20080404Application.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
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Corp.RECEIVED
zona APR -3 PH 12= l 7
April 2, 2008
Jean D. Jewell
Commission Secretar
Idaho Public Utilities Commission
472 W. Washington Street
Boise, il 83702
Avo -t -ò8 --( (
Avu _6-08--1
TarifflP.U.C. No. 28 (Electric) and TariffIPUC No. 27 (Natural Gas)
Enclosed for fiing with the Commission is an original and nine copies of an Application by A vista
Corporation dba Avista Utilities (Avista) dated April 2, 2008 for approval of revised electrc and
natural gas rates. This filing reflects a general rate increase for both electric and natural gas service
in the State ofIdaho, to be effective May 5,2008.
A vista has also included for filing nine copies of its prepared direct testimony, and exhibits in
support of its revised rates, as well as three copies of workpapers showing how test year data were
adjusted. Computer readable copies of the testimony, exhibits, and workpapers, required under
Rule 231.05, are included on the attached compact disc.
Additionally, A vista has included a signed copy of the Protective Agreement between A vista and
the Commission Staff, and the Attorney's Certificate and Claim of Confidentiality Relating to
Portions of Avista's Direct Testimony and Exhibits.
Sincerely,
¿fø 4w=
Kelly O. Norwood
Vice President
Enclosures
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zona APR - 3 PH 12: l 8
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 2nd day of April, 2008, served the foregoing
application, and Avista's Direct Testimony and Exhibits in Docket No. AVU-E-08-
01 and AVU-G-08-01 upon the following parities, by mailing a copy thereof,
property addressed with postage prepaid to:
Jean D Jewell, Secretary
Idaho Public Utilities Commission
Statehouse
Boise, ID 83720-5983
Howard Ray
Mill Technical Services Manager
Potlatch Corporation
803 M il Road
P.O. Box 1126
Lewiston, ID 83501-1126
Scott Woodbury
Deputy Attorney
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702-0659
~~tty Olsness
Rates Coordinator
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DAVID J. MEYER
VICE PRESIDENT, GENERAL COUNSEL,
GOVERNENTAL AFFAIRS
AVISTA CORPORATION
P . O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727TELEPHONE: [phone]FACSIMILE: [phone]
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2008 APR - 3 Pl1 12: 18
REGULATORY, ¡2f.. iii, ....u ttl jrfi:::,t,
-. : ,~:- ':;)
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION)
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN
OF IDAHO
CASE NO. AVU-E-08-01
CASE NO. AVU-G-08-01
ATTORNEY'S CERTIFICATE
CLAIM OF
CONFIDENTIALITY
RELATING TO PORTIONS
OF AVISTA'S DIRECT
TESTIMONY AND EXHIBITS
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FOR AVISTA CORPORATION
1 I, David J. Meyer, represent Avista Corporation. I am
2 Vice President and General Counsel, Regulatory and
3 Governmental Affairs for Avista Corporation (UAvista" or
4 uCompany") and I am appearing on its behalf in this
5 proceeding.
6 I make this certification and claim of confidentiality
7 pursuant to IDAPA 31.01.01 because Avista, through its Direct
8 Testimony, Exhibits and supporting workpapers, is disclosing
9 certain information that is CONFIDENTIAL and constitutes
10 TRADE SECRETS as defined by Idaho Code Section 9-340 and
11 48-801 and protected under IDAPA 31.01.01.067 and
12 31.01.01.233.
13 The printed information Avista provides will, as
14 required under IDAPA Rule 67, be marked as uCONFIDENTIAL,"
15 will be reproduced Uon any colored paper other than white, "
16 and will be provided under separate cover. The electronic
17 information Avista provides will be reproduced separately on
18 a compact disk (CD) and will also be marked as CONFIDENTIAL.
19 The confidential information that Avista is disclosing
20 can be classified into three basic categories: 1) information
21 pertaining to contract prices, terms and conditions, 2)
22 certain results providing detailed information on the
23 Company's load and resource positions by month, and 3) Risk
ATTORNY'S CERTIFICATE - 2
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1 Management Policies which contain general policies,
2 guidelines, and position limits.
