HomeMy WebLinkAbout20060828_1651.pdfDECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:WELDON STUTZMAN
DATE:AUGUST 24, 2006
SUBJECT:CASE NO. A VU-06-
VISTA CORPORATION'S REQUEST TO DEFER THE COSTS
RELATED TO GRID WEST, A REGIONAL TRANSMISSION
ORGANIZATION
On April 27, 2006 , Avista Corporation filed an Application requesting an accounting
order from the Commission authorizing the deferral of costs the Company incurred relating to
the development of a regional transmission organization (RTO). Avista participated in efforts to
develop an RTO , now called Grid West, pursuant to orders issued by the Federal Energy
Regulatory Commission (FERC). Avista states it provided startup costs to the RTO to retain
experts and facilitators, and that the current balance of Avista s loan to Grid West
217,499., which includes interest of $188 187.34. Avista estimates that the total amount of
the deferred amount is $421 620 for the Idaho jurisdiction.Because it now appears the
development of Grid West is unlikely, Avista requests authorization to defer the amounts it
loaned to Grid West, with interest, in the development process.
On June 29, 2006, the Commission issued a Notice of Application and Notice of
Modified Procedure, establishing a deadline for the filing of written comments. Comments were
filed only by the Commission Staff.
Staff reviewed the Company s Application as well as relevant FERC Orders. Staff
stated that Avista s participation in Grid West complied with FERC Orders and FERC's attempt
to protect and provide additional benefits to customers. Staff recommended that the Commission
authorize Avista to book the principal amount of the funding agreements with Grid West to
account 182.3 (Other Regulatory Assets), and that a separate sub-account be maintained for the
DECISION MEMORANDUM
029 311.92 total system cost, $356 450.72 for the Idaho jurisdiction, not including interest.
Staff also recommended that the recovery of these costs and the amortization period used for
recovery be addressed in the Company s next general rate case filing.
Staff stated that A vista should not be allowed to defer for future recovery the amount
of interest accrued on the promissory notes to Grid West because, had Grid West been
successful, the interest on these loans would have been paid by Grid West as a return on Avista
investment in the RTO. Furthermore, because Avista never had any cash outlay for the interest
portion, Staff believes the return of the actual expenditure without interest is sufficient recovery
for the utility.
Staff also recommended that the Company begin amortization of the deferred balance
at the conclusion of its next general rate case or on January 1 , 2010, whichever occurs first. Staff
believes that the initial amortization period should be five years unless a different time period is
supported by a party in a general rate case and is approved by the Commission.
COMMISSION DECISION
Should the Commission issue an Order authorizing deferral of the amount A vista
loaned to Grid West? If so, should the amount for deferral include interest (thus totaling
$421 620) or not include interest (thus totaling $356,450.72) for Avista s Idaho jurisdictional
services?
Should the Order include a date for amortization to begin and the amortization
period?
Weldon Stutzman
bls/M:A VU-O6-03 ws
DECISION MEMORANDUM