HomeMy WebLinkAbout20020906Decision Memo.docDECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
DON HOWELL
RANDY LOBB
KATHY STOCKTON
TERRI CARLOCK
KEITH HESSING
DAVE SCHUNKE
TONYA CLARK
BEV BARKER
GENE FADNESS
WORKING FILE
FROM: LISA NORDSTROM
DATE: SEPTEMBER 6, 2002
RE: IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION FOR A MODIFICATION TO THE RESIDENTIAL AND SMALL FARM ENERGY RATE ADJUSTMENT CREDIT, CASE NO. AVU-E-02-7.
On August 30, 2002, Avista Corporation filed an Application seeking modification of the Residential and Small Farm Energy Rate Adjustment Credit. Avista proposes that the credit be increased from 0.337¢ per kilowatt-hour (kWh) to 0.347¢/kWh effective October 12, 2002. Avista states that the purpose of the energy rate adjustment credit is to pass through the estimated benefits of the Residential Exchange Settlement Agreement between Avista and the Bonneville Power Administration (BPA) to qualifying electric residential and small farm customers. The proposed rate credit of 0.347¢/kWh is based on estimated benefits for the second contract year of the ten-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.
THE RESIDENTIAL EXCHANGE SETTLEMNT 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, 2011. Under the Settlement Agreement, Avista received rights to 90 average megawatts (aMW) of benefits from the federal hydropower system beginning October 1, 2001. Avista receives the 90 aMW in the form of both monetary and firm power sale benefits that are expected to total $3,310,988.
Monetary 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 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, Avista elected to terminate the Firm Power Sale Agreement and convert it to monetary benefit for the first five years.
Avista notes that the benefits credited to customers are different than the actual benefits received from BPA under the Settlement Agreement due to differences in actual and estimated retail loads. Also, BPA 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 BPA is reduced. Furthermore, BPA has determined that a terminated Firm Power Sale Agreement converted to monetary benefit (as Avista has done) is subject to all three CRAC components. Avista proposes a true-up adjustment in its filing to true-up the difference between the benefits credited to customers and the actual benefits received from BPA during the first contract year, October 1, 2002 through September 30, 2002.
ENERGY RATE ADJUSTMENT CREDIT
Avista proposes to pass through the estimated second contract year benefit and first contract year true-up amounts on a uniform cents per kilowatt-hour basis to all qualifying customers served under Schedules 1, 12, 22, 32, 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 5.62%, or $2.08 per month. The decrease for a customer using 1,400 kWh per month would be 5.50%, or $4.86 per month. The Company proposes an effective date of October 12, 2002, which is 12 months from the date that the rate credit was initiated on October 12, 2001.
STAFF RECOMMENDATION
Staff recommends that this case be processed under Modified Procedure with a standard 21-day comment period.
COMMISSION DECISION
Does the Commission wish to process Avista’s request to modify the Residential and Small Farm Energy Rate Adjustment Credit under Modified Procedure with a 21-day comment period?
___________________________
Lisa D. Nordstrom
M:AVUE0207_ln
DECISION MEMORANDUM 1