20041105Reply to Petition for Reconsideration.pdf

SCOTT D. WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 1895
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
VISTA CORPORATION FOR THE
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. A VU-O4-
A VU -O4-
STAFF REPLY TO AVISTA
PETITION FOR
RECONSIDERATION
On October 29, 2004, Avista Corporation (Avista; Company) filed a timely Petition
for Reconsideration of Commission Order No.29602 in Case Nos. A VU-04-and
A VU-04-1. Staff offers the following comments regarding Company identified errors in
calculation.
Deal A Corrections
A vista contends that there are four miscalculations related to the determination of
Deal A losses that need to be corrected.
1. Company Contention: The Commission-ordered disallowance of $4 771 550 is
based on "one-third" of the Deal A losses. The Company has already absorbed 10% of the total
Deal A losses through the 90%/1 0% sharing feature of the PCA. The effective disallowance
therefore 40% of the total losses-not the "one-third" disallowance ordered by the Commission.
The Company proposed adjustment is $1 060 344, reducing the Deal A disallowance figure to
711 206.
STAFF REPLY TO A VISTA PETITIONFOR RECONSIDERATION
2. Company Contention: The Deal A disallowance is based on total Deal A losses
for the period November 2001 through May 2004. The losses in the period November 2001
through June 2002, however had previously been authorized by the Commission for PCA
recovery. To order a disallowance based on losses that were previously approved for recovery
would, the Company contends, constitute retroactive ratemaking.The Company proposed
adjustment is $1,461,415, reducing the Deal A disallowance to $2 249 791.
3. Company Contention: Staff Exhibit 141 relied upon by the Commission, has the
wrong number of days for the months of July 2003 through May 2004. This error overstates the
loss calculation for Deal A. ... The Company-proposed adjustment is $91 035, reducing the Deal
A disallowance figure to $2 158 756.
4. Company Contention The Staff Exhibit No. 141 calculation of Deal A gas losses
includes an incorrect calculation of the Deal A gas profitably burned for the months of
November 2003 through May 2004. It included only one-half of the Deal A gas profitably
burned and should have included all of it, since Deal B had ended October 31 , 2003. The
Company-proposed adjustment is $35 819, resulting in Company-calculated net Deal A adjusted
disallowance figure of$2 122 937.
The cumulative reduction for the four Company-identified miscalculations
648 937. Incorporating these four adjustments to the calculation of gas losses results in a
Deal A disallowance of $2 122 937. This compares to the Deal A disallowance of$4 771 550 in
Order No. 29602.
Staff Comments
With respect to items 3 and 4 identified above, Staff concurs with the corrections
proposed by the Company as depicted in its Attachment C, which is an update of Staff witness
Hessing s Exhibit 141. Staff notes that Staff Exhibit 141 was completed with the assistance of
the Company. The corrections are to the wrong number of days in the month that were included
in both Deals A and B, and to the incorrect calculation for gas profitably burned for the period
November of 2003 through May of 2004.
Staff has incorporated these corrections into the calculation of the disallowance for
Deal A as described in the Commission Order.
STAFF REPLY TO A VISTA PETITIONFOR RECONSIDERATION
The methodology used to calculate Deal A disallowance is clearly specified in Order
No. 29602 on page 46:
Deal A losses through May amounted to $47 936 010 on a system basis;
$15 905 167 on an Idaho jurisdictional basis. With 90/10 sharing the Idaho
PCA amount related to Deal A losses is $14 314 651. Of that amount
636 885 was previously authorized for PCA recovery (July 1 - June 2002).
Based on our consideration of the record and Deal A findings, the
Commission finds it reasonable to exclude or disallow one-third of the Idaho
system Deal A losses, or $4 771 550.
The table below duplicates the Commission specified methodology. The total amount
of Deal A losses, at the system level, is multiplied by the allocation factor for the Idaho
Jurisdiction, to come up with the Idaho Jurisdictional amount of the total Deal A losses. This
amount is then adjusted to reflect the 10% sharing mechanism in the PCA calculation and the
ratepayer portion of the losses. The ratepayer portion is then divided by three to arrive at the
disallowance ordered by the Commission. Using the same methodology with corrections
incorporating the proper number of days and the proper amount of gas profitably burned results
in a Deal A disallowance of $4 608,452.
