20070529Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL .AVU~t..~ol-
FROM:RANDY LOBB
DATE:MAY 23, 2007
RE:VISTA CORP. TARIFF ADVICE TO REVISE THE RESIDENTIAL
AND SMALL FARM ENERGY RATE ADJUSTMENT CREDIT,
SCHEDULE 59.
On May 22 2007, Avista Corp (Company) filed a Tariff Advice to revise the Residential
and Small Farm Energy Rate Adjustment Credit, Schedule 59. The revised tariff sheet
eliminates the Residential and Small Farm Energy Rate Adjustment Credit of 0.459 cents per
kilowatt-hour and establishes a proposed charge of 0.144 cents per kilowatt-hour rate to recover
the over refunded exchange credit balance over a twelve month period.
The Company has proposed an effective date of June 22, 2007, to accommodate the
30-day statutory notice requirement. However, the Company also notes that the delay in the
effective date will increase the credit deferral balance subject to later recovery and therefore
requests approval of the tariff change as soon as possible.
In support of its filing the Company has submitted the sworn affidavit of David J. Meyer
Vice President and Chief Counsel of Regulatory Affairs of Avista Corporation, stating that the
Bonneville Power Administration has suspended Residential Exchange Program Payments
thereby creating an emergency situation and the need for the foregoing filing. The Company
estimates that the average customer bill will increase by 9.52% through elimination ofthe credit
and implementation of the deferral balance surcharge.
STAFF ANALYSIS
Staff has reviewed the Company s filing and supports emergency revision of the
Residential and Small Farm Energy Rate Adjustment Credit. Staff believes that the affidavit of
David Meyer with the supporting letter from the Bonneville Power Administration suspending
DECISION MEMORANDUM - 1 -MAY 23, 2007
Residential Exchange Program Payments to Avistajustifies the emergency action. Failure to
take immediate action will result in significant overpayment of credits to A vista s custoII;lers
with rapid growth in the credit deferral balance subject to later recovery through customer
surcharge.
Consequently, Staff recommends that the proposed surcharge rate of 0.144 cents per
kilowatt-hour be implemented with an effective date of June 1 2007. However, while Staff
recognizes the emergency situation that justifies elimination of Residential Exchange Credit
payments, it does not believe recovery of the existing credit deferral balance constitutes such an
emergency. Staffs support of the Credit Rate Surcharge to recover the deferral balance is on an
interim basis in an effort to affect a single change in the rate credit. Staff further recommends
modified procedure with a 30-day comment period to allow customer input, to conduct
additional audit of the deferral balance amount and to review assumptions and calculations
leading to the derivation of the surcharge rate. Once the comment period is completed, the
Commission can either continue the interim surcharge rate or change it if warranted.
The Company has not indicated in its filing how notice will be provided to customers. .
However, it is Staffs understanding that the Company will immediately begin providing notice
in billings regarding the elimination of the rate credit and the implementation of the proposed
surcharge subject to comment. Staff believes this is reasonable customer notice given the
emergency nature of the situation.
RECOMMENDATION
Staff recommends that the Residential and Small Farm Energy Rate Adjustment Credit be
modified to reflect a surcharge of 0.144 cents per kilowatt-hour. The rate change is to be
processed in two parts: I) emergency elimination of the rate credit; and, 2) interim
implementation of the rate credit surcharge to recover Avista's existing credit deferral balance.
Modified procedure and a comment period are recommended to determine if such surcharge is
properly allocated and appropriate for the full period as proposed by Avista. Staff recommends
modified procedure with a 30-day comment period.
1 Staff recommends that the rate credit and surcharge be effective June 1 2007.
DECISION MEMORANDUM - 2 -MAY 23, 2007
COMMISSION DECISION
Does the Commission accept Staffs recommendation?
Does the Commission wish to eliminate the BP A rate credit effective June 1 , 20077
Does the Commission wish to order the surcharge effective June 2007 subject to
verification by modified procedure as recommended by Staff above?
Randy Lobb
i:udmemosiAvista BPA Credit D Memo
DECISION MEMORANDUM - 3 -MAY 23 , 2007