20080407_2210.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GERRY GALINA TO
DATE:APRIL 2, 2008
RE:VISTA TARIFF ADVICE NO. 08-04-E TO REVISE TARIFF IPUC
NO. 28, SCHEDULE 59, RESIDENTIAL AND SMALL FARM ENERGY
RATE ADJUSTMENT CREDIT
On March 12 2008, Avista Corporation (Avista; Company) proposed changes to its
TariffI.P.u.c. No. 28, Schedule 59 - Residential and Small Farm Energy Rate Adjustment
Credit. Specifically, the Company requested revisions of Sheet No. 59 reflecting a rate
adjustment related to the Residential Exchange Program (REP) benefits that A vista might receive
under interim contract agreement with the Bonneville Power Administration (BP A). On
February 22, 2008, BPA announced that interim residential exchange rate relief was being
offered related to BP A's 2008 fiscal year. BP A has offered contracts that its customers must
sign with BP A by March 24, 2008 , to receive the interim payments. A vista is planning to sign
its contract with BP A. BP A expects that the interim payments will be paid as lump sum in the
first week of April 2008. Avista s share of the interim rate relief payment applicable to Idaho
qualifying customers amounts to $3 028 000.
The Company has proposed a rate credit of 0.554 cents per kilowatt-hour revising
Schedule 59 reflecting this credit. The current rate of Schedule 59 is a surcharge of 0.144 cents
per kilowatt-hour that was put in place in June 1 , 2007 to recover the over-funded exhange credit
balance that was caused by timing differences between pass-through of Schedule 59 credits and
receipt of payments, and because of suspension of such payments from BP A in May 2007. The
Company also proposed to eliminate the existing surcharge and to implement the proposed new
DECISION MEMORANDUM APRIL 2, 2008
rate credit effective April 11 , 2008. The Company further requested that the filing be processed
under Modified Procedure.
The Company also indicated that it is not certain the interim benefit payment would be
received. If other parties contest the interim payments, BP A may decide to not issue the
payments. Due to this uncertainty, the Company also filed an alternative revision to Schedule
59. The alternative tariff revision eliminates the existing surcharge of 0.144 cents per kilowatt-
hour and contains a proposed rate credit of 0.000 cents per kilowatt-hour.
For residential customers using 1 000 kilowatt-hours, eliminating the surcharge of 0.144
cents per kilowatt-hour would result in a decrease of $1.44 per month, or a 2.04% decrease in
existing rates. Implementing the 0.554 cents per kilowatt-hour rate credit related to the interim
payment would result in a decrease of7.87%, or a $5.54 decrease for a customer using 1 000
kilowatt-hours per month. The combined impact of putting both rate changes into effect would
be a monthly reduction of9.91 %, or a $6.98 decrease based on a 1 000 kilowatt-hours per
month. The actual decrease will vary based on customer usage.
A vista also indicated that the proposed rate changes would have no effect on the
Company s net income.
ST AFF REVIEW
As part of A vista s filing for the proposed rate changes, the Company submitted
workpapers supporting the calculation of the rate credit. The calculation starts with the interim
benefit amount of $3 027 840.00 to be received from BPA. This amount is adjusted to include
additional interest applied to about 50% of the balance during the 5.5-month refund period, and
further adjusted using a revenue conversion factor of 0.994819, making the total amount
084 824. The conversion factor is the difference of one minus the sum of uncollectible rates
and IPUC fees. The projected energy usage for all affected group of customers during the refund
period is 556 522 000 kilowatt-hours. The total credit amount divided by the projected energy
use is approximately 0.554 cents per kilowatt-hour. Staff reviewed the methodology and data
used by the Company and believes the proposed rate credit of 0.554 cents per kilowatt-hour is
appropriate.
The Company did not indicate in its filing how to zero out the REP benefit payment
received. After discussing this issue with the Company, it indicated that the remaining balance
DECISION MEMORANDUM APRIL 2, 2008
would be used as the starting credit amount when additional BP A Residential Exchange Program
benefits will be available in future years. Staff agrees with this process.