3 Avista herein asserts that the aforementioned
4 information is confidential in that: 1) the contract
5 information is prohibi ted, by the contract terms, from public
6 disclosure, 2) making the load and resource information
7 public will give entities access to competitive information
8 on future operating plans and market purchase requirements
9 and Avista believes the information could be used to
10 disadvantage its customers, 3) the Risk Management policies,
11 if shared wi th competi tors, could also be used to disadvantage
12 Avista i s customers, and 4) sensitive information concerning
13 pending or threatened litigation would be disclosed.
14 i am of the opinion that this information is
15 uCONFIDENTIAL," as defined by Idaho Code Sections 9-340D and
16 48-801, should therefore be protected from public inspection,
17 examination and copying, and should be utilized only in
18 accordance with the terms of the PROTECTIVE AGREEMENT BETWEEN
19 AVISTA CORPORATION AND IDAHO PUBLIC UTILITIES COMMISSION
20 STAFF.
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RESPECTFULLY SUBMITTED this 2nd day of April, 2008
DaVid~/¿'
Vice President, General Counsel,
Regulatory & Governmental Affairs
Avista Corporation
ATTORNEY'S CERTIFICATE - 2
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DAVID J. MEYER
VICE PRESIDENT, CHIEF COUNSEL,
REGULATORY & GOVERNENTAL AFFAIRS
AVISTA CORPORATION
P . O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
F AC SIMI LE : ( 5 0 9 ) 49 5 - 8 8 51
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION FOR THE )
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC AND )
NATURAL GAS SERVICE TO ELECTRIC AND)
NATURAL GAS CUSTOMERS IN THE STATE )OF IDAHO )
)
CASE NO. AVU-E-08-01
CASE NO. AVU-G-08-01
APPLICATION OF AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
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1 Application is hereby made to the Idaho Public tilities
to
2 Commission for an Order granting Avista Co
3 (UApplicant," uCompany," or uAvista") the
4 increase its rates and charges for electric and na ural gas
5 service to electric and natural gas customers in the State of
6 Idaho to be effective on and after May 5, 2008.
7 Through this filing the Company is requesting an electric
8 revenue increase of $32.3 million or 15.8%1. With egard to
9 natural gas, the Company is requesting an increas of $4.7
10 million or 5.8%.
11 In support of this Application, Applicant states as
12 follows:13 I.
14 The name of the Applicant is Avista Corporation, dba
15 Avista Utilities, a washington corporation whose principal
16 business office is 1411 East Mission Avenue, Spokane,
17 washington, and is qualified to do business in the State of
18 Idaho. Avista maintains district offices in Moscow, Lewiston,
19 Sandpoint and Coeur d' Alene, Idaho.Communications in
20 reference to this Application should be addressed to the
21 following:
22 David J. Meyer, Esq.23 Vice President, Chief Counsel, Regulatory &
24 Governmental Affairs25 Avista Corporation
1 The proposed increase to base retail rates is 16.7%, but the overall bil impact to customers is 15.8%.
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 1
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1 P . O. Box 3727
2 1411 E. Mission Ave
3 Spokane, WA 99220-37274 Phone: ( 509) 495 - 4 316
5 Fax: (5 0 9) 49 5 - 8851
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7 Kelly Norwood
8 Vice President - State and Federal Regulation9 Avista utilities
10 P . O. Box 3727
11 1411 E. Mission Ave
12 Spokane, WA 99220-3727
13 Phone: [phone]
14 Fax: [phone]
1516 Ii.
17 Avista is a public utility primarily engaged in the
18 generation, transmission and distribution of electric power
19 and the distribution of natural gas in certain portions of
20 eastern and central Washington, northern Idaho, as well as
21 distribution of natural gas in northeast and southwest Oregon.
22 The Company is subj ect to the jurisdiction of this Commission,
23 the Washington Utilities and Transportation Commission, the
24 Oregon Public Utility Commission, the Montana Public Service
25 Commission and the Federal Energy Regulatory Commission.26 III.
27 Applicant's existing base rates and charges for electric
28 service were approved as a result of the Commission's Order No.
