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UTILITIES COr?H~1ISSI0H
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN
THE STATE OF IDAHO.
) CASE NO. AVU-O4-) AVU-O4-
DIRECT TESTIMONY OF MICHAEL FUSS
IDAHO PUBLIC UTiliTIES COMMISSION
JUNE 21 , 2004
Please state your name and business address for
the record.
My name is Michael Fuss.My business address
is 472 West Washington Street, Boise, Idaho.
By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities
Commission as a Staff engineer.
What is your educational and professional
background?
I have a Bachelor of Science Degree in Civil
Engineering from Washington State Uni versi ty and a Master
of Business Administration Degree from Boise State
Uni versi ty.I am a licensed Civil Engineer in the states
of Idaho, Oregon, and Washington.I am a past president
of the Southern Idaho Section of the American Society
Civil Engineers and have been a member of various
professional affiliations and service organizations.
I have over 15 years of Civil Engineering
Experience in the areas of Municipal, Utility,
Regulatory, and Development Civil Engineering and
consul t ing
While at the Idaho Public Utility Commission
have attended the National Association of Regulatory
Utility Commissioners (NARUC) Basic Training Program
Risk Management Techniques for the Natural Gas Industry
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04
(Di)FUSS, M
STAFF
at New Mexico State University and the Northwest Public
Power Association s course on Unbundled Cost of Service
Rate Design.
What is the purpose of your testimony?
My testimony pertains only to Avista ' s Natural
Gas (Gas) rate case.In my testimony I review the
Company s Natural Gas Jurisdictional Separation Study
(Separation Study) This separation study is used by
Avista to develop the Idaho gas unadj usted resul ts
opera t ion.
I review the Company s Gas Cost of Service
(COS) Study, its method of incorporating the results
operation adj ustments, and the development of the Class
Revenue Requirement.
I also review the Cost of Gas in base rates,
Gas Special Contracts, and recommend an additional
natural gas tariff sheet.
How is your testimony structured?
My testimony is structured as follows:
Summary
Gas Jurisdictional Separation
Methodology
Adjustments
Cost of Service
Methodology
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04
(Di)FUSS, M
STAFF
Other Studies
Adj ustments
Adj ustment Summary
Cost of Gas in Base Rates
Special Contracts
Tariff Summary Sheet Recommendation
Would you please summarize your testimony?
I have reviewed and recommend acceptance of the
Company s Gas Jurisdictional Separation Study using the
Four- Factor methodology wi th one minor adj ustment
I have also reviewed and recommend acceptance
of the Company s Gas Cost of Service Study known as the
Washington Accepted Methodology with exception of two
adj ustments.I recommend an adjustment in usage within
the pro forma revenue calculation that resul ts in an
increase of $23,000 to current revenues.I al
recommend allocating storage expenses and credits based
on winter therm usage as opposed to the annual usage
proposed by the Company.
I recommend that the Company s request to move
the cost of gas in base rates to $0. 44989/therm
considered reasonable.I believe increasing the cost of
gas in base rates will reduce the overall magni tude of
future PGA adj ustments If actual gas costs increase,
the PGA adjustment will be lower; and if actual gas costs
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04
(Di)FUSS, M
STAFF
decrease, a PGA credit is more likely.
I recommend acceptance of the Company
treatment of Idaho gas special contracts within the Gas
COS Study.I believe the Gas COS Study appropriately
allocates gas special contract revenues and expenses.
I recommend that the Company be directed to add
a tariff summary sheet to its gas tariff schedules.
believe the additional tariff sheet will not be
administratively burdensome for the Company and it will
provide clarity for Customers.
GAS JURISDICTIONAL SEPARATION STUDY
Have you reviewed the Company s Gas
Jurisdictional Separation Study and do you have any
recommendations regarding the study?
Yes, I have reviewed the Company s Gas
Jurisdictional Separation Study and recommend that the
Commission accept the Separation Study wi th a mlnor
adj ustment The Separation Study uses the Four-Factor
methodology, a methodology first reviewed by Staff when
initiated by the Company in 1993.The Separation Study
is also consistent with the methodology used in Case No.
WWP-E- 98 -, the last Avista Idaho Electric General Rate
Case.Furthermore , the general methodology of the
Separation Study has been approved for the Company in all
of its other operating jurisdictions.
CASE NO. AVU-04-1/AVU-04-6/21/04
(Di)FUSS, M
STAFF
Methodology
Please gl ve a brief description of the
Company s Gas Jurisdictional Separation Study
methodology.
Jurisdictional separation is performed in the
following steps.
Direct Assiqnment
All expenses , revenues, and rate base
investments that can be directly assigned are allotted to
the Idaho gas jurisdiction.
Utility Codes
For items not directly assigned , six utility
codes are used to assign expenses, revenues and rate base
to common cost categories.The categories are Avista
Electric, Avista Gas, WPNG (Avista Gas OR/CA) , Common to
Avista Electric and Avista Gas, Common to Avista Gas and
WPNG, and Common to Avista Electric, Avista Gas and WPNG.
