20170626_Brandon1.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: BRANDON KARPEN
DEPUTY ATTORNEY GENERAL

DATE: JUNE 21, 2017

SUBJECT: AVISTA GENERAL RATE CASE – ELECTRIC AND GAS
CASE NOS. AVU-E-17-01 AND AVU-G-17-01

On June 9, 2017, Avista Corporation filed an Application seeking authority to
increase the Company’s general rates for electric and natural gas service in Idaho. Avista has
proposed a two-year rate plan that would increase annual electric billed revenues by $18.6
million (7.9%) on January 1, 2018, and by $9.9 million (4.2%) on January 1, 2019. The plan
includes an increase in annual natural gas billed revenues by $3.5 million (5.7%) on January 1,
2018, and by $2.1 million (3.3%) on January 1, 2019.
THE APPLICATION
Avista is a public utility engaged in the generation, transmission and distribution of
electricity and natural gas. Avista’s service area includes eastern Washington, northern Idaho,
and parts of southern and eastern Oregon. Avista’s existing base rates and charges for electric
and natural gas services were approved by the Commission in December 2016 for electric
service, and December 2015 for gas service. Order Nos. 33682 and 33437.
In its Application, Avista claims its existing rates are not fair, just, and reasonable,
and that it must increase them so it can earn a fair return on its investment. Application at 5.
Avista plans to notify its customers about the proposed rate increases by distributing bill stuffers
over the June 2017 billing cycle, and through news releases. Id. at Exhibit B.
Avista attributes the increase in its rates primarily to capital investments in
infrastructure, system maintenance, and technology and increased power supply costs. The
DECISION MEMORANDUM 2
Company’s proposal includes a stay-out period where Avista would not file a new general rate
case for a new rate plan to be effective prior to January 1, 2020.
Avista’s evidence in support of its requested rate increases is based on a 12-month
test year that ended December 31, 2016. Id. at 5. Avista requests an overall rate of return of
7.81%, which includes a 9.9% return on equity. Avista asserts that the proposed rate of return
and capital structure reasonably balance safety, reliability, customer satisfaction, and economy.
Id. at 7. The proposed rate increases would impact customers’ as described below.
1. Electric Service
With regard to electric services, if Avista’s Application is approved, a residential
customer using an average of 910 kilowatt hours (kWh) per month could expect to see a bill
increase of $7.03 per month in 2018, which includes a basic charge increase from $5.75 to $6.00
per month. For 2019, the same customer could expect an increase of $4.02 per month. Avista’s
proposed electric rate increase would impact customers’ electric bills by schedule as follows:
Proposed Electric Increase
Residential Service Schedule 1 8.1% 4.3%
General Service Schedules 11 & 12 7.5% 4.0%
Large General Service Schedules 21 & 22 8.2% 4.4%
Extra Large General Service Schedule 25 7.7% 4.3%
Extra Large General Service Schedule 25P 7.2% 4.1%
Pumping Service Schedules 31 & 32 8.8% 4.6%
Street & Area Lighting Schedules 41-49 7.5% 3.8%

See Application Exhibit B.
2. Gas Service
With regard to gas services, if Avista’s Application is approved, a residential
customer using an average of 61 therms per month could expect to see a bill increase of $3.37
per month in 2018, which includes a basic charge increase from $5.25 to $6.00 per month. For
2019, the same customer could expect an increase of $2.07 per month. Avista’s proposed natural
gas rate increase would impact customers’ gas bills by schedule as follows:

DECISION MEMORANDUM 3
Proposed Natural Gas Increase
General Service Schedule 101 6.6% 3.8%
Large General Service Schedule 111 & 112 2.2% 1.3%
Interruptible Sales Service Schedules 131 & 132 0.0% 0.0%
Transportation Service Schedule 146
(excluding natural gas costs)
9.2% 5.0%

See Application Exhibit B.
STAFF RECOMMENDATION
Staff notes that Avista’s proposed tariffs specify a July 9, 2017, effective date, but
Avista asks the Commission to suspend that effective date until January 1, 2018. Staff thus
recommends that the Commission issue a Notice of Application that suspends the July 9, 2017,
effective date until January 1, 2018. See Idaho Code § 61-622(4). Staff further recommends that
the Commission set a 14-day intervention deadline, and direct Staff to informally confer with the
parties about scheduling. Finally, Staff recommends that the Commission direct Staff to convene
an informal prehearing conference for the parties to discuss scheduling of discovery, testimony,
technical hearings, and other matters that may arise.
COMMISSION DECISION
Does the Commission wish to issue a Notice of Application that suspends Avista’s
proposed July 9, 2017, effective date to January 1, 2018, establishes a 14-day intervention
deadline, and directs Staff to informally confer with the parties about scheduling?

M:AVU-E-17-01_AVU-G-17-01_bk