nterests of the Company and j-ts customers,
irincluding its
represents a
interests and
The
low-i-ncome customers. As such,
among differing
the Stipulation represent el-ectric
changes designed to provide
over the Two-Year Rate Plan
and natural gas base rate
necessary retail
8 from September
reasonable
points of
terms of
compromrse
view.
revenues
Parties have agreed
for the revenue
operations, thus
Two-Year Rate Period.
In the final analysis,
2021 through August 31, 2023. The
that the Company has demonstrated the
changes for its electric and natural
providing recovery of its costs over
t-,
need
gas
the
the give-and-take
settlement reflects
negotiations. Thea compromise in
Commission has
any
of
before it a Stipulation that is supported
by sound
of which
0.
A.
analysis
is in the
and supporting evidence, the approval
public interest.
Does this conclude your direct testimony?
Yes, it does.
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(The following proceedings were had in
open hearing. )
COMMISSIONER RAPER: Any further testlmony
you would like your witness to provide?
MR. MEYER: No, she is available for
CTOSS.
COMMISSIONER RAPER: Thank you.
MR. MEYER: Thank you.
COMMISSIONER RAPER: I think to streamli-ne
this, I can go through each person, but seeing as how
every party has signed a stipulation, I will ask
generally, is there any cross-examination for this
witness?
MR. OTTO: No cross-examination from the
fdaho Conservation League.
COMMISSIONER RAPER: Mr. Otto has l-earned
how to use the sound system. Thank you. Okay, so no
redirect, then, from the Company?
MR. MEYER: There's none.
COMMISSIONER RAPER: It would appear that
we oh, any questions from the Commissioners? It would
appear that Commissioner Kjetlander may have a question.
No questions from the Commissioners.
THE WITNESS: Thank you.
COMMISSIONER RAPER: Thank you very much,
CSB REPORTING
208.890. s198
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ANDREWSAvista Corporation
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Ms. Andrews , f or your testimony and your t j-me.
(The witness left the stand. )
MR. MEYER: Next f call to the stand
Mr. Ehrbar, Patrick Ehrbar.
PATRICK D EHRBAR,
instance of Avistaproduced as a witness at
Corporation, having been
truth, was examined and
the
first duly sworn to teIl the
testified as follows:
DIRECT EXAMINATION
BY MR. MEYER:
O For the record, please state your name and
your employer.
A Patrick Ehrbar, that's E-h-r-b-d-Tr and
Avista.
O And have you
testimony in support of the
A Yes, I have.
O Do you have
prepared and prefiled
settlement?
any changes or corrections to
make to that?
A No, I do not.
O So if I were to
appear in that document, would
ask you the questions that
your answers be the
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CSB REPORTING
208.890. s198
EHRBAR (Di)
Avista Corporation
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same?
A They wouId.
MR. MEYER: With that, I would move that
the testimony be spread as if read.
COMMISSIONER RAPER: V[ith no objection,
Mr. Ehrbar's testimony will be spread across the record
as if read.
(The fol-lowing prefiled testimony of
Mr. Patrick Ehrbar is spread upon the record. )
CSB REPORTING
208 .8 90. 5198
EHRBAR (Di)
Avista Corporation
11
I. INTRODUCTION
O. Pl-ease state your name, employer, and business
address.
A. My name is Patrick D. Ehrbar and I am employed
as the Director of Regulatory Affairs for Avista
Utilities ("Company" or "Avista"), at LALL East
Misslon Avenue, Spokane, Washington.
O. Have you previously fil-ed direct testimony in
this proceeding?
A. No, f have not.
O. Please provide information pertaining to your
educational- background and professional experience?
A. I am presently assigned to the Regulatory
Affairs Department as the Dj-rector of Regulatory Affairs.
I am a 1995 graduate of Gonzaga University with a
Bachel-or of Business Administrat j-on degree. In 1997 I
graduated from Gonzaga University with a Master of
Business Administratj-on degree. I started with Avista in
April 1,997 as a Resource Management Analyst in the
Company's Demand Side Management (DSM) department. Later,
I became a Program Manager, responsible for energy
efficiency program offerings for the Company's
educational- and governmental- customers. In 2000, 7 was
selected to be one of the Company's key Account
Executives, where I was responsible for, among other
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Ehrbar, Di 1Avista Corporation
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things, being the primary point of contact for numerous
commercial and industrial customers.
I joined the State and Eederal Regulation
Department as a Senior Regulatory Analyst Ln 2007.
Responsibilities in that role included being the
discovery coordinator for the Company's rate cases, line
extension policy tariffsr ds weII as
miscellaneous regulatory issues. In November 2009, I was
promoted to Manager of Rates and Tariffs, and later
promoted to be Senior Manager of Rates and Tariffs. My
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Ehrbar, Di 1aAvista Corporation
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primary areas of responsibility included electric and
natural gas rate design, decoupling, power cost and
natural- gas rate adjustments, customer usage and revenue
analysis, and tariff administration. In October 201,7, I
was promoted to my present position, where I am
responsible for al-l- matters related to general rate
cases, tarlff filings, rulemakings, and other regulatory
acti-vities.
O. What is the scope of this testimony?
A. The purpose of my testimony is to describe and
support the non-revenue requirement portions of the
Stipulation and Settl-ement ("Stipulation"), filed
on June 14, 2021 between the Staff of the Idaho Public
Utilities Commissj-on ("Staff'), Clearwater Paper
Corporation ( "C1earwater" ) , Idaho Conservation League
(*ICL"), Idaho Eorest Group, LLC ("Idaho Forest"), the
Community Action Partnership Assocj-ati-on of Idaho
( "CAPAI " ) , Wa1mart, Inc. (Wal-mart ) , and the Company.
These entities are col-lectively referred to as the
"Parties" and singularly as a "Party" and represent aLl
who have appeared in these proceedings. In my testimony I
wil-l- explain the Settlement components related to Rate
Spread and Rate Design, and Other Settl-ement Items.
O. Are you sponsoring any exhibits?
A. No, I am not. Company witness Ms. Andrews is
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sponsoring Exhibit No. 19, which
Stipulation and Settlement filed
the Commi-ssion.
is a copy of the
on June L4, 2021, with
II. RATE SPREAD & RATE DESIGN
0. Please explain the settlement terms relating to
el-ectrj-c and natural gas cost of service.
Ehrbar, Di 2aAvista Corporation
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A. In this case, for el-ectric operations, the
Company prepared an electric cost of servj-ce analysis
that incorporated, among other things, a system load
factor peak credit method of cl-assifying production
costs, allocating 100% of transmission costs to demand,
and allocating transmission costs on a twel-ve-month
coincident peak aflocation factor. The Parties do not
agree on any particular cost of service methodology. In
recognition, however, that certain rate schedules are
generally above their re1ative cost of service the
Parties agree
8 25% of the
that Schedule 25P should receive
overall percentage base rate changes for the
September 7, 202L and September L, 2022 base rate
increases. In addition, Schedul-es 17/L2 shoul-d recej-ve
25e" of the overall percentage base rate change for the
September l, 2022 increase. Al1 other schedules, except
Schedule l, should recei-ve a uniform percentage of the
t2 overal-l- base rate revenue increase. The remaining
revenue requirement should be spread to Schedule 1.
For natural gas operations, the Parties agreed
to a unj-form percentage of distribution margin change on
September t, 202L and September L, 2022.
The Parties agreed that the Tax Customer
Credits shoul-d be passed through to customers through
separate Tariff Schedules 76 (electric) and L76 (natural
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gas). Eor Year 1 electric, the Parties agree to return an
amount equal to the base rate increase. For Year 2
electric, the Parties agree to return the remaining
balance of the Tax Customer Credit, offsetting the
overall- base rate increase effective September 1-,
2! 2022. The Parties agreed that $250,000 of the Tax
Customer Credit applicable to Schedule 11 would be
allocated to Schedul-e 25. For natural gdsr the Parties
agree to begin returning the Tax Customer Credit
September t, 2021, over a ten-year period as
proposed by the Company.
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A. How did the Stipulation address rate design?
A. For settlement purposes, the Parties agreed to
the rate design changes proposed by Company witness Mr.
Mil1er in his direct testimony for the September 7,
2021, base rate changes.l For the September 1,, 2022 base
rate increases, the electric and natural gas Residentj-al
Basic Charges (Schedule 1 and 101), will increase from
$6.00 per month to $7.00 per month, an increase of $1.00
per month. The Parties agreed that there will be no
changes to the electric demand charges in either year of
the rate p1an. All other basic and mj-nimum charges
effective September \, 2022 are as proposed by the
Company in its initial filing. Appendix F of the
Stipulation (Exhibit No. 19) provides a summary of the
current and proposed rates and charges for both electric
and natural qas service.
