20090325Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
ISB NO. 6864
Ri: r r-...iij'~
7009 MAR 25 PH 3: 26
Street Address for Express Mail:
472 W WASHINGTON
BOISE ID 83702-5983
Attorney for the Commission Staff
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 )IRRGATION DISTRICT. )
)
)
CASE NO. A VU-E-09-2
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilties Commission, by and through its
Attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 30739 on March 4, 2009,
submits the following comments.
BACKGROUND
On February 2, 2009, Avista Corporation ("Avista" or "Company") fied an Application
with the Commission seeking approval of its Electric Distribution Service Agreement
("Agreement") with East Greenacres Irrigation District ("East Greenacres").
The paries entered into the Agreement on January 30, 2009 and have stipulated to an
effective date of March 1, 2009 or the first day following an Order by the Commission granting
approval of the Agreement. The proposed Agreement expires on September 30, 2014, unless it
is terminated earlier by the Company or East Greenacres with at least one year written notice.
STAFF COMMENTS 1 MARCH 25, 2009
The Agreement provides for the continued delivery of United States Bureau of
Reclamation energy over Avista-owned and -operated distribution facilties from Avista's Post
Falls Substation to certain delivery points on the East Greenacres system.
Avista states in its Application 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.
The distribution charge recited in the proposed Agreement is $3,622.77 per month, or
$43,473.24 per year.
STAFF REVIEW
Staff verified the values in the rate calculation from the Company's Cost of Service study
from its last approved general rate case, Case No. A VU-E-08-1. East Greenacres Annual
Distribution and Substation Use of Facilities Charge is proposed to be $43,473 or $3,623 per
month. The anual distribution charge is based on a percentage of Idaho's total distribution
facilities cost. The percentage is calculated using East Greenacres's "Load Ratio Share" of
0.0978% which is the ratio of East Greenacres annual energy consumption of3,352,862 kWh
and Idaho's normalized annual energy consumption of3,429,176,000 kWh in 2007. Idaho's
distribution facilties cost of$44,451,166 is from the Idaho total distribution cost of $49,580,740
minus the Customer Service, and Information and Sales costs of$5,129,574. The Customer
Service, and Information and Sales costs are excluded because they are not relevant to the use of
facilities costs to deliver the energy to East Greenacres. When the irrigation district's load ratio
of 0.0978% is applied to distribution facilty costs of $44,451,166, the Use of Facilties Charge is
calculated to be $43,473/yr.
The use by the Company of an Idaho jurisdictional energy methodology to allocate
distribution costs to East Green Acres Irrigation District is just one of several methodologies that
can be used to establish a facilities charge. While Staff does not necessarily oppose the use of
the proposed methodology in this case, we believe that allocation of the distribution facilties
used by the irrigation district based on demand would be more appropriate. Clearly, the cost of
distribution facilties is driven by demand rather than energy. Consequently, a demand-based
allocation of the distribution costs would better reflect cost causation. Staff and the Company
have discussed this issue and have agreed to work together to develop a demand-based rate
calculation methodology for use in the future.
STAFF COMMENTS 2 MARCH 25, 2009
In this case the data needed to apply the Company's energy allocation methodology was
more readily available than the demand data. The Company has proceeded with an agreement
based on energy and both paries have approved the proposed Agreement. Staff does not believe
that the general body of ratepayers wil be hared by approval of the proposed Agreement. Staff
therefore recommends that the proposed Agreement be approved in this case.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the terms of the submitted Agreement.
~
Respectfully submitted this d5 day of March 2009.
~~&w;)
Neil Price
~ Deputy Attorney General
Technical Staff: TJ Golo
Dave Schune
i :umisc:commentsavue09.2nptjdes
STAFF COMMENTS 3 MARCH 25, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25TH DAY OF MARCH 2009,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-E-09-2, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
TARA L KNOX
SENIOR REG ANALYST
A VISTA CORPORATION
1411 E MISSION AVE
SPOKANE W A 99220
E-MAIL: tara.knoxriavistacorp.com
DA VID 1. MEYER
VICE PRESIDENT AND CHIEF COUNSEL
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220
E-MAIL: david.meyerriavistacorp.com
\9J~K~.
SECRETARY
CERTIFICATE OF SERVICE