Four- Factor
For common items the Company uses an allocator
composed of four factors to allocate these items to the
Idaho natural gas utility.The four factors are:Direct
O&M Expense excluding labor and resource costs, Direct
Labor , Number of Customers, and Net Direct Plant.
Other Allocators
The Company uses a number of other allocators
CASE NO. AVU-04-1/AVU-04-6/21/04
(Di)FUSS, M
STAFF
such as five-day firm peak demand, distribution operating
expense and number of customers to allocate the
appropriate Avista Gas costs to the Idaho gas
jurisdiction.
Adjustments
Do you recommend that the methodology from the
Company s Gas Jurisdictional Separation Study be accepted
without change?
No.I believe that one mlnor adjustment
necessary.
Would you please explain your mlnor adj ustment?
I believe the Separation Study is inconsistent
In the allocation of plant investment, expenses, and
revenues in the following tax adj usting (Schedule
accounts in report G-SCM-12A:1999.
Hardware/Software/Furni ture Lease Payments, 1999.
Airplane Lease Payments, and 1999.14 Sale Leaseback of
General Office Building.In the Separation Study as
filed, the Company uses allocator 5 -Actual Therms
Purchased for these accounts.I believe this is
incorrect.
In all other areas within the Separation Study
where I reviewed the natural gas accounts 1999.09,
1999.13, and 1999., the revenue and expenses were
allocated using the four- factor allocator.The same
CASE NO. AVU-E- 04 -l/AVU-G- 04-
6/21/04
(Di)FUSS, M
STAFF
Schedule accounts are also allocated using the four-
factor methodology in the Electric Jurisdictional
Separation Study.Therefore, I recommend that the
appropriate four-factor allocator be used to distribute
costs in the stated gas accounts.
What is the net affect of this adjustment?
Using the four-factor allocator on the listed
accounts reduces Idaho s share of taxes and the Idaho gas
net operating income by $1, 888 .The Company in answer to
Staff Production Request No.1 79 confirmed the amount of
the adj ustment
GAS COST OF SERVICE STUDY
Methodology
Would you please describe the Company s Gas
Cost of Service (COS) Study?
Certainly, the Company s Gas COS Study is a
complex operation using three main Excel spreadsheets to
incorporate the resul ts of operation , make adj ustments,
functionalize, classify, and allocate expenses to develop
the revenue requirement for the various customer classes.
Output from the Gas COS Study is then used to help design
rates.The Company uses the spreadsheet ~ Proformn to
incorporate the resul ts of operation and make
adj ustments It uses the spreadsheet ~Assign n to
functionalize , classify, and assign costs.Assign
CAS E NO. A VU - E - 04 - 1/ A VU - G - 04 - 16/21/04
(Di)FUSS, M
STAFF
contains varlOUS parameters used to develop allocation
factors and facilitate cost assignment.The final
spreadsheet ~SumcostU organizes the results and provides
a revenue requirement estimate for each customer class.
The Company s Gas Cost of Service Study also
incorporates a number of ~other studies u used to
normalize the resul ts and create allocation factors.
Some of the other studies worth mentioning are the
weather normalization study, the Pro Forma Gas Revenue
Calculation, the Labor Dollars study, and the Weighted
Meter and Service Cost Analysis.
Other Studies
Would you please explain the significance of
these other studies and why these particular studies are
most important?
Certainly.The weather normalization study
important because natural gas usage is highly weather
dependant for most customer classes.The weather
normalization study uses regression analysis to determine
the amount of gas consumption that is weather dependant
for each customer class.It also relates the test year
weather pattern to a 30-year normal weather pattern and
adj usts the test year usage to reflect normal weather
conditions.Staff witness Sterling s direct testimony
includes additional discussion on weather normalization.
CASE NO. AVU-E- 04 -l/AVU-G- 04-
6/21/04
(Di)FUSS, M
STAFF
The Pro Forma Revenue Calculation develops
normalized billing determinants (therms and customers)
adjusting the test year to reflect expected conditions on
average.This includes but is not limited to known
customer changes , weather normalization , and period
adj ustments.The Pro Forma Calculation uses rates in
place during the test year to reflect the appropriate
normalized revenue generation by the various customer
classes.
The Labor Dollars Study is a study that
embedded wi thin the Gas COS Study that determines labor
cost allocation.This study is important because it is
used to develop labor allocators used in the four- factor
allocator within the Jurisdictional Separation Study.
The labor allocators are also used to allocate costs for
some labor related accounts.
The Weighted Meter and Service Cost Analysis
an engineering/ economic study that calculates metering
and service costs for the various customer classes.This
study is important because it creates weighting factors
and cost relationships used to allocate a number of meter
and customer cost categories.
What is the purpose of the Gas Cost of Service
Study?