O. What is the effect on retail rates, bY rate
schedule, of the proposed settlement?
A. Tables No. 1 and No. 2 reflect the agreed-upon
percentage increases by schedu1e for electric service:
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Ehrbar, Di 4aAvista Corporation
Table No. I - Electric Chanee for Rate Year I
BreSslqgsh
ResiledialSchedub I
Cremeral Serrice Schedubs I l/12
Large General Senvbe Schedubs 2122
E:da Large GelrralServhe Schedub 25
Chanrrater Paper Scbe&b 25P
Puryirg Servbe SctBdules 31/32
Strreet & tuea Lidhts Scheduhs 4l-48
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Incrcese inBilliry Clarye inBiling
Incrcese in Base Revenr beforc Revenue rrlth
Revenue Oftet Ofiset
4.9/o
4-3o/o
4.3o/o
4.3%
l.lo/o
4.3o/o
4.3o/o
#Ye
4.9/o
4.1%
4.lo/o
4.20/,
l.0o/o
4-2o/o
4-2o/o
4J,%:
0.60/o
0.OYo
0.0%
0.0%
-3.1o/o
0.0%
0.0%
9,9Y!
1 For the September 1-, 2O2L rate increase, the Company proposed that
all of the base revenue increase be recovered solely through the
energy charges for al-l- of the electric and natural gas rate
schedules.
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Table No. 2 - Electric Chanee for Rate Year 2
Rate Schcdule
Resllertial Scbedub I
General Service Schedubs 1 l/12
Iarge Gencral Servicc Schedules 2 I 22
Etra Iarge General Servbe Scbedub 25
Cbarwater Paper Schedub 25P
Purpn:rg Servbe Schedubs 3ll32
Steet & Area Lights Schedules 4l-48
Overall
Increase in Billlr€ Change in BiUng
Increese ln Base Revenue before Revenue dth
Revenue Offset Offset
4.3o/o
0.8%
3.lo/o
3.1%
0.8o/o
3.r%
3.t%
3.1V"
4.4%
0.8%
3.t%
3.1%
0.8o/o
3.1%
3.t%
3'2,%
03%
-2.s%
-0.8o/o
a ao/-L,L /O
-3.2o/o
-0.8%
-0.8o/o
{,8%
Tables No. 3 and No. 4 reflectthe agreed-uponpercentage changes by schedule for
nafural gas service:
Table No.3 -Natural Chanse for Rate Yeer L
Rate Schedule
Gerrral Servbe Schedule l0l
L:rge Crerrral Service Schedubs llllll2
Transportatbn Servbe Schedub 146
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Charye in
MarginRevenue
Ctange in Bi[ing Change in
Revenue Biling Revenue
before Offset with Ofrset
-3.7%
-3.7%
-3.7o/o
-3.7o/"
-2.6%
-2.1%
-3.1Yo
*'Ys
-4.6%
-3.7%
-6.5%
4.5o/"
Table No. 4 - Natural Gas Change for Rate Year 2
Rate Schedule
General Service Schedtrle l0l
I*rge General S€rvbe Schedules II1./IL2
Transportation Service Schedule 1 46
Ovenll
Change in
MareinRevenue
Change in
Bitling Revenue
2.2o/o
2.2%
2.2o/o
?r'2%
l.60/o
r.3%
23%
L,E%
Ehrbar, Dl 5Avista Corporation
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O. What are the residential bill impacts if the
Commission approves the Settlement Stipulation?
A. Effective Sep tember L, 2021, an electric
residential customer using an
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average of 892 kilowatt hours per month would see a
$0.49, or 0.6?, increase per month for a revised monthly
bill of $86.12. Effective September 7, 2022 an electric
residential customer woul-d see a $0.31r oE 0.4%, increase
per month for a revised monthly bill of $86.43.
Effective September 7, 2027 a natural gas
residential customer using an average of 63 therms per
month would see a $2.30r or 4.6e", decrease per month for
a revised monthly bill- of $41.L9. Effective September L,
2022 a natural gas residential- customer would see a
$0.76, or I.6%, increase per month for a revised monthly
bill of $47.95.
III. OTEER EI.,EMEITTS OF TBE SIIPI'I,ATIO}I
O. Pl-ease explain the settl-ement terms relating to
the Power Cost Adjustment (PCA) authorized IeveI of
expenses.
A. The new level of power supply revenues,
expenses, retail load and Load Change Adjustment Rate
resulting from the September 7, 202L settlement revenue
requirement, for purposes of monthly PCA mechanism
calculatj-ons, are detailed in Appendix A of the
Stipulati-on (Exhibit No. 19) .
O. Please explain the settl-ement terms relatj-ng to
the authorized base for the Electric and Natural Gas
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Fixed Cost Adjustment Mechanism.
A. The new 1evel of baseline values for the
electric and natural gas fixed cost adjustment mechanism
resulting from the September t, 2021, and September l,
22 2022 settlement revenue requirement are detailed in
the Stipulation as follows (Exhibit No. 19):
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O. Please explain the
the Settlement Stipulation.
A. The Parties agreed
El-ectric FCA BaseEl-ectric ECA Base
Natural Gas FCA Base
Natural Gas FCA Base
other issues agreed upon in
to meet and confer, prior to
case filing, regarding
service study and
charges. The purpose of
the merits of differing
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Appendix
Appendix
Appendj-x
Appendlx
B
U
D_
E
2027
2022
202L
2022
the Company's next general rate
the Company's el-ectric cost of
the appropriate l-evel of basic
the workshop wil-l- be to discuss
cost of service methodologies and basic charge levels.
The Company will provide availabl-e information, studies
and data requested by any of the Partles so as to enabl-e
meaningful workshop participation and discussion of
issues. No Party shal-l- be bound by workshop discussions
and may contest cost of service and rate spread or rate
design issues in subsequent proceedings.
Second, the Company and interested parties will
meet and confer with Staff, and interested parties, on
its weather normalization methodologies, with the
intentlon to see what changes, tf dny, should be made to
further the accuracy of its modeling.2
Third, as it relates to the long-term ownership
of Colstrip, the Stipulation provided that in Order No.
34814 in Case No. AVU-E-19-01, pertaining to the
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Company's 2020 Electric Integrated Resource P1an, the
Commission ordered the
2 The Company's electric and natural gas weather normalization
adjustment calculates the change in usage required to adjust actual
foads during the 2019 test period to the amount expected if weather
had been normal-. This adjustment incorporates the effect of both
heating and cooling (for electric) on weather-sensitive customer
groups. The weather adjustment is developed from a regression
analysis of ten years of bi1led usage per customer and billing period
heating and cooling degree-day data. The resulting seasonal weather
sensitivity factors (use-per-customer-per-heating-degree day
and use-per-customer-per-cooling-degree day) are applied to monthly
test period customers and the difference between normal
heating,/cooling degree-days and monthly test period observed
heating/cooJ-ing degree-days .
Ehrbar, Di 1aAvista Corporation
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Company to fil-e an annual update on its Colstrip
ownershj-p interest by October 1 of each year. The report
is intended to "provide updated economic anal-yses of
retirement dates, closure plans and estimated retirement
dates, and annual accounting for decommissioning and
remediation expenditures/estimates. " Additionally, the
Order requires that "Avista shal-l- notify the Commissj-on
within 30 days of Col-strip partner decisions and plant
j-ssues that may materially affect Idaho customers. " The
Commission noted that "Providing a separate venue for the
Colstrip analysis reflects the IRP's useful-ness as a
portfolio planning process that leaves specific resource
decisions to separate dockets. " The process established
will- provide a venue for all- interested stakeholders to
receive information as it pertains to the Company's
long-term ownership interest in Colstrip. Avista wil-I
extend an invitation to the Parties to participate in
schedu.l-ed meetings as contemplated by Order No. 34814,
supra, and toprovide its annual reports filed with the
Commission to the Parties.
Eourth, Avista agrees
Commission Staff to discuss the
to meet and confer with
prudence of network
Substation andupgrades related to the
Interconnection.
Lastly, Avista agrees to meet and confer with
Neilson
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Commissi-on Staff to discuss customer sati-sfaction
metrics, and how the Company's investment in
customer-facing technologies affect those metrics and
drive customer experiences
O. Does this concl-ude your direct testimony?
A. Yes, it does.
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(The following proceedings were had in
open hearing. )
MR. MEYER: And he is available for
cross.