On May 31 , 2007, the Commission granted Avista s request to revise its Schedule 59
Residential and Small Farm Rate Adjustment Credit, and implemented a 0.144 cents per
kilowatt-hour surcharge on an interim basis along with the elimination of Residential Exchange
Program credit pass-through from BP A. Order No. 30327. On July 12 2007, the Commission
subsequently issued Order No. 30366 authorizing the Company to continue the surcharge until
the overcharge refunded balance reaches zero or the REP credits from BP A resumes. In
addition, the Commission ordered the Company to track the balance of collections from the
surcharge versus excess credits received by rate schedule, or customer class, and provide a report
to the Commission within 30 days of the termination of the surcharge. The Commission was
concerned that there might be imbalances that exist between credits and collections for any
customer classes upon the termination of the surcharge.
In this current filing, the Company addressed the elimination of the existing surcharge.
The Company submitted workpapers showing the balance of the Over-Refunded Balance ofREC
credit in the amount of$295 201 as of February 29, 2008, and the calculations of the projected
surcharge termination date. The Company estimates that by April 11 , 2008, which is the
proposed effective date of 0.144 cents per kilowatt-hour surcharge termination date, it would
have generated a negative (under-refund) balance of approximately $8 534. Staff agrees with the
methodology and data used in estimating the projected surcharge balance.
To address the issue of potential imbalances between credits and collections by customer
classes, the Company presented an analysis showing the proportions of kilowatt-hour sales by
rate schedule during the surcharge period and during the last refund period. A comparison of the
two periods indicates that the proportions are very similar. Staff reviewed the Company s data
and methodology and believes that the process was appropriate and that no significant mismatch
occurred between credits and surcharges for any customer classes. Staff also believes that the
Company has complied with the Commission Order No. 30366.
The Company submitted the tariff change, which was processed by the Commission as a
Tariff Advice. Staff reviewed the filing, and not anticipating contentious issues related to this
filing, Staff agreed that processing as a regular Tariff Advice is reasonable. In addition, since
rate credits are given to the customers and the existing surcharge to recover the previously over-
DECISION MEMORANDUM APRIL 2, 2008
funded RECs are eliminated, Staff believes the earlier these tariff changes are implemented, the
better for customers.
As indicated previously, the Company developed two options because ofthe uncertainty
of receiving funds from BP A. The Company notified staff on March 31 , 2008 that the Company
has received the fully executed Residential Exchange Interim Agreement between A vista and
BP A. In addition, the Company also notified Staff on April 2, 2008 that A vista has received the
funds from BP A. Staff agrees with the Company s proposal to eliminate the 0.144 cents per
kilowatt-hour surcharge and replace it with 0.554 cents per kilowatt-hour credit.
RECOMMENDATION
Staff recommends that the Commission approve the requested revisions of A vista Corp.
Schedule 59, Tariff I.P.C. No. 28, eliminating the 0.144 cents per kilowatt-hour surcharge and
replacing it with 0.554 cents per kilowatt-hour credit.
CO MMISSI 0 N D ECISI 0 N
Does the Commission wish to approve A vista Corp. proposed revision to Schedule 59
TariffI.P.u.C. No. 28 , with an effective date of April 1 2008?
Attachments
i:udmemos/Avista Advice 2008-Sch 59.doc
DECISION MEMORANDUM APRIL 2, 2008
AviSta. Corp.
1411 EiistMission PO Box3121
Spokane. Washington 99220,3121
Teleph()l1eg~489;O500
ioll Free 800-72J.9110
IS 'FA"
Corp.
March 12, ZO08
Ms. Jeanp. Jewell Secretary
Idaho PUblic Utilities Commission
472W. Washington St.
Boise, Idaho 83720
Re:TariffLP.C. No. 28, Electric Service
Residential and Small Fann Energy Rate Adjustment Credit
Dear Ms. Jewell:
Attached for filing with the Commission is one copy of the following tariff sheets:
Eighth Revision Sheet 59 Canceling Seventh Revision Sheet 59
Alternative Eighth Revision Sheet 59 Canceling Seventh Revision Sheet 59
Eighth Revision Sheet 59 reflects a rate adjustment related to residential exchange
program benefits that Avista may receive under an interim contract agreement with the
Bonneville Power Administration (BP A). On February 22~ 2008~ BP A announced that
interim residential exchange program rate relief was being offered related to BPA's 2008
fiscal year. BP A has offered contracts that its customers must sign by March 24 2008, to
receive the interim payments. A vista is planning to sign its contract with BP A. BFA
expects that the intelim payments will be paid as lump sums in the first week of April
2008. Avista s share of the interim rate relief applicable to Idaho qualifYing customers
amounts to approximately $3 028 000.
