20050927Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEG AL
FROM:WELDON STUTZMAN
DA TE:SEPTEMBER 27, 2005
SUBJECT:CASE NO. A VU-05-6; APPLICATION OF A VISTA CORPORATION
FOR RECOVERY OF DEFERRED POWER COSTS THROUGH ITS
EXISTING PCA SURCHARGE
On August 11 , 2005, Avista Corporation filed an Application for an Order approving
recovery of power costs deferred through June 30, 2005. Avista requested approval of a 12-
month extension of the existing PCA surcharge that allows the Company to recover above
normal costs of supplying power to its customers. The Commission approved a 19.4% PCA
surcharge in October 2001 to enable the Company to pay down a $78 million power cost debt
incurred during the 2000-2001 western states energy crisis. The surcharge was reduced to 4.38%
last year, and in April of this year, was reduced to its current level of 2.450/0. Avista s deferred
power cost balance was $26.1 million as of June 30, 2004, but was reduced to $5.9 million as of
June 30, 2005. The existing PCA surcharge produces annual revenues of approximately
268 000, which is less than the remaining deferral balance.
On September 1 , 2005 , the Commission issued a Notice of Modified Procedure and
Notice of Application to process Avista 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.One public comment demonstrates perhaps a
misunderstanding of the filing, and one generally objects to any rate increase for A vista. The
third argues against recovery of the excessive power costs during 2009-01 from customers, and
recommends shareholders or previous Company officials pay the costs.
Staff reviewed the amounts that comprise the deferral balance and determined that
the balances are appropriate, including the Company s calculation of interest on the deferral
balance. Staff recommended the Commission accept them as filed by the Company. Staff also
DECISION MEMORANDUM
recommended that the current PCA surcharge remaIn in place through June 30, 2006, as
proposed by the Company. The Company proposed to file a status report on or before August
, 2006, covering the period from July 1 , 2005 through June 30, 2006. The Commission can
review the Company s filing again next year and determine whether a change in the PCA level is
appropriate at that time.
Staff recommends the Commission approve the Application of A vista Corporation
for an Order to continue the current PCA surcharge of 2.448%, and direct that the Company file
a status report on or before August 15, 2006.
COMMISSION DECISION
Should the Application of A vista Corporation for an Order authorizing recovery of
deferred power costs through its current PCA surcharge through June 30 , 2006 be approved
along with a directive for the Company to file a report on or before August 15 , 2006?
Weldon B. Stutzman
blslM:A VUEO506 ws2
DECISION MEMORANDUM