COMMISSIONER RAPER: Any cross-examination
from any of the attorneys? I see heads nodding no, so
any redirect needed from the Company?
MR. MEYER: No.
COMMISSIONER RAPER: Any questions from
the Commissioners? Commissioner Kjellander does not have
a question. Mr. Ehrbar, it would appear that you are
done for the today. Thank you very much for your
testimony.
THE WITNESS: Thank you.
(The witness left the stand. )
MR. MEYER: And that completes the
presentatj-on by the Company.
COMMISSIONER RAPER: Thank you, Mr. Meyer.
MR. MEYER: Thank you.
COMMISSIONER RAPER: Commission Staff has
two witnesses it would appear from the record.
MR. HAMMOND: Yes, thank you. Commissj-on
Staff would cal-I Terri Carlock.
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CSB REPORTING
208 .890.5198
EHRBARAvista Corporation
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CSB REPORTING
208.890.5198
CARLOCK (Di)
Staff
TERRI CARLOCK,
produced as a witness at the instance of the Staff,
having been first duly sworn to tel1 the truth, was
examined and testified as follows:
DIRECT EXAMINATION
BY MR. HAMMOND:
o
A
o
name, spe11
where you're
A
for the Idaho
Good morning.
Good morning.
. Carlock,
Iast name
will you please state your
and tell us
Ms
your for the record,
employed?
Terri Carlock, T-e-r-r-i C-a-r-l-o-c-k,
Publ-ic Utilities Commission.
O And can you teII us a little bit about
your experience at the Commission?
A Yes, I became employed with the Idaho
Public Utilities Commission in 1980 and was appointed as
the utilities division administrator in 2018.
O Thank you. Have you had the opportunity
to review the prefited direct testimony of Donn English
fil-ed in this matter?
A Yes, I have.
O And have you had an opportunity to25
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determine whether there are any additions or corrections
that need to be made to that testimony?
A Yes, I have. Therefs one sma11 typo on
page !2, line 1. The word I'at, should be "as."
O Yourve reviewed this testimony, do you
agree with the positions and informatj-on in that
testimony?
A Yes, I do.
O Additionally, have you reviewed Exhibit
No. 1 or Staff's Exhibit No. 101, excuse me, that's
attached to the testimony?
A I have.
O If the same questions were asked in
Mr. English's testimony of you today, would you answer
the same as the answers given in Mr. Englishrs
testimony?
A Yes, I wou1d.
MR. HAMMOND: With that, I would ask that
the prefiled direct testimony of Donn English in support
of the stipulation and settlement agreement be entered
into the record as if read, along with admitting Exhibit
No. 101, and we would tender the witness for cross, if
necessary.
COMMISSIONER RAPER: Thank you, Mr.
Hammond. Without objection, the testimony of Donn
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CSB REPORTING
208.890.5198
CARLOCK (Di)
Staff
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English, sponsored by Ms. Carlock, is spread upon the
record as if read, and Exhibit 101 is admitted to the
record.
(Staff Exhibit No. 101 was admitted into
evidence. )
(The following prefiled testimony of
Mr. Donn English, sponsored by Ms. Terri Carlock, is
spread upon the record. )
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CSB REPORTING
208.890.5198
CARLOCK (Di)
Staff
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O. Please state your name and business address?
A. My name is Donn English. My business address
is 11331 W. Chinden BIvd., BLDG 8, STE 201-A, Boise,
Idaho 83714.
O. By whom are you employed and in what capacity?
A. I am employed by the Idaho Public Utilities
Commission as a Program Manager overseeing the Accounting
and Audit Department in the Utilities Division. I am
also the Program Manager overseeing the Technical
Analysis Department, al-so within the Utilities Division.
O. Please describe your educational background and
professional experience.
A. My educational- background and professional-
experiences are shown in Exhibit No. 101.
O. What is the purpose of your testimony in this
proceedlng?
A. The purpose of my testimony is to describe the
Application of Avista Corporation ("Avista" or "Company")
to increase its rates and charges for electric and
natural- gas service in Idaho, describe the proposed
comprehensive Stipulation and Settlement ("Settlement")
reached by the parties in this case, and explain Staffrs
support for the stlpulated revenue requirement. Staff
wj-tness Mj-ke Louis' testimony provides support for cost
of service and rate design issues agreed to by theparties and al-so discusses
AVU-E_21_01 & AVU-G_2L_OL
01 /1"9/2L
ENGLISH, D. (Stip)
STAFF
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the appropriate leve1 of net power supply expenses to
include in base rates.
0. How is your testimony organized?
A. My testimony is subdivided under the following
headi-ngs:
Background Page 2
Staff Investigation Page 6
Settlement Evaluation Page 1
Settlement Overview Page I
Colstrip Transmission Page L6
Background
O. Please descrlbe Avj-stars original filing.
A. Avista made its ori-gina1 filing with the Idaho
Public Utilities Commissj-on ("Commission") on ,January 29,
2021, proposing a two-year rate plan to increase its
revenue. The Company requested authority to increase its
electric base revenue in Idaho by $24.8 mil1ion, or
10.12, effective September L,2027,
2022.
and $8.7 mi11ion, or
3.2eo, effective September 7,For natural gds, the
Company requested an increase in base
or 0.1%, effective September \, 2021,
or 2.2%, effective September L, 2022.
revenue
and $1.0
With the
of $52,000,
mi11ion,
two-year
general
to
rate pIan, the Company would not file another
rate case with a proposed effective date prior
September lt 2023.
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AVU-E-21-01 & AVU-G-27-0L
01 /L9 /2L
ENGLISH, D. (Stip)
STAFF
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22,
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The Companyrs requested increases were based
oRa
/
/
/
AVU-E-21-01 & AVU-G-21-0L 100
01 /te/2L ENGLISH, D. (Stip)
STAFF
.+
?$tl
r ].|'gIti
i.
2a
test period ending December 31, 2019, with specific
expense adjustments based on pro forma period ending
August 37, 202I, for the first increase in the two-year
rate plan, and August 31, 2022, for the second increase.
Capital additions through August 3L, 2022, were incl-uded
in the Company's proposed first-year increase and
calculated on an Average of Monthly Averages ("AMA")
basis. For the second year of the rate p1an, capital
additions were included through August 31, 2023, and were
also calculated on an AMA basis.
The Company proposed using a capital structure
of 50? equity and 50% debt, and a return on common equity
("ROE") of 9.9%, for an overall weighted average cost of
capital of 7 .3%.
O. How did the Company propose to mitigate the
effect of its requested increase on customers?
A. In Order No. 34906, the Commission approved the
Company's Tax Accounting Application request authorizing
it to change its accounting for federal income tax
expense from a normalization method to a flow-through
method for certain plant basis adjustments, including
Industry Director Directive No. 5 ("IDD #5") and meters
(Case Nos. AVU-E-20-L2 and AVU-3-20-07). The change in
accounting method provided i-mmediate benefits to Idaho
customers, which Avista recorded in a regulatoryl-iability account.
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AVU-E-21-01 & AVU-G-2L-01
07 /1.9/27
ENGLISH, D. (Stip)
STAEF
3
25
101
Avista proposed to amortize and return those deferred tax
benefits to customers ($31-.3 million Idaho el-ectric and
$12.7 mil-l-ion
schedules, Tax
(el-ectric) and
increases.
Eor
Idaho natural gas) through separate tariff
Customer Credit Tariff Schedule 76
1,76 (natural 9as), to offset the requested
Idaho el-ectric customers, the Company
proposed to use the tax benefit to offset the entire
first-year rate increase, resulting in no bil-l-ed impact
to el-ectric customers until- approximately December of
2022. For Idaho natural gas customers, the Company
proposed a ten-year amortization of the tax benefits,
resulting in a first year decrease in bil-l-ed rates of
approxj-mately 1.8%. For the second year, the Company
proposed to offset the requested increase of
approximately $1.0 mil-lion by using the "Natural Gas
Deferred Depreciation Expense" regulatory liability
approved in Order No. 34216 in Case Nos. AVU-E-18-03 and
AVU-G-18-02 (see Settl-ement at page 9, para. 14). The
Natural Gas Deferred Deprecj-ation Expense balance is
estimated to be approximately $900,000 through August 31,
2021. Under the Company's proposal, Idaho natural gas
customers would see a second-year increase in bil-led
rates of approximately 0.1?.