The Gas Cost of Service Study is an engineering
CASE NO. AVU-04-1/AVU-04-6/21/04 (Di)FUSS, M
STAFF
economlc analysis that allocates expenses to establish
the revenue requirement based on cost causation.The
account-by-account study apportions each expense to the
various customer classes or rate schedules.The Gas Cost
of Service Study is the starting point in ul timately
establishing rates for each customer class.The resul ts
of the study provide an indication of the amount of
revenue that should be generated from rates for each
customer class or rate schedule.
Do you agree with the Company s Gas Cost of
Service Study?
Not entirely; there are any number of ways to
perform a cost of service study and any number of items
that can be used to allocate costs among customer
classes.Any individual or interest group could
reasonably argue for changes that would cause costs to
shift from one customer class to another.After a
detailed review of the Company s Gas COS Study, I believe
several small adjustments are required.
Adjustments
What changes to the Company s Gas Cost of
Service Study do you recommend?
I recommend changes to the Company s Pro Forma
Gas Revenue calculation.The Company adj usts for known
and measurable changes in usage by adding or subtracting
CASE NO. AVU -E- 04 -l/AVU -G- 04-6/21/04 (Di)FUSS, M
STAFF
revenue in the Pro Forma Revenue Calculation.In Brian
Hirschkorn s workpapers GAl-GAS adjustments are made in
gas consumption to reflect actual condi tions, weather
normalization, and unbilled usage.The consumpt ion
reduction in Mr. Hirschkorn s calculation of revenue
associated with Schedules 111 and 112 double counts gas
revenue included in the monthly minimum charge.Double
counting the reduction causes an understatement of
approximately $23 000 in the Idaho Gas Pro Forma Revenue
Calculation.I recommend that addi t ional revenue be
included in the Company s Gas cas Study to properly
reflect normalized revenues.
I further recommend adding consumpt ion to the
normalized billing determinants used to determine
proposed rates.
What is the net affect of your recommended
adj ustments?
The net affect of my adjustments is a decrease
in Idaho Gas Revenue Requirement of $23,414 when tax
effects are included.
Does Staff agree with the methodology the
Company uses to allocate storage costs and storage
capaci ty release credi ts to the various Idaho customer
classes?
Staff has reviewed the CompanyNo.
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04 (Di)FUSS, M
STAFF
methodology and believes that adjustment is necessary.
The Company allocates storage costs and credits among the
Idaho classes based on annual consumption.While this
methodology will allocate costs and credits, it does not
reflect the true value each class receives when using the
Company s storage facili ties.
The primary purpose of the Company s storage
facilities is for winter peak supply.The use of the
storage facilities is very limited throughout the rest of
the year.In fact stored gas is currently distributed to
Idaho on a systematic schedule.Storage is used in the
months of November , December, January, February, and
March.Staff believes that allocating storage costs
based on individual customer class usage over these
months is more appropriate because it better reflects
val ues received by each class.Consequently, I have
included this allocation methodology in the Company s Gas
Cost of Service Study.
Furthermore, Staff believes that the storage
capacity release credits should also be allocated based
on the monthly storage withdrawal cycle.Staff has made
two adj ustments to the Company s Gas Cost of Service
Study to reflect this change.Staff first allocates the
credi t over the Company s fixed storage wi thdrawal
schedule on the basis of volume to determine the amount
CASE NO. AVU-04-1/AVU-04-6/21/04 (Di)FUSS, M
STAFF
of credit attributable to each month.Staff then
allocates the monthly storage credit to each customer
class based on the class s contribution to the monthly
throughpu t I have included this allocation methodology
in Staff's adjustment to the Gas Cost of Service Study.
The storage allocator calculation is attached as Exhibit
No. 136.All natural gas rates and Gas Cost of Service
resul ts presented in my testimony include these
allocations.While the changes to the storage
allocations do not change the Gas Jurisdictional Revenue
Requirement, Staff believes it provides a more
appropriate revenue requirement by customer class.Staff
recommends that the Commission approve allocation of
storage costs and credi ts based on the Company s actual
use of storage.
Adjustment Summary
What is the net affect on the Gas
Jurisdictional Revenue Requirement from the recommended
adjustments included in your testimony?
The net affect to the Idaho Gas Revenue
Requirement is a decrease of $26,367.The decrease is
shown as adjustment G13 & G14 on Staff Exhibit No. 107.
Have you provided a summary of the Staff
adjusted Gas Cost of Service results?
Yes, attached as Exhibit No. 137 are the
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04 (Di)FUSS, M
STAFF
resul ts of the Staff adj usted Gas Cost of Service Study.
COST OF GAS IN BASE RATES
Has the Company requested a change in the cost
of gas included in base rates?
Yes, the Company has requested to increase gas
costs in base rates to $0. 44989/therm.
Do you believe an adj ustment of gas cost in
base rates is necessary?
Yes, over the past several years the Company
has requested and received several fairly large Purchase
Gas Cost Adjustments (PGA)These rate adjustments were
intended to reflect the Company s actual cost of gas
purchased for customers above the price of gas included
in base rates.The Company is proposing to add the
current PGA WACOG adjustment of $0. 27186/therm to base
rates to produce a total base rate gas cost of
$0.44989/therm.
