20080805final_order_no_30610.pdf

Office of the Secretary
Service Date
August 5, 2008
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION DBA A VISTA
UTILITIES FOR AN ORDER
AUTHORIZING DEFERRAL OF NET
REVENUES FROM SALES OF CARBON
FINANCIAL INSTRUMENTS
ORDER NO. 30610
CASE NO. A VU-08-
On May 22, 2008, A vista Corporation filed an Application requesting an order from
the Commission authorizing the Company to defer net revenues from the sale of carbon financial
instruments (CFTs). The revenues result from the sale of credits relating to the reduction in
greenhouse gas emissions through a pilot program offered through the Chicago Climate
Exchange. Participants in the Exchange are required to reduce greenhouse gas emissions during
two phases. The Exchange allows members to sell greenhouse gas credits based on greenhouse
gas reductions compared to a baseline. A vista banked credits for 2003 through 2006, and was
able to sell surplus Phase 1 CFIs for $2 557 065, net of the Exchange commissions.
Tn this filing, the Company requested an order allowing for the deferral of the net
revenue (revenues from sales of CFTs, less costs, including membership fees paid to the
Exchange). Avista proposes to allocate the net revenues to the Company s Washington and
Idaho jurisdictions based on the current production/transmission allocation of 64.59% to
Washington and 35.41 % to Idaho. The Company requests authority to defer the CFI revenues in
Account 254 - Other Regulatory Liabilities. Interest would accrue on the Idaho share of the
deferrals at the customer deposit rate. The Company will propose ratemaking treatment of the
net revenues and accrued interest in its next general rate case filing or some other proceeding.
On June 25, 2008, the Commission issued a Notice of Application and Notice of
Modified Procedure that established a period for filing written comments. Comments were filed
by Staff and no other party.
The Chicago Climate Exchange (CCX) is an emission registry, reduction and trading
system for greenhouse gases. Membership in CCX is voluntary for Phase I and Phase II
although the emission reduction pledges are legally binding under the CCX Accord. Currently
members represent various industries with emission sources and offset projects worldwide.
ORDER NO. 30610
the Electric Power Generation industry there are 17 members. A vista became a member in
November 2007.
The Carbon Financial Instrument (CFI) is the traded commodity. Each CFI contract
represents 100 metric tons of CO2 equivalents (CO2e). Emissions from six greenhouse gases
(GHGs) are converted to metric tons CO2e using the one-hundred-year Global Warming
Potential values established by the Intergovernmental Panel on Climate Change. The six GHGs
include carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs) and sulfur hexafluoride (SFs).
Members participating in Phase I and Phase II commit to meet emission reduction
targets for Phase I of 1 % per year for 2003 - 2006 and Phase II of 0.5% per year for 2007 - 2010
or a 6% reduction. Members joining during Phase II commit to a 6% reduction by 2010. Exhibit
A to the Application shows Avista s qualifying reductions for Phase I in 2003 - 2006.
Reductions that exceed the sales cap in Phase I are reclassified to Super Reductions that may be
banked to offset a portion of Phase II reductions or may be sold outside of the normal CCX
trading system to the general public. A vista qualified for 6906 CFI Super Reduction credits
leaving 4007 CFI banked credits in Phase I as shown on Exhibit A. These Phase I banked credits
are the 4007 surplus CFIs sold by Avista for $2 557 065 , net ofCCX commissions.
A vista requests authority for deferred accounting in Account 254 - Other Regulatory
Liability. The deferred accounting treatment covers booking of the net revenues, revenues from
the sale of CFIs less costs including commissions and fees during both Phase I and Phase II of
the CCx. The total CCX fees paid in 2007, or to be paid in 2008-2010, amount to $305 000 as
shown on Exhibit B to the Application. A vista proposes to address the ratemaking treatment for
the CFI credits in its next general rate case filing or another proceeding.
Based on the record in this case, the Commission finds it reasonable and appropriate
to approve Avista s Application for an accounting order. Deferred accounting is appropriate to
assure customers receive the benefits from the sale of CFIs. We also find the allocation to
Avista s Idaho operations to be appropriate. Avista proposed to establish separate Washington
and Idaho accounts using the current Production/Transmission allocator of 64.59% to
Washington and 35.41% to Idaho.
ORDER NO. 30610
ORDER
IT IS HEREBY ORDERED that Avista s Application for an order authorizing the
Company to defer net revenues from the sale of carbon financial instruments is approved. The
revenues should be deferred in Account 254 - Other Regulatory Liability with an offset shown
for associated CCX commissions and fees. Separate regulatory subaccounts shall be established
for Washington and Idaho based on the Production/Transmission allocator. Ratemaking effect of
the CFI sales will be determined in the next rate case or other proceeding.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise , Idaho this 51'1-
IJIAg/,f,St
day of .I\Ily 2008.
MACK A. RED ENT
jf~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
bls/O:A VU-08-02 ws2
ORDER NO. 30610