1. Losses already recovered on Deal A:
2. Losses deferred for recovery on Deal A:
3. Total System losses on Deal A:
4. Jurisdictional Factor:
5. Idaho Jurisdictional Portion of Deal A Losses:
6. 10% Shareholder PCA Portion of Deal A Losses:
7. Ratepayer Portion of Deal A Losses:
8. One Third of Ratepayer Portion of Deal A Losses:
9. Disallowance Amount of Deal A Losses:
Commission
Order
$18 876,448
$29.059.562
$47 936 010
33.18%
$15 905 517
$15 905 168
$14 314 651
$ 4 771 550
$ 4 771 550
Commission Order
With Corrections
$18 876 448
$27.421.045
$46 297,493
33.18%
$15 361 508
$ 1 536 151
$13 825 357
$ 4 608 452
$ 4 608,452
With respect to items 1 and 2 described above, the Company s calculation of the Deal
A disallowance is not consistent with the Commission s Order. Rather than using total Deal A
losses of $46,421 045 (as corrected) to calculate the disallowance as specified by the
Commission, the Company uses only Deal A losses of $27,421 045 (as corrected) currently
deferred for recovery. The Company then improperly takes one third of the unrecovered Idaho
jurisdictional Deal A losses before applying the 10% percent PCA sharing. This is in contrast to
STAFF REPLY TO A VISTA PETITIONFOR RECONSIDERATION
the Commission Order that applies the 10% sharing first to the Idaho Jurisdictional losses and
then takes one third of the remaining total to establish the disallowed amount.
The Company has calculated the Deal A disallowance in the following manner:
Deal A losses deferred for recovery:
Jurisdictional Factor:
Idaho Jurisdictional Portion of Unrecovered Deal A Losses:
One Third of Idaho Jurisdictional portion of Unrecovered Deal A Losses:
Less 10% of Idaho Jurisdictional portion of Unrecovered Deal A Losses:
Company Disallowance Amount of Deal A Losses
$27,421 045
33.18%
$ 9 098 303
$ 3 032 768
$ 909 830
$ 2 122 937
The Company perceives inclusion of the $18 876 448 in the Deal A disallowances calculation to
be retroactive ratemaking and therefore, removes the amount to correct what it characterizes as a
calculation error. However, the Commission Order clearly states ". $5 636 885 was
previously authorized for PCA recovery (July I-June 2002).The $5 636 885 is the Idaho
jurisdictional ratepayer share of $18 876,448. Total Deal A losses were simply used in the Order
to establish what amount of the additional losses were subject to recovery through the PCA and
what amount were not. Prior amounts recovered in rates are not being reversed.
In summary, the net effect of the proposed corrections 3 and 4 is an increase in Deal
loss recovery through the PCA of $163 098 after applying the Commission ordered
disallowance methodology.
Pension Expense Adjustment
Company Contention A vista contends that the electric revenue requirement should
be increased by $46 411 and the natural gas revenue requirement should be increased by $11,422
to correctly reflect the impact of the Commission s adjustment to the Company s pension
expense. The identified changes are needed to correctly allocate the "system" corporate level of
pension expense to utility operations prior to applying the Idaho jurisdictional allocation factors.
This step was omitted during the calculation of pension expense allowed in Order No. 29602.
Staff Comments
A vista in its Petition for Reconsideration identified a technical correction to the
adjustment of the Company s pension costs resulting in an increase to the electric and natural gas
revenue requirements calculated in Order No. 29602. As noted in its Petition, Staff agrees with
this technical correction proposed by the Company.
STAFF REPLY TO A VISTA PETITIONFOR RECONSIDERATION
DATED at Boise, Idaho this ::;rh. day of November 2004.
Vld/N:A VUE/GO41 sw7
ST AFF REPLY TO A VISTA PETITIONFOR RECONSIDERATION
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 5TH DAY OF NOVEMBER 2004
SERVED THE FOREGOING STAFF REPLY TO A VISTA PETITION FOR
RECONSIDERATION, IN CASE NO. AVU-04-lIAVU-04-, BY E-MAILING A
COpy THEREOF AND BY MAILING A COpy THEREOF POSTAGE PREPAID
THE FOLLOWING:
DAVID 1. MEYER
SR VP AND GENERAL COUNSEL
VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-mail dmeyer~avistacorp. com
KELLY NORWOOD
VICE PRESIDENT - STATE & FED. REG.
AVIS T A UTILITIES
PO BOX 3727
SPOKANE WA 99220-3727
E-mail Kell y .norwood~avistacorp .com
CONLEY E WARD
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701-2720
E-mail cew~givenspursley.com
DENNIS E PESEAU, PH. D.
UTILITY RESOURCES INC
1500 LIBERTY ST SE, SUITE 250
SALEM OR 97302
E-mail dpeseau~excite.com
CHARLES L A COX
EV ANS KEANE
111 MAIN STREET
PO BOX 659
KELLOGG ID 83837
E-mail ccox~usamedia. tv
BRAD M PURDY
ATTORNEY AT LA W
2019 N 17TH ST
BOISE ID 83702
E-mail bmpurdy~hotmai1.com
~~~
SECRETARY
CERTIFICATE OF SERVICE