I believe this change in gas cost
appropriate.Base rates should reflect the best estimate
of what gas costs would be in the future.The more
accurately base rates reflect gas costs, the less extreme
PGA adjustments will be.
Is a gas cost of $0. 44989/therm the appropriate
price level to be included in base rates today?
While Staff cannot predict the magnitude of
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04 (Di)FUSS, M
STAFF
future natural gas prlces with certainty, we believe that
the $0. 44989/therm proposed by the Company is a
reasonable price level for natural gas in base rates
going forward.Natural gas prices are considerably
higher today than in 1988 when the current base rate gas
price of $0.7803/therm was established.However , Staff
notes that increasing gas costs included in base rates
will not eliminate the need for a PGA in the future.
the extent actual gas costs lncrease, the PGA will simply
be lower than it otherwise would have been.If actual
gas costs decrease, then larger PGA credi ts will resul
That being said, natural gas is in a period of
extreme volatility.Staff believes that natural gas
prices will likely vary between $0.300 and $0.600 over
the next five to seven years.The Company s proposed
cost of gas in base rates falls at approximately the mid-
point of Staff's estimated range of future gas prlces.
Therefore, Staff recommends that the Company s proposal
be accepted.
SPECIAL CONTRACTS (NATURAL GAS)
How are Idaho Gas Special Contract customers
like Potlatch, IMCO, and Lignetics treated in the rate
case?
The Company has included all expenses
associated with serving Idaho s Gas Special Contract
CASE NO. AVU-E- 04 -l/AVU-G- 04-6/21/04
(Di)FUSS, M
STAFF
customers in the general rate filing.These expenses are
allocated among all customer classes using the same
methodology used for allocating other service costs.
order to offset the rate effect of allocating special
contract expenses to other customer classes, special
contract revenue is also credited to the classes.The
result is the inclusion of costs and benefits to all
other customer classes.
Staff believes that the revenue credit
continues to provide an adequate offset to Company
expenses as approved by the Commission during the
contract approval process.Based on Staff's review of
the Company s Gas Cost of Service Study, the credi ts are
appropriately applied.
Are Idaho Gas Special Contract Customers rates
changed as a resul t of this case?
All Gas Special Contract Customers inNo.
Idaho are served under existing long-term contracts at
fixed rates.All current Idaho contracts were in place
before the test year used by the Company in this case.
While Special Contract rates are not changed as a resul t
of this case, the Commission has previously reviewed the
contract condi tions and revenue contribution from these
customers and found them prudent.However, when the
current contracts expire, the terms and contribution of
CAS E NO. A VU - E - 04 - 1 / A VU - G - 04 - 16/21/04 (Di)FUSS, M
STAFF
each contract should be reevaluated and updated to
reflect the appropriate cost of service or appropriate
level of contribution to margin.Staf f does not bel ieve
that any change is necessary at this time.
TARIFF ISSUE
Do you have any natural gas general tariff
recommendations?
Yes, Staff recommends that the Company add a
tariff summary sheet,denoted as sheet which
summarlzes all natural gas rate schedules and all natural
gas adjustment clauses wi th the exception local
franchise fees.Currently the Company uses a number of
tariff sheets such as Schedules 150, 155, and 191 to
identify various periodic rate adj ustments such as
Purchase Gas Adjustments (PGAs) and Demand Side
Management (DSM) tariff riders.While the use of the
various tariff schedules minimizes the number of sheets
that must be updated, the practice increases the
likelihood for rate calculation errors and is somewhat
confusing to customers.Staff believes adding a tariff
sheet will benefit customers and will not be overly
burdensome on the Company.
Does this conclude your direct testimony in
this proceeding?
Yes, it does.