O. How was thls case processed after the Company'sfiling was received?
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AVU-E-21-01 & AVU-G-21-01
07 /te/27
ENGLISH, D. (Stip)
STAFE
4
25
702
A. The Commission issued a combined Notice of
Application and Notj-ce of Intervention Deadline
("Notice") on Eebruary
Intervention Deadline
23, 2027, establishing an
of March 16, 202L. Intervenor
status was subsequently granted to Cl-earwater Paper
Corporation, Idaho Eorest Group,
Action Partnership Association of
Conservation League, and Wafmart
referred to as the "Parties").
LLC, the Community
Idaho, Inc., the ldaho
Inc., (collectively
The Parties participated
on June 74, 202L, thein two settl-ement conferences,
proposed settlement signed by
the Commission.
and
al-l Parties was filed with
Staff Investigation
O. What type of investigation did Staff conduct to
evaluate the Company's rate increase request?
A. Staff 's approach j-n any general rate case is to
extensively review the Company's Application and
associated testimony and workpapers, identify adjustments
to its revenue requirement, and prepare to file testimony
for a fu11y-litigated proceeding. There were L1 Staff
members analyzing this case consisting of auditors,
engineers, utility analysts, and consumer investigators,
along wlth supervisors. Staff auditors reviewed the
Company's test year results of operations, capital
budgets, capital spending trends, operations, and
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AVU-E-21-01 & AVU-G-27-0L
07 /L9/2L
ENGLISH, D. (Stip)
STAFE
5
25
103
maintenance ('rO&M") expenses and trends, and verifj-ed all
of the Companyrs
AVU-E-21-01 & AVU-G-21,-01
07 /t9/2t
i a-_
:j:.,
ir,
ENGLISH, D. (Stip) 5a
STAFE
104
calculations and assumptions
revenue requirement. Because
due to the COVID-19
with regard to the overall
of the public health
virus, Staff members wereemergency
not able to conduct onsite audits or reviews of the
Company's books and records and they did not have
extensive in-person interviews with Company personnel.
However, the auditors reviewed thousands of transactions,
selected samples, and performed transaction testing in
accordance with standard audit practices. Staff reviewed
the Companyrs labor expense, incentive pIans, and
employee benefj-ts to ensure. the appropriate level of
expenditures are included in rates.
Staff reviewed both completed and proposed
Company investments to determine the prudence of capital
additions. Expenditures including pension expense,
salaries, and O&M expenses were also examined.
Additionally, Staff investigated the Company's cost of
capital, actual and proposed capital structure, cost of
service, and revenue normalization. In total-, Staff
submitted over 180 production requests and hel-d several
virtual meetings with Company personnel- as a part of its
comprehensive investigation.
Based on the success of its j-nvestigation,
Staff proposed 27 separate revenue requirement
adjustments during settlement
were either completely
discussions, all- of which
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AVU-E-21-01 & AVU-G-2L-07
01 /79/21
ENGLISH, D. (Stip)
STAFF
6
25
105
or partially accepted by the Company.
Settlement Eva].uation
O. How did Staff determine that the overall
Settlement was reasonable?
A. In every settl-ement evaluation,
of losing
Staff and other
atparties must
hearing and
examine the risks pos j-tions
a betterdetermine if the
overall outcome. Staff must
agreement is
evaluate each individual
adjustment and determine the likelihood of the Commission
accepting or rejecting Staffrs rationale for the
adjustment. Ultimately, Staff's intent in every
settl-ement conference is to negotiate the best possible
outcome for customers.
O. Does Staff support the Settlement as
reasonable?
A. Yes. After a comprehensive review of the
Company's Application, thorough audit of the Company's
books and records, and extensive negotiations with the
parties to the case, Staff supports the proposed
Settlement. The Settlement offers a reasonable balance
between the Company's opportunity to earn a reasonable
return on its investment and affordabl-e rates for
customers. Staff believes the SettJ-ement, supported by
the Parties, is in the public interest, fair, just, and
reasonable; and should be approved by the Commission.
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STAFF
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Sett].uent Orrervier
O. Would you please describe the terms of the
AW-E-21-01 & AVU-G-21-0L
07 /!9/2L
ENGLISH, D. (Stip)
STAFF
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Settlement?
A. The proposed Settlement provides a reduction in
the Company's requested revenue requirement. Instead of
the Company's proposed el-ectric base rate increase $24.8
m1l-1ion (l-0.1%) and natural- gas base rate i-ncrease of
$52,000 (0.1%) for the first year of the two-year rate
pIan, base rates under the proposed Settlement for Idaho
electric customers will increase by $l-0.6 million (4.3e"),
and natural- gas customers will see a base rate decrease
of $1.6 mill-ion (3.12 ) ef fective
1 I 2022, Idaho el-ectric
September 7, 2021. On
customers' base ratesSeptember
under the
mill-ion (3 . 1% ) compared to
(3.54), while natural gas
increase by $0.9 miIlion.
by $8.0
million
customers' base rates wilI
These base rate increases are
proposed Settlement will increase
the proposed $8.7
before any offsets from the Tax Customer Credit Schedule
Nos. 16 and 716.
The Tax Customer Credit Schedu]e No. 76 will
entlrely
proposed
years of
amortize
natural
a billed
a billed
offset the base rate increases under the
Settl-ement for Idaho electric customers for both
the two-year rate plan. Schedule No. 1,76 wil-l
the availabl-e tax deferral bal-ance for Idaho
gas customers over 10 years which will resul-t in
rate decrease of 4.52 on September L, 202L, and
rate increase of 1.58 on September L, 2022,
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AVU-E-21-01 & AVU-G-27-07
07 /1,9/21
ENGLISH, D. (Stip)
STAFF
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under the proposed Settlement. During the Company's next
general rate case,
/
AVU-E-21-01 & AVU-G-2L-A1
07 /L9/21
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STAFF
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109 8a
the remaining balance of the Customer Tax Credit for
natural gas and the remaining amortization will be
revisited and possibly modified.
0. How was the stipulated revenue requirement
derived?
A. The Settlement first-year revenue requirement
was calculated by starting with the Company's proposed
revenue requirement and subtracting the agreed upon
adjustments proposed by Staff and the Parties. The
cal-culation of the Settlement revenue requirement is
shown on Table No. 1 (electric) and Table No. 3 (natural
gas) of the Settl-ement. Tab]e No. 2 (electric) and Table
No. 4 (natural gas) il-l-ustrate the additional- proforma
adjustments accepted by the Partj-es to come to a
second-year revenue requirement under the proposed
Settlement. Several agreed upon adjustments to the
Company's revenue requirement were timing differences
where amortj-zation periods were extended, while other
adjustments updated the Company's proforma estimates to
actual- amounts as they became known. Rather than discuss
every adjustment that was proposed and agreed upon, I
wiII hiqhlight the adjustments that had a significant
impact to revenue requirement and those that require
additional policy discussions.
O. Pl-ease explain the cost of capital and return
on equity components of the Settlement.
AVU-E-21-01 & AVU-G-2L-0L
07 /1.9/21,
ENGLISH, D. (Stip)
STAFE
9110
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9
A. In i-ts Application, Avista proposed a 50%
conimon equity ratio and a 9.9eo ROE. The Parties agreed
to a ROE of 9.4% while accepting the 503 common equity
ratio. A 9.4% ROE reduces the Company's requested
first-year el-ectric revenue requirement by approximately
$2.9 mil-l-ion and requested first-year natural gas revenue
requirement by approximately $0.6 mj-Il-ion.
0. How does the Settlement account for the
Company's capital investments in net rate base?
A. In its Application, the Company proposed to
include capital investments through August 31, 2022, in
the calcul-ation of net rate base for the first-year
increase. The Parties agreed that only capital
investments scheduled to be placed in service before
August 37, 2021, will be included in the first-year
revenue requirement. Those capital additions wil-l- be in
service and benefitting customers when new rates are
effective on September L, 2021.
For the second-year increase effective
September I, 2022, the Company proposed capital additions
through August 37, 2023, to be included in the
calcufation of net rate base. The Parties agreed that
any capital investment after August 31, 2022 would be
excluded, and the Settlement revenue requirement for the
second-year of the rate plan would only include a portion
of the Company's capital
AVU-E-21-01 & AVU-G-27-07
01 /19/27
ENGLISH, D. (Stip)
STAEF
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t- 11 10
investments from September L, 2021, through August 31,
2022.
0.
capital
A.
address any specific
purposes, the Rattlesnake
Fl-ats Interconnection and Transmission/Substation
projects were
Additionally,
the Customer
removed from the Company's net rate base.
