HomeMy WebLinkAbout20110815_3424.pdfDECISION MEMORANDUM 1
DECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL
DATE: AUGUST 11, 2011
SUBJECT: AVISTA’S ANNUAL PCA, CASE NO. AVU-E-11-03
On July 28, 2011, Avista Corporation dba Avista Utilities filed its annual Power Cost
Adjustment (PCA) Application. Avista requests an Order approving an overall reduction in its
PCA surcharge of 5.99% with a proposed effective date of October 1, 2011. Application at 4.
THE APPLICATION
Avista’s PCA mechanism is used to track changes in revenues and costs associated
with variations in hydroelectric generation, secondary prices, thermal fuel costs, and changes in
power contract revenues and expenses. The Company’s existing PCA methodology and method
of recovery were approved in 2007 in Case No. AVU-E-07-01 (Order No. 30361). In that case,
the Commission approved a change in the PCA methodology from a trigger and cap mechanism
to a single annual PCA rate adjustment filing requirement. The Commission also approved a
change in the method of PCA deferral recovery from a uniform percentage basis to a uniform
cents per kWh basis.
The proposed 0.072¢/kWh PCA surcharge will replace an existing 0.532¢/kWh
surcharge, for a decrease of 0.460¢/kWh (or 5.99%). The proposed surcharge is designed to
recover power costs deferred by the Company for the period of July 1, 2010 through June 30,
2011, as well as the unrecovered balance related to the July 1, 2009 through June 30, 2010
deferral period, and interest during the recovery period of October 1, 2011 through September
30, 2012.
DECISION MEMORANDUM 2
When calculating power supply expenses, the Company noted that higher hydro
generation decreased power supply expenses during the deferral period. However, the hydro-
related decrease was offset by increases associated with the Lancaster plant’s fixed-cost, thermal
fuel costs at Colstrip and Kettle Falls, and the effect of declining power prices.1
The actual percentage decrease will vary by rate schedule as shown below.
Customer Group
(Schedule)
Percentage Decrease
Under the Company’s proposal, an average residential customer using 956 kWh per
month will experience a decrease in their monthly bill of $4.40. The Company requests that its
Application be processed by Modified Procedure.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with comments
due by September 21, 2011.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure with
comments due by September 21, 2011?
M:IPC-E-11-13_kk
1 Lancaster costs are currently being recovered through the PCA because the power purchase agreement became
effective after base rates were established in Case No. AVU-E-09-01. Stipulation and Settlement at 10, approved by
Order No. 30856.