20100727McKenzie Direct.pdf

David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governental Affairs
A vista Corporation
141 1 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
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2ßfOJUL 27 AHfO:4l
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TH MA TIER OF THE POWER COST )
ADJUSTMENT (PCA) ANAL RATE )
ADJUSTMEN FILING OF A VISTA )CORPORATION )
CASE NO. AVU-E-IO-O,3
DIRCT TESTIMONY 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 Department.
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
10 September i 974. I obtained a Master of Business Administration Degree from Eastern
11 Washington University in 1989. I have attended several utility accounting and ratemaking
12 courses and workshops. I have held varous accounting positions within the Company. I have
13 served in the State and Federal Regulation Departent for the majority of my career with the
14 Company.
15 Q. What is the scope of your testimony in this proceeding?
16 A. My testimony provides a status report of the accounting entries and account
17 balances related to the Idaho Power Cost Adjustment (PCA) for the twelve months ended June
18 30,2010. My testimony also addresses the proposed surcharge to be effective October 1,2010,
19 which wil replace the existing surcharge.
20 Q. Are you sponsoring an Exhibit?
21 A. Yes. I am sponsoring Exhibit No. _ (RL-I), consisting of a sheet showing the
22 impact of the proposed PCA surcharge by rate schedule, a sheet showing the calculation of the
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1 proposed uniform cents per kilowatt-hour PCA surcharge of 0.532~, and the proposed PCA
2 tarff, Schedule 66.
3 Q. Would you please explain the order that was issued regarding Avista's existig
4 PCA methodology?
5 A. Yes. On June 29, 2007 the Commission issued Order No. 30361 in Case No. A VU-
6 E-07-01. That case dealt with the review of the PCA methodology and method of recovery. The
7 Commission approved a change in the PCA methodology from a trigger and cap mechanism to a
8 single annual PCA rate adjustment filing requirement. The Commission approved the following
9 procedural schedule for administering the anual PCA fiings:
10 August 1 Company filing for prior July - June deferral period
11 September 1 Review and comments by Staff and other interested parties
12 October 1 Commission Order and effective date of PC A rate adjustment
13 The Commission also approved a change in the method of PC A deferral recover from a uniform
14 percentage basis to a uniform cents per kilowatt-hour basis effective with the October 1, 2007
15 rate change.
16 Q. Would you please explain the f'ings and orders associated with the existig
17 peA rate?
18 A. Yes. On July 28, 2008 A vista fied its PCA report for the period July 1, 2007
19 though June 30, 2008 and requested a surcharge of 0.61 O~ per kilowatt-hour effective October
20 1, 2008. On September 30, 2008 the Commission issued Order No. 30645 in Case No. A VU-E-
21 08-05, approving the PCA surcharge ofO.61O~ per kìlowatt-hour effective October 1, 2008.
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1 The PCA surcharge was then reduced to 0.344Ø per kilowatt-hour effective August 1,
2 2009, to parially mitigate the general rate increase that was approved by Order No. 30856 in
3 Case No. A VU-E-09-01, dated July 17,2009.
4 On July 30, 2009 A vista filed its annual PCA report for the period of July 1, 2008
5 through June 30, 2009 and requested that the PCA rate established by Order No. 30856 remain in
6 effect until the Company's next anual PCA fiing establishes a new rate to be effective on
7 October 1, 2010. The Commission approved that proposal in Case No. A VU-E-09-07, by Order
8 No. 30919, dated October 7,2009.
9 Q. Does the present fiing conform to the requirements of Order No. 30361?
10 A. Yes. The proposed PCA rate adjustment is based on deferrals for the perod July 1,
11 2009 through June 30, 2010, as well as the unrecovered balance related to the July 1, 2008
12 through June 30, 2009 deferral period. The proposed PCA surcharge rate is a uniform cents per
13 kilowatt-hour rate of 0.532~ to be effective October 1,2010.
14 Q. What were the amounts of deferrals and interest for the period July 1, 2009
15 through June 30, 2010?
16 A. The amounts are shown below:
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18
19
20
21
Deferrals (July 2009 - June 2010)
Centralia refund
Subtotal
Interest
Balance at June 30, 2010
$16,613,904
-189,607
16,424,297
121,794
$16.546,091
22 Mr. Johnson discusses the components that make up the deferals shown above. The
23 Centralia refund amount relates to a refund 'of unexpended Centralia environmental remediation
24 funds. Avista sold its ownership share of the Centralia power plant to TransAlta in May 2000.