5% of certaln IS/IT investments and 50% of
Facing Technology projects were removed.
The Parties agree that these projects will be further
reviewed in the Company's next general rate case.
O. Will you please summarize how employee labor
and incentive payments are accounted for in the
Settlement?
A. For executive compensation, all wage increases,
and incentive payments were removed from revenue
requirement consistent with Staffrs recommendation in
other rate cases. The Company will recover the Idaho
jurisdictional portion of executive salaries at the 20L9
test year level.
Eor non-executive labor, the Company will
recover the 20L9 Idaho juri-sdictional portion of employee
sal-ari-es plus the contractually obligated 2020 bargaini-ng
unit ("union") increases during the first year of the
two-year rate p1an. On September L, 2022, the Company
Does the Settl-ement
proj ect s ?
Yes, for settlement
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01 /79/27
ENGLISH, D. (Stip)
STAEE
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will begin recovering the 2020 non-union annualized labor
increases as
AVU-E-21-01 & AVU-G-21-01
07 /79 /21
ENGLTSH, D. (Stip)
STAFF
1L3 L1a
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well- as the 2021 union annual-ized labor increases.
The Company proposed to recover the 6-year
average of Idaho's jurisdictional- share of non-executj-ve
incentive payments. The Settl-ement provides recovery of
non-executive incentive payments at the 2019 test year
target l-evels, reducing the proposed revenue requirement.
Staff believes that recovery of employee j-ncentj-ve
payments should not be greater than the Company's actual
target l-eveLs.
0. Please discuss the adjustment to the Company's
proposed Wildfire Expenses.
A. This adjustment includes in revenue requirement
the Company's actual wildfire expenses for the period
September l, 2020, through December 3L, 2021, dS well- as
expected amounts from January 2021 through August 202L.
The Idaho el-ectric jurisdictj-onal share of $1.471 mil-lion
establishes the base level of wil-dfire expense recovery
and reduces the flrst-year revenue requirement by
$121 r000. During the second year of the rate plan, the
base level- of wildfire expenses included in revenue
requirement increases to $1.836 mil-1ion.
fn Order No. 34883, Case No. AVU-E-20-05, the
Company received approval to defer into a regulatory
asset account the incremental- expenses associated with
the Company's Wil-dfire Mitigation Pl-an. The Company wil-1
AVU-E-21-01_ & AVU-G-2L-07
01 /79/21
ENGLISH, D. (Stj-p1
STAFF
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L74 72
contj-nue to defer any difference in actual wil-dfire
expense from the authorized leve1 approved in base rates
j-nto the Wildfire Expense Balancing Account. The balance
in the deferral wiII be inc1uded for review and recovery
in a future general rate case.
O. How does the Settlement account for investments
the Company has made to join the Energy Imbalance Market
( "ErM" ) ?
A.
preparing
increase.
Company' s
2022, the
investment
through the
mechanism,
The Company included
to join the EIM in
its capital investments j-n
the first-year rate
Because the expected
in theparticipat j-on EIM is not until March l,
Parties agreed to delay recovery of this
until- the second-year rate increase effective
"Go-Live" date for the
on September L, 2022.
Per Order No. 34606 in Case No. AVU-E-20-01,
the Idaho jurisdictional share of the incremental EIM O&M
expenses are being deferred until- the expected "Go-Lj-ve"
date. The Parties agree
March t, 2022 "Go-Live"
reflect Idahors share of
that effective with the expected
date, the Company will- begin to
j-ncremental EIM O&M expenses
Cost Adjustment ("PCA")
share of the EIM benefits that
annual Power
to Idaho's
wil-l- also
up
flow through
expenses exceeding the
deferred and
the PCA. Any incremental EIM O&M
EIM benefits will- continue to be
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01 /t9/21
ENGLISH, D. (Stip)
STAFF
25
115 13
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4
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6
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8
9
reviewed for recovery in a future proceedj-ng.
O. Do you have any other comments on the
Settlement?
A. Yes. Staff believes that an important aspect
of a two-year rate plan is to provide rate stability and
certaj-nty to customers. Although not explicitly stated
in the Settlement, the Parties agreed that other than
this two-year rate p1an, base rates from a general rate
case filing would not increase before September 7, 2023.
Stability and certainty in rates only occur if the
Company does not file another general rate case during
the two-year rate plan. Therefore, it is important that
the Commission order in this case require the Company not
to fil-e another general rate case with rates effective
prior to September L, 2023. With that caveat, Staff
believes the Settl-ement represents a fair, just, and
reasonable compromise of the positions put forth by aI1
parties and is in the public j-nterest. Therefore, Staff
recommends the Commission approve the Settl-ement without
material changes or modj-fications.
Colstrip Transuission fnvestments
O. Pl-ease provide a brief summary of the
accounting treatment approved by the Commission for
Colstrip Units 3 and 4.
A. In Order No. 3427 6 in Case No. AVU-E-I-B-03, the
AVU-E-21-01 & AVU-G-21-0t
07 /L9/21,
ENGLISH, D. (Stip)
STAEE
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116 14
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Commlssj-on approved the Settlement Stipulation proposed
by
/
AVU-E-21-01 & AVU-G-2FAI
o7 /\9 /2L
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the settling parties regarding Avista's recovery of its
undepreciated investment in Col-strip Units 3 and 4 and
the asset retirement obligations ("ARO") for Colstrip,
Decemberassuming a useful life of those units through
31, 2027. The current level of Idahors share of the
depreciatj-on expense ($2.A75 million annually) would
continue to be recovered through December 31, 2027. The
undepreciated balance as of December 31, 2021, and the
ARO would be offset by $6.41 million of tax credj-ts
derived from the Tax Cuts and Jobs Act of 2078. The
remaining balance not recovered through depreciation will
be recovered through the amortization of a Regulatory
Asset (FERC Account No. 1,83.327 - Colstrip Regulatory
Asset) and amortized over 34.15 years (beginning April L,
2019) through 2053. The Colstrip Regulatory Asset, net
of accumul-ated deferred federal- income taxes, is j-ncluded
in rate base.
O. Does the Settlement change the accounting
treatment for Colstrip Units 3 and 4?
A. No, the Settlement is silent on the accounting
treatment for Colstrip. However, Company witness Andrews
testimony discusses Avista's proposal to remove
transmission assets from the Colstrip Regulatory Asset
and begin depreciating those transmission assets using
the same depreciation rates approved for non-Colstrip
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AVU-E-21-01 & AVU-G-21,-01
01 /t9 /21,
ENGLISH, D. (Stip)
STAEF
25
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9
transmission assets. The Company has determined that the
transmission
AVU-E-21--01 & AVU-G-21.-07
07 /Le/21
ENGLISH, D. (Stip)
STAFP
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119 15a
assets will be functional if and when Colstrip generating
units are no longer functj-onal. Therefore, the Company
proposed to move the Colstrip transmission assets from
the Regulatory Asset account to Plant in Servj-ce.
Although the Settlement is silent on this
requirementaccounting proposal, the
accounts for a reduction
expense by
Settl-ement
Commi-ssi-on,
$125,000. On
stipulated revenue
in the Colstrip
June 24, 2021,
amortization
after the
was signed by aII Parties and filed with the
Avista sent an email to the Parties
explaining that the Settlement did not address the new
depreciation rates for the Colstrip transmission assets,
although embedded in the agreed upon revenue requirement.
Because Avista must use the updated depreciation rates on
its books to match the accounting for the Colstrip
transmission assets, the Commj-ssion must approve the
Al-l- Parties tochange in depreciatj-on rates
the case concurred that the
should address the depreciation rates for the Colstrlp
transmission assets.
O. Does this concl-ude your testimony?
A. Yes, it does.
in an order.
Commission Order in this case
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01 /L9/2r
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STAEE
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(The followj-ng proceedings were had in
open hearing. )
COMMISSIONER RAPER: Is there any
cross-examj-nation from any of the parties for
Ms. Carl-ock? Mr. Otto.
MR. OTTO: No questions from the
Conservation League.
COMMISSIONER RAPER: Thank you. Mr.
Semanko?
MR. SEMANKO: No, thank you.
COMMISSIONER RAPER: Mr. Meyer.
MR. MEYER: No, thank you.
COMMISSIONER RAPER: Any questions from
the Commissioners? Ms. Carlock, it looks like your time
j-s up. Thank you.
(The witness left the stand. )
MR. HAMMOND: Staff would cal-I a second
witness Mr. Mike Loui-s.
