28869.pdf

Office of the Secretary
Service Date
October 15, 2001
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION DBA AVISTA
UTILITIES—WASHINGTON WATER
POWER DIVISION (IDAHO) FOR
AUTHORITY TO IMPLEMENT A
RESIDENTIAL AND SMALL FARM
ENERGY RATE ADJUSTMENT CREDIT.
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CASE NO. AVU-E-01-13

ORDER NO. 28869

On August 16, 2001, Avista Corporation dba Avista Utilities (Avista; Company) filed
an Application with the Idaho Public Utilities Commission (Commission) requesting authority to
implement a Schedule 59 Residential and Farm Energy Rate Adjustment credit of 0.439¢ per
kilowatt hour. The purpose of the energy rate adjustment credit is to pass through to qualifying
electric residential and small farm customers the estimated benefits to be derived under the
Residential Exchange Settlement Agreement (Settlement Agreement) between Avista and the
Bonneville Power Administration (BPA) for the contract year October 1, 2001 through
September 30, 2002. In its Settlement Agreement with BPA, Avista received system rights to 90
aMW of benefits from the federal hydro power system beginning October 1, 2001. On
September 10, 2001, the Company revised its filing, reducing the proposed credit to 0.337¢ per
kilowatt hour. The revision reflects a recent determination of the BPA regarding calculation of
monetary benefits under the Settlement Agreement.
The Northwest Regional Power Act establishes a Residential Exchange Program to
provide benefits to residential and small farm consumers of Pacific Northwest Utilities. The
Settlement Agreement between Avista and BPA settles the parties’ rights and obligations for the
Residential Exchange Program for the ten-year term of the Agreement, October 1, 2001 through
September 30, 2012. The proposed rate credit will be adjusted periodically over the 10-year
term to match the actual benefits from the Settlement Agreement.
Explanation of Benefits
The benefits from the Settlement Agreement consist of three components: a monetary
benefit, a firm power sale benefit, and a firm power reduction benefit. A description of the
benefits is set forth in the Company’s Application. The total benefit amount may vary based on
the Company’s election of options. The actual benefits credited to customers in the first year

ORDER NO. 28869 1
will be different than the actual benefits received from BPA under the Agreement due to
differences in actual and estimated retail loads, and/or market price of power and BPA’s
Residential Load (RL) Firm Power rate. Therefore, Avista is proposing a true-up mechanism to
true-up the difference over time between the benefits credited to customers and the actual
benefits received from BPA.
Accounting, Interest, True-up
Benefits derived as a result of the Settlement Agreement will be deferred to Account
254—Other Regulatory Liabilities. A separate subaccount will be used to distinguish the
residential exchange from other items that may be included in Account 254. The payment
amounts to Avista will be directly credited to Account 254. The payment amounts include the
monetary benefit, the firm reduction benefit and the cash payment for power Avista chooses not
to take. Charges for wheeling and losses will be debited to Account 254. The payment for
power deliveries taken will be charged to Account 555—Purchased Power Expense. The benefit
for residential and small farm customers associated with the power deliveries taken will be the
difference between the Mid-C price and the amount paid to BPA for the power. The benefit
connected with power deliveries taken will be accounted for by debiting Account 557—Other
Power Supply Expense and Crediting Account 254. The result being that the charges to Account
555 and Account 557 will reflect a purchase power expense amount equivalent to having
purchased power at the average Mid-C price for the month. Charges to Account 555 and
Account 557 will be included in the calculation of the deferral of power costs under the
Company’s Power Cost Adjustment (PCA) mechanism.
Account 254 will be amortized by debiting Account 254 and crediting Account
407.4—Regulatory Credits by an amount equal to the amount of revenue credit passed through
to customers during the month. Deferred federal income taxes will be recorded. Interest will be
calculated on the balance of Account 254 in similar fashion to the calculation of interest on PCA
balances. It is expected that the rate credit will be revised on an annual basis and may be revised
more often, if necessary, depending how close actual results compare to estimates. A balance in
Account 254 will reflect the difference between actual benefits and the amount of credit passed
on to residential and small farm customers. The balance in Account 254 will be part of the
calculation of any revision to the rate credit.

ORDER NO. 28869 2
Energy Rate Adjustment Credit
The Company proposes to pass through the estimated benefit amount on a uniform
cents per kilowatt hour basis to all qualifying customers served under Schedules 1, 12, 22, 32
and 48. The percentage reductions applicable to the individual rate schedules are as follows:
Schedule 1
Schedule 12
Schedule 22
Schedule 32
Schedule 48
Residential Service
Residential and Farm General Service
Residential and Farm Large General Service
Residential and Farm Pumping Service
Residential and Farm Area Lighting
-6.17%
-4.44%
-6.74%
-6.01%
-2.34%

Actual percentage reductions may vary according to factors contained in certain rate schedules.
The overall reduction in revenue amounts to approximately $3.5 million or about 6% for the
group of qualifying residential and small farm customers as a whole. The resulting decrease for
a residential customer using 1,000 kWh per month would be 6.12% or $3.37 per month.
The Company is proposing that the Schedule 59 rate credits be effective coincident
with the date that new rates covering the Company’s proposed Schedule 66 Power Cost
Adjustment surcharge become effective. Reference Case No. AVU-E-01-11. Having the same
effective date, the Company states, will avoid residential and small farm customers from having
a rate increase followed by a rate reduction.
The revenue reduction amount for the energy rate adjustment credit reflects a
conversion factor for revenue-related expense items. The conversion items utilized were from
the same calculations authorized in the Company’s most recent Idaho general rate case, updated
for actuals through December 31, 2000, as filed with the Commission.

On August 24, 2001, the Commission issued Notices of Application and Modified
Procedure in Case No. AVU-E-01-13. The deadline for filing written comments or protests was
September 13, 2001. The Commission Staff was the only party to file comments. Staff
recommends approval of the Company’s Application. Staff believes the combination of the true-
up, the use of the PCA and Schedule 59 will properly pass through the BPA credits to customers.
It should also, Staff contends, provide Avista the accounting flexibility to incorporate future
Settlement Agreement contract revisions. Staff recommends that the mechanism be closely
monitored, at least initially, to assure that credits provided to customers reasonably match the

ORDER NO. 28869 3
benefits derived. Staff further recommends that the effective date of Schedule 59 coincide with
the effective date of any rate change approved in the Company’s PCA proceeding.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. AVU-E-01-13,
including the comments and recommendations of Commission Staff. The Commission finds that
the Avista Schedule 59 energy rate adjustment credit will benefit qualifying residential and small
farm customers and provide appropriate benefits from regional power as contemplated by the
1980 Pacific Northwest Electric Power Planning and Conservation Act. The Idaho Public
Utilities Commissioners wish to express their appreciation to Bonneville Power Administration
(BPA) for its acknowledgement that the benefits of the Federal Columbia River Power System
(FCRPS) should be spread to all the residents of the Pacific Northwest. This is a significant step
to more equitably share the benefits provided by the FCRPS to the residential and small farm
customers of Avista.
The Commission finds it reasonable to approve the proposed tariff Schedule 59
Residential and Farm Energy Adjustment Credit of $0.337 per kilowatt hour for an effective date
to coincide with the effective date of any change in rates that we may authorize in Case No.
AVU-E-01-11.
O R D E R
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve the proposed changes to Avista
electric tariff Schedule 59—Idaho for an effective date to coincide with the effective date of any
change in rates authorized by this Commission in the Company’s PCA surcharge Case No.
AVU-E-01-11.
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.

ORDER NO. 28869 4
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of September 2001.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

bls/O:AVUE0113_sw3

ORDER NO. 28869 5