Order No 29126.pdf

Office of the Secretary
Service Date
October 7, 2002
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR A
MODIFICATION TO THE RESIDENTIAL
AND SMALL FARM ENERGY RATE
ADJUSTMENT CREDIT.ORDER NO. 29126
CASE NO. AVU-O2-
On August 30 2002, Avista Corporation filed an Application seeking modification of
the residential and small farm Energy Rate Adjustment Credit. A vista proposed that the credit be
increased from 0.337~ per kilowatt-hour (kWh) to 0.347~/kWh effective October 12, 2002. The
purpose of the energy rate adjustment credit is to pass through the estimated benefits of the
Residential Exchange Settlement Agreement between A vista and the Bonneville Power
Administration (BP A) to qualifying electric residential and small farm customers. In the Notice
of Application and Modified Procedure issued September 9, 2002, the Commission solicited
comments regarding Avista s Application. Order No. 29111. No comments were received other
than those submitted by Commission Staff. In this Order, the Commission approves Avista
Application to increase the Energy Rate Adjustment Credit effective October 12 2002.
THE RESIDENTIAL EXCHANGE SETTLEMENT AGREEMENT
The Northwest Regional Power Act established 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 10-year term of the Agreement, October 1 2001 through
September 30, 2011. Under the Settlement Agreement, Avista received rights to 90 average
megawatts (aMW) of benefits from the federal hydropower system beginning October 2001.
A vista receives the 90 aMW in the form of both monetary and firm power sale benefits that are
expected to total $3 310 988.
Monetarv Benefit: Avista receives 42 aMW (29 aMW Washington, 13 aMW Idaho)
of the 90 aMW of benefits in the form of a monthly monetary payment. The amount of the
payment is determined by taking the difference between BPA's Forward Flat-Block Price
Forecast ($38/MWh) and the residential load base rate at 100 percent load factor ($19.71/MWh)
multiplied by the annual amount of energy. The energy amount of the monetary benefit is fixed
ORDER NO. 29126
for the first five years of the contract, October 2001 through September 2006. BPA shall, no
later than October 1 2005, notify Avista of the amount of monetary benefit expressed in annual
aMW, for which payments will be made to Avista during the period October 2006 through
September 2011.
Firm Power Sale Benefit: The Settlement Agreement gives Avista 48 aMW (33
aMW Washington, 15 aMW Idaho) of firm power benefits. In September 2001 , A vista elected
to terminate the Firm Power Sale Agreement and convert it to monetary benefit for the first five
years.
Benefit True-up: A vista noted that the benefits credited to customers are different
than the actual benefits received from BP A under the Settlement Agreement due to differences in
actual and estimated retail loads. Also, BP A has a Cost Recovery Adjustment Clause (CRAC)
that has three components: "load-based" CRAC
, "
financial-based" CRAC, and "safety-net"
CRAC. The initial 42 aMW of monetary benefit is subject only to the safety-net CRAC
component. If the safety-net component is triggered, the amount of benefit received from BP
is reduced. Furthermore, BP A has determined that a terminated Firm Power Sale Agreement
converted to monetary benefit (as Avista has done) is subject to all three CRAC components. In
its filing, A vista proposed an adjustment to true-up the difference between the benefits credited
to customers and the actual benefits received from BP A during the first contract year, October 1
2002 through September 30, 2002.
ENERGY RATE ADJUSTMENT CREDIT
The proposed rate credit ofO.347~/kWh is based on estimated benefits for the second
contract year of the 10-year Agreement, which covers the period October 1 , 2002 through
September 30, 2003 , as well as an estimated true-up for the first contract year. Avista proposed
to pass this credit through on a uniform cents per kilowatt-hour basis to all qualifying customers
served under Schedules 1 , 12 , and 48. When factoring this modified credit into customer
rates, the bill of a residential customer using 1 000 kWh per month would decrease by 5.54%, or
$3.47 per month. The percentage decrease for a customer using 600 kWh per month would be
62%, or $2.08 per month. The decrease for a customer using 1 400 kWh per month would be
50%, or $4.86 per month. The Company requested an effective date of October 12, 2002
which is 12 months from the date that the rate credit was initiated on October 12 2001.
ORDER NO. 29126
STAFF COMMENTS
Based upon its analysis, the Commission Staff recommended approval of A vista
proposed Energy Rate Adjustment Credit of 0.347~/kWh. The Staff believes that Avista has
applied the previously approved methodology for determining the credit as the Commission
intended and Staff s audit has verified the true-up amounts. A vista s estimate of the Energy Rate
Adjustment Credit amounts and energy sales subject to the credit have proven to be accurate as
evidenced by the true-up amounts and the small adjustment in the amount of the credit.
COMMISSION FINDINGS
The Commission has reviewed the filings of record in Case No. A VU-02-
including the comments and recommendations of Commission Staff. The Commission finds that
the 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. Based on the record before us, the
Commission finds it reasonable to increase the Energy Rate Adjustment Credit from 0.337~ per
kilowatt-hour (kWh) to 0.347~/kWh effective October 12 2002. We also find it reasonable for
A vista to continue using the same accounting, interest and true-up treatment as established by
Order No. 28869 in Case No. A VU-OI-13.
ORDER
In consideration of the foregoing and as more particularly described above, IT IS
HEREBY ORDERED and the Commission does hereby approve Avista s Application to
increase the Energy Rate Adjustment Credit from 0.337~ per kilowatt-hour (kWh) to
347~/kWh. This modification shall be effective October 12 2002.
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. 29126
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this 1#-
day of October 2002.
PAUL KJEL
, pu
SIDENT
fuL.. JMARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:A VUE0207 In2
ORDER NO. 29126