20090416final_order_no_30784.pdf

Office ofthe Secretary
Service Date
April 16 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
APPROVAL OF AN ELECTRIC
DISTRIBUTION SERVICE AGREEMENT
WITH EAST GREENACRES IRRIGATION
DISTRICT
ORDER NO. 30784
CASE NO. A VU-09-
On February 2, 2009, Avista Corporation ("Avista" or "Company filed an
Application with the Commission seeking approval of its Electric Distribution Service
Agreement with East Greenacres Irrigation District ("Greenacres
On March 4, 2009, the Commission issued a Notice of Application and Notice of
Modified Procedure and established a 21-day comment period. Order No. 30739. Commission
Staff was the only party to file written comments within the established comment period.
THE AGREEMENT
The Electric Distribution Service Agreement ("Agreement") entered into between
A vista and Greenacres provides for the continued delivery of United States Bureau of
Reclamation ("Bureau" or "Bureau of Reclamation ) energy over A vista-owned and -operated
distribution facilities from Avista s Post Falls Substation to certain delivery points on the
Greenacres system. Application at 1. The effective date of the Agreement is March 2009
the first day following an Order by the Commission granting approval of the Agreement. Id.
The Application stated that the Agreement is "unique, and therefore more
appropriately provided under a special contract rather than a filed tariff." Id. at 2. Avista stated
that the distribution rate charged by the Company is "consistent with distribution charges
embedded in current Idaho retail rates" and the net revenues generated via the Agreement will
serve as an offset to the Company s fixed costs. Id. In recent years, A vista has delivered
approximately 3.1 million kWhs to Greenacres' pumping facilities at an annual rate of $8 157.
Id. at3.
The parties entered into the Agreement on January 30, 2009. Id. The Agreement
does not contain a fixed termination date. Id. However, the parties contemplate that the
Agreement will terminate contemporaneously with the occurrence of either of the following
conditions: (1) the termination of the parties' Transmission Agreement; or (2) one-year prior
ORDER NO. 30784
written notice submitted by either party. Id. The distribution charge recited in the Agreement is
622.77 per month, or $43 473.24 per year. Id. The Application stated that the charge was
derived from Avista s last cost of service study" and subsequent settlement adjustments and
revenue increases associated with Case No. A VU-08-01 and Commission Order No. 30647.
Id. at 3-
A vista stated that "the contract is non-discriminatory and is not unreasonably
preferential." Id. at 4. The Company requested that its Application be processed under the
Commission s Modified Procedure rules. Id. at 2.
STAFF COMMENTS
Staff reviewed the Agreement by utilizing A vista s cost -of-service study approved in
its last general rate case, A VU-08-, to verify the Company s rate calculations. Staff
Comments at 2. Staff stated that Greenacres' annual distribution charge of $43,473 is calculated
by determining its "Load Ratio Share" (Greenacres' annual energy consumption -7- Idaho
normalized annual energy consumption) and applying that ratio, 0.0978%, to the cost ofIdaho
distribution facilities, $44 451 166. Id.
Staff mentioned that the jurisdictional energy methodology employed by A vista is
just "one of several methodologies that can be used to establish a facilities charge.Id. While it
does not oppose the Company s use of an energy allocation methodology, Staff believes that
allocation of distribution facilities used by the irrigation district based on demand is more
appropriate" because "the cost of distribution facilities is driven by demand rather than energy.
Id. Staff discussed this issue with A vista and the Company agreed to work with Staff "
develop a demand-based rate calculation methodology for use in the future.Id. Staff also
added that the necessary data for applying A vista s energy allocation methodology was more
prevalent than demand data. Id. at 3.
Staff acknowledged that the energy-based distribution agreement was mutually
agreed upon and approved by both the parties. Id. Further, Staff believes that the general body
of ratepayers will not be harmed by approval of this Agreement and therefore recommended the
Commission approve the Agreement. Id.
ORDER NO. 30784
COMMISSION DECISION AND FINDINGS
The Commission has reviewed and considered the filings in Case No. A VU-09-
including the Electric Distribution Agreement submitted for approval and filed comments. We
find the terms and conditions of the parties' underlying Agreement to be reasonable. We
acknowledge Staffs assessment of Avista s energy-based methodology as well as its efforts to
develop a more appropriate demand-based methodology for use in future electric distribution
service agreements. Thus, we strongly encourage the Company to offer its full cooperation
toward the development of this alternate methodology.
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation, an
electric utility, and the issues presented in this matter pursuant to its authority under Title 61 of
the Idaho Code, and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that the Commission approves Avista Corporation
Electric Distribution Service Agreement with East Greenacres Irrigation District.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30784
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this /(f; f-I'
day of April 2009.
~~~
JIM D. KEMPTON, P SIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Co mission Secretary
O:A VU-O9-np2
ORDER NO. 30784