29 29602 dated October 8, 2004, in Case No. AVU-E-04-01 that were
30 later adjusted to include the second half of Coyote Springs 2
31 generating plant in Case No, AVU-E-05-1. The existing rates
32 and charges for electric service on file with the Commission
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 2
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1 designated as Applicant's Tariff No. 28 are incorporated herein
2 as though fully attached hereto.3 iv.
4 Applicant's existing base rates and charges for natural
5 gas service were approved as a result of the Commission/s Order
6 No. 29602 dated October 8, 2004, in Case No. AVU-G-04-01. The
7 existing rates and charges for natural gas service on file with
8 the Commission designated as Applicant's Tariff No. 27 are
9 incorporated herein as though fully attached hereto.10 v.
11 The electric and natural gas rates and charges which
12 Applicant desires to have the Commission approve are filed
13 herewith as Exhibit A. Also included in Exhibit A are copies
14 of the tariff schedules showing the proposed changes by
15 striking over the existing rates and underlining the proposed
16 rates. Company witness Mr. Hirschkorn fully describes in his
17 testimony and exhibits the proposed changes herein.18 Vi.
19 The circumstances and conditions relied upon and
20 justification for approval of the proposed increase in rates
21 for electric and natural gas service are as follows:
22 Applicant's present electric and natural gas rates will
23 not produce sufficient revenue to provide operating income
24 required to allow the Applicant the opportunity to earn the
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 3
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1 8.74% rate of return being requested and supported in this
2 Application.
3 The Applicant's last electric and natural gas general rate
4 case (Case Nos. AVU-E-04-01 and AVU-G-04-01) in Idaho was
5 effective in September 20042. The proposed revenue increases
6 are driven primarily by increased power supply costs, capital
7 investments in upgrading aging infrastructure to increase
8 capaci ty and reliability, relicensing costs for Avista' s
9 Spokane River hydropower projects, its investment in Advanced
10 Meter Reading (AMR), and expanding the natural gas storage and
11 delivery capacity at its Jackson Prairie Storage Facility.
12 Unless the increased rates as requested in this filing are
13 approved, Applicant's rates will not be fair, just and
14 reasonable and it will not have the opportunity to realize a
15 fair rate of return on its investment.
16 Applicant's evidence in support of its need for increased
17 electric and natural gas rates is based on a 2007 test year.
18 Applicant's rate base evidence is presented on an average
19 basis.Documentation showing how the test year data was
20 adjusted is provided in the testimony and exhibits of Company
21 witness Elizabeth Andrews.
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2 An additional rate adjustment related to the Coyote Sprigs 2 generatig project was implemented April
12,2005 (A VU-E-05-01).
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 4
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Applicant provides utility service in states other than
Idaho.A jurisdictional separation of all investments,
3 revenues and expenses allocated or assigned in whole or in part
4 to the Idaho utili ty business regulated by this Commission are
5 described in the testimony and exhibits of Company witness
6 Elizabeth Andrews.7 VII.
8 Applicant's evidence will show that an overall rate of
9 return of 8.74% is fair, just and reasonable. The Company's
10 exhibi ts and testimony support an increase in retail electric
11 and natural gas revenue of $32.3 million and $4.7 million
12 respectively.Simultaneous with the filing of this
13 Application, Applicant has filed its prepared direct
14 testimony, and exhibits in support of its revised rates, as well
15 as workpapers showing how test year data were adjusted.16 VIII.
17 A complete justification of the proposed increases in
18 electric and natural gas rates are provided in the testimony
19 and exhibits of Company witnesses. The testimony and exhibits,
20 among other studies and justification, show financial
21 information, costs of capital and appropriate cost of service
22 studies. These witnesses and a brief sumary of their testimony
23 is as follows.
