28595.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION DBA AVISTA UTILITIES—WASHINGTON WATER POWER DIVISION (Idaho) FOR APPROVAL OF A PROPOSED RULE 26—BUY-BACK OF CUSTOMER POWER TO ITS IDAHO RULES AND REGULATIONS AND TO A RELATED WAIVER OF STATUTORY NOTICE. )
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CASE NO. AVU-E-00-10

ORDER NO. 28595

On December 11, 2000, Avista Corporation dba Avista Utilities – Washington Water Power Division (Idaho) (Avista; Company) made a filing with the Idaho Public Utilities Commission (Commission) proposing a new Rule 26 – Buy-Back of Customer Power to the Company’s Idaho Rules and Regulations. The purpose of the filing is to reduce the Company’s power supply expense during periods of extraordinarily high wholesale power costs. Participating customers would voluntarily reduce loads in exchange for a bill credit. All other customers benefit, the Company contends, because of increased reliability of the regional power system. The Company requests that the rule be approved on less than statutory notice to become effective on December 12, 2000 so that the rule may be implemented in December during which time power costs are expected to be extraordinarily high and to respond to potential regional energy shortages.
Avista in its Application notes that recent five-day weather forecasts are predicting temperatures in the inland Northwest and the western United States to be significantly below normal. These temperatures, in combination with other factors such as power plant availability, the Company states, have driven wholesale power prices to very high levels. Forward power prices for the last two weeks of December have hit highs of $3,000 per megawatt.
The proposed Rule 26 would allow customers supplied through one meter installation for a demand of not less than 3000 Kva to voluntarily reduce loads in exchange for a bill credit. Avista is proposing a buy back rate pricing power based on its value in the wholesale markets. If the pricing of the product changes within any one-day period (midnight to midnight), the highest price taken by any one customer will be provided to any other customer taken service during this same day. Such a “most favored nation” approach is intended to avoid discrimination among customers and to avoid customers “holding out” for a higher rate by delaying curtailment.
The rate offered by Avista under Rule 26, the Company states, will be less than 70% of the wholesale price of power on any given day. The Company anticipates that the credit amount offered to customers will be at approximately half of the wholesale market rate. The shared savings approach is intended to encourage participation and promote fairness.
The amount of curtailed energy for which payment is due will be calculated by comparing the difference between energy consumed each day during the load curtailment served and energy consumed on the 14 work week days immediately preceding the load curtailment. The Company states that it will perform engineering analyses to verify customer’s baseline usage data. Other methods of calculation may be utilized upon prior mutual written agreement between a customer and Avista’s account representative.
Although the Company indicates that it is presently unsure about the subscription level, it maintains that it is prudent to put the tariff into place to be prepared to respond to unprecedented winter power market conditions. The Company maintains that there is no revenue increase associated with its filing. The effect of the filing would be to reduce power supply expense over what would be the case in the event the filing was not in effect.
The Company commits to file a report with the Commission, describing participation, key aspects of the buy-back option, and efforts taken to avoid unintended consequences of such an offering including how the Company avoided situations in which customer loads would have been reduced for other reasons notwithstanding the buy-back offer.
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. AVUE00-10 and the Company’s proposed Rule 26—Buy-Back of Customer Power. We find that the forecast for extreme cold weather in the Northwest this month, the state of this region’s electric supply and the recent volatility of energy market prices create sufficient exigent circumstances to justify waiver by this Commission of the standard statutory 30-day notice requirement. Reference Idaho Code 61-307.
We find that the proposed Rule 26 will provide the Company with an important planning tool: a vehicle for reducing electric load through voluntary curtailment. The success of such a tool will of course depend on actual subscription.
We note that Commission Staff has recommended and the Company has agreed to:
Post offered curtailment prices on a publicly available web site;

File informational reports with Staff of individual Rule 26 transaction details when agreements (contracts) are executed;

Establish a separate sub-account in FERC Account 555—Purchased Power— for Rule 26 transactions; and

File a status report with the Commission within 60 days including details of all Rule 26 transactions, related impacts on daily dispatch and PCA deferral account ramifications (if any).

We find it reasonable and condition our approval of Rule 26 in this case on the Company’s compliance with the foregoing.
We find it reasonable to approve the Company’s filing for effective date December 12, 2000 and further find that such approval is in the public interest.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over Avista Corporation dba Avista Utilities—Washington Water Power Division (Idaho) and its Application in Case No. AVU-E-00-10 pursaunt to the authority and power granted under Title 61 of the Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.
O R D E R
In consideration of the foregoing and as more particularly described and qualified above, IT IS HEREBY ORDERED and the Commission does hereby approve the proposed Rule 26—Buy-Back of Customer Power to Avista’s Idaho Rules and Regulations.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of December 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

vld/O:AVU-E-00-10_sw

ORDER NO. 28595 1

Office of the Secretary
Service Date
December 13, 2000