25 Funds were withheld from the proceeds of the sale of the Centralia plant to pay for potential
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1 environmental remediation. The held back funds reduced the gain on the original sale of the
2 Centralia plant. No further material actions are expected for the potential environmental
3 remediation, and all funds withheld have been returned to Avista.
4 In June 2010 a journal entr was made to record the Idaho ratepayer portion of the
5 refud to the PCA deferral account. The monthly PCA report for June 2010 included a copy of
6 the journal, and a copy of the spreadsheet that shows the allocation of the refund between the
7 Washington and Idaho jurisdictions, as well as the allocation between the shareholder and
8 ratepayer portion of the refund. The same allocations used in the allocation of the original
9 Centralia plant gain were used in allocating the refund for the funds that were held back for
i 0 potential environmental remediation.
11 The $ 121,794 interest amount represents interest for the twelve-month period July
12 1, 2009 through June 30, 2010. Interest for the twelve-month period was calculated using the
13 Customer Deposit Rate (July-December 2009 at 2%, and January-June 2010 at 1 %).
14 Q. What surcharge rate is the eompany proposing to be effective October 1,
15 2010?
16 A. The Company is proposing a uniform cents per kilowatt-hour PCA surcharge of
1 7 0.532~ to be effective October 1, 2010. Page 3 of Exhibit No. _ (RLM-I) is a copy of the
18 proposed tarff, Schedule 66, which contains the proposed PCA surcharge rate. Page 2 of
19 Exhibit No. _ (RLM-l) shows the calculation of the proposed surcharge. The proposed
20 surcharge is designed to recover deferrals and interest for the July 1, 2009 through June 30, 2010
21 period, as well as the unrecovered balance related to the July 1, 2008 through June 30, 2009
22 deferal perod, plus an estimate of interest during the recovery perod. After applying the
23 conversion factor related to commission fees and uncollectibles, the resulting revenue
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1 requirement of approximately $18.7 millon is divided by forecasted kìlowatt-hours for the
2 period October 1, 2010 through September 30, 2011, to derve the proposed surcharge rate of
3 0.532t per kilowatt-hour.
4 Q. What is the impact of the proposed surcharge by rate schedule?
5 A. Page 1 of Exhibit No. (RLM-l) shows the effect of the proposed PCA
6 surcharge by rate schedule. The proposed surcharge is 0.532t per kilowatt-hour, which is 0.188t
7 per kilowatt-hour more than the existing surcharge of 0.344~ per kilowatt-hour. Column (f)
8 shows the percentage increases by rate schedule. The overall increase is 2.61%.
9 Q. What wil be the impact of the proposed surcharge on an average residential
10 customer?
11 A. Under the Company's proposal, the surcharge rate for all customers, including
12 residential customers wil increase from 0.344~ per kilowatt-hour to 0.532t per kilowatt-hour, or
13 an increase of 0.188~ per kìlowatt-hour. For an average residential customer using 1,000
14 kilowatt-hours per month, the monthly increase wil be $1.88. Under present rates, a residential
15 bil for 1,000 kilowatt-hours amounts to $80.90. With the proposed surcharge in place the
16 monthly bil would be $82.78, or about 2.3% higher than the bil under present rates.
17 Q. Is the Company continuing with its customer bil paying assistance programs?
18 A. Yes. The Company has several programs available to assist customers with paying
19 their bils. Avista's Comfort Level Biling program offers the option for customers to pay the
20 same bil amount each month of the year by averaging their anual usage. Under this program,
21 customers can avoid unpredictable winter heating bils. The CARS (Customer Assistance
22 Referal and Evaluation Services) program provides assistance to special-needs customer
23 through access to specifically trained CARS representatives who provide referrals to area
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1 agencies and churches for help with housing, utilities, medical assistance, etc. LIHEAP (Low
2 Income Heating Energy Assistance Program) is a Federal program aimed to help low income
3 customers pay their electrc and gas bils. These funds are distrbuted through local agencies.