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Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 5
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1 Mr. Scott L. Morris, Chairman, President, and Chief
2 Executive Officer of Avista Utilities, presents the Company's
3 policy testimony and describes Avista Corporation and Avista
4 Utili ties' overall utility operations.He sumarizes the
5 Company's request in this filing, the major factors driving the
6 Company's need for general rate relief, and some of the current
7 and future challenges being addressed by the Company. Finally
8 Mr. Morris introduces other witnesses providing testimony on
9 the Company's behalf. Mr. Morris explains that:
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. The proposed revenue increases are driven primarily
by capital investments in upgrading aging
infrastructure to increase capacity and
reliabili ty, relicensing costs for Avista' s Spokane
Ri ver hydropower proj ects, and expanding the natural
gas storage and delivery capacity at its Jackson
Prairie Storage Facility.
. Among the capi tal investments included in the filing
are upgrades to the company's Noxon Rapids
hydroelectric proj ect to gain additional renewable
generation capacity, as well transmission upgrades
added over 100 circuit miles of new 230 kV
transmission line to Avista' s system, and increasedthe capacity of an additional 50 miles oftransmission line.
. Costs incurred in the seven-year public process to
relicense five of Avista' s six hydroelectricproj ects on the Spokane River. The proj ects annually
generate a combined 105 average megawatts of
renewable energy. Avista generates about 57 percent
of its electricity with renewable resources,
including hydropower. To date, Avista has invested
$21 million in the Spokane River relicensingprocess.
. Driving the natural gas rate request is Avista' s
investment in the expansion of storage and delivery
capaci ty of its Jackson Prairie Natural Gas Storage
Facility. The ability to deliver more lower-priced
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 6
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natural gas lessens the need to purchase higher
priced spot gas in winter to meet customer demand,
an important component in managing customer costs.
. In addition to working diligently to gain
efficiencies and control the cost of providing
energy service, Avista continues to provide a number
of energy assistance programs to aid customers who
are most affected by rising energy costs. These
include Project Share, CARES, Senior Energy Outreach
and energy efficiency workshops.
. Avista' s energy efficiency programs offer 34
residential and commercial programs that deliver
more than 300 efficiency measures. In 2007, Avista
provided $9.4 million in incentives to customers
making energy efficiency improvements to their home
or business in an effort to reduce energy usage.Program information is available atww.everylittlebit.com.
23 Mr. Malyn Malguist, Executive Vice President and Chief
24 Financial Officer will describe, among other things, the overall
25 financial condition of the Company, its current credit ratings,
26 the Company's plan for improving its financial health, its near
27 term capital requirements, the proposed capital structure, and
28 the overall rate of return proposed by the Company. Mr. Malquist
29 explains that:
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. Avista' s plans call for significant capital
expendi ture requirements for the utility over
the next three to five years to assure
reliabili ty in our energy systems, and to keep
pace with regional growth and customer demand.
Capital expenditures are planned for 2008-2009
of approximately $390 million for customergrowth, investment in generation, transmission
and distribution facilities for the electric
utility business as well as necessary
maintenance and replacements of our natural gas
utili ty systems. Avista needs adequate cash
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 7
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flow from operationsrequirements.to fund these
. Avista' s corporate rating from Standard &Poor's is currently BBB-. Avista Utili ties
should operate at a level that will support a
strong investment grade credit rating, meaningat least a strong "BBB" or weak "A". The
Company's financial performance has improved;
however, we have not improved financial ratios
to a level that would result in a strong
investment grade credit rating.
. We have made solid progress in improving our
financial health by improving our cash flow,
managing our costs and paying down debt and
refinancing debt at lower rates. The Company
plans to issue up to $350 million of secured,
fixed rate bonds during 2008 to fund existing
debt maturities as well as to repay funds
borrowed under our credit facility. Further,
the Company plans to obtain a portion of ourcapi tal requirements through equi ty issuance.
The Company has proposed an overall rate of return of 8. 74%
including a 47.94% equity ratio and an 10.8% return on equity.
28 Dr. William E. Avera, as a President of Financial Concepts
29 and Applications (FINCAP), Inc., has been retained to present
30 tes t imony wi th respec t to the Company's cos t 0 f common equi ty .
31 He concludes that:
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. Applications of quantitative methods to alternative
groups of proxy companies imply a cost of equity range
of 10.7 percent to 12.2 percent.
