20080728McKenzie Direct.pdf

David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
I :l
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST )
ADmSTMNT (PCA) ANAL RATE )
ADmSTMENT FILING OF AVISTA )CORPORATION )
CASE NO. A VU-E-08- bS
DIRCT TESTIONY OF
RONALD L. MCKENZIE
FOR AVISTA CORPORATION
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1 Q. Please state your name, the name of your employer and your business address.
2 A. My name is Ronald L. McKenzie. I am employed by A vista Corporation at 1411
3 East Mission Avenue, Spokane, Washington.
4 Q. In what capacity are you employed?
5 A. I am employed by A vista as Manager of Regulatory Accounting in the State and
6 Federal Regulation Deparent.
7 Q. Please state your educational background and professional experience.
8 A. I graduated from Eastern Washington University in 1973 with a Bachelor of Ars
9 Degree in Business Administration, majoring in Accounting. I joined the Company in September
10 1974. I obtained a Master of Business Administration Degree from Eastern Washigton
11 University in 1989. I have attended several utility accounting and ratemakng courses and
12 workshops. I have held varous accounting positions within the Company. I have served in the
13 State and Federal Regulation Departent for the majority of my career with the Company.
14 Q. What is the scope of your testimony in this proceeding?
15 A. My testimony provides a status report of the accounting entres and account
16 balances related to the Idaho Power Cost Adjustment (PCA) for the twelve months ended June
17 30, 2008. My testimony also addresses the proposed surcharge to be effective October 1, 2008,
18 which wil replace the existing surcharge that wil expire on September 30, 2008.
19 Q. Are you sponsoring an Exhibit?
20 A. Yes. I am sponsorig Exhibit No. _ (RLM-l), consisting of a sheet showing the
21 impact of the proposed PCA surcharge by rate schedule, a sheet showing the calculation of the
22 proposed uniform cents per kilowatt-hour PCA surcharge of 0.610~, and the proposed PCA
23 tarff, Schedule 66.
McKenzie, Di
Avista
Page 1
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1 Q. Would you please explain the order that was issued regarding Avista's existig
2 PCA methodology?
3 A. Yes. On June 29, 2007 the Commission issued Order No. 30361 in Case No. A VU-
4 E-07-01. That case dealt with the review of the PCA methodology and method of recovery. The
5 Commission approved a change in the PCA methodology from a trgger and cap mechanism to a
6 single anual PCA rate adjustment filing requirement. The Commission approved the following
7 procedural schedule for administering the anual PCA filings:
8 Company filing for prior July - June deferral periodAugust 1
9 September 1 Review and comments by Staff and other interested paries
10 October 1 Commission Order and effective date of PC A rate adjustment
11 The Commission also approved a change in the method of PCA deferral recovery from a uniform
12 percentage basis to a uniform cents per kilowatt-hour basis effective with the October 1, 2007
13 rate change.
14 Q. Would you please explain the filg and order associated with the October 1,
15 2007 PCA rate change?
16 A. Yes. On July 31, 2007 A vista fied its PCA report for the period July 1, 2006
17 though June 30, 2007 and requested a surcharge of 0.267 ~ per kilowatt-hour effective October 1,
18 2007. On September 14, 2007 the Commission issued Order No. 30429 in Case No. A VU-E-07-
19 07 approving the PCA surcharge of 0.267 ~ per kilowatt-hour from October 1, 2007 through
20 September 30, 2008.
21 Q. Does the present filg conform to the requirements of Order No. 30361?
McKenzie, Di
Avista
Page 2
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1 A. Yes. The proposed PCA rate adjustment is based on deferrals for the period July 1,
2 2007 through June 30, 2008. The proposed PCA surcharge rate is a uniform cents per kilowatt-
3 hour rate ofO.610~ to be effective October 1,2008.
4 Q. What were the amounts of deferrals and interest for the period July 1, 2007
5 through June 30, 2008?
6 A. The amounts are shown below:
7
8
9
Deferrals (July 2007 - June 2008)
Interest
Balance at June 30, 2008
$20,348,374
618,541
$20,966,915
10 Mr. Johnson discusses the components that make up the deferrals shown above. The $618,541
11 interest amount represents interest for the twelve-month period July 1, 2007 through June 30,
12 2008. Interest for the twelve-month period was calculated using the Customer Deposit Rate
13 (July-December 2007 at 5%, and Januar-June 2008, also at 5%).
14 Q. What surcharge rate is the Company proposing to be effective October 1,
15 2008?
16 A. The Company is proposing a uniform cents per kilowatt-hour PCA surcharge of
17 0.61 O~ to be effective October 1, 2008. Page 3 of Exhibit No. _ (RLM -1) is a copy of the
18 proposed tarff, Schedule 66, which contains the proposed PCA surcharge rate. Page 2 of Exhibit
19 No. _ (RLM-l) shows the calculation of the proposed surcharge. The proposed surcharge is
20 designed to recover deferrals and interest for the July 1, 2007 though June 30, 2008 period, plus
21 an estimate of interest durng the recovery period. After applying the conversion factor related to
22 commission fees and uncollectibles, the resulting revenue requirement of approximately $21.7
23 milion is divided by forecasted kilowatt-hours for the period October 1, 2008 through September
24 30,2009, to derve the proposed surcharge rate ofO.610~ per kilowatt-hour.
McKenzie, Di
Avista
Page 3
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1 Q. What is impact of the proposed surcharge by rate schedule?
2 A. Page 1 of Exhibit No. _ (RLM-l) shows the effect of the proposed PCA
3 surcharge by rate schedule. The proposed surcharge is approximately $21.7 milion, which is
4 approximately $12.2 milion more than the existing surcharge of approximately $9.5 milion.