CSB REPORTING
208.890.5198
CARLOCKStaff
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CSB REPORTING
208.890.5198
LOUIS (Di)
Staff
MICHAEL
at the
LOUIS,
instance ofproduced as a witness
having been first duly
examined and testified
sworn to tel-l- the
the Staff,
truth, was
as fol-lows:
o
your name for
employed?
A
DIRECT EXAMINATION
BY MR. HAMMOND:
Can you please
the record and
state your name and spe11
teI1 us where you're
Michael Louis, M-i-c-h-a-e-1, J-ast name
Louis, L-o-u-i-s. I work for the Commission Staff of the
fdaho Public Utilities Commissi-on.
a Can you tell- me what your position is at
the Idaho Public Utilities Commissi-on?
A I am the program manaqer over the
engineerj-ng section.
a Did you cause to be filed in this case
direct testimony in support of a stipulation and
settlement agreement?
A r dld.
O Are there any additions or corrections
that you would make to your testimony today?
A I do not.25
122
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CSB REPORTING
208 .8 90 . 5198
LOU]S (Di)
Staff
O If you were asked the same questions that
are contained in your prefiled direct testimony, would
your answers be the same today?
A They would be the same.
O Did you cause to be attached to your
testimony Exhibit, Staff Exhibit, No. 102?
A No, I did not attach any exhibits.
O Staff Exhibit No. 702 attached to your
testimony are the, what's called the, Professional
Qualifications of Mike Louj-s?
A Excuse me, correction, I did attach
those.
O Thank you.
MR. HAMMOND: I would ask that Mr. Louisrs
testimony be entered into the record as if read and would
tender the witness for cross.
COMMISSIONER RAPER: Would you l-ike
Exhibit I02 admitted?
MR. HAMMOND: Yes, excuse me. After all-
of that, sorry, I woul-d ask, al-so ask, that Exhibit 1,02,
Staff Exhibit No. LO2, be admitted into the record as
well. Thank you.
COMMISSIONER RAPER: Without ob j ecti-on,
the record asMr. Louis's testimony will be
if read and Exhibit 702 will-
spread across
be admitted into the record.25
123
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(Staff Exhibit No. 102 was admitted into
evidence. )
Mr
(The following prefiled testi-mony of
Michael- Louis is spread upon the record. )
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CSB REPORTING
208.890. s1_98
LOUrs (Di)
Staff
25
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O. Please state your name and business address for
the record.
A. My name is Michael Louis. My business address
is 11331 W. Chinden B1vd., BLDG 8, STE 201-A, Boise,
rdaho 831L4.
O. By whom are you employed and in what capacity?
A. I am employed by the fdaho Public Utilities
Commj-ssion as the Engineering Section Program Manager.
0. V0hat is your educational and professional
background?
A. My educational background and professional
experiences are shown in Exhibit No . \02.
O. What is the purpose of your testimony and how
is your testimony organized?
A. The purpose of my testimony is to provide
and Settlementsupport for the comprehensive Stipulation
("Settlement") filed as a result of the Settlement
reached between the Parties in both the electric and
natural gas cases. Specifically, my testimony addresses
concerns rel-ated to: (1) net power supply expense and
transmj-ssion-rel-ated expenses ("PSE") incJ-uded in the
electric case revenue requi-rement and the adjustments
that were made from the orj-ginal Application including
the removal of the Rattlesnake Flat and Palouse wind
contracts from base PSE;
upgrade investment costs
(2) the removal of network
from
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AVU-E-21-01 & AVU-G-21-0L
07 /L9/2L
LOUIS, M. (Stip)
STAFF
1
25
t25
the revenue requJ-rement associated with Rattlesnake Flat;
(3) the spread of the 202L and 2022 electric and natural-
gas revenue requirements among the different customer
classes; and (4) changes to rate design for electric and
natural- gas rates. An out1ine of my testimony is as
foll-ows:
I. PSE in El-ectric Base Rates
Palouse Wind PSE Adjustment
Rattlesnake Elat PSE Adjustment
II. Rattlesnake Flat Network Upgrade Cost
III. Spread of Revenue Requj-rement to Customer Classes
El-ectric Revenue Requirement CLass ALlocation
Natural Gas Revenue Requirement Class
Allocation
IV. Rate Design
I. PSE in E]ectric Base Rates
O. What were your overall concl-usions for base PSE
included in the revenue requirement for electric?
A. I be1ieve the PSE agreed to by the Parties is
fair and reasonabl-e because it represents an amount that
the Company will likely incur given what is known and
measurable and because the amount is adjusted for costs
that are driven by Idaho customersr needs and
requirements.
O. Pl-ease summarj-ze the PSE included in the
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AVU-E-21-01 & AVU-G-21-07
07 /19 /27
LOUIS, M. (Stip)
STAEF
2
25
726
1
2
3
4
5
6
7
8
9
Settlement and the adjustments made to the amount
included in the Company's origJ-na1 Application.
AVU-E-21-01 & AVU-G-21-01
07 /\9/21.
LOUIS, M. (Stip)
STAFF
tt
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13
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11
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h
r!.{'.: it.
+a
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t27 2a
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A. If the Settlement is approved, the total amount
of annual PSE in el-ectric base rates will be $126 mil-lion
for the system, of which $43 million is ldaho's
jurisdictional share. Idaho's share refl-ects five
adjustments to the Companyrs requested PSE amount as
summarized in the table below for a total- reducti-on of
about $5 million in PSE:
ADJUSTMENTS $ (000)
Removal of Palouse Wind (decrease)
Update
Idaho
Removal of Rattlesnake EIat (decrease)
Gas Forecast (increase)to Electric and
Power Transmj-ssj-on Contracts (decrease)
Rate Case (decrease)EERC General
Remove BPA Contract (decrease)
(3,1L7 )
(232)
1,878
(1,105)
(1,399)
(383)
Total Adjustments (4,958)
O. What were your major concerns regarding the PSE
filed in the original Application?
A. My two greatest concerns were the inclusion of
Pal-ouse Wind and Rattl-esnake FIat wind projects. Staff
also evaluated potential known and measurable Pro Eorma
updates to PSE that should occur prior to rates going
into effect on September 1-, 202L.
AVU-E-21_-01 & AVU-G-21-01
01 /19/27
LOUIS, M. (Stip)
STAFF
3
25
L2B
Palouse Wind PSE Ad ustment
0. What is your concern with the Palouse Wind
project rel-ative to PSE?
A. I was concerned with the prudence of including
the Company' s Application.Pal-ouse Wind in base PSE
The Palouse Wind project
base rates since it was originally submitted for base
rate recovery in Case No. AVU-E-12-08. In that case,
"Staff objected to the project because the Company
acquired it to satisfy a Washington State Renewable
Portfol-io Standard without any immediate need to serve
l-oad. Moreover, Staff determined that the project's PSE
would exceed project benefi-ts under near term normalized
load and power supply conditions." Lobb, DI, Case No.
AVU-E-12-08, p. 13. For settlement purposes in Case No.
AVU-E-12-08, the net cost/benefits have been tracked and
recovered through the Power Cost Adjustment ("PCA")
mechanism with 902/702 Company,/Customer sharing band that
effectively aIlows the Company to recover 90% of
Pal-ouse's contribution to PSE.
In the general rate cases that followed, the
cost difference of the contract rates compared to market
rates, including the comparison I completed in this
case, have maintained a sizable di-fference supporting
Staff's view that the project is uneconomic for Idaho
as 1n
has not been included in Idaho
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AVU-E-21-01 & AVU-G-21-0L
07 /19 /21,
LOUIS, M. (Stip)
STAEE
4
25
729
1_
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3
4
5
6
7
I
9
customers. The treatment through the PCA effectively
provides a 108
I
AVU-E-21-01 & AVU-G-21,-0L
07 /7e/21
LOUIS, M. (Stip)
STAF'F
,ht.,t:l
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25
130 4a
discount for the cost of the project's power for Idaho
customers, has been maintained in al-l- subsequent general
rate cases.
O. How were the concerns with Palouse Wind PSE
addressed in the Sett]ement in this case?
A. The Settlement maintains the same PCA treatment
as in past general rate cases for the cost of Palouse
Wind power, which on ba1ance with the overall Settlement,
provides reasonable PSE for Idaho customers.
Rattl-esnake Flat PSE Ad ustment
O. What is your concern with the Rattlesnake Flat
project rel-ative to PSE?