. Because Avista' s requested ROE of 10.8% percent falls
at the lower end of the recommended range, itrepresents a conservative estimate of investors'
required rate of return.
. Considering investors' expectations for capital
markets and the need to support financial integrity
and fund crucial capital investment even under
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 8
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1 adverse circumstances, 10.8% percent is a reasonable2 ROE for Avista.
3 . Because of Avista' s reliance on hydroelectric
4 generation, the Company is exposed to relatively5 greater risks of power cost volatility.
6 . Investors view the Power Cost Adjustment ("PCA") as
7 supportive of the Company's financial integrity, but
8 they understand that the PCA does not insulate Avista
9 from the need to finance accrued power production and10 supply costs or shield the Company from potential11 regulatory disallowances.
12 . Avista' s requested capi talization is consistent wi th13 the Company's need to strengthen its credi t standing14 and financial flexibility as it seeks to raise15 additional capital to fund significant system16 investments and meet the requirements of its service17 terri tory.
18 . The reasonableness of a minimum 10.8% percent ROE for19 Avista is also supported by the greater risks20 associated with the Company's relatively small size21 and the need to consider flotation costs.
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2324 Mr. Dennis Vermillion, Vice President of Energy Resources,
25 will provide an overview of Avista' s resource planning and power
26 operations. He will discuss the Company's resources, current and
27 future load and resource position, and future resource plans.
28 He will also discuss Company hydroelectric upgrades, the Montana
29 riverbed lease agreement, current hydro relicensing issues,
30 mercury abatement at Colstrip, and Jackson Prairie storage. Mr.
31 Vermillion explains:
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. Avista' s electric generation portfolio, including
power supply operations.
. The Company is in an annually balanced-to-surplus
energy position through 2017 with the addition of
Lancaster, with the Company's net resource position
becoming deficient in 2018.
. The Company's decision to join the Chicago Climate
Exchange.
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 9
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. Avista' s risk m nagement policy for energy resources,
including the electric hedging plan.
4 Mr. Clint Kalich, M nager of Resource Planning & Power
5 Supply Analyses, will de cribe the Company' s AURO~p model
6 (Dispatch Model) inputs, a sumptions, and results related to the
7 economic dispatch of resources to serve load
8 requirements, and market forecast of electricity prices. He
9 explains:
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. The key assump ions driving the Dispatch Model's
market foreca t of electricity prices. This
discussion inc udes the variables of natural gas,
Western Inter onnect loads and resources, andhydroelectric ondi tions .
. The model dispa ches Avista' s resources and contracts
in a manner th t maximizes benefits to customers.
. The use of quan itative rate-period loads for 2009,
for modeling p 0 forma net power supply expenses.
. The output resu ts from the model, including thermal
generation an short-term wholesale sales and
purchases, we provided to Mr. Johnson to
incorporate i the power supply pro formaadjustments.
. The inclusion 0 a "rate mitigation adjustment" in the
Company's AURO p model, reducing power supply
expenses and t erefore reducing the overall rate
impact to cust mers.
Mr. William Johnson Wholesale Marketing Manager, will
30 identify and explain the proposed normalizing and pro forma
31 adjustments to the 2007 t st period power supply revenues and
32 expenses. He will also exp ain the new base level of power supply
33 costs for Power Cost Adjus ment (PCA) calculation purposes using
34 the pro forma costs proposed by the Company in this filing. Mr.
35 Johnson describes:
Application of Avista Co poration
Case Nos. AVU-E-08-01 & VU-G-08-01
Page 10
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. The adjustment of revenues and expenses based on
normal stream flow and weather conditions, and
expected wholesale market power prices.
. Adjustments made to reflect known and measurable
changes in power contracts, thermal generation fuel
expense, and transmission expense, between the 2007
test period, and the pro forma period of 2009.
. The net effect of the adjustments to the 2007-test
period power supply expense is an increase of $971,000
on a system basis.
. The significant increase in power supply expense over
the expense currently in base rates is based on
numerous factors, including higher retail loads,reduced hydro generation, increased fuel costs,
increased Mid-Columbia purchases costs, and
increased transmission expense.
