20051004final order no 29881.pdf

Office of the Secretary
Service Date
October 4, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR AN
ORDER APPROVING RECOVERY OF
DEFERRED POWER COSTS ORDER NO. 29881
CASE NO. AVU-O5-
On August 11 , 2005, Avista Corporation filed an Application for an Order approving
extension of its existing Power Cost Adjustment (PCA) surcharge that allows the Company to
recover above normal costs of supplying power to its customers.In October 2001 the
Commission approved a 19.4% PCA surcharge to enable the Company to pay down a $78
million power cost debt incurred during the 2000-2001 western states energy crisis. The
Commission last year reduced the surcharge to 4.38%, and in April of this year reduced it again
to its current level of 2.448%. A vista s deferred power cost balance was $26.1 million as of June
, 2004, but was reduced to $5.9 million as of June 30, 2005. The existing PCA surcharge
produces annual revenues of approximately $4 268 000, which is less than the remaining deferral
balance.
On September 1 2005 , the Commission issued a Notice of Application and Notice of
Modified Procedure to process A vista s Application. The Notice established a 21-day period for
interested parties to file written comments. Written comments were filed by the Commission
Staff and three members of the public. The public comments generally object to any rate
increase for A vista, and one recommended that recovery of the excessive power costs during
2000-2001 should come from shareholders or previous Company officials.
Staff in its comments reviewed the amounts that comprise the deferral balance and
determined that the amounts are reasonable, including the Company s calculation of interest on
the deferral balance. Staff recommended the Commission accept them as filed by the Company.
Staff also recommended that the current PCA surcharge remain in place as proposed by the
Company to allow further reduction of the deferral balance.
The normal costs of supplying power to customers are recovered in the utility s base
rates. A utility may incur higher than normal power costs from unusual circumstances, however
such as low water conditions or higher than expected market conditions. In those circumstances
ORDER NO. 29881
the Commission has approved a temporary PCA surcharge to enable the company to recover its
higher than normal costs. Revenues from a PCA surcharge are used only to pay the increased
power costs and do not increase the earnings of the company.
The Commission approved a PCA for A vista after the unusual increase in power
supply costs following the 2000-2001 debacle in the wholesale energy markets resulted in a $78
million deferred cost balance for the Company. Since then, the debt has been reduced to $5.
million, and the Commission has reduced the PCA surcharge from 19.4% to 2.448%. The report
filed by A vista and audit by Staff indicate the Company is properly accounting for PCA revenues
and appropriately applying them to excess power costs. By leaving the PCA in place for another
year, Avista will be able to further reduce the power cost deferral balance and customers will not
experience any increase in existing rates.
On the record presented, the Commission approves the Application of A vista for an
Order to continue the current PCA surcharge of 2.448%. The Company proposed to file a status
report on or before August 15 , 2006 , covering the period from July 1 , 2005 through June 30
2006. Accordingly, we direct the Company to file a status report on or before August 15 , 2006.
The Commission can review the Company s filing next year and determine whether the PCA
surcharge should again be lowered or to make other appropriate adjustments.
ORDER
IT IS HEREBY ORDERED that the Application of Avista Corporation for an Order
to continue the current PCA surcharge of 2.4480/0 is approved. The Company is directed to file a
status report on or before August 15 , 2006, accounting for PCA funds and payment of the power
cost deferral, covering the period from July 1 , 2005 through June 30, 2006.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) or in interlocutory Orders previously issued in this Case No. A VU-O5-
may petition for reconsideration within twenty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this case. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code 9 61-626.
ORDER NO. 29881
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this nt.
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+-0 h(,.,f"
day of ptemeer 2005.
U1J:L MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:A VU-05-06 ws2
ORDER NO. 29881