avug003.swahnh.doc

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION DBA AVISTA UTILITIES - WASHINGTON WATER POWER DIVISION FOR AN ORDER APPROVING A CHANGE IN NATURAL GAS RATES AND CHARGES. )
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CASE NO. AVU-G-00-3

COMMENTS OF THE COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Scott Woodbury, Deputy Attorney General, and in response to the Notice of Application, Notice of Modified Procedure and Notice of Comment/Protest Deadline issued on August 9, 2000, submits the following comments.
Staff has reviewed the filing made by Avista Corporation d.b.a. Avista Utilities – Washington Water Power Division (Avista) in this case and reviewed the information provided. The combined effect of all changes will be a 29.04% increase in annual revenue totaling $9,941,262. Avista has requested that the new rates take effect on September 1, 2000. Staff recommends that Avista’s Application be approved.

SCHEDULE 155 – TEMPORARY ADJUSTMENTS
Schedule 155 is used by Avista to pass through any over- or under-collection of gas costs since the last tracker was approved. A change in rates to Schedule 155 reflects a refund or a surcharge of the deferred gas cost balance. For this filing, Avista proposes no revision to the .03154 rates currently contained in Schedule 155. This will generate approximately $2,100,000 to cover the current deferred balance of approximately $4,890,000. The under-collected balance of approximately $2,790,000 deferred gas costs, along with any new costs or refunds for the current period, will be reflected in the next purchased gas adjustment (PGA), anticipated in Mid-2001, at which time Avista may propose a change in Schedule 155 rates to refund or surcharge the balance of the deferred gas costs.
At this time, Staff believes that there are three reasons Schedule 155 costs should be deferred. First, the proposed commodity WACOG of $.2950/therm together with the present amortization charge of $.03154/therm from Schedule 155 means that gas prices going forward could average $.3265/therm without adding to the deferral balance. Second, there is the possibility that the proposed WACOG is high enough to start paying down the deferred costs. If gas costs drop below the $.3265/therm level later in the year, the amounts in the deferral account will be reduced. Although there is no guarantee that this will happen, Staff believes it is reasonable to delay changes in Schedule 155 rates given the 29% increase already required for the proposed WACOG. Finally, Avista has a higher requested WACOG ($.3799/therm) than Intermountain Gas Company did ($.3672/therm). That lowers the risk of increased deferrals due to continued price escalations.

SCHEDULE 150 – PERMANENT GAS COST CHANGES
Schedule 150 is used by Avista to reflect continuing changes in the cost of purchasing and transporting gas for customers. Increasing gas costs appear to be a reality not only here in the Northwest, but throughout the country. One of the major factors causing the price increases is demand for gas used in peaking gas-fired turbines in California. In fact, in California, current gas prices are higher than futures prices for December. Other factors include late injections into storage, new pipelines that continue to siphon off less-expensive Canadian gas, expectations for a cold winter, and increased prices of heating oil.
Not only is gas more expensive, but the market is also much more volatile than it has been in the past. Prices can change ten to twenty percent up or down in a single day. That makes forecasting extremely difficult. Staff was able to compare gas futures prices for the coming year with the WAGOC proposed by Avista. Here are some selected futures prices based on approximate NYMEX adjusted prices as of August 9, 2000:

September 2000 $.3531/therm
October 2000 $.3761/therm
December 2000 $.4280/therm
July 2001 $.3308/therm

Compared to these prices, Avista’s commodity WACOG of $.2950 is below current market levels for every month. Avista is hoping to secure gas cheaper in the future than is currently available on the market. Because of the high prices we have seen lately and the $4,890,000 that is already in the deferred account, Staff believes it is important to grant the entire amount requested by Avista in the permanent adjustment schedule.

