20030827Notice of Application.pdf

Office of the Secretary
Service Date
August 27, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE SUBMISSION OF
THE SCHEDULE 66 PCA STATUS REPORT
OF A VISTA CORPORATION AND
APPLICATION FOR CONTINUATION OF A
SCHEDULE 66 POWER COST
ADJUSTMENT (PCA) SURCHARGE
CASE NO. A VU-O3-
NOTICE OF APPLICATION
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF
CO MMENT /PROTEST
DEADLINE
NOTICE OF PCAIENERGY
DISCUSSION
YOU ARE HEREBY NOTIFIED that on August 11 , 2003, Avista Corporation dba
Avista Utilities (A vista; Company) filed a Power Cost Adjustment (PCA) Schedule 66 Status
Report with the Idaho Public Utilities Commission (Commission) and an Application requesting
approved recovery of excess power costs deferred through June 30, 2003 and further
continuation of a 19.4% ($23.6 million) PCA surcharge currently scheduled to expire on October
, 2003. Following a public hearing, the 19.4% surcharge was originally authorized by the
Commission in Order No. 28876 dated October 11 , 2001 in Case No. A VU-Ol-ll. A 12-
month continuation of the surcharge was authorized following a public workshop and comments
in Order No. 29130 in Case No. A VU-02-6. In its Order continuing the surcharge, the
Commission stated:
As we did last year, we find it reasonable to continue a close monitoring of
the Company s PCA decisions and thus require the Company to file a PCA
status report 60 days prior to the expiration of the PCA surcharge. As
before, if the status report and our review of the actual PCA deferral
balance supports continuation of the surcharge, we anticipate continuation
of the surcharge for an additional term.
Order No. 29130, p. 16. The current status of the unrecovered Idaho PCA deferral balance as of
June 30, 2003 is $27 843 108 for its Idaho jurisdiction.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION
Status Report - Application for Extension
The details of the deferred cost balance as reflected in the Company s PCA account
are as follows:
Unrecovered Balance at June 30, 2002
Net Deferral Activity (July 2002 - June 2003)
Amortizations Related to Surcharge Revenues
(July 2002 - June 2003)
Unrecovered Balance at June 30, 2003
$45 600 228
789 503*
(24,546,623)
$27 843 108
Deferral Activity Detail
Net Increase in Power Supply Cost
Centralia Capital and O&M Credit
PGE Monitization Accelerated Amortization
Transfer Small Generation Capital Costs & Interest
Intervenor Funding Payment
Interest
Net Deferral Activity (July 2002 - June 2003)
$23 383 629
817 996)
(13 855 680)
( 921 184)
138
999,596
$ 6 789 503
During the review period, Avista reports that Idaho s share of power supply expenses
exceeded the authorized level by $25 924 662. The Company states that power supply expenses
were higher than the authorized level due to several factors:
The largest factor was the sale of fixed price gas. Based on the average
purchase and sale price, the fixed price gas purchases added approximately
$13.1 million to Idaho s share of power supply expense. Hydro-generation
was approximately 12.9 aMW below the authorized level, which would
account for approximately $2.1 million of increased expense. Colstrip and
Kettle Falls together generated approximately 8 aMW above the authorized.
Rathdrum generated approximately 21 aMW below the authorized level due
in part to the relatively low price of electricity compared to natural gas
costs. The Company s other gas-fired generating plants, North East
Turbine, Boulder Park, and the Kettle Falls Combustion Turbine generated
2 aMW during the period.
Other power supply expenses during the review period include a payment to
terminate a long-term power purchase with Enron and the final lease
payments of $3.7 million ($1.3 million Idaho share) related to the Kettle
Falls Bi-Fuel generating units. The $2.9 million Enron buy-out payment
($960 000 Idaho share) occurred in October 2002, and was recorded as a
power purchase expense. The Kettle Falls Bi-Fuellease payments began in
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION
September 2001 and were included in the prior filing for the review period
ending June 2002.
Another factor driving the deferrals is the age of the authorized case. The
authorized case is based on loads, contracts and resources in place for the
period July 1999 through June 2000. During that period, the Company had
several large off-system power sales that generated significant revenue.
Almost all of the sales have ended and, as such, the revenue is reduced
which is reflected in a reduction in Account 447, Sale for Resale, revenue
of $72 million on a system basis ($24 million Idaho share). Purchased
power expense has also decreased from the authorized level due in part to
several long-term contracts ending. Purchased power expense, however
has decreased by only $24 million on a system basis ($8 million Idaho
share). The Company plans to file a general rate case within the next year
to reset the authorized level of power supply revenues and expenses.
