20090730McKenzie 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, VV ashington 99220
Phone: [phone], Fax: [phone]
RECEIVED
2009 JUl 30 AM 10: 08
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN TH MATIR OF TH POWER COST )
ADJUSTMNT (PCA) ANAL RATE )
ADJUSTMNT FILING OF A VISTA )CORPORATION )
CASE NO. A VU-E-09-0?
DIRCT TESTIMONY OF
RONALD L. MCKENZIE
FOR A VISTA CORPORATION
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 Easter 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 Easter Washington
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 Deparent for the majority of my career with the Company.
14 Q. What is the scope of your testiony 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 30,2009. My testimony also explains why no change in the surcharge rate is being proposed.
18 Q. Would you please explain the order that was issued regarding Avista's existing
19 PCA methodology?
20 A. Yes. On June 29, 2007 the Commission issued Order No. 30361 in Case NO.A VU-
21 E-07-0L. That case dealt with the review of the PCA methodology and method of recovery. The
22 Commission approved a change in the PCA methodology from a trgger and cap mechanism to a
McKenzie, Di
Avista
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1 single anual PCA rate adjustment filing requirement. The Commission approved the following
2 procedural schedule for administering the anual PCA fiings:
3 August 1 Company fiing for prior July - June deferal perod
4 September 1 Review and comments by Staff and other interested paries
5 October 1 Commission Order and effective date of PC A rate adjustment
6 The Commission also approved a change in the method of PCA deferal recover from a uniform
7 percentage basis to a uniform cents per kilowatt-hour basis effective with the October 1, 2007
8 rate change.
9 Q. How many annual reports and associated rate changes have occurred since
10 Order No. 30361 was issued?
11 A. There have been two anual report filings since Order No. 30361 was issued. The
12 associated rate changes occured on October 1,2007, and October 1,2008.
13 Q. Would you please explain the ïilg and order associated with the October 1,
14 2007 PCA rate change?
15 A. Yes. On July 31, 2007 A vista fied its PCA report for the perod July 1, 2006
16 though June 30, 2007 and requested a surcharge ofO.267f/ per kilowatt-hour effective October 1,
17 2007. On September 14,2007 the Commission issued Order No. 30429 in Case No. A VU-E-07-
18 07 approving the PCA surcharge of 0.267f/ per kilowatt-hour from October 1, 2007 through
19 September 30, 2008.
20 Q. Would you please explain the ïilg and order associated with the October 1,
21 2008 PCA rate change?
22 A. Yes. On July 28, 2008 Avista fied its PCA report for the period July 1, 2007
23 through June 30, 2008 and requested a surcharge ofO.610f/ per kilowatt-hour effective October 1,
McKenie, Di
Avista
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1 2008. On September 30, 2008 the Commission issued Order No. 30645 in Case No. A VU-E-08-
2 05 approvig the PCA surcharge of 0.610f/ per kilowatt-hour from October 1, 2008 though
3 September 30, 2009.
4 Q. What period does the present ïilg cover?
5 A. The present filing consists of the PCA report for the perod July 1, 2008 though
6 June 30, 2009.
7 Q. In the present ïilg is the Company proposing an adjustment to the PCA
8 surcharge rate?
9 A. No. Under normal circumstances the Company would be proposing a PCA rate
10 adjustment based on deferals for the perod July 1, 2008 through June 30, 2009. In ths instance
11 no rate adjustment is being proposed due to the Stipulation and Settlement approved by Order
12 No. 30856 dated July 17, 2009 in the Company's electrc and gas general rate cases, Case Nos.
13 AVU-E-09-01 and AVU-G-09-0L. As par of the Settlement (Item 15(f) on page 12) the paries
14 agreed to reduce the PCA surcharge rate effective August 1, 2009. The PCA surcharge rate of
15 0.610f/ per kilowatt-hour that was effective October 1, 2008, wil be reduced to 0.344f/ per
16 kilowatt-hour effective August 1,2009.
17 The August 1, 2009 PCA surcharge rate of 0.344f/ per kilowatt-hour is expected to
18 remain in place until October 1, 2010, when it will be replaced by a new rate that wil be
19 proposed as par of the Company's anual PCA report for the period July 1,2009 though June
20 30,2010.
21 Q. Would you please show the beginning bàlances, account activity, and ending
22 balances in the deferral accounts?
McKenie, Di
Avista
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1 A. Yes. The Company keeps track of each deferral period in a separate account. The
2 accounts and associated amounts are shown below:
3
4
5
6
7
8
Account 182385 ED il (7/06-6/07 Deferals)
Balance at June 30,2008
Amortization
Interest
Transfer to Account 182387 ED il
Balance at June 30, 2009
$2,854,904
-2,503,036
31,357
-383,225$ 0
9
10
11
12
13
Account 182386 ED il (7/07-6/08 Deferrals)
Balance at June 30, 2008
Amortization
Interest
Balance at June 30, 2009
$20,966,915
-15,141,573
625,937
$ 6.451.279
14
15
16
17
18
19
Account 182387 ED il (7/08-6/09 Deferals)
Balance at June 30, 2008
Deferrals
Transfer from Account 182385 ED il
Interest
Balance at June 30, 2009
$ 0
10,761,381
383,225
77,175
$11.221.781
20 The deferrals shown above in Account 182387 ED il of$10,761,381 for the period July 1, 2008
21 though June 30, 2009 are the costs to be reviewed in this filing for recover from customers.
22 Mr. Johnson discusses the components that make up these defered costs. The transfer amount
23 from Account 182385 ED il to Account 182387 ED il of $383,225 represents the under-
24 recovered amount related to the surcharge that was made effective October 1, 2007. Interest in
25 each account durng the twelve-month period was calculated using the Customer Deposit Rate
26 (July-December 2008 at 5%, and Januar-June 2009 at 2%).
27 Q. How wil amortation be recorded related to the October 1, 2008 and the
28 August 1, 2009 PCA surcharge rates?
29 A. Amortization wil first be applied to Account 182386 ED il until that account
30 reaches zero, and then applied to Account 182387 ED il.
McKenzie, Di
Avista
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f
1 Q. Does that conclude your prefied direct testimony?
2 A. Yes it does.
McKene, Di
Avista
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