Notice of Application.pdf

Office of the Secretary
Service Date
March 23, 2000
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION FOR APPROVAL OF
REVISED ELECTRIC LINE EXTENSION
SCHEDULE 51.
)
)
)
)
)
)
)
)
)
)
)
)

CASE NO. AVU-E-00-1

NOTICE OF APPLICATION

NOTICE OF MODIFIED
PROCEDURE

NOTICE OF COMMENT/
PROTEST DEADLINE

ORDER NO. 28325

YOU ARE HEREBY NOTIFIED that on February 28, 2000, Avista Corporation dba
Avista Utilities—Washington Water Power Division (Avista) filed an Application with the Idaho
Public Utilities Commission (Commission) requesting approval of proposed revisions to its
electric Schedule 51 Line Extension, Conversion and Relocation tariff. The Company’s filing is
in response to Commission Order No. 28097 issued July 29, 1999, in Case No. WWP-E-98-11.
As reflected in the Company’s Application, the present Schedule 51 tariff
incorporates the principle of average costing for the installation of facilities commonly used in
extending electric service. The tariff sets forth “Basic Costs”, which are based on the average
material and labor costs for the installation of these facilities, such as transformers and conduit,
which are used consistently in the installation of electric line extensions. The Basic Costs have a
fixed and variable component, with a variable component stated on a cost-per-foot basis. The
present tariff also provides a list “Exceptional Costs”, which are items not included in the Basic
Costs and that can materially increase the cost of a line extension project, such as trenching in
rock-soil conditions. Under the present tariff, Exceptional Costs must be paid by the customer or
developer.
The Company is not proposing to change the conceptual structure of the Schedule 51
tariff. The present tariff, it states, is relatively easy to apply, is fair and understandable to
customers, and has resulted in relatively few customer complaints. The Basic Costs set forth in

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 1

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 2
the tariff, however, have not been updated since 1990. As part of the proposed tariff, the
Company has updated all Basic Costs based on 1998 materials and labor costs.
Residential Developments
For residential developments the total Basic Cost is proposed to increase from
$1,120 to $1,400 per lot. Of the total $280 increase, $130 represents an increase in Primary,
Secondary and Transformer costs and $150 represents an increase in service line costs. As the
developer is responsible for Primary, Secondary and Transformer costs, a cash deposit or credit
instrument is required from developers for these costs until such time as the residents begin
taking service. As Primary, Secondary and Transformer costs increase by $130 per lot under the
proposed tariff, the developer deposit or credit instrument is also being increased $130 per lot,
from $910 to $1,040. However, if the developer provides the ditching within the development,
the deposit or credit instrument required will be only $760 per lot, reflecting Avista’s average
ditching cost savings of $280 per lot ($1,040 - $280 = $760). Additionally, as the Company is
proposing a revised residential allowance of $1,300, as discussed below, the developer would
receive a refund of $940 if a cash deposit was made ($1,300 allowance less $360 service cost).
Residential Allowance
As part of its review of its Schedule 51 tariff, the Company states that it examined
the present level of the line extension allowances. An allowance is the amount of credit the
customer receives against the estimated cost of the line extension based on future energy
consumption and resulting margin to the Company. If the estimated line extension cost exceeds
the allowance, the customer is required to pay the excess cost in the form of a cash contribution
(Contribution In Aid of Construction). The present level of the residential single family
allowance is $1,000. The Company is proposing to increase that level to $1,300. The increase in
the allowance of $300 approximates the increase in the Basic Costs of $280 per lot for residential
developments, therefore the majority of new residential customers will be unaffected by the
proposed changes.
The Company’s present allowance level of $1,000 was based on the average energy
consumption of all residential electric customers, a net margin that recovers the incremental cost
of the line extension, and a first year rate of return equal to the Commission-authorized level in
1990. The derivation of the present allowance also assumes that all of the Company’s costs are