5 Colum (j shows the breakdown of the $12.2 milion increase over the existing surcharge by
6 rate schedule and column (k) shows the resulting percentage increases by rate schedule.
7 Q. What wil be the impact of the proposed surcharge on an average residential
8 customer?
9 A. Under the Company's proposal, the surcharge rate for residential customers wil
10 increase from 0.267~ per kilowatt-hour to 0.610~ per kilowatt-hour, or an increase of0.343~ per
11 kilowatt-hour. For an average residential customer using 1,000 kilowatt-hours per month, the
12 monthly increase wil be $3.43. Under present rates, a residential bil for 1,000 kilowatt-hours
13 amounts to $63.44. With the proposed surcharge in place the monthly bil would be $66.87, or
14 about 5.4% higher than the bil under present rates.
15 Q. Is the Company contiuing with its customer bil payig assistance programs?
16 A. Yes. The Company has several programs available to assist customers with payig
17 their bils. Avista's comfort level biling program offers customers the option of averaging their
18 bils and paying the same monthly amount all year long in order to smooth out the seasonal highs
19 and lows. Under the C.A.R.E.S. (Customer Assistance Referral and Evaluation Servce)
20 program, specially trained customer servce representatives provide referrals to area agencies and
21 churches for customers with special needs for help with housing, utilities, medical assistance, etc.
22 LllEAP (Low Income Heating Energy Assistance Program) is a Federal program aimed to help
23 low income customers pay their electric and gas bils. These fuds are distrbuted though local
McKenzie, Di
Avista
Page 4
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1 agencies. Project Share is a voluntar contribution option allowing customers to contribute
2 donations that are distributed through local community action agencies to customers in need.
3 Idaho customers who have children, elderly or infirm persons in the household may qualify for
4 the winter moratorium plan. From December 1 through Februar 28, customers are not required
5 to pay their bils in full and can defer payment or make parial payments. In addition, the Winter
6 Payment Plan provides for lower winter bil payments by allowing customers to make monthy
7 payments equal to one-half of the levelized bil amounts, with balance in full or a new payment
8 arangement due by April 1 st. The Company also works out payment arangements with
9 customers having difficulty paying their bils.
lOIn addition, the Company has convenience options that help those who need flexibilty,
11 but are generally able to pay. APS, or automatic payment serce (money is deducted from
12 checking account automatically each month), is one example. Other popular serices include
13 debit and credit card service, check-by-phone or over the web, preferred due date (the customer
14 picks a more convenient date to pay than the one the Company states on the bil), and e-biling.
15 Q. Does that conclude your prefied direct testimony?
16 A. Yes it does.
McKenzie, Di
Avista
Page 5
David J. Meyer
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]
l r i.*'1
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF TH POWER COST )
ADmSTMENT (PCA) ANAL RATE )
ADmSTMENT FILING OF AVISTA )CORPORATION )
CASE NO. A VU-E-08-0S-
EXHIT NO. (RLM-l)
RONALD L. MCKENZIE
FOR AVISTA CORPORATION
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.
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.Avista Corporation
Proposed PCA Surcharge Rate
Effective October 1! 2008
Line
No.
Account 182386 ED ID
1 Deferrals (July 2007 - June 2008)$20.348.374
2 Interest through June 2008 618,541
3 Total 20,966,915
4 Forecast of interest for July, August, and September (g 5%254,355
5 Forecast of interest during recovery period (4% on 1/2 of balance)424,425
6 Forecasted deferral balance to recover including interest $21,645.695
7 Conversion factor 0.995358
8 Revenue requirement $21,746,643
9 Forecast kWhs 3,565,448.000
10 Proposed Surcharge Rate $0.00610.
.
Exhibit No. _(RM.I)
Case No. AVU-E-08-_
Avista
Page 2 of3
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I.P.U.C. No.28
Tenth Revision Sheet 66
Canceling
Ninth Revision Sheet 66
AVISTA CORPORATION
d/b/a Avista Utilities
66
SCHEDULE 66
TEMPORARY POWER COST ADJUSTMENT - IDAHO
APPLICABLE:
To Customers in the State of Idaho where the Company has electric service
available. This Power Cost Adjustment shall be applicable to all retail customers for
charges for electric energy sold and to the flat rate charges for Company-owned or
Customer-owned Street Lighting and Area Lighting Service. This Rate Adjustment is
designed to recover or rebate a portion of the difference between actual and allowed
net power supply costs.
MONTHLY RATE:
The energy charges of electric Schedules 1, 11, 12, 21, 22, 25, 25P, 31, and 32
are to be increased by 0.61 Oø per kilowatt-hour in all blocks of these rate schedules.
Flat rate charges for Company-owned or Customer-owned Street Lighting and
Area Lighting Service, Schedules 41-49, are to be increased by 0.610Ø per kilowatt-
hour times the monthly usages of the various light sizes and types on these schedules.
SPECIAL TERMS AND CONDITIONS:
The rates set forth under this Schedule are subject to periodic review and
adjustment by the IPUC based on the actual balance of deferred power costs.
Service under this schedule is subject to the Rules and Regulations contained
in this tariff.
The above Rate is subject to increases as set forth in Tax Adjustment
Schedule 58.
Issued July 25, 2008 Exhibit No. _(RLM-I)
Case No. AVU-E-08-_
Avista
Page 3 on
Kelly O. Norwood - Vice President, State & Federal Regulation
Effective October 1, 2008
Issued by Avista Utilities
By