991022_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
DON HOWELL
STEPHANIE MILLER
TONYA CLARK
RON LAW
MADONNA FAUNCE
NANCY HARMAN
WORKING FILE

FROM:

DATE: October 22, 1999

RE: CASE NO. AVU-G-99-2 (Avista)
ANNUAL PURCHASE GAS ADJUSTMENT (PGA) FILING

On September 15, 1999, Avista Corporation dba Avista Utilities — Washington Water Power Division (Avista; Company) applied to the Idaho Public Utilities Commission (Commission) for authority to implement new rates and charges for natural gas service in the state of Idaho. Avista serves approximately 48,600 customers in Idaho. Over 48,000 of those customers are residential. As computed by the company, the total requested net annual revenue increase in Idaho is $2,708,000 (8.58%), which includes separate billing adjustments for contract customers as detailed below. The increase in price per therm to residential customers is approximately 8.41%. Residential customers using an average of 80 therms per month under the Company’s proposal can expect an increase in their average monthly bill of $3.21. The change in rates and charges to other customers will vary according to customer class and usage. The Company has requested an effective date of November 1, 1999. The Company maintains that the public interest does not require a hearing on its Application and requests that the matter be processed under the Commission’s Rules of Modified Procedure, i.e., by written submission rather than by hearing, IDAPA 31.01.01.201-204.
As part of this Purchase Gas Adjustment (PGA) filing, the Company is also requesting to collect $.0004 per therm from sales customers for remittance to the Gas Research Institute (GRI) for research and development (R&D) projects. GRI is requesting that local distribution companies (LDCs) contribute, on a voluntary basis, an annual amount equal to lost pipeline funding. The proposed customer charge of $.0004 per therm is estimated to provide approximately $31,000 on an annual basis.
The overall effect of the proposed changes, if authorized, would be to increase customer rates per therm in the follow amounts:

Class Description
& Schedule

$ Per Therm
General/Large General & Commercial
(Schedules 101,111 &121)

Large General & Commercial Receiving Lump Sum Bill
Credits or Charges
(Schedules 112 & 122)

Interruptible Service & Interruptible Service Receiving Lump Sum Bill Credits or Charges
(Schedules 131 & 132)

Transportation
(Schedule 146)

$0.04012

$0.02185

$0.01784

$Ø
Schedule 155Gas Rate Adjustment
Schedule 155Gas Rate Adjustment (Idaho) is used by the Company to pass through any under- or over-collection of gas costs since its last tracker filing. The company estimates a net deferral amount of $1,245,411 owing from its customers as of June 30, 1999. The result is an increase in the Tariff Schedule 155 rates for Schedules 101, 111 and 121 customers of $0.01827/therm.
As per the Company’s Application and to clear out residual balances in customer accounts the following large transportation and interruptible customers will receive individual billing charges and/or credits/refunds that include interest that has accumulated from the end of the test period to the date of Commission approval. Balances at the end of the test period were:

Kootenai Medical Center
Idaho Asphalt
Imsamet
Hughes Greenhouse
Lignetics
Louisiana Pacific (Sandpoint)
Louisiana Pacific (Chilco)
Interstate Asphalt
University of Idaho
St. Joseph Hospital
Coeur dAlene Asphalt
Crown Pacific
($ 224)
($ 189)
$ 0
($ 33)
$ 182
$2,345
($ 32)
$ 8,508
$10,561
$11,766
($ 1,088)
$12,658
Potlatch will receive an individual (Sch 155) refund/credit of $3,462.

Schedule 150Permanent Gas Cost Changes
Schedule 150Permanent Gas Cost Changes (Idaho) is used by the Company to reflect continuing changes in the cost of purchasing and transporting gas for customers. Since rates were last approved, the net change in commodity, demand and storage gas costs results in an increase of $0.02185/therm for firm gas Schedules 101 through 122; an increase of $0.01784/therm for interruptible Schedules 131 and 132; and no change for transportation Schedule 146. As per the Company’s Application, the resultant annual net increase in annual revenue requirement (Idaho) related to Schedule 150 changes is $1,462,698. The Company calculates its current weighted average cost of gas (WACOG) to be $0.19308, an increase of $0.2567 from the previous $0.16741.

On October 4, 1999, the Commission issued Notices of Application and Modified Procedure in Case No. AVU-G-99-2. The deadline for filing written comments or protests was October 22, 1999. The Commission Staff was the only party to file comments. Staff recommends that the Company’s Application be approved. Staff continues to request a more timely filing by the Company of its trackers. As reflected in its comments, in the last tracker for the Company, Staff pointed out that the delay in filing the tracker (June closing with October filing and December 1 proposed effective date) caused the Company to miss part of the heating season and caused the customer to pay additional interest on the amount deferred. Staff notes that the Company in this case has improved by making a September 15, 1999, filing and asking for a November 1 effective date. Staff continues to believe, however, that with a June 30 closing, the Company should be able to make a July or August filing and have new rates in effect by September 1 for the heating year. This, Staff represents, would protect the consumer from incurring additional interest charges.
The Commission has also received a number of letters from Avista customers opposing the size of the proposed increase, questioning the necessity of an increase and expressing concern regarding the impact of the increase on fixed and low-income customers.

Commission Decision
The Company in its tracker filing has requested an 8.58% or $2,708,000 increase in annual revenue. The Company has requested that the new rates take effect on November 1, 1999. Should the Company’s Application be approved? If not, how does the Commission wish to proceed?

vld/M:AVU-G-99-2_sw

DECISION MEMORANDUM -3-