CASE NO. AVU-04-1/AVU-04-6/21/04 (Di)FUSS, M
STAFF
Staff Calculation
Allocate Storage Costs Based on Storage Withdrawal Schedule
Withdrawal from Schedule 163 paragraph 4
5/28/2004
Storage Capacity Release Credit to Idaho $647 000
Spread of Credit based on the
Storage Withdrawal Schedule
From Schedule 163 Para 4
Withdrawal Credit
Dth Spread
November 65179 $61 579
December 170748 $161 316
January 213435 $201 645
February 192780 $182 131
March 42687 $40 329
Total 684829 $647 000
Rate Schedule Allocator Based on Winter Usage
Data From Production Request 290
Sch 101 Sch 111 Sch 121 Sch 131 Sch 146 Total
November 5148821 1269795 222157 601 50 381259 7082182
December 6649173 1535662 225555 62009 374138 8846537
January 8669247 1939247 204488 60327 378706 11252015
February 7606192 1728687 197331 50236 322536 9904982
March 7340150 1692575 212566 47471 288421 9581183
Total 35413583 8165966 1062097 280193 1745060 46666899
46666899
Summed Allocator for Storage Capacity Credit
Credit Allocated To Schedule Based on Therm Usage
Sch 101 Sch 111 Sch 121 Sch 131 Sch 146 Total
November $44 768 $11 041 932 $523 315 $61 579
December $121 247 $28 003 113 131 822 $161 316
January $155 360 $34 753 665 $1 ,081 787 $201 645
February $139 861 $31 787 $3,628 $924 931 $182 131
March $30 896 124 $895 $200 214 $40 329
Total $492 133 $112 707 $14 232 858 $24 069 $647 000
$647 000
New Allocator EO8
Check
New Allocator S22
Check
Exhibit No. 136
Case No. A VU-04-
A VU-04-
M. Fuss, Staff
6/21/04
Sumcost AVISTA UTILITIES AS ADJUSTED BY PUC STAFF Natural Gas Utility
Company Base Case Cost of Service General Summary Idaho Jurisdiction 6/18/04
WA Accepted Methodology For The Twelve Months Ended December 31 , 2002 4:37 PM
(b)(c) (d) (e)(f)
(g)
(h)(i)(k)
Residential Small Firm Large Firm Interrupt Transport
System Service Service Service Service Service
Description Total Sch 101 Sch 111 Sch 121 Sch 131 Sch 146
Plant In Service
Production Plant
Underground Storage Plant 041 000 825,407 882 095 114 729 30,267 188,503
Distribution Plant 598,000 75,115,371 10,131 341 937 240 199,847 214 201
Intangible Plant 766,000 652 766 047 694 902 591
General Plant 943,000 064 228 706,537 67,486 762 89,987
Total Plant In Service 99,348,000 657 773 811 019 128,149 246,778 504 281
Accum Depreciation
Production Plant
Underground Storage Plant 294 000)740 822)(401,414)(52 209)(13,773)(85 782)
Distribution Plant (26 397 000)(22 793,740)880 654)(299,560)(63 624)(359,421)
Intangible Plant (626,000)(533,435)(74,422)(7,109)555)(9,479)
General Plant 076,000)769,029)(246,806)(23 574)(5,157)(31,434)
Total Accumulated Depreciation (31 393,000)(26 837 027)603,296)(382,452)(84 110)(486,115)
13 Net Plant 955,000 820,746 207 723 745 696 162 668 018,166
14 Accumlulated Deferred FIT 831 160)377 462)168,781)(111 638)(24,420)(148,859)
15 Miscellaneous Rate Base 743 000 515,867 138 081 620 839 49,592
Total Rate Base 866,840 959 152 177 023 666,679 145,087 918 899
17 Revenue From Retail Rates 51,419 278 113 651 954 774 521 691 385,070 444 092
18 Other Operating Revenues 156,000 925,383 173 755 897 091 875
Total Revenues 575 278 039 034 128,529 541 588 390,161 475,967
Operating Expenses
Purchased Gas Costs 797 892 296,587 923,227 262 238 312 505 334
Underground Storage Expenses 133,805 101 539 23,414 045 803 003
Distribution Expenses 123,435 822 953 214 313 047 8,452 38,66923 Customer Accounting Expenses 918,196 863,897 46,106 235 309 64924 Customer Information Expenses 257 116 220,236 23,672 865 023 32125 Sales Expenses 216 129 213 954 105
26 Admin & General Expenses 593,160 950 686 436 794 663 296 110 721
Total O&M Expenses 039,733 34,469,853 669 631 389,130 344 396 166 723
28 Taxes Other Than Income Taxes 876 000 746,673 104 021 923 168 21529 Depreciation Expense
Underground Storage Plant Depr 104 968 79,656 368 389 630 925
Distribution Plant Depreciation 125,000 841 640 226,067 626 013 65332 General Plant Depreciation 321,016 273 548 38,164 645 797 86133 Amortization of Intangible Plant 260 000 221 555 910 952 646 937
Total Depr & Amort Expense 810,984 2,416,399 313 509 32,613 087 376
35 Income Tax 389,744 707 601 469,169 52,362 19,775 140,837
Total Operating Expenses 116,461 340,526 556 330 1,484 027 373,426 362 151
37 Net Income 3,458,817 698,508 572 199 561 16,734 113,815
38 Rate of Return 88%5.40%97%63%11.53%12.39%