A vista contends that continuation of the current surcharge is not only justified by the
current level of unrecovered power cost deferrals, but is essential to the continued improvement
in the financial health of the Company. Investor concerns surrounding cash flows, deferral
balances, and the ability to recover costs in a timely manner have had an impact on the
Company s financings. The Company s credit ratings were lowered by credit rating agencies to
below investment grade in October 2001. Because of Avista s present credit ratings, debt is more
expensive. A vista contends that it is imperative for both the Company and its customers that
A vista continue to improve its financial condition so that investment grade credit ratings can be
restored and so that longer-term debt can be refinanced on more reasonable terms.
Current projections indicated that with continuation of the 19.4% surcharge, the PCA
deferral balance would reach zero in mid-2005. The actual point when the deferral balance
reaches zero is dependent upon factors such as hydroelectric conditions, wholesale market prices
contract changes, etc., during the relevant period.
The Company requests that the Commission continue the PCA surcharge for an
additional 12 months, beginning October 12, 2003 and continuing through October 11 , 2004.
The Company requests that its Application be processed pursuant to Modified Procedure, i., by
written submission rather than by hearing.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of
record in Case No. A VU-03-6. The Commission has preliminarily determined that the public
interest regarding the Company s Application requesting a 12-month continuation of 19.4%
($23.6 million) Schedule 66 PCA surcharge may not require a hearing to consider the issues
presented, and the issues raised by the Application may be processed under Modified
Procedure, i., by written submission rather than by hearing. Reference Commission Rules of
Procedure, IDAP A 31.01.01.201-204.
Notice of PCA/Energy Discussion
YOU ARE FURTHER NOTIFIED that Commission Staff will be available to
discuss Avista s PCA filing and the Company s energy situation (gas and electric) as it affects
Avista customers following the public workshop already scheduled in Avista s PGA Case No.
A VU-03-1. The workshops in Avista s natural gas PGA filing are scheduled as follows:
Monday, September 8, 2003, Lewiston, Idaho, at the Nez Perce County
Commission Brammer Building, 1225 Idaho Street beginning at 7:00 p.
PDT.
Tuesday, September 9, 2003, Coeur d' Alene, Idaho, at the Student Union
Building of North Idaho College, 1000 W. Garden Avenue beginning at 7:00
m. PDT.
YOU ARE FURTHER NOTIFIED that the Commission may not hold a hearing in
this proceeding unless it receives written protests or comments opposing the use of Modified
Procedure and stating why Modified Procedure should not be used.
31.01.01.203.
Reference IDAP A
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments
or protests with respect to the Application and the Commission s use of Modified Procedure in
Case No. A VU-03-6 is Tuesday, September 30, 2003. Persons desiring a hearing must
specifically request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline, the Commission will consider the matter on its merits and enter its
Order without a formal hearing. If comments or protests are filed within the deadline, the
Commission will consider them and in its discretion may set the matter for hearing or may
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION
decide the matter and issue its Order based on the written positions before it. Reference IDAP
31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concernIng Case No.
A VU-03-6 should be mailed to the Commission and to Avista at the addresses reflected below.
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Kelly O. Norwood
Vice President
A vista Corporation
1411 E. Mission Avenue
Spokane, W A 99220
Mail: kelly.norwood(0avistacorp
472 W. Washington Street
Boise, ill 83702-5983
David J. Meyer
Senior Vice President and General Counsel
A vista Corporation
1411 E. Mission Avenue
Spokane, W A 99220
E-mail: dmeyer(0avistacorp
These comments should contain the case caption and case number shown on the first page of this
document.
Persons desiring to submit comments VIa e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the A vista at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set, the Commission will consider this matter on its merits and
enter its Order without a formal hearing. If written comments are received within the time limit
set, the Commission will consider them and, in its discretion, may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application in Case No. A VU-03-
can be reviewed at the Idaho Public Utilities Commission, 472 W. Washington Street, Boise
Idaho and at the Idaho offices of A vista. In addition, the Application may be viewed by
accessing the Commission s Website at www.puc.state.id.us under the "File Room" icon and
selecting the appropriate topic heading.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION
DATED at Boise, Idaho this J... 7 ~ day of August 2003.
Gi!ti
MARSHA H. SMITH, COMMISSIONER
ATTEST:
iE:
lJ~
D. Jewell
C mmISSIon Secretary
blslN:A VUEO306 sw
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
NOTICE OF PCAIENERGY DISCUSSION