18 Mr. Bruce Howard, Director of Environmental Affairs, will
19 provide an overview of the Spokane River relicensing, including
20 an overview of the Spokane River proj ects, and the main areas
21 of contention in the process. Finally, Mr. Howard will discuss
22 the costs that have been included in this case.
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24 Ms. Toni Pessemier, Advisor to the Office of the president,
25 will provide testimony regarding other hydro relicensing and
26 compliance issues.
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28 Mr. Don Kopczynski, Vice President of Transmission and
29 Distribution Operations, will describe Avista' s electric and
30 natural gas energy delivery facilities and operations, and
31 recent efforts to increase efficiency and improve customer
32 service. Mr. Kopczynski describes:
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 11
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Avista's customer service programs such as energy
efficiency, Project Share, CARES program, Senior
Outreach Program, and payment plans. Some of these
programs will serve to mitigate the impact on
customers of the proposed rate increase.
The Company's multi-faceted effort to increase
customer service automation, including replacement
and upgrade of the new Interactive Voice Response
(IVR) system, Mobile Dispatch, Outage Management
System and Web Redesign.
The decision by the Company to outsource our bill
printing and mailing services. This decision was
based on Company needs for disaster recover, added
scalability and flexibility, and cost savings.
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Mr. Scott Kinney, Chief Engineer, System Operations, will
17 discuss Avista' s nearly completed five-year transmission
18 upgrade project, the additional electric transmission and
19 distribution investments included in this case, and presents the
20 Company's pro forma period transmission revenues and expenses.
21 In addition, he describes the Company's Asset Management
22 Program. Mr. Kinney explains:
23 . Avista is expecting to invest over $12.1 million24 (system) in electric transmission proj ects with25 completion dates in 2008.
26 . Several revisions have been made to transmission27 expenses for the 2009 pro forma period.
28 . Changes in replacement and maintenance costs
29 associated with the Company's asset management.
30 . The near completion of the five-year transmission31 upgrade projects at a total cost of $136.4 million.
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33 Mr. Dave DeFelice, Senior Business Analyst, will describe
34 the pro forma adjustments for non-revenue capital expenditures.
35 Mr. DeFelice explains:
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 12
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. The rising cost of essential materials specific to theutili ty industry is causing significant increases incapi tal proj ect funding requirements.
. These costs must be pro formed into historical test-
year computations in order to allow necessary
recovery of our costs to serve customers.
8 Mr. Greg Paulson, Manager of Customer Service, Analytics
9 and Technology, will discuss the implementation of Advanced
10 Meter Reading for Avista's customers in the State of Idaho, and
11 our request for recovery of capital expenditures related to its
12 deployment. Mr. Paulson explains:
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. The history of the AMR project in Idaho, including an
overview of the system, the technologies deployed in
the Company's electric and natural gas meters, and the
types of technologies used in areas wi th high and lowmeter densities.
. A discussion around AMR and AMI, Advanced Metering
Infrastructure, which is a newer technology thatcould provide further functionality for utili ties,
but which is still in the very early stages of
development.
. An overview of the benefits the Company has realized
from the deployment of AMR, including safety of our
customers and employees, elimination of the need for
estimated reads, reduction in the volume of phone
calls associated with estimated reads, and more
accurate customer billing.
. The Company will have invested approximately $28.8
million from 2005 through 2008 on this project inIdaho.
Ms. Elizabeth Andrews, Manager of Revenue Requirements,
34 will discuss the Company's overall revenue requirement
35 proposals.In addition, her testimony generally provides
36 accounting and financial data in support of the Company i sneed
37 for the proposed increase in rates. She sponsors:
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 13
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. Electric and natural gas revenue requirementcalculations.
. Electric and natural gas results of operations.
. Pro forma operating results including expense and
rate base adjustments.
. System and jurisdictional allocations.