39 Return Ratio 1.47
40 Interest Expense 761 000 343 207 336,620 269 805 099
Print Date 6/18/2004 Time 4:38 PM
Exhibit No. 137
Case No. A VU-04-
A VU -04-
M. Fuss, Staff
6/21/04 Page 2 of
Sumcost AVISTA UTILITIES AS ADJUSTED BY PUC STAFF Natural Gas Utility
Company Base Case Cost of Service General Summary Idaho Jurisdiction 6/18/04
WA Accepted Methodology For The Twelve Months Ended December 31 , 2002 4:37 PM
(b)(c) (d) (e)(f)
(g)
(h)(i)(k)
Residential Small Firm Large Firm Interrupt Transport
System Service Service Service Service Service
Description Total Sch 101 Sch 111 Sch 121 Sch 131 Sch 146
STAFF REVENUE REQUIREMENT CALCULATION
Total Rate Base $58 866 840 $49 959 152 177 023 $666 679 $145 087 $918 899
Total Current Revenues $52 575 278 $41 039 034 128 529 541 588 $390 161 $475 967
Total Current Operating Expenses AT $49 116 461 $38 340 526 556 330 484 027 $373,426 $362,151
Net Income AT $3,458 817 698 508 $572 199 $57,561 $16 734 $113 815
Current Rate of Return 88%5.40%97%63%11.53%12.39%
Percent of Current Return 100.00%91.93%135.69%146.94%196.30%210.80%
Recommended Rate of Return 25%25%25%25%25%25%
Net Income Required At Rec. ROR $5,445 183 621 222 $663 875 $61 668 $13 421 $84 998
Income Deficiency BT 986 366 922 714 $91 676 107 ($3 314)($28 817)
Tax Gross Up Factor 639261 639261 639261 639261 639261 639261
Increase in Rev. Rqmt. AT 107 284 007 713 $143,409 $6,425 ($5 184)($45 079)
Total Recommended Revenue Requirement $55 682 562 $44 046 747 271 938 548 013 $384 977 $430 888
Other Operating Revenues (Staff Alloc)($1,156 000)($925 383)($173 755)($19 897)($5 091)($31 875)
Rev. Req. From Rates (Q) COS & ROR $54,526 562 $43 121 364 098 183 528 116 $379 886 $399 013
Staff Adjustment ($213 745)$105 251 $21 840 $10 759 $75 895
Staff Recommended Rate Revenue Requirement $54 526 562 $42,907,619 203,435 549 956 $390 644 $474,908
Cost of Service Index 100.00%99.50%101.16%101.43%102.83%119.02%
Recommended Increase 107 284 793 968 $248 660 $28 265 575 $30 816
Recommended Increase (%)98%97%78%86%1.45%94%
Print Date 6/18/2004 Time 4:38 PM
Exhibit No. 137
Case No. A VU-04-
A VU -04-
M. Fuss, Staff
6/21/04 Page 3 of
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Sumcost AVISTA UTILITIES AS ADJUSTED BY PUC STAFF Natural Gas Utility 6/18/04
Company Base Case Summary by Function with Margin Analysis Idaho Jurisdiction 4:37 PM
WA Accepted Methodology For The Twelve Months Ended December 31 2002
(b)(c) (d) (e)(f)
(g)
(h)(i)(k)
Residential Small Firm Large Firm Interrupt Transport
System Service Service Service Service Service
Description Total Sch 101 Sch 111 Sch 121 Sch 131 Sch 146
Functional Cost Components at Current Rates
1 Production 008 084 456 863 963 878 269 650 314 340 353
2 Underground Storage (174,818)(175 993)368)229 134 179
3 Distribution 422 937 444 718 463 583 168 334 803 299,499
4 Common 163 193 388 156 536 701 83,482 794 132 061
Total Current Rate Revenue 419 396 113 743 954 795 521 695 385 070 444 093
6 Exclude Cost of Gas w / Revenue Exp.847 253 27,336,965 933 468 264 105 312 715
Total Margin Revenue at Current Rates 572,143 776 778 021 327 257 590 355 444 093
Margin per Therm at Current Rates
8 Production $0.002260 $0.002352 $0.002352 $0.002352 $0.002352 $0.000798
9 Underground Storage ($0.002457)($0.003452)($0.000725)$0.000097 $0.001641 $0.002186
10 Distribution $0.160534 $0.185271 $0.113197 $0.071410 $0.067729 $0.071312
11 Common $0.058508 $0.066463 $0.041510 $0.035414 $0.032985 $0.031444
Total Current Margin Melded Rate per Therm $0.218846 $0.250633 $0.156334 $0.109273 $0.104707 $0.105740
Functional Cost Components at Uniform Current Return
13 Production 008 084 456 863 963 878 269 650 314 340 353
14 Underground Storage (198 311)(151 648)(34 191)018)164)290)
15 Distribution 11,445,404 095 121 059 087 120 206 725 145 265
16 Common 164 219 3,426 340 513 145 523 21,465 122 746
Total Uniform Current Cost 419 396 826 676 501 918 466 360 360 367 264,075
18 Exclude Cost of Gas w / Revenue Exp.847 253 336 965 933 468 264 105 312 715
Total Uniform Current Margin 572,143 489 711 568 450 202 255 47,652 264 075
Margin per Therm at Uniform Current Return
20 Production $0.002260 $0.002352 $0.002352 $0.002352 $0.002352 $0.000798
21 Underground Storage ($0.002787)($0.002975)($0.002644)($0.001704)($0.001685)($0.001736)