Eighth Revision Sheet 59 reflects a proposed rate credit ofO.554~ per kilowatt-hour. The
current rate on Seventh Revision Sheet 59 is a surcharge ofOJ44~ per kilowatt-hour that
was put in place June 1 2007 to recover the over-refunded exchange credit balance that
was caused by timing differences between thc pass-through of Schedule 59 credits and
receipt of payments from BPA, and because of suspension of such payments from BP A in
May 2007. The Company is proposing to eliminate the existing surcharge and to
implement the proposed new rate credit effective Aprilll , 2008. The Company re(luests
that the filing be processed under Modified Procedure.
It is not certain that Avista will receive an interim benefit paymcnt. If other parties
contest the interim payments, BP A may decide to not issue the payments. Due to this
uncertainty, the Company is also filing Alternative Eighth Revision Sheet 59. The
alternative tariff revision eliminates the existing surcharge of O.l44~ per kilowatt-hour
and contains a proposed rate credit of O.OOO~ per kilowatt-hour.
Enclosed are two sets of workpapers. One set applies to the elimination of the existing
surcharge ofO.144~ per kilowatt-hour and shows how the April I!, 2008 effective date
was derived. The other set applies to the possible interim benefit payment and shows the
derivation of a 0.554~ per kilowatt-hour rate credit to pass through the intelTIn payment
amount during the period of April 11 , 2008 through October 31 , 2008, assuming the
payment is received prior to April 11.
For a residential customer using 1 000 kilowatt-hours per month, eliminating the
surcharge ofO.144~ per kilowatt-hour would resultin a decrease of$L44 per month, or a
04% decrease ftom existing rates. Implementing the 0.554~ per kilowatt-hour rate
credit related to the interim payment would result in a decrease of $5., or a 7.87%
decrease for a customer using 1 000 kilowatt-hours per month. The combined impact of
putting both rate changes into effect would be a monthly reduction of $6.98, or a 9.91 %
decrease, based on 1 000 kilowatt-hours per month. The actual decrease win vary based
on customer usage. And, again, the decrease related to the interim benefit is contingent
upon A vista receiving the interim benefit payment from BP A.
Order No. 30366 in Case No. A VU-07 -03 dated July 12, 2007, at page 3 requires the
Company to "track the balance of collections from the surcharge versus excess credits
received by rate schedule, or customer class, and provide a report to the Commission
within 30 days oftennination of the surchargc_" Excess credits (over-refunds) and under-
refunds are not tracked by rate schedule. Pages 2 and 3 , of the enclosed set of work papers
that address the elimination of the existing surcharge ofO.144~ per kilowatt-hour, show
the proportions of kilowatt-hour sales by rate schedule during the surcharge pcliod and
during the last refund period, respectively. A comparison of the two periods shows that
the proportions are very similar.
The proposed rate changes will have no effect on Avista s net income. In addition to the
proposed tariffs and workpapers, also enclosed are the following items: 1) an affidavit, 2)
tar'iff sheets showing changes by using strikeouts and underlining, ar1d 3) a copy of the
interim benefit contract. Please direct any questions regarding this filing to Ron
McKenzie at(509) 495-4320.
Sincerely,
/4ir
Kelly Norwood
Vice President State and Federal Regulation
&\1
Attachments
AFFIDA VIT
STATE OF WASHINGTON)
:ss
County of Spokane
I, David J. Meyer, being first duly sworn on oath, deposes and says: 11lat he is the
Vice President and Chief Counsel of Regulatory and Governmental Affairs of A vista
Corporation and makes these statements for and on behalf of said corporation, being
thereto duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be true.
r//
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SIGNED AND SWORN to before me this 12th day of March 2008, by David J. Meyer.