A. Like the Palouse Wind project, I was concerned
with the prudence of incl-uding Rattlesnake Elat in base
PSE, especially since the project went online in 20L9
several- years before a need for capacity to meet load.1
Without a need for capacity, the project j-s required to
meet an economic threshold defined by the next best
alternative. As 1n the case of Pal-ouse Wind, I believe
that market electricity cost for the same amount of
generation serves as a good proxy for evaluation
purposes.
1 December 2026 was the first capacity deficiency date
authorized in Order No. 33958 at the time when the project
went onl-ine. November 2026 was the first capacity deficiency
date authorized in Order No.34981 when this case was filed.
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AVU-E-21-01 & AVU-G-2L_OL
07 /L9/21
LOUIS, M. (Stip)
STAFF
5
25
131
fn Case No. AVU-E-19-04, Staff had concerns
about the impact
analysis, market
most recent IRP
Rattlesnake Flat had on PSE. In Staff's
electricity price forecasts from their
were Iess expensive than Rattlesnake Fl-at
contract prices, while ad;usting for wind integration
earned by thecosts and renewabl-e energy credits ( "REC" )
the contract.project, over the term of
The Settl-ement between the parties j-n Case No.
AVU-E-19-04 util-ized the same treatment as Pal-ouse Wind,
Ieaving the cost of Rattl-esnake Fl,at out of base rates
and flowing the project's PSE through the PCA,
effectively reducing PSE of the project by 10%.
Staff's analysis in this case showed similar
resul-ts as those in Case No. AVU-E-19-04 general rate
case. Staff analysis showed the cost of the Rattl-esnake
Fl-at project over the term of the contract being higher
than market rates, even when adjusting for potential- REC
revenue, wind integration costs, and network upgrade
costs associated with the project.
0. How were concerns with the PSE of Rattlesnake
Flat addressed in the Settl-ement in this case?
A. The Sett.l-ement maintains the same PCA treatment
for Rattlesnake Flat as was negotiated in Case No.
AVU-E-19-04, by not including the cost of the project in
base rates but flowing it through the PCA at 90%. Staff
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AVU-E-21-01 & AVU-G-2L-0]-
01 /1-9/21
LOUIS, M. (Stip)
STAFE
6
25
L32
believes the treatment of Rattlesnake Flat in this
Settlement makes the projectrs contribution to PSE
reasonabl-e for Idaho customers.
Miscellaneous PSE Pro Forma Ad ustments
O. What other adjustments to PSE dld the
Settlement address?
A. The Settl-ement incorporated four other
adjustments to PSE in base rates. Three of these
adjustments represent a decrease in base PSE, while the
fourth-an update in the natura1 gas price forecast-
represents an increase in base PSE.
The three adjustments that resul-ted in
decreases were adjustments to costs and revenues with
outside entities. These include (1) new fj-rm
transmission contracts with fdaho Power that will earn
the Company additional- revenue; (2) J-ncremental-
transmission revenue that will- resul-t from a Eederal
Energy Regulatory Commission rate case that will be
completed by the end of 202L; and (3) a reduction in
transmission cost resulting from a Bonneville Power
Agency contract that was not renewed.
O. Please explain the j-ncrease in PSE due to an
update in the electric and natura1 gas forecast.
A. Unlike other types of expense, the Company uses
projected PSE dispatch costs developed through an AURORA
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AVU-E-21-01 & AVU-G-2L-01 133
01 /79/2t
( stip)
STAFF
1
25
LOUIS, M
model run starting with the date that customer rates go
into effect. An historical test period is used to
normafize loads and resource costs. Exceptions are the
market natural gas and electricity price forecasts, which
are major
gas-flred
that the
drivers of dispatch cost for the Company's
generators and fo r electricity market prices
from the Mid-ColumbiaCompany purchases
trading-hub. Because the forecasts are based on forward
contract prices, they represent the best indicators of
future natural gas and electricity prices, dt least in
the near term when there is a sufficient volume of
trading.
Staff has historically requested the Company
run its AURORA mode1 with the l-atest naturaL gas forecast
to get the most accurate dispatch cost included in base
PSE. In the past several general rate cases, wh11e the
price of natural- gas was experiencing a declining trend,
incorporating the l-atest natural gas price has resul-ted
in updates to PSE in the customerrs favor. However,
more recently market fundamentals have caused market
prices to trend upwards compared to the forecast
submitted in the Applj-catj-on making it reasonable to
reflect higher PSE due to anticj-pated higher future
natural- gas prices.
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AVU-E-21-01 & AVU-G-21-01,
01 /79/21
LOUIS, M. (Stip)
STAFF
I
25
]-34
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II. Rrttlecaeke FIat Netrork lbgrrds Coet
O. What is your concern with Rattlesnake Flat
Interconnection Costs that were included J-n plant-in-
/
/
/
-+*.,',lir
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t"
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; =;itir,'
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(StiP) 8a
STAFF
',P
: ;li'*;lAVU-E-21_-01 & AVU-G-ZI-OL
07 /L9/2L
25
135 LOUIS, M
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service in the Company's Application?
A. I was concerned with the cost of the network
upgrades on the Companyrs side of the point of
interconnection. Given that I coul-d not recommend a
determination of prudence to
rates from a
include the Rattl-esnake FIat
i-n baseproj ect
included adjustments for the
upgrades, it woul-d not
network upgrade costs
perspective, since the
PSE standpoint, which
cost of the network
be reasonabl-e to determine the
are prudent from an ldaho ratepayer
wind project was the cause of the
network upgrades cost. Essent j-a11y, the j-nvestment in
network upgrades without the Rattlesnake FIat wind
project would not be needed.
O. How were these same network costs handled in
the settlement agreement approved by the Commission in
the l-ast general rate case, Case No. AVU-E-I9-04?
A. The network upgrade costs were not incl-uded.
O. How was your concern addressed in the
Settlement in this case?
A. The Parties agreed to not incl-ude the network
upgrade costs in the Compdny's plant-in-service for this
CASC.
III. Spread of Revenue Requirement to Custoaer CJ.asses
Electric Revenue Re irement Class A]location
O. Please summarize the cl-ass all-ocation of the
AVU-E-21-01 & AVU-G-27-01
07 /1"9/21.
LOUIS, M. (Stip) 9
STAEF
25
136
1
2
3
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5
6
7
I
9
revenue requirement for electric service in the
Settlement.
AVU-E-21-01 & AVU-G-21-0L
07 /!9/2L
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LOUIS, M. (Stip) 9a
STAE'F
25
137
A. The two-year rate plan in the Settlement
util-izes available tax credits owed to customers as
discussed in Staff witness English's direct testimony.
The tax credits wou1d be used to offset portions of the
increases in base rates over both years. The tax credits
provided an opportunity for certain classes to make
movements in the allocation of the revenue requirement to
achieve greater equity based on their cost-of-service.
Eor al-l- other classes that did not include movements
toward cost-of-servj-ce, base rate increases were spread
on a unj-form percentage basis.
O. Please explain the movements in the cl-ass
allocati-on towards cost-of -service in the Settl-ement.
A. The primary principle in cost-of-service-based
ratemaking is to assign costs to the customer cl-asses
causing the cost so that rates for the various customer
classes can be developed to recover the costs assigned to
them. The Company's cost-of-service analysJ-s results
incl-uded in Company witness Tara Knox's direct testimony
provides the rate of return for each customer cl-ass based
on current rates. Dividing the rate of return for each
customer class by the overal-l- rate of return provides a
Rel-ative Return Ratio for each customer cl-ass. A
Return Ratio equal to one
paying no more and no less
customer class with a Rel-ative
(or at unity) is assumed to be
than its
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AVU-E-21-01 & AVU-G-2L-07
07 /te/2L
( StiP )
STAEE
25
138 LOUIS, M 10
cost-of-service. A ratio
the class is paying more
whi]e a ratio less than
not paying its fair share.
analysis
towards
Relying on the
as a guide, the
unit.y
of the
greater than
than its fair
one indicates that
share of
(small- commerc j-aI
starting in Year 2. In both cases,
were accomplished by allocating more
one indicates that the
costs,
class is
results of the cost-of-service
these re-allocations
of the revenue
Year 1
Parties agreed to move 7Seo
for Schedule 25P (Cl-earwater) starting in
rate plan and by movj-ng
service) customers
Schedul-es L\/72
by the same amount
requirement to Schedule I (residential service)
customers.
0. Do you have any concerns wlth the class
allocations in the Settlement?
A. I believe the reductions in the allocation of
the revenue requirement towards unity for Schedules L7/L2
increasing the allocation for Schedule 1and 25P by
customers
1,1, / L2 and
cost-of-service,
paying Iess than
concern is with
Year 2.