22 Distribution $0.160850 $0.198029 $0.081912 $0.050993 $0.037228 $0.034588
23 Common $0.058523 $0.067212 $0.039688 $0.034159 $0.031063 $0.029226
Total Current Uniform Margin Melded Rate per Therm $0.218846 $0.264619 $0.121308 $0.085799 $0.068958 $0.062877
25 Margin to Cost Ratio at Current Rates
Functional Cost Components at Proposed Rates
26 Production 007 890 456 689 963 859 269 647 314 340 353
27 Underground Storage (60 260)(80 574)264 399 653 999
28 Distribution 249 882 993 804 685 697 192 920 559 325 902
29 Common 329 168 537 791 549 635 994 23,093 133 655
Total Proposed Rate Revenue 54,526 680 907 711 203 455 549,960 390 645 474 909
31 Exclude Cost of Gas w / Revenue Exp.847 060 27,336 792 933,450 264 103 312 715
Total Margin Revenue at Proposed Rates 18,679,621 570 919 270 005 285 856 931 474 909
Margin per Therm at Proposed Rates
33 Production $0.002260 $0.002352 $0.002352 $0.002352 $0.002352 $0.000798
34 Underground Storage ($0.000847)($0.001581)$0.000330 $0.001017 $0.002392 $0.002857
35 Distribution $0.200264 $0.235274 $0.130376 $0.081839 $0.074612 $0.077598
36 Common $0.060841 $0.069398 $0.042510 $0.036056 $0.033419 $0.031824
Total Proposed Margin Melded Rate per Therm $0.262518 $0.305444 $0.175568 $0.121264 $0.112775 $0.113078
Functional Cost Components at Uniform Proposed Return
38 Production 007 992 27,456 793 963 860 269 646 314 340 353
39 Underground Storage (79 636)(61 591)(13,425)317)(452)852)
40 Distribution 14,268,359 500 995 397 466 150 814 260 186 824
41 Common 329 965 567 578 532 850 405 877 125 256
Total Uniform Proposed Cost 526 680 463 775 880,751 501 549 368 025 312,581
43 Exclude Cost of Gas w / Revenue Exp.847 161 336 895 933 450 264,102 312,714
Total Uniform Proposed Margin 679 519 126 880 947 301 237 447 311 312,581
Margin per Therm at Uniform Proposed Return
45 Production $0.002260 $0.002352 $0.002352 $0.002352 $0.002352 $0.000798
46 Underground Storage ($0.001119)($0.001208)($0.001038)($0.000559)($0.000654)($0.000679)
47 Distribution $0.200523 $0.245224 $0.108083 $0.063978 $0.046684 $0.044483
48 Common $0.060852 $0.069983 $0.041212 $0.034957 $0.031659 $0.029824
Total Proposed Uniform Margin Melded Rate per Therm $0.262516 $0.316350 $0.150609 $0.100728 $0.080041 $0.074427
50 Margin to Cost Ratio at Proposed Rates
Print Date 6/18/2004 Time 4:38 PM
Exhibit No. 137
Case No. A VU-04-
A VU -04-
M. Fuss, Staff
6/21/04 Page 4 of
Sumcost
Company Base Case
WA Accepted Methodology
AVISTA UTILITIES AS ADJUSTED BY PUC STAFF
Summary by Classification with Unit Cost Analysis
For The Twelve Months Ended December 31 2002
(b)(c) (d) (e)
Descri tion
Cost by Classification at Current Return by Schedule
1 Commodity
2 Demand
3 Customer
Total Current Rate Revenue
Revenue per Therm at Current Rates
5 Commodity
6 Demand
7 Customer
Total Revenue per Therm at Current Rates
Cost per Unit at Current Rates
9 Commodity Cost per Therm
10 Demand Cost per Peak Day Therms
11 Customer Cost per Customer per Month
Cost by Classification at Uniform Current Return
12 Commodity
13 Demand
14 Customer15 Total Uniform Current Cost
Cost per Therm at Current Return
16 Commodity
17 Demand
18 Customer19 Total Cost per Therm at Current Return
Cost per Unit at Uniform Current Return
20 Commodity Cost per Therm
21 Demand Cost per Peak Day Therms
22 Customer Cost per Customer per Month
23 Revenue to Cost Ratio at Current Rates
Cost by Classification at Proposed Return by Schedule
24 Commodity
25 Demand
26 Customer27 Total Proposed Rate Revenue
Revenue per Therm at Proposed Rates
28 Commodity
29 Demand
30 Customer31 Total Revenue per Therm at Proposed Rates
Cost per Unit at Proposed Rates
32 Commodity Cost per Therm
33 Demand Cost per Peak Day Therms
34 Customer Cost per Customer per Month
Cost by Classification at Uniform Proposed Return
35 Commodity
36 Demand
37 Customer38 Total Uniform Proposed Cost
Cost per Therm at Proposed Return
39 Commodity
40 Demand
41 Customer42 Total Cost per Therm at Proposed Return
Cost per Unit at Uniform Proposed Return
43 Commodity Cost per Therm
44 Demand Cost per Peak Day Therms
45 Customer Cost per Customer per Month
46 Revenue to Cost Ratio at Proposed Rates
Print Date 6/18/2004 Time 4:38 PM
(f)
System
Total
35,426 653
590 440
049 185
066 278
$0.497875
$0.120727
$0.113121
$0.731724
$0.497875
$21.
