20061024final_order_no_30151.pdf

Office of the Secretary
Service Date
October 24, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
AUTHORIZATION TO DEFER THE COST
OF A LOAN RELATED TO GRID WEST ORDER NO. 30151
CASE NO. A VU-06-
On April 27, 2006, Avista Corporation filed an Application requesting an accounting
order from the Commission authorizing the deferral of costs the Company incurred relating to
the development of a regional transmission organization (RTO). Avista participated in efforts to
develop an RTO, called Grid West, consistent with orders issued by the Federal Energy
Regulatory Commission (FERC) and that agency s attempt to develop and enhance a national
electric wholesale market. Avista provided loans for startup costs to the RTO to retain experts
and facilitators. In April, the Grid West Board of Directors approved a Plan for Dissolution of
Grid West, making it unlikely that Grid West will be developed, or that Avista s loans will be
repaid.
Avista requests authorization to defer the amounts it loaned to Grid West, with
interest, in the development process. According to A vista s Application, the current balance of
Avista s loan to Grid West is $1 217 499.26, including interest of $188 187.34. Avista estimates
that the amount attributable to its Idaho jurisdiction is $421 620 including interest. Avista
Application stated that it also incurred internal costs, such as employee salaries, employee travel
and legal expenses, but it did not include these costs in its Application for deferral.
On June 29, 2006, the Commission issued a Notice of Application and Notice of
Modified Procedure, establishing a deadline for the filing of written comments. Only
Commission Staff filed comments. Staff reviewed the Company s Application as well as
relevant FERC Orders, and recommended that the Commission authorize deferral of only the
principal amount Avista loaned to Grid West. Staff recommended Avista book the principal
amount of the funding agreements with Grid West to account 182.3 (Other Regulatory Assets),
and that a separate sub-account be maintained to provide details on the $1 029 311.92 total
system cost, as well as the $356 450.72 for the Idaho jurisdiction, not including interest. Staff
also recommended that the Company begin amortization of the deferred balance at the
ORDER NO. 30151
conclusion of its next general rate case or on January 1 , 2010, whichever occurs first, using a
five-year amortization period.
We find, on the record presented, that it is appropriate to approve Avista
Application insofar that it requests authorization to defer the principal amount that it loaned to
Grid West, or $356 450.72 attributable to its Idaho jurisdiction.As stated in Avista
Application, A vista and other northwest electric utilities were strongly encouraged by FERC to
develop an RTO, or explain why an RTO could not be developed. Avista s participation in the
development of Grid West, and the loans it made for that effort, were prudent and in the public
interest. It would be unfair to disallow deferral of the amount Avista loaned to Grid West.
Although Avista prudently participated in the Grid West development process, it
does not automatically follow that Avista s retail customers should pay all costs related to the
unsuccessful effort. Avista s Application states that its loans to Grid West were for start up
costs, including "retaining experts and facilitators, as well as other expenses associated with
transmission studies and stakeholder participation.Application p. 2. Had Grid West been
successfully organized, the amount loaned by Avista would have been repaid through surcharges
to customers using the transmission system. The interest on the amount repaid to A vista most
likely would have accrued to the benefit of its shareholders, not its retail customers.
A vista in its Application identifies some potential benefit from its experience with
Grid West. Avista and five other electric utilities recently formed a non-profit organization
called ColumbiaGrid to pursue "improvements to ways in which the region s transmission
providers operate and manage the region s transmission system.Application p. 3. Avista
asserts that ColumbiaGrid "will be using many of the concepts and technical work that began
under Grid West, (so that) the Company and region will benefit from the prior work of Grid
West." Application p. 3. This potential benefit is a reason to allow recovery of the principal
amount but does not justify requiring customers to pay interest.
The Commission finds that it was prudent and in the public interest for A vista to
participate in the development process for Grid West, and that it was reasonable for Avista to
make start-up loans to Grid West. We therefore authorize deferral of the principal amount of
those loans, specifically the amount of $356 450.72 attributable to its Idaho jurisdiction. We find
Staffs recommendation of a five-year amortization period to be reasonable, and direct that the
ORDER NO. 30151
amortization begin as of January 1 2007. Avista did not request a carrying charge as part of the
deferred account, and we approve none.
ORDER
IT IS HEREBY ORDERED that Avista is authorized to defer in a separate sub-
account the principal amount that it loaned to Grid West, specifically the amount of $356,450.
attributable to its Idaho jurisdiction. A vista is authorized to amortize the deferral over a five-
year period, beginning January 1 , 2007.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this d-.,-/M
day of October 2006.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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Barbara Barrows
Assistant Commission Secretary
O:A VU-06-03 ws2
ORDER NO. 30151