20060925_1675.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:SCOTT WOODBURY
DATE:SEPTEMBER 19,2006
SUBJECT:CASE NO. A VU-06-8 (Avista)
PROPOSED ELIMINATION OF CENTRALIA GAIN RATE CREDIT
On September 14, 2006 , Avista Corporation dba Avista Utilities (Avista; Company)
filed an Application with the Idaho Public Utilities Commission (Commission) requesting to
eliminate or zero-out the temporary rate adjustment credits (tariff Schedule 65) that have been
used to pass through the customer portion of the gain on the sale of the Centralia Power Plant.
The proposed effective date is November I , 2006. The Company expects that the customer
portion of the gain on the sale of the Centralia Power Plant will be fully refunded to customers
by November 1 2006.
Elimination of the rate credit will result in an overall annual increase in Idaho electric
revenue of approximately $2.5 million or 1.45% and will affect all electric customers. Energy
charges for the individual rate schedules are to be increased by the following amounts:
Schedule I
Schedule II and 12
Schedule 21 and 22
Schedule 25
Schedule 31 and 32
091~
0.124~
085~
059~
073~
Flat rate charges for Street and Area Lighting Service (Schedules 41-49) are to be increased by
777%.
BACKGROUND
The Commission approved the sale of the Company s interest in the Centralia Power
Plant in Order No. 28297 dated March 7, 2000 in Case No. A VU-99-6. The customer portion
DECISION MEMORANDUM
of the gain was deferred and was originally to be passed on to customers over an eight-year
period. Potlatch's Lewiston facility was initially exempted from receiving any portion of the
gain as the facility was served under a special service contract. The Centralia gain rate credits
contained on Original Sheet 65 were effective August 2000. Beginning January 2002
Potlatch began receiving service under Schedule 25 - Extra Large General Service and began
receiving and has continued to receive the Centralia gain credit applicable to Schedule 25.
The Commission in 2004 approved the sale of the Company s interest in the
Skookumchuck hydroelectric generation facility, which is operated to supply cooling water
the Centralia Power Plant. Reference Order No. 29484, Case No. A VU-04-2. As proposed by
the Company and approved by the Commission, the customer portion of the gain on the sale
Skookumchuck was deferred and added to the deferred gain on the Centralia Power Plant.
The customer portion of the net of tax Centralia gain amounted to approximately
507 000 and the customer portion of the net of tax Skookumchuck gain amounted to
approximately $154 000. The Company expects that the total amount of the net of tax gains of
approximately $7 661 000, and the benefit of a carrying cost on the unamortized gains, will have
been passed on to customers at the end of October 2006. The shorter pass-through period is due
primarily to having Potlatch receive the gain credit applicable to Schedule 25 beginning January
, 2002. In addition, customer loads have grown since the gain credits were made effective on
August 1 , 2000, also resulting in a shorter pass-through period. The Company proposes that any
under-refunded or over-refunded balance on November 2006 be transferred to the deferred
Power Cost Adjustment (PCA) deferral account as well as the remaining balance of associated
deferred federal income tax being transferred to the PCA deferred tax account.
A vista proposes that the Centralia gain temporary rate credits be eliminated effective
November 1 , 2006. Elimination of the temporary rate credits will result in an overall increase in
annual revenue of approximately $2.5 million. A residential customer using 1 000 kilowatt-
hours per month will see an increase of $0.91 or 1.45% in their monthly bill due to the
elimination of the temporary rate credit.
COMMISSION DECISION
A vista requests an Order from the Commission approving the elimination or zeroing
out of the Centralia gain rate credits contained on temporary rate adjustment Schedule 65
effective November 1 , 2006. Any under-refunded or over-refunded balance of the Centralia gain
DECISION MEMORANDUM
will be transferred to the PCA deferral account and PCA deferred tax account. A vista requests
that its Application be processed under Modified Procedure, i., by written submission rather by
hearing. Reference Commission Rules of Procedure, IDAP A 31.01.01.201-204. Staff concurs in
the recommended procedure.Does the Commission agree that Modified Procedure
appropriate in Case No. A VU-06-
Scott Woodbury
bls/M:A VU-O6-08 sw
DECISION MEMORANDUM