CONSUMER ISSUES
When Avista Utilities filed its Application in Case. No. AVU-G-00-03 on July 31, 2000, both the customer notice and the press release were included as a part of the filing. Neither document met the requirements of Rule 102, Notices to Customers of Proposed Changes in Rates. Utility Customer Information Rules (IDAPA 31.21.02.102) (Attachment D).
Customer Notice. Avista submitted drafts of the individual customer notice for Staff review prior to its filing. Avista did revise its customer notice based on Staff comments. Unfortunately, neither the Staff nor Avista recognized at the time of those discussions that the notice did not include the overall percentage increase as required by Rule 102.01. (See
Attachment B).
Press Release. Staff did not have the opportunity to review the press release before it was issued. Much of the information required to be in the release was omitted, including the dollar amount requested and the percentage increase for each major customer class (IDAPA 31.21.02.102.04). The increased dollar amount for residential customers and the overall percentage increase were included. The press release did not state that a copy of the application is available for public review at the offices of both the Commission and the utility. (See Attachment C).
Staff has discussed the omissions in the customer notice and the press release with Avista. Avista will be working closely with Staff on future filings to insure that the requirements of
Rule 102 are met. However, this is not the first time that the adequacy of customer information has been at issue. In Order No. 28402, Case No. AVU-E-00-2, the Commission made the following comment concerning customer notice provisions: “We caution Avista that repeated instances of oversights will demonstrate an unacceptable pattern of neglect. Our customer information rules are no less a requirement for Avista than our statutes and orders.”
Staff is concerned that adequate time has not been allowed for Avista’s customers to comment regarding this rate increase. Avista has requested an effective date of September 1, 2000, but individual customer notification will not be completed until August 29, 2000. For those customers whose billing cycle is the latter part of August, the customer notice may very well arrive after the proposed effective date of the increase.
As of August 29, the Commission has received and placed in its formal case file nine (9) written comments from customers, all of which oppose the proposed rate increase. One Avista customer requests that the Commission give careful consideration to the business practices of senior officers of the corporation before approving an increase, specifically referencing the class action suit filed on behalf of purchasers of Avista Corporation common stock during the period between April 7, 2000 and June 21, 2000 that was initiated about July 28, 2000.
Avista Utilities is committed to mitigate the effects of the proposed rate increase on its customers, but there is not a lot that can soften the large increase in rates. Avista Utilities participates in a low-income support fund, Project Share, which assists low-income customers who need help paying their gas bills. Although Avista encourages customers to donate to Project Share throughout the year, extra reminders are made during the winter. Avista customers can designate specific amounts for Project Share on each payment or make a pledge for the year. The Community Action Agencies that administer Project Share also have federal energy assistance (LIHEAP) funds available. However, when the rates go up, the benefit amount from the federal monies doesn't correspondingly increase.
Many counties in northern Idaho offer help for needy customers through their social services departments. Customers may also seek help through private social service agencies such as the Salvation Army and St. Vincent DePaul. Avista offers Comfort Level Billing, a level payment plan that allows a customer to pay their average annual usage with equal monthly payments. Although the usage is reviewed quarterly, the payments are usually adjusted bi-annually to allow for usage or rate increases or decreases. Approximately 15% of Avista's customers take advantage of level payment plans. Avista Utilities has other special level payment arrangements to help customers manage their utility payment in extraordinary circumstances. To make special arrangements, the customer should contact Customer Service at Avista Utilities. Avista has Cares Representatives whose primary responsibility is to network funds from various agencies for customers in emergency situations who may not know where to go for help.

STAFF RECOMMENDATION
1. Staff is not recommending that Avista be required to re-issue either the customer notice or the press release. However, Staff recommends that Avista be reminded again that both the customer notice and press release must meet the requirements of Rule 102, Notices to Customers of Proposed Changes in Rates (IDAPA 31.21.02.102).
2. Staff recommends that Avista be directed to provide information to its customers concerning the availability of levelized payment plans for all customers plus the assistance programs for needy customers. Staff also recommends that Avista provide information concerning demand side management and conservation changes that customers can implement before the winter heating season commences to reduce their use of gas.
3. Staff recommends that the Company revise the Comfort Level Billing amount (level payment plan) for those customers already on the program to reflect the increased rates. Adjusting payments now will prevent participating customers from accumulating arrearages in their level pay accounts during the winter heating season. Customers should also be given the opportunity to stop participating and resume regular payment procedures.
4. Staff recommends that in the future Avista be directed to allow enough time between the requested effective date of an increase and the last billing cycle containing the customer notice for customers to express their comments and concerns.
5. Staff recommends approval of rates as filed by Avista.

Dated at Boise, Idaho, this day of August 2000.

_______________________
Scott Woodbury
Deputy Attorney General
Technical Staff: Alden Holm
Nancy Harman

TC:SW:gdk:i:wpfiles/umisc/comments/avug003.swahnh

STAFF COMMENTS 4 AUGUST 30, 2000