20070510notice_of_proposed_changes_to_pca_methodology.pdf

Office of the Secretary
Service Date
May 10, 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
PROPOSED CHANGES TO PCA
METHODOLOGY
NOTICE OF REQUEST
FOR CONTINUATION OF
EXISTING SURCHARGE
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF
COMMENT/PROTEST DEADLINE
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
(A vista; Company) Power Cost Adjustment (PCA) methodology and method of recovery.
A vista 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.
On March 2, 2007 , the Commission opened Case No. A VU-07-01 to establish a
vehicle for review of Avista s 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:
. . . 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 Staffs 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
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
mechanism modifications. It is only with this review of PCA methodology
that we authorize and continue the existing PCA surcharge of 2.448%.
In Order No. 30161 the Commission authorized Avista to continue the current PCA
surcharge of 2.448% until the deferral balance reaches zero or June 30, 2007, whichever occurs
first. The Commission further ordered that one or more PCA methodology workshops were to
be held and a report filed 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.
On March 19 2007, a workshop in Case No. A VU-07-01 was held in Boise, Idaho
to review Avista s PCA methodology and method of recovery. The workshop was attended by
representatives from A vista, Commission Staff, Potlatch Corporation and Idaho Power
Company.
YOU ARE HEREBY NOTIFIED that on April 27, 2007, Avista filed a report in
Case No. A VU-07-01 recommending proposed changes to the PCA methodology and
requesting a continuation ofthe existing 2.448% PCA surcharge through September 30, 2007.
A vista in its report recommends three modifications to the PCA methodology and
method of recovery:
1. Single annual PCA rate adjustments rather than returning to triggers and
a cap.
2. Annual schedule for rate adjustments and review of prior PCA deferrals.
3. Method of recovery - rate spread for October 1 , 2007 and October 1
2008 PCA rate adjustments.
The Company proposes that it be allowed the flexibility to seek a departure from the
PCA methodology procedures adopted. Examples discussed at the workshop were (1) maintain
flexibility to do rate adjustments in addition to the annual PCA adjustment if the situation
warrants, (2) maintain flexibility to not do a PCA rate adjustment if the adjustment is too small
and (3) maintain flexibility to recover or rebate the PCA deferral balance over more than one
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
period. Of course, the Company concedes that it would be required to request authorization and
provide justification for any departure from the PCA rate mechanism procedures.
Single annual PCA rate adjustments
A vista proposes that the PCA methodology be modified to require an annual PCA
adjustment filing to recover or rebate the deferrals being reviewed in the annual PCA status
report filing. The PCA rate adjustment would be set each year on October 1 to recover the
previous June 30 deferral balance, would remain in place for 12 months, and would be replaced
by a new rate adjustment that is set based on the next 12 months of deferrals. Any over- or
under-recovered surcharge or over- or under-refunded rebate balance will be transferred to the
deferral balance that will be subject to the next rate adjustment.
Schedule for rate adjustments and review PCA deferrals
A vista has been making annual PCA review filings on or before August 15 of each
year. The review filings cover power costs and the associated PCA deferrals that were recorded
during the immediately preceding 12-month period of July through June. The Company
proposes that these filings continue to be made and form the basis of the annual PCA rate
adjustment.
A vista proposes the following dates for the Company filing, review and comments by
Staff and other interested parties Commission Order, and effective date of the PCA rate
adjustment for 2007:
August 1 , 2007 Company filing for July 2006 - June 2007
deferral period
September 1 , 2007 Review and comments by Staff and other
interested parties
October 1 , 2007 Commission Order and effective date of PCA
rate adjustment
Under the Company s proposal the current PCA surcharge of 2.448% would be
extended and would expire on September 30 2007. The PCA surcharge would be replaced by an
October 1 , 2007 rate adjustment designed to recover deferrals for the July 2006 - June 2007
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
period that would expire on September 30, 2008 , which, in turn, would be replaced by a October
, 2008 rate adjustment designed to recover deferrals for the July 2007 - June 2008 period that
would expire on September 30, 2009. The process would continue in the future, unless it is
modified.
Method of Recovery - Rate spread for October 1, 2007 and October 1, 2008 rate
adjustments
The Company proposes that the October 1 , 2007 rate adjustment be spread on a
uniform percentage basis and that the October 1 , 2008 rate adjustment and subsequent
adjustments be spread on a uniform cents per kilowatt-hour basis. In supporting its
recommended delay in switching from uniform percentage to cents per kilowatt-hour the
Company notes that the deferral balance did not actually reach zero.
Request for continuation of existing surcharge
A vista requests that the existing 2.448% PCA surcharge not expire on June 30, 2007
(as per Order No. 30161) but be allowed to continue through September 30, 2007. Based on
current estimates, A vista contends that it is likely that the PCA surcharge rate will increase from
2.448% to about 4% on October 1 , 2007. Rather than have the PCA surcharge go to zero on July
2007, leaving the existing surcharge in place through September 30, 2007, the Company
contends, will minimize the rate increase impact that occurs on October 1 , 2007. Also, if the
existing surcharge is allowed to continue, the October 1 , 2007 rate adjustment will be lessened
by the amount of revenue received from the existing surcharge during the months of July,
August, and September 2007.
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of
record in Case No. A VU-07-, the proposed changes to the PCA methodology and the
Company s request to continue the present surcharge and has preliminarily found that the public
interest in this matter may not require a hearing to consider the issues presented, and that issues
raised by the Company s filing may be processed under Modified Procedure, , by written
submission rather than by hearing. Reference Commission Rules of Procedure, IDAP
31.01.01.201-204.
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or
protests in Case No. A VU-07-01 with respect to the Company s PCA proposal and the use of
Modified Procedure is Thursday, May 31, 2007.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the deadline, the Commission may consider the matter on its merits and may
enter its Order without a formal hearing. If comments or protests are filed within the deadline
the Commission will consider them and in its discretion may set the matter for hearing or may
decide the matter and issue its Order based on the written positions before it. Reference IDAP
31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case
No. A VU-07-01 should be mailed to the Commission and the Company at the addresses
reflected below.
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Kelly O. Norwood
Vice President State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
Spokane, W A 99220
E-mail: kelly.norwood~avistacorp.com
472 W. Washington Street
Boise, ID 83702-5983
David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
Spokane, W A 99220
E-mail: david.meyer~avistacorp.com
All comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to A vista at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that the filings in Case No. A VU-07-01 may be
viewed at the Commission s website www.puc.idaho.gov by clicking on "File Room" and
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE
Electric Cases " or can be viewed during regular business hours at the Idaho Public Utilities
Commission, 472 W. Washington Street, Boise, Idaho and at the Idaho offices of Avista
Corporation dba A vista Utilities.
DATED at Boise, Idaho this O-fh day of May 2007.
LD JtilJea . Jewell
Co mission Secre ary
bls/N:A VU-O7-sw2
NOTICE OF PROPOSED CHANGES TO
PCA METHODOLOGY
NOTICE OF REQUEST FOR CONTINUATION
OF EXISTING SURCHARGE
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/PROTEST DEADLINE