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 3
variable and will increase proportionately with the addition of a new customer, i.e., a fully-
distributed cost of service approach.
The Company states that it no longer believes that a fully distributed cost of service
approach is reasonable. It does not believe that all of the Company’s costs will increase
proportionately with the addition of new customers. Rather than estimating the variability of
each cost account, the Company employed an overall reasonableness test regarding the
“contribution to system costs” resulting from the proposed allowance of $1,300. The Company
performed a revenue requirement analysis assuming a line extension investment of $1,300 (equal
to the proposed allowance), a required (levelized) rate of return based on the level authorized by
the Commission in Case No. WWP-E-98-11, and an estimated annual gross margin received
from the customer of $261. The gross margin estimate is based on the estimated electric revenue
from a typical customer using gas heat and water-heat less the customers average production cost
from the Company’s cost-of-service study filed in its general rate case. Based on these
assumptions, a new customer would provide a contribution to approximately 47% of system
costs. The result based on the proposed allowance level of $1,300 is that a new customer will
contribute approximately 1.3¢ per kilowatt hour to system transmission and distribution costs,
compared to an embedded average of approximately 2.7¢ per kilowatt hour.
Other Proposed Schedule 51 Changes
Commercial/Industrial Extensions
Presently, the Company performs a customer-specific analysis to determine the cost
and allowance associated with extending service to a commercial or industrial customer who
uses over 72,000 kilowatt hours (kWh) per year. All commercial customers who use less than
72,000 kWh hours per year presently receive a fixed allowance of $1,300. The present
allowance of $1,300 was based on the average energy usage for all Commercial Schedule 11
customers and the 72,000 kWh hour level was based on the maximum annual usage for a
customer taking service under Schedule 11. Based on an analysis similar to that performed for
residential customers, an appropriate allowance level for a commercial customer using 72,000
kWh hours would be several times the present level of $1,300. Therefore, the Company is
proposing that a customer specific analysis be performed on all commercial and industrial
customers, using their estimated energy usage and the appropriate allowance per kilowatt hour

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 4
depending on the rate schedule, in order to determine the allowance. The allowances for all rate
schedules other than Residential Schedules 1 and 12 are stated on a per kilowatt basis and are
being increased based on the present rates of those schedules and a financial analysis similar to
that per Residential Schedule 1.
The line extension costs for commercial and industrial customers will be analyzed
differently depending on if they require a single-phase or three-phase service. Basic Costs set
forth in the tariff are based on single-phase service. For customers requiring three-phase service,
the line extension cost will be based on the total estimated costs derived from internally
published average costs.
Exceptional Costs/Customer Requested Costs
Under the present tariff, a residential or small commercial customer is required to
pay “Exceptional Costs”, which are the costs associated with unusual materials or labor.
Exceptional Costs presently include the cost associated with items which may be necessary to
install the extension, as well as items which may be requested by the customer but are not
necessary to install the extension. Under the proposed tariff the Company has created a new cost
category called “Customer-Requested Costs”, which is the “cost of unusual labor and/or
materials requested by the customer but which are not necessary to construct the line extension
based on the company’s minimum design, construction and operating practices.” The customer
will be required to pay for all Customer-Requested Costs.
Exceptional Costs still exist under the proposed tariff, however, they are limited to
those costs which are necessary to construct the line extension but which are not reflected in the
Basic Costs set forth under the tariff. This proposed change, the Company states, will not have a
significant effect on the amount of customer contributions required from single-party residential
customers and developers. For residential developments, the Basic Cost ($1,400) exceeds the
allowance ($1,300), therefore, any Exceptional Costs will be paid by the developer, as well as
any Customer-Requested Costs. With regard to single-party residential extensions, in nearly all
instances the Basic Costs will exceed the allowance. However, because of the significant
increases in the allowance per kilowatt-hour for non-residential rate schedules, the allowance
could cover all or part of any Exceptional Costs for commercial line extensions.

