20080522Application.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.
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VIA OVERNIGHT MA
May 21,2008
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Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702-5983
Re: Case No. A VU-E-08-0":t
Application of A vista Corporation for an Order Authorizing Deferral
of Net Revenues from Sales of Carbon Financial Instrents
Dear Ms. Jewell:
Enclosed is Avista's Application for an Order Authorizing Deferral of the Net Revenues from Sales
of Carbon Financial Instrments. The filing consists of an original and seven copies of A vista's
Application.
Please direct any questions regarding this filing to Ron McKenzie at [phone].
Sincerely,~ J",~
Kelly Norwood
Vice President, State and Fedèral Regulation
Enclosure
c: See attached service list
David J. Meyer, Esq.
Vice President and Chief Counsel of
Regulatory and Goverental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
i)
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BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN THE MATTER OF THE APPLICATION OF
AVISTA CORP., dba AVISTA UTILITIES, FOR
AN ORDER AUTHORIING DEFERR OF
NET REVENUS FROM SALES OF CARON
FINANCIA INSTRUMENTS
)
) Case No. A VU-E-08-D~
) APPLICATION OF
) A VISTA CORPORATION
)
I. INTRODUCTION
1.A vista Corporation, doing business as A vista Utilities (hereinafter A vista or
Company), at 1411 East Mission Avenue, Spokane, Washington, puruant to Section 61-524
Idaho Code and Rule 52 of the Idaho Public Utilties Commission ("Commission Rules of
Procedure"), hereby applies to the Commission for an order authorizing the deferral of net
revenues from the sale of Carbon Financial Instruments ("CFIs")l on the Chicago Climate
Exchange ("CCX"). Pursuant to Commission Rule of Procedure 201, the Company requests
that this filing be processed under the Commission's Modified Procedure rules.
2.Avista is a utility that provides servce to approximately 352,000 electrc customers
and 215,000 natural gas customers in a 26,000-square-mile area in easter Washington and
nortern Idaho. Avista Utilities also serves 95,000 natual gas customers in Oregon. The
largest community served in the area is Spokane, Washington, which is the location of the
I The commodity traded at the Chicago Climate Exchange (CCX) is the CFI contract, each of which
represents i 00 metric tons of CO2 greenhouse gas equivalents.
APPLICATION OF AVISTA CORP.Page 1 of6
corporate headquarers. Communications in reference to this Application should be
addressed to:
Kelly O. Norwood
Vice President
State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: kelly.norwood(favistacorp.com
David J. Meyer, Esq.
Vice President and Chief Counsel of
Regulatory and Goverental Affairs
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: david.meyer(favistacorp.com
II. BACKGROUND
3.A vista is seeking to defer the revenues from the sale of credits relating to the
reduction in greenhouse gas emissions through a pilot program offered through the Chicago
Climate Exchange ("CCX"). CCX is an emission registry, reduction and trading system for
greenhouse gases ("GHGs"), including carbon dioxide (C02). CCX is a self-regulated, rules-
based exchange designed and governed by CCX members. A vista became a member in
November 2007 for Phase I and Phase II of the program, described below.
4.The CCX GHG reduction commitment is divided into two phases: Phase I commits
members to emission reductions from 2003 to 2006; and Phase IT commits members to
emission reductions between 2007 and 2010. Members pledge to reduce emissions by 1 %
per year for Phase I, for a total 4% reduction in four years. For Phase IT, members pledge to
reduce 0.5% per year durng 2007-2010, for a 6% total reduction though 2010. Membership
in CCX is wholly voluntar (for Phase I or Phase 11; however, the pledge for emissions
reductions is legally binding under the terms of the CCX Accord.
5.The emission reductions any member must make are made against a calculated
baseline. The baseline for Phase I equals the emissions average for the period beginning
APPLICATION OF A VISTA CORP.Page 2 of6
1998 to the end of 200 1. The baseline for Phase IT can be either the 1998 - 2001 average or
year 2000 emissions.
6. The CCX has built-in provisions that protect members from being overly penalized if
they miss their reduction targets by growing too rapidly, and it also has built-in provisions or
safety valves to prevent members from gaming or unfairly capitalizing the market. As a
result, there is a maximum amount of credits that A vista wil be allowed to sell each year.
Staring in 2003, members do not have to purchase more than 3 % over their baseline and also
canot sell more than 3 % of any reductions under their baseline. These caps increase to 9%
by 2010. Reductions that exceed the sales cap in Phase I are deemed as Super Reductions,
which can be used to offset a portion of Phase II emissions or may be sold outside of the
normal CCX trading system to the general public.
7. Under Phase I of the program, A vista is able to trade a certain number of credits
baned from Phase I years. The CCX allows members to ban credits each year based on the
allowed growth provisions minus the annual sales amount. A vista's baned credits for 2003
to 2006 total 4,007 Carbon Financial Instruments (CFIs), and are shown in Exhibit A
attached to this Petition. Avista has sold 4,007 surplus Phase I CPIs for $2,557,065, net of
the CCX commissions.