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Commission Expires:J:2::LJ/tJ
LP.C. No. 28
Eighth Revision Sheet 59
Canceling
Seventh Revision Sheet 59
AVISTA CORPORATION
dba Avista Utilities
SCHEDULE 59
RESIDENTIAL AND FARM ENERGY RATE ADJUSTMENT -IDAHO
APPLICABLE:
To Residential Customers in the State of Idaho where Company has electric
service available. This rate adjustment results from an Agreement between the
Company and Bonneville Power Administration (BPA) covering Residential
Exchange Program benefits. The rate adjustment in this schedule shall be
applicable to customers served under Schedules 1, 12 22,32 and 48.
MONTHLY RATE:
The energy charges for all blocks of electric Schedules 1 , 12, 22 and 32 and
the charges for area lights based on the energy usages of the lights on Schedule
48 are to be reduced by 554i per kWh.
SPECIAL TERMS AND CONDITIONS:
The rate adjustment under this schedule is subject to revision to reflect the
true up from estimated to actual benefits and to reflect projected future benefits. In
the event the credits applied under this schedule exceed the benefits, the
Company will adjust the rate on this schedule to recover that difference.
The energy credit applied to Schedule 32 for farm irrigation and pumping
load, for each billing period, shall not exceed the amount of energy determined by
the following formula:
400 x 0.746 x days in the billing period x 24
In no instance shall any qualifying irrigation and pumping load for any month
exceed 222,000 kWh.
Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
The above rate is subject to the provisions of Tax Adjustment Schedule 58.
Issued March 12. 2008 Effective April 11. 2008
Issued by Avista Utilities
Kelly Norwood - Vice President. State and Federal Regulation
LP.C. No. 28
Alternative Eighth Revision Sheet 59
Canceling
Seventh Revision Sheet 59
AVISTA CORPORATION
dba Avista Utilities
SCHEDULE 59
RESIDENTIAL AND FARM ENERGY RATE ADJUSTMENT -IDAHO
APPLICABLE:
To Residential Customers in the State of Idaho where Company has electric
service available. This rate adjustment results from an Agreement between the
Company and Bonneville Power Administration (BPA) covering Residential
Exchange Program benefits. The rate adjustment in this schedule shall be
applicable to customers served under Schedules 1, 12, 22, 32 and 48.
MONTHLY RATE:
The energy charges for all blocks of electric Schedules 1, 12, 22 and 32 and
the charges for area lights based on the energy usages of the lights on Schedule
48 are to be reduced by O.OOO~ per kWh.
SPECIAL TERMS AND CONDITIONS:
The rate adjustment under this schedule is subject to revision to reflect the
true up from estimated to actual benefits and to reflect projected future benefits.
the event the credits applied under this schedule exceed the benefits, the
Company will adjust the rate on this schedule to recover that difference.
The energy credit applied to Schedule 32 for farm irrigation and pumping
load, for each billing period, shall not exceed the amount of energy determined by
the following formula:
400 x 0.746 x days in the billing period x 24
In no instance shall any qualifying irrigation and pumping load for any month
exceed 222.000 kWh.
Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
The above rate is subject to the provisions of Tax Adjustment Schedule 58.
Issued March 12, 2008 Effective April 11 , 2008
Issued by Avista Utilities
Kelly Norwood - Vice President, State and Federal ReguJation
LP.C. No. 28
Eighth Revision Sheet 59
C~nceling
Seventh Revision Sheet 59
A VISTA CORPORATION
dba Avista Utilities
SCHEDULE 59
RESIDENTIAL AND FARM ENERGY RATE ADJUSTMENT -IDAHO
APPLICABLE:
To Residential Customers in the State of Idaho where Company has electric
service available. This rate adjustment results from an Agreement between the
Company and Bonneville Power Administration (BPA) covering Residential
. Exchange Program benefits. The rate adjustment in this schedule shall be
applicable to customers served under Schedules 1 , 12, 22, 32 and 48.
MONTHLY RATE:
The energy charges for all blocks of electric Schedules i. 12. 22 and 32 and
the charges for area lights based on the energy usages of the lights on Schedule
48 are to be reduced by 0.554 per kWh.