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 5
Miscellaneous Proposed Changes
Under the present tariff, customers who are estimated to use less than 4800 kilowatt
hours per year do not receive an allowance and must pay the entire cost of the line extension.
The rationale used to establish the present minimum use level of $4,800 is that the margin per
kilowatt hour provided under Residential Schedule 1 must at least recover the cost of providing
service from the primary or secondary line to the residents. Using the proposed average service
cost of $360 and the margin from Schedule 1, a minimum annual usage amount of 2500 kilowatt
hours would provide recovery of the service cost.
The residential allowance for dwellings which have more than four units
(apartments) is proposed to increase from $600 to $780 per unit. The proposed increase in the
allowance for these dwellings is proportional to the increase in the allowance for residential
dwellings with less than four units ($1,000 to $1,300).
Lastly, the Company is proposing a revision under the “Conversions and
Relocations” section of the tariff. The present tariff requires a customer requesting a Conversion
or Relocation of facilities to pay both the cost of the new facilities plus the remaining value of
the existing facilities. As the revenue received from the customer will continue to pay for the
cost of existing facilities over time, they should only be charged for the cost of the new facilities.
Therefore, the provision for charging the customer for the remaining value of the existing
facilities has been deleted.

Avista states that it provided an informational letter in late December to
approximately twenty residential developers that the Company works with which outlined the
proposed changes to the Company’s line extension tariff. The Company requests that the
Commission approve the proposed revisions to its line extension tariff Schedule 51 for an
effective date of April 15, 2000. The Company by letter dated March 9, 2000, requests that the
Commission process its Application pursuant to Modified Procedure, i.e., by written submission
rather than by hearing.
YOU ARE FURTHER NOTIFIED that the Commission has preliminarily found that
a public interest in this matter may not require a hearing to consider the issues presented and that
the issues raised by the Company’s filing may be processed under Modified Procedure, i.e., by

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 6
written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA
31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the Commission on the recommendation of
Commission Staff finds it reasonable to suspend the Company’s proposed April 15, 2000,
implementation date so as to provide sufficient time for public comment. In doing so the
Commission expresses its concern regarding a mid-season change in rules for new construction
and development and commits to consider and process the matter expeditiously. Reference
Idaho Code §§ 61-307 and 61-623.
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or
protests with respect to Avista’s Application and the use of Modified Procedure in Case
No. AVU-E-00-1 is Friday, May 5, 2000.
YOU ARE FURTHER NOTIFIED that if no written protests or comments are
received within the deadline, the Commission may consider the matter on its merits and enter its
Order without a formal hearing. If comments or protests are filed within the deadline, the
Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order on the basis of the written positions before it. Reference
IDAPA 31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case
No. AVU-E-00-1 should be mailed to the Commission and the addresses reflected below:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
Street Address for Express Mail:
472 W WASHINGTON ST
BOISE, ID 83702-5983
THOMAS D DUKICH, MANAGER
RATES & TARIFF ADMINISTRATION
AVISTA CORPORATION
1411 E MISSION AVE.
PO BOX 3727
SPOKANE, WA 99220

All comments should contain the case caption and case number shown on the first page of this
document.
YOU ARE FURTHER NOTIFIED that the Company’s Application in Case
No. AVU-E-00-1 may be viewed during regular business offices at the Idaho Public Utilities

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ PROTEST DEADLINE
ORDER NO. 28325 7
Commission, 472 West Washington Street, Boise, Idaho and at the Idaho offices of Avista
Corporation dba Avista Utilities—Washington Water Power Division.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission in Case No. AVU-E-00-1 does hereby approve the
Modified Procedure schedule set out above.
IT IS FURTHER ORDERED that the Company proposed April 15, 2000 effective
date for implementation of the proposed Schedule 51 revisions in Case No. AVU-E-00-1, be
suspended until such time as the Commission may issue an Order accepting, rejecting or
modifying the Application.
DATED at Boise, Idaho this day of December 2002.

DENNIS HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

Vld/N:AVU-E-00-01_sw