$11.42
281 826
496 290
288 162
066 278
$0.495840
$0.119404
$0.116479
$0.731724
$0.495840
$20.
$11.
358 960
483 541
331,061
173 562
$0.510978
$0.133279
$0.131136
$0.775393
$0.510978
$23.
$13.
246 348
9,411 285
515 929
173 562
$0.509395
$0.132263
$0.133734
$0.775393
$0.509395
$23.
$13.
(9)
Residential
Service
Sch 101
598,445
390 267
617 071
605 784
$0.521764
$0. 125354
$0.149419
$0.796536
$0.521764
$21.
$10.
798 312
585 267
935 699
319 277
$0.525684
$0.129179
$0.155669
$0.810532
$0.525684
$21.
$11.
380 243
154 132
865,377
399 752
$0.537100
$0.140338
$0.173906
$0.851344
$0.537100
$23.
$12.
536 372
306 248
113 904
956 525
$0.540162
$0.143322
$0.178781
$0.862266
$0.540162
$24.
$13.
(h)
Small Firm
Service
Sch 111
008 647
782 268
276 567
067,482
$0.542065
$0.137845
$0.021390
$0.701300
$0.542065
$26.
$40.
787 102
592 513
234 580
614 195
$0.524931
$0.123169
$0.018143
$0.666242
$0.524931
$24.
$34.
130 111
886,416
299 615
316 142
$0.551460
$0.145900
$0.023173
$0.720532
$0.551460
$28.49
$43.
972 062
751 159
269 690
992 911
$0.539236
$0.135439
$0.020858
$0.695533
$0.539236
$26.45
$39.
Natural Gas Utility
Idaho Jurisdiction
(i)
Large Firm
Service
Sch 121
195 444
269 550
70,930
535 924
$0.507123
$0.114347
$0.030090
$0.651560
$0.507123
$16.
$591.
173 898
246 857
752
1,480 507
$0.497984
$0.104720
$0.025348
$0.628051
$0.497984
$14.
$497.
206,415
281 135
639
564 188
$0.511778
$0.119261
$0.032511
$0.663550
$0.511778
$16.
$638.
187 521
261 271
66,857
515,649
$0.503762
$0.110835
$0.028362
$0.642959
$0.503762
$15.
$557.
Interrupt
Service
Sch 131
356 422
220
286
388 928
$0.515784
$0.020578
$0.026462
$0.562824
$0.515784
$5.
$761.
343 750
317
128
364 196
$0.497446
$0.010588
$0.018998
$0.527033
$0.497446
$2.
$547.
359,276
778
449
394 503
$0.519913
$0.022832
$0.028145
$0.570891
$0.519913
$6.42
$810.
347 658
9,456
14,726
371 841
$0.503102
$0.013685
$0.021311
$0.538097
$0.503102
$3.
$613.
6/18/04
4:37 PM
(k)
Transport
Service
Sch 146
267 694
134 135
331
468 161
$0.063739
$0.031938
$0.015794
$0.111471
$0.063739
$6.
$789.
178 764
337
003
288 104
$0.042564
$0.015319
$0.010715
$0.068599
$0.042564
$2.
$535.
282 915
146 081
69,981
498 977
$0.067363
$0.034782
$0.016663
$0.118808
$0.067363
$6.
$833.
202 735
149
752
336 636
$0.048272
$0.019798
$0.012084
$0.080154
$0.048272
$3.
$604.
Exhibit No. 137
Case No. A VU-04-
A VU -04-
M. Fuss, Staff
6/21/04 Page 5 of
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 21ST DAY OF JUNE 2004
SERVED THE FOREGOING DIRECT TESTIMONY OF MICHAEL FUSS, IN
CASE NO. AVU-04-l/AVU-04-, BY MAILING A COpy THEREOF POSTAGE
PREPAID TO THE FOLLOWING:
DAVID J. MEYER
SR VP AND GENERAL COUNSEL
VISTA CORPORATION
PO BOX 3727
SPOKANE W A 99220-3727
KELLY NORWOOD
VICE PRESIDENT STATE & FED. REG.
VISTA UTILITIES
PO BOX 3727
SPOKANE W A 99220-3727
CONLEY E WARD
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701-2720
DENNIS E PESEAU, PH. D.
UTILITY RESOURCES INC
1500 LIBERTY ST SE, SUITE 250
SALEM OR 97302
CHARLES L A COX
EV ANS KEANE
111 MAIN STREET
PO BOX 659
KELLOGG ID 83837
BRAD M PURDY
ATTORNEY AT LAW
2019 N 17TH ST
BOISE ID 83702
SECRETARY
CERTIFICATE OF SERVICE