O. Please
are reasonable. Under current rates, Schedules
their25P have both been overpaying
while Schedule 1 customers have been
their fai-r share. However, my largest
the rate changes that occur at the end of
explain your concern with the rate
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AVU-E-21-01 & AVU-G-21-01
07 /79/27
( stip)
STAFF
25
139 LOUIS, M 11
changes at the end of Year 2 and overall rate plan in
more detail.
A. There ls a likelihood that there will be a
AVU-E-21-01 & AVU-G-21-01, 140
07 /19/2L
,lr,
al
!l
,l
(Stip) 11a
STAFF
LOUIS, M.
"pancaking" of rates after the end of Year 2. This may
negatively affect
increase in base
rate stability. After Year 2, the
rates will be immediately reflected in
customer's bil-ls without the offset from the tax credits.
If the Company files another general rate case
with an effective date soon after Year 2 ends, there will
be an additional increase in customer rates.
However, it is important to consider that the
impact of the tax credit refunds to customers, regardl-ess
of any other changes in rates automatically causes issues
related to rate stability. It is the customer's money
and the mere fact of provl-ding a refund will cause a
temporary change in customer rates reflected in customer
biIls.
It is possible to refund the tax credit amount
over a longer period to lessen the effects on rate
stabllity; however, doing so
intergenerational- equity. If
causes issues with
the body of customers who paid
the period were extended,
those taxes in the
Company's rates may not necessarily be same customers
receiving the refund due to customers who move into and
out of the Company's service territory. Refunding the
tax credit over a longer period to improve rate
stability, would only increase these inequities.
However, I be1ieve making progress in
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AVU-E-21-01 & AVU-G-21-07
0'7 /1,9/27
( stip 1
STAFF
25
L41,LOUIS, M L2
1
2
3
4
5
6
7
I
9
developing rates that adhere to the principJ-es of
cost-of-service rate
AVU-E-21-01 & AVU-G-21-01,
a7 /19 /2t
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(Stip) t2a
STAEE
25
L42 LOUTS, M.
making to
important.
is also
SCTV]-CE
important,
would ever
provide equity across the customer classes is
Balancing rate movements with
otherwise no movements
rate stability
toward cost-of-
bel-ieve theoccur. fn this case, I
movements are justified and more
because of the offsets from the
easily facilitated
tax credit refunds.
Natural Gas Revenue Requirement Class Allocation
O. Please summarize the cLass al-location of the
revenue requirement for natural gas service in the
Settl-ement.
A. There are no changes in the class allocation
percentages of the revenue requj-rement for natural gas
service in the Settlement. A11 the decreases in base
rate revenue requirement occurrj-ng during Year 1 of the
two-year rate plan and the increases in Year 2 axe spread
to customer cl-asses on a uniform percentage basis.
O. Do you have any concerns with the class
al-locations or the overall rate plan in the Settlement?
A. I do not have any concerns. I believe the
resulting spread of the rates to different customer
classes i-s fair and reasonable, given that there are no
changes in the current class alLocation.
fV. Rate Desigm
O. Please summarize changes in rate design
incorporated into the Settlement.
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2
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AVU-E-21-01 & AVU-G-2L-01
07 /L9/27
( stip )
STAEF
25
743 LOUIS, M 13
A. For Year I of the two-year rate pIan, al-l- of
the base rate revenue increases or decreases are
recovered 100% through the energy charge for a1l- rate
schedules. The only meaningful change for Year 2 is a $1
per month j-ncrease-from $6 to $7-in the electric and
natural gas Residential- Basic Charge (Schedules 1 and
101).
O. Pl-ease discuss the j-ncrease 1n the electric and
natural gas Residentia1 Basic Charge for Year 2.
A. The last increase 1n the Basic Charge resul-ted
from Case Nos. AVU-E-17-01 and AVU-G-17-01. The increase
was $0.25 from $5.75 to $6.00 for electric service and
$0.75 from $5.25 to $6.00 for natural gas service.
The Basic Charge is designed to recover costs
j-ncurred on a per customer basis and these costs do not
vary with the amount of el-ectricity or natural gas
consumed. Examples incl-ude bilting costs, meter reading
costs, and the cost of
the cost-of-service for
the meter. The current amount in
these expenses is over six times
as much as the existing $6 per month Basic Charge. By
increasing the basic charge, it will also reduce the
volumetric ($ per kil-owatt-hour or $ per therm) portion
of rates so customers shoul-d not see drastic changes in
increase ratetheir total bill. However, it should
stabil-ity with bills that vary l-ess across al-l- months of
1
2
3
4
5
6
1
I
9
10
11
t2
13
t4
15
75
71
18
L9
20
21,
22
23
24
AVU-E-21-01 & AVU-G-27-0L
01 /L9/27
(stip) 74
STAFF
25
144 LOUIS, M
1
2
3
4
5
6
7
8
9
the year. For these reasons, I believe the increase in
the Basic
AVU-E-21-01 & AVU-G-21-01 145
07 /19 /21
ni
'(it
10
11
L2
13
14
15
16
t7
18
t9
20
21
22
23
24
(Stip) !4a
STAFF
25
LOUIS, M.
1
2
3
4
5
6
7
8
9
Charge is reasonable.
a. .Does this conclude your testimony in this
proceedl-ng?
A. Yes, it does.
AVU-E-21-01 & AVU-G-21-01
07 /L9/2L
( stip)
STAFF
10
1t-
L2
13
74
15
16
1-7
18
19
20
2L
22
23
24
25
L46 LOUTS, M.15
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2
3
4
5
6
7
I
9
10
11
t2
13
t4
15
t6
11
18
19
20
2!
22
23
24
CSB REPORTING
208.890.5198
LOUIS
Staff
(The following proceedings were had in
open hearing. )
COMMISSIONER RAPER: And is there any
cross-examination for this wi-tness? Mr. Otto.
MR. OTTO: No questions from the
Conservation League.
COMMISSIONER RAPER: Mr. Semanko.
MR. SEMANKO: No, thank you.
MR. MEYER: No questions.
COMMISSIONER RAPER: Any questions from
the Commissioners? Okay, Mr. Louis, you are excused.
THE WITNESS: Thank you.
COMMISSIONER RAPER: Thank you.
(The witness left the stand. )
COMMISSIONER RAPER: That exhausts our
witness 11st. I appreciate you all being here lj-ve in
We are trying to get back to busj-nessthe Hearing
as usual.
Room.
This
like to have the
purposes, so we
your time. I'm
getting steamier
is paft of bus j-ness as usual for us. We
parties in front of us for these
appreciate your appearance here today and
grateful that j-t was short, because it's
as we speak.
The only remaining part of the schedule
public commentsbefore the records cfoses, it looks l-ike
are due by tomorrow, close of business,on August 3rd.25
147
1
2
3
4
5
6
7
8
9
After that, the record wiII close and this Commission
will render its decision in this caser so unless there is
anything more before us that needs to be di-scussed, this
heari-ng is adjourned.
MR. MEYER: Thank you.
MR. HAMMOND: Thank you.
(The hearing adjourned at 9:56 a.m. )
CSB REPORTING
208 .8 90 . 5198
10
11
1,2
13
t4
15
L6
L7
18
t9
20
21-
22
23
24
Iui-,
25
148 COLLOQUY
AUTHENTICATION
This is to certify that the foregoing
proceedings hel-d in the matter of the application of
Avista Corporation for authority to increase its rates
and charges for electric and natural gas service to
el-ectric and natural gas customers in the State of ldaho,
commencing at 9:30 a.m.r oD Monday, August 2, 202I, dt
the Commission Hearing Room, 11331 West Chinden Blvd.,
Building 8, Suj-te 201-A, Boise, Idaho, is a true and
correct transcript of said proceedings and the original
thereof for the file of the Commission.
Accuracy of all- prefiled testimony as
originally submitted to the Reporter and incorporated
herei-n at the direction of the Commi-ssion is the sole
responsibility of the submitting parties.
J
CONSTANCE
Certified
S. BUCY
Shorthand Reporte 87
CONSTANCE S EUCY
NOTARY PUBI.IC . SIA]E OF IDAIIO
coMMtssloN
MYCOMMISSION
NUMBER 12995
EXPTRES $t2024
1
2
3
4
(
6
1
I
9
10
11
72
13
t4
15
L6
!1
1B
79
20
2l
22
23
24
CSB REPORTING
208.890. s198
25
749 AUTHENTICATION