Under Phase II ofthe program, the CFIs that wil be eared in the years 2007 though8.
2010 wil be available for sale by A vista in each of the subsequent years after completion of
an audit.
9. Initial membership fees to join the CCX amounted to $200,000 and were paid in
2007. Ongoing membership fees wil amount to $35,000 per year for each ofthe years 2008
through 2010. Total fees for Phase I and II amount to $305,000, and are shown in Exhibit B
APPLICATION OF AVISTA CORP.Page 3 of6
attached to this Petition. CCX membership fees paid by A vista in 2007 were recorded in
FERC Account 186 - Miscellaneous Suspense Account.
10. In this filing, the Company is requesting an order allowing for the deferal of the net
revenue (revenues from sale of CFIs, less cost, including membership fees paid) for both
Phase I and Phase II. A vista wil address the proposed method of ultimate ratemaking
treatment in its next general rate case filing or other proceeding, as appropriate.
III. PROPOSED ACCOUNTING TREATMENT
11. The Company requests authority to defer the CFI revenues in Account 254 - Other
Regulatory Liabilities. Upon approval, the Company wil transfer the membership fees paid
in 2007 from FERC Account 186 to Account 254. In addition, the Company requests
authority to defer the future anual membership dues payments for 2008 - 2010 in Account
254. The net revenues wil be allocated to the Washington and Idaho jursdictions based on
the current Production/Transmission allocation of 64.59% to Washington and 35.41 % to
Idaho, and placed in separate Washington and Idaho 254-accounts. Interest would accrue on
the Idaho share of the deferrals at the customer deposit rate. The Company would propose a
method of ratemaking treatment of the net revenues and accrued interest in its next general
rate case filing or other proceeding.
APPLICATION OF AVISTA CORP.Page 4 of6
IV. REQUEST FOR RELIEF
12. WHREFORE, Avista respectfully requests that the Commission issue an Order
allowing the deferral of net revenues from the sale of CFIs. The ultimate ratemaking
treatment of the net revenues would be addressed in its next general rate case filing or other
proceeding.
13. The Company requests that the matter be processed under the Commission's
Modified Procedure rules through the use of wrtten comments.
Dated at Spokane, Washington this 21 sl day of May 2008.
AVISTA CORPORATION
By~L
Davi J:l, Esq.
Vice President and Chief Counsel of
Regulatory and Goverental Affairs
~
APPLICATION OF AVISTA CORP.Page 5 of6
VERIICATION
STATE OF WASHINGTON)
)County of Spokane )
David J. Meyer, being first duly sworn on oath, deposes and says: That he is the
Vice President and Chief Counsel of Regulatory and Governental Affairs of A vista
Utilities and makes this verification for and on behalf of A vista Corporation, being thereto
duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be true.
9-1r~7
SIGNED AN SWORN to before me this 21 sl day of May 2008, by David J. Meyer.
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NOTARY P LIC in and for the State of
Washington, residing at Spokane.
.:/Z2lO~ iCommission Expires:
APPLICATION OF A VISTA CORP.Page 6 of6
Exhibit A
AVISTA UTILITIES
Credits in CCX
2003.2006
2003 I 2004 I 2005 I 2006 I Total
Emissions Baseline 20,273 20,273 20,273 20,273
Emissions Reduction Objective 20,070 19,868 19,665 19,462
Actual Direct Emissions 16,328 15,710 18,496 17,618
Gross Surplus CFls 3,742 4,158 1,169 1,844 10,913
Reclassification to Super Reductions (3,134)(3,347)(425)(6,906)
Net CFls 608 811 1,169 1,419 4,007
All quantities are in CFls, each of which represents one hundred metric tons carbon dioxide.
Page 1 of 2
Exhibit B
AVISTA UTILITIES
Membership Fees for CCX
2003 - 2010
Phase I Phase II Total
Enrollment Fee $15,000 $10,000 $25,000
2003 Annual Dues 35,000 35,000
2004 Annual Dues 35,000 35,000
2005 Annual Dues 35,000 35,000
2006 Annual Dues 35,000 35,000
2007 Annual Dues 35,000 35,000
2007 Payment 155,000 45,000 200,000
2008 Annual Dues 35,000 35,000
2009 Annual Dues 35,000 35,000
2010 Annual Dues 35,000 35,000
$155,000 $150,000 $305,000
Page 2 of2
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation's Application for an Order
Authorizing Deferral of Net Revenues from Sales of Carbon Financial Instruments by
mailing a copy thereof, postage prepaid to the following:
Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, 1083720-5983
Scott Woodbury
Deputy Attorney
Idaho Public Utilties Commission
472 W. Washington
Boise, 10 83702-0074
Pamela Mull
Vice President & General Counsel
Potlatch Corporation
601 Riverside Ave., Suite 1100
Spokane, WA 99201
Dated at Spokane, Washington this 21st day of May 2008.
O~dLpattyOI~
Rates Coordinator