8 Ms. Tara Knox, Senior Regulatory Analyst, sponsors the cost
9 of service studies for electric and natural gas service, the
10 revenue normalization adjustments to resul ts of operations, and
11 the proposed production property adjustment. Ms. Knox studies
12 indicate:
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. Electric residential service, extra large general
service and street and area lighting service
schedules are earning less than the overall rate of
return under present rates, while general service,
large general service and pumping service schedules
are earning more than the overall rate of return
under present rates. However, all customer groups
are currently providing a rate of return lower than
the rate of return requested in this case.
. Natural Gas high load factor large firm service and
interruptible schedules are earning considerably
less than the overall rate of return at present
rates, the transportation service schedule is
earning substantially more than the overall rate of
return, while small firm schedules are also above
unity but below the requested return and residential
service is slightly below unity.
31 Mr. Brian Hirschkorn, Manager of Pricing, discusses the
32 spread of the proposed annual revenue changes among the
33 Company's general service schedules. He explains, among other
34 things, that:
35
36
. The proposed electric annual revenue increase is
$32.3 million, or 15.8%.
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 14
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. The monthly bill for a residential customer
using an average of 977 kwhs per month would
increase from $67.38 to $78.08 per month, anincrease of $10.70 or 15.9%. This includes the
proposed increase in the monthly basic orcustomer charge from $4.00 to $4.60.
. The proposed natural gas annual revenue increase is
$4.7 million, or 5.8%.
. The monthly bill for a residential customer
using 65 therms per month would increase from
$75.14 to $80.05 per month, an increase of $4.91
or 6.5%. This includes the proposed increase in
the monthly basic or customer charge from $3.28
to $4.00.
16 Mr. Bruce Folsom, Senior Manager of Demand Side Management,
17 provides an overview of the Company's DSM programs and documents
18 Avista' s expenditures for electric and natural gas energy
19 efficiency programs. Mr. Folsom describes:
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. The Company exceeded its 2007 electric efficiency
targets by 13% and 2007 natural gas efficiency target
by 41%.
. Avista' s expenditures for electric and natural gas
energy efficiency programs from November 1, 2003
through December 31, 2007 have been prudentlyincurred.
ix.
29 Avista has provided under separate cover an Attorney's
30 Certificate And Claim Of Confidentiality Relating To Portions
31 Of Avista's Direct Testimony And Exhibits pursuant to Idaho
32 Code Section 9-340D and IDAPA 31.01.01.067 and 31.01.01.233.33 x.
34 Notice to the public of the proposed rates and charges,
35 pursuant to IDAPA 31.21.02.102, will be given simultaneously
36 with the filing of the Application by posting a notice at each
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 15
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1 of the Company's district offices in Idaho, and by a news
2 release, both of which are attached as Exhibit B. Notice of
3 proposed rates will also be given to all Idaho customers by
4 individual bill insert as required by rule.
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XI.
Portions of the Company's Application and accompanying
8 testimony and exhibits are based on computer models.
9 Documentation and explanation on some of the models have
10 already been provided to Commission Staff.Additional
11 documentation and explanation are provided with testimony,
12 exhibits and work papers in this filing. Further information
13 can be provided upon request.
1415 XII.
16 The Applicant stands ready for immediate consideration of
17 this Application.
18
19 WHEREFORE Applicant requests the Commission issue its
20 Order finding the proposed rates and charges attached as part
21 of witness Mr. Hirschkorn's testimony to be fair, just,
22 reasonable and nondiscriminatory, and effective for electric
23 and natural gas service rendered on and after May 5, 2008.
24
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 16
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DATED at Spokane, Washington, this 2nd day of April 2008
4 AVISTA CORPORATION
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By 7#1¿~
Kelly O. Norwood
Vice President
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
Page 17
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1 STATE OF WASHINGTON2 ss
3 County of Spokane
4
5 Kelly O. Norwood, being duly sworn, on oath deposes
6 and says:
7 That he is the vice President of Avista Corporation;
8 That he has read the foregoing Application, knows the contents
9 thereof, and believes the same to be true.
-z4t d,~~
Kelly O. Norwood
Subscribed and sworn to before me this 2nd day of April, 2008.
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Notary Public in and for the State
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Washington, res iding in Spokane
Application of Avista Corporation
Case Nos. AVU-E-08-01 & AVU-G-08-01
page 2