SPECIAL TERMS AND CONDITIONS:
The rate adjustment under this schedule is subject to revision to reflect the
true up from estimated to actual benefits and to reflect projected future benefits. In
the event the credits applied under this schedule exceed the benefits, the
Company will adjust the rate on this schedule to recover that difference.
The energy credit applied to Schedule 32 for farm irrigation and pumping
load, for each biUing period, shall not exceed the amount of energy determined by
the following formula:
400 x 0.746 x days in the billing period x 24
In no instance shall any qualifying irrigation and pumping load for any month
exceed 222 000 kWh.
Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
The above rate is subject to the provisions of Tax Adjustment Schedule 58.
Issued March 12, 2008 Effective April 11 2008
Issued by Avista Utilities
Kelly Norwood - Vice President, State and Federal Regulation
LP.C. No. 28
Alternative Eighth Revision Sheet 59
Canceling
Seventh Revision Sheet 59
A VISTA CORPORATION
dba Avista Utilities
SCHEDULE 59
RESIDENTIAL AND FARM ENERGY RATE ADJUSTMENT" IDAHO
APPUCABLE:
To Residential Customers in the State of Idaho where Company has electric
service available. This rate adjustment results from an Agreement between the
Company and Bonneville Power Administration (BPA) covering Residential
Exchange Program benefits. The rate adjustment in this schedule shall be
applicable to customers served under Schedules 1 , 12. 22, 32 and 48.
MONTHLY RATE:
The energy charges for all blocks of electric Schedules 1 , 12, 22 and 32 and
the charges for area lights based on the energy usages of the lights on Schedule
48 are to be reduced by O.OOO per kWh.
SPECIAL TERMS AND CONDITIONS:
The rate adjustment under this schedule is subject to revision to reflect the
true up from estimated to actual benefits and to reflect projected future benefits. In
the event the credits applied under this schedule exceed the benefits, the
Company will adjust the rate on this scheduJe to recover that difference.
The energy credit applied to Schedule 32 for farm irrigation and pumping
load, for each billing period, shall not exceed the amount of energy determined by
the following formula:
400 x 0.746 x days in the billing period x 24
In no instance shall any quaHfying irrigation and pumping load for any month
exceed 222,000 kWh.
Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
The above rate is subject to the provisions of Tax Adjustment Schedule 58.
Issued March 12, 2008 Effective April 11, 2008
Issued by Avista Utilities
Kelly Norwood - Vice President. State and Federal Regulation
I.P.C. No. 28
Seventh Revision Sheet 59
Canceling
Sixth Revision Sheet 59
AVISTA CORPORATION
dba Avista Utilities
SCHEDULE 59
RESIDENTIAL AND FARM ENERGY RATE ADJUSTMENT - IDAHO
APPLICABLE:
To Residential Customers in the State of Idaho where Company has electric
service available. This rate adjustment results from an Agreement between the
Company and Bonneville Power Administration (BPA) covering Residential
Exchange Program benefits. The rate adjustment in this schedule shall be
applicable to customers served under Schedules 1 , 12, 22, 32 and 48.
MONTHLY RATE:
The energy charges for all blocks of electric Schedules 1, 12, 22 and 32 and
the charges for area lights based on the energy usages of the lights on Schedule
48 are to be increased by 114 rp per kWh.
SPECIAL TERMS AND CONDITIONS:
The rate adjustment under this schedule is subject to revision to reflect the
true up from estimated to actual benefits and to reflect projected future benefits. In
the event the credits applied under this schedule exceed the benefits, the
Company wiJI adjust the rate on this schedule to recover that difference.
The energy credit applied to Schedule 32 for farm irrigation and pumping
load, for each billing period, shall not exceed the amount of energy determined by
the following formula:
400 x 0.746 x days in the billing period x 24
In no instance shall any qualifying irrigation and pumping load for any month
exceed 222,000 kWh.
Service under this schedule is subject to the Rules and Regulations
contained in this tariff-
The above rate is subject to the provisions of Tax Adjustment Schedule 58.
Issued May 22, 2007 Effective June 1 , 2007
Issued by Avista Utilities
Kelly Norwood - Vice President, State and Federal Regulation