200197_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
BILL EASTLAKE
TONYA CLARK
DON HOWELL
LYNN ANDERSON
RANDY LOBB
DAVE SCHUNKE
MICHAEL FUSS
GENE FADNESS
WORKING FILE
FROM:
DATE:
SEPTEMBER 7, 2001 RE: CASE NO. AVU-E-01-15 (Avista)
SCHEDULE 92—ALL CUSTOMER ELECTRIC ENERGY BUY BACK
PROGRAM
PROPOSED TERMINATION OF PROGRAM

On September 4, 2001, Avista Corporation dba Avista Utilities—Washington Water Power Division (Idaho) made a filing with the Idaho Public Utilities Commission (Commission) requesting approval of a proposal to terminate the Company’s All Customer Electric Buy Back Program (Program; Schedule 92) effective with customer meter readings on and after September 14, 2001. The underlying Schedule 92 program was authorized by the Commission in Case No. AVU-E-01-06. The Program began with meter readings on May 15, 2001 and was intended to expire on October 12, 2001. Because of the current lower short-term market price for energy, the Buy Back Program the Company contends, does not appear to be cost effective for the remaining month of the buy back term.
As reflected in the Company’s filing, the purpose of the Buy Back Program was to encourage conservation and reduce the Company’s power supply expense during a projected high priced short-term market. Under the Program, Avista has paid all qualifying customers 5¢ per kilowatt hour, via a credit on their bill, for all kilowatt hours saved in excess of a 5% reduction from a customer’s previous year usage. Avista has paid out over $6.3 million in credits to qualifying customers in Washington and Idaho.
At the time of the initial filing, short-term market prices for electricity were expected to be $200 per MWh for the duration of the Program. However, short-term market prices have dropped significantly. The current forward market prices in September and October are about $35/MWh, significantly less than the $50/MWh (5¢ per kWh) being credited to customers for their savings. Based on this estimated $15/MWh differential and the average bill credits, the Company estimates that ending the program a month early would save over $500,000 in system power costs ($150,000 in Idaho).
The Company stresses the importance of the proposed September 14, 2001 termination date so as to provide all customers with the same number of billings under the program. The Company requests that the tariff revision be approved on less than statutory notice.
Commission Decision
Commission Staff believes that the Company’s request is fair and equitable. Staff recommends that the Company’s request for early termination of its Schedule 92 —All Customer Buy Back Program be approved without further Notice for an effective date of September 14, 2001. Does the Commission agree to the early termination of the Schedule 92 program and the proposed September 14, 2001 effective date?

vld/M:AVU-E-01-15_sw

DECISION MEMORANDUM 1