4 Project Share is a voluntary contrbution option allowing customers to contrbute donations that
5 are distrbuted though local community action agencies to customers in need. Idaho customers
6 who have children, elderly or infirm persons in the household may qualify for the Winter
7 Moratorium plan. From December 1 through Februar 28, customers are not required to pay
8 their bils in full and can defer payment or make partial payments. In addition, the Winter
9 Payment Plan provides for lower winter bil payments by allowing customers to make monthly
10 payments equal to one-half of the levelized bil amounts, with balance in full or a new payment
11 arrangement due by April 1 st. The Company also works out payment arangements with
12 customers having difficulty paying their bils.
13 In addition, the Company has convenience options that help those who need flexibilty,
14 but are generally able to pay. APS, or automatic payment service (money is deducted from
15 checking account automatically each month), is one example. Other popular services include
16 debit and credit card service, check-by-phone or over the web, preferred due date (the customer
17 picks a more convenient date to pay than the one the Company states on the bil), and e-billng.
18 Q. Does that conclude your prefied direct testimony?
19 A. Yes it does.
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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]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST )
ADJUSTMENT (PCA) ANAL RATE )
ADJUSTMENT FILING OF A VISTA )CORPORATION )
CASE NO. AVU-E-IO- 03
EXHffIT NO. _ (RLM-1)
RONALD L. MCKENZIE
FOR AVISTA CORPORATION
.AVISTA UTILITIES
IDAHO ELECTRIC
IMPACT OF PROPOSED SCHEDULE 66 PCA INCREASE
12 MONTHS ENDED DECEMBER 31. 2009
(OOOs of Dollars)
(OOOs of kWh)Total Biled Percent
2009 Revenue Proposed Increase
Line Type of Schedule Pro Forma at Present Sch.66 on Bited
No.Service Number Kilowatt-hours Rates(1l Increase Revenue
(a)(b)(c)(d)(e)(f)
1 Residential 1 1,152,198 $94,102 $2,166 2.30%
2 General Service 11,12 317,877 31,255 598 1.91%
3 Large General Service 21,22 715,623 54,639 1,345 2.46%
4 Extra Large General Service 25 258,715 13,774 486 3.53%
5 Clearwater 25P 892,291 43,827 1,678 3.83%
6 Pumping Service 31,32 58,956 4,729 111 2.34%
7 Street & Area Lights 41-49 13,816 3,208 26 0.81%
8 Total 3,409,476 $245,534 $6,410 2.61%
9 Proposed surcharge rate $0.00532
10 Existing surcharge rate 0.0034
11 Increase in surcharge rate $0.00188.(1) Includes all present rate adjustments: Schedule 56-Temporary PCA Adj., Schedule 91-Energy
Effciency Rider Adj., and Schedule 59-Residential & Farm Energy Rate Adj.
Source: Pat Ehrbar's Exhibit No. 14, Schedule 3, page 1 of 3 in Case No. AVU-E-10-01.
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Exhibit No. __ (RLM- I)
Case No. AVU-E- 10-03Avista -
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.Avista Corporation
IdahoPCA
Proposed Rate Adjustment
Effective October 1! 2010
Account 182387.ED.lD 7/08-6/09 Deferrals
Actual balance at 6/30/10
Forecasted interest
Forecasted amorization
Forecsted unrecovered balance at 11/30/10*
Account 182385.ED.lD 7/09-/10 Deferrals
Actual balance at 6/30/10
Forecasted interest
Forecasted balance at 9/30/10
Amount to recover
Interest - 12 months ~ 1 % on 50% of balance
Total amount including interest
Conversion factor
Revenue requirement
Projected kWh 1011/10 - 9/30/11
Proposed surcharge rate
Existing surcharge rate
Increase in surcharge rate.
$5,195,389
14,315
-3,253,000
1,956,704
16,546,091
41,061
16,587,152
18,543,856
92,719
18,636,575
0.994965
$18,730,885
3,522,531,000
$0.00532
0.00344
$0.00188
*tncludes forecasted amortization related to September 2010
usage to be biled in October and November 2010.
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Exhibit No. _ (RM- I)
Case No. AVU-E-IO-Q6
Avista
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I.P.U.C. No.28
Twelfth Revision Sheet 66
Canceling
Eleventh Revision Sheet 66
AVISTA CORPORATION
d/b/a Avista Utilties
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 O.532Ø 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 O.532Ø 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 26, 2010 Effective October 1, 2010 Exhibit No. _ (RLM-l)
Case No. A VU-E- i 0-Q."3
Avista
Page 3 00
Kelly O. Norwood - Vice President, State & Federal Regulation
Issued by Avista Utilties
By