20070302notice_of_workshop.pdf

Office of the Secretary
Service Date
March 2, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE REVIEW OF THE
POWER COST ADJUSTMENT (PCA)
METHODOLOGY OF A VISTA
CORPORATION DBA A VISTA UTILITIES
CASE NO. A VU-O7-
NOTICE OF
PCA METHODOLOGY REVIEW
NOTICE OF WORKSHOP
On October 31 , 2006, the Idaho Public Utilities Commission (Commission) in Case
No. A VU-06-05 issued Order No. 30161 announcing a review of Avista Corporation s Power
Cost Adjustment (PCA) methodology and method of recovery. Avista s PCA is used to track
changes in revenues and costs associated with variations in hydroelectric generation, secondary
prices and changes in power contract revenues and expenses.
YOU ARE HEREBY NOTIFIED that the Commission opens this case docket A VU-
07-01 to establish a vehicle for review of Avista Corporation dba Avista Utilities' (Avista;
Company) PCA methodology and method of recovery.
Background
The context for the present docket is set forth in the Commission s Order No. 30161
Case No. A VU-06-05. In that Order the Commission made the following findings:
The Commission has reviewed and considered the filings of record in Case
No. A VU-06-5. . .. We have also reviewed our 2001 Order No. 28775 in
Case No. A VU-Ol-l modifying the PCA methodology and subsequent
PCA Orders.
The temporary changes in Avista s PCA methodology authorized in 2001
were triggered by dramatic increases in prices on the wholesale market.
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 in 2004 reduced
the surcharge to 4.38%, and in April 2005 reduced it again to its current level
of 2.448%. The existing PCA surcharge produces annual revenues of
approximately $4 268 000, which is greater than the $1 517 103 June 30
2006 unrecovered balance. To justify continuation of the surcharge the
Company proposes that the Commission recognize an intervening increase in
deferral activity. Although unaudited, the Commission is apprised that the
PCA deferral balance booked by A vista for the three months of July through
September 2006 is $7 100 927.
NOTICE OF PCA METHODOLOGY REVIEW
NOTICE OF WORKSHOP
The Commission in its Order No. 28775 in 2001 approving modifications to
the PCA methodology agreed with Potlatch that the changed methodology
approved in that case merited close monitoring. Order No. 28775 p. 15.
Potlatch had recommended that the Commission "restrict the adoption of the
proposed changes to a limited period of time, perhaps two years, with a
thorough review of the new methodology thereafter. . . ." Order No. 28775 p.
14. The Commission found that a two-year review seemed appropriate and
stated:
After two years of operation with these changes we will expect the
Company to file a report with this Commission detailing the
operation of the modified PCA. The report should include total
surcharge and rebate amounts recovered over the period, significant
events that have impacted power supply expenses, changes in the
long-term (greater than one year) supply/demand situation and
mechanism modifications that may be justified. (Emphasis added.
On August 8, 2003, the Company filed a Status Report together with
Company testimony. In the testimony of Ron McKenzie, the Company
estimated that the PCA deferral balance would reach zero in mid-2005.
McKenzie Testimony p. 5 , Case No. A VU-03-
The Commission has continued to monitor the Company s PCA and the
Company s declining deferral balance and finds that the balance declined in
2006 to a level near zero. We find that the events that justified
implementation of changes in PCA methodology, however, cannot be used to
support an unending continuation of the charges. A thorough review and
examination is required. In this filing the Company uses a projected increase
in deferral to justify its request to continue rather than reduce the existing
surcharge level. This recommended use of projections is a significant
departure from the approved PCA methodology. We find it appropriate at
this time to conduct the thorough review of PCA methodology envisioned
when we approved changes to the methodology in 2001. We find Staff s
suggestion to hold one or more workshops to be an acceptable vehicle for
reviewing the Company s PCA methodology and expect the Company at the
conclusion of that review to file a report with the Commission assessing the
PCA methodology and providing justification for mechanism modifications.
It is only with this review of PCA methodology that we authorize and
continue the existing PCA surcharge of 2.448%.
In our Order No. 30161 we authorized Avista to continue the current PCA surcharge
of 2.448% until the deferral balance reaches zero or June 30, 2007, whichever occurs first. We
further ordered that one or more PCA methodology workshops were to be held and a report filed
NOTICE OF PCA METHODOLOGY REVIEW
NOTICE OF WORKSHOP
with the Commission by A vista on or before August 15 , 2007 recommending continuation or
proposed changes to the PCA methodology and method of recovery.
YOU ARE FURTHER NOTIFIED that a workshop in Case No. A VU-07-01 to
review Avista s PCA methodology and method of recovery is scheduled for MONDAY,
MARCH 19, 2007 COMMENCING AT 9:30 A.M. AT THE COMMISSION'S HEARING
ROOM, 472 WEST WASHINGTON STREET, BOISE, IDAHO
DATED at Boise, Idaho this :l~' day of March 2007.
MARSHA H. SMITH, COMMISSIONER
-..,
ATTEST:
~L\).f'LJi
jea D. Jewell
Crifnmission Secretary
blslN:A VU-07-01 sw
NOTICE OF PCA METHODOLOGY REVIEW
NOTICE OF WORKSHOP