20110728McKenzie Di.pdf

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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]
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2m 1 JUt 28 IO~ 30
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN TH MATTR OF TH POWER COST )
ADJUSTMENT (PCA) ANAL RATE )
ADJUSTMNT FILING OF AVISTA )CORPORATION )
CASE NO. A VU-E-11-0""
DIRCT TESTIMONY OF
RONALD L. MCKENZIE
FOR AVISTA CORPORATION
\.
1 Q. Please state your name, the name of your employer, and your business address.
2 A. My name is Ronald L. McKenie. 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 Avista as Manager of Regulatory Accounting in the State and
6 Federal Reguation 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
10 September 1974. I obtained a Master of Business Administration Degree from Easter
11 Washington University in 1989. I have attended several utility accounting and ratemaking
12 courses and workshops. I have held varous accounting positions withn the Company. I have
13 served in the State and Federal Regulation Deparent for the majority of my career with the
14 Company.
15 Q. What is the scope of your testimony in this proceedig?
16 A. My testimony provides a status report of the accounting entres and account
17 balances related to the Idaho Power Cost Adjustment (PCA) for the twelve months ended June
18 30,2011. My testimony also addresses the proposed surcharge to be effective October 1,2011,
19 which wil replace the existing surcharge.
20 Q. Are you sponsoring an Exhibit?
21 A. Yes. I am sponsoring Exhibit No. _ (RM-l), consisting of a sheet showing the
22 calculation of the proposed unform cents per kilowatt-hour PCA surcharge of 0.072~, as well as
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1 the impact of the proposed PCA surcharge by rate schedule, and the proposed PCA tarff,
2 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 Commssion approved a change in the PCA methodology from a trgger and cap mechansm to a
8 single anual PCA rate adjustment filing requirement. The Commission approved the following
9 procedural schedule for administering the anual PCA filings:
10 August 1 Company filing for prior July - June deferral period
11 September 1 Review and comments by Staff and other interested paries
12 October 1 Commission Order and effective date of PCA 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 summarize the filg and order associated with the existig
17 PCA rate?
18 A. Yes. On July 27, 2010, Avista filed its anual PCA report for the perod July 1,
19 2009 though June 30, 2010 and requested a PCA surcharge of 0.532~ per kilowatt-hour
20 effective October 1,2010. The Commission approved that proposal in Case No. A VU-E-1O-03,
21 by Order No. 32080, dated September 30,2010.
22 Q. Does the present filg conform to the requirements of Order No. 30361?
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1 A. Yes. The proposed PCA rate adjustment is based on deferrals for the perod July 1,
2 2010 though June 30, 2011, as well as the unecvered balance related to the July 1, 2009
3 though June 30, 2010 deferral period, and interest during the recover perod of October 1, 2011
4 though September 30,2012. The proposed PCA surcharge rate is a uniform cents per kilowatt-
5 hour rate of 0.072~ to be effective October 1,2011.
6 Q. What were the amounts of deferrals and interest for the period July 1, 2010
7 through June 30, 2011?
8 A. The amounts are shown below:
9
10
11
Deferrals (July 2010 - June 2011)
Interest
Balance at June 30, 2011
$2,064,368
20,165
$2.084.533
12 Mr. Johnson discusses the components that make up the deferals shown above. The
13 $20,165 interest amount represents interest for the twelve-month perod July 1, 2010 though
14 June 30, 2011. Interest for the twelve-month perod was calculated using the Customer Deposit
15 Rate of 1 %.
16 Q. What surcharge rate is the Company proposing to be effective October 1,
17 2011?
18 A. The Company is proposing a unform cents per kilowatt-hour PCA surcharge of
19 0.072~ to be effective October 1,2011. Page 2 of Exhibit No. _ (RM-l) is a copy of the
20 proposed tarff, Schedule 66, which contains the proposed PCA surcharge rate. Page 1 of
21 Exhibit No. _ (RLM-l) shows the calculation of the proposed surcharge. The proposed
22 surcharge is designed to recover deferrals and interest for the July 1,2010 through June 30, 2011
23 period, as well as the unrecovered balance related to the July 1, 2009 through June 30, 2010
24 deferral perod, plus an estimate of interest durng the recovery period. After applying the
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1 conversion factor related to commission fees and uncollectibles, the resulting revenue
2 requirement of approximately $2,428,000 is divided by forecasted kilowatt-hours to derve the
3 proposed surcharge rate of 0.072~ per kilowatt-hour.
4 Q. What is the impact of the proposed surcharge by rate schedule?
5 A. Page 1 of Exhbit No. _ (RM-l) shows the effect of the proposed PCA
6 surcharge by rate schedule. The proposed surcharge is 0.072~ per kilowatt-hour, which is 0.460~
i per kilowatt-hour less than the existing surcharge of 0.532~ per kilowatt-hour. Colum (f) shows
8 the percentage decreases by rate schedule. The overall decrease is 5.99%.
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 decrease from 0.532~ per kilowatt-hour to 0.072~ per kilowatt-hour, or
13 a decrease of 0.460~ per kilowatt-hour. For an average residential customer using 956 kilowatt-
14 hours per month, the monthly decrease wil be $4.40. Under present rates, a residential bil for
15 956 kilowatt-hours amounts to $83.81. With the proposed surcharge in place the monthly bil
16 would be $79.41, or about 5.25% lower than the bil under present rates.
17 Q. Is the Company contiuing with its customer bil payig 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 (Cutomer Assistance
22 Referal and Evaluation Serices) program provides assistace to special-needs customer
23 though access to specifically trained CARS representatives who provide referals to area
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1 agencies and churches for help with housing, utilties, medical assistace, etc. LllAP (Low
2 Income Heating Energy Assistace Program) is a Federal program aimed to help low income
3 customers pay their electrc and gas bils. These fuds are distrbuted though local agencies.
4 Project Share is a voluntar 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 though Febru 28, customers are not required to pay
8 their bils in full and can defer payment or make paral payments. In addition, the Winter
9 Payment Plan provides for lower winter bil payments by allowing customers to make monthy
10 payments equal to one-half of the levelized bil amounts, with balance in full or a new payment
11 arangement due by April 1 st. The Company also works out payment arangements with
12 customers having diffculty paying their bils.
13 In addition, the Company has convenence options that help those who need flexibility,
14 but are generally able to pay. APS, or automatic payment serce (money is deducted from
15 checking account automatically each month), is one example. Other services include debit and
16 credit card serice, check-by-phone or over the web, prefered due date (the customer picks a
17 more convenient date to pay than the one the Company states on the bil), and e-biling.
18 Q. Does that conclude your prefied diect 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 TH MATTER OF TH POWER COST )
ADJUSTMNT (PCA) ANAL RATE )
ADJUSTMNT FILING OF AVISTA )CORPORATION )
CASE NO. A VU-E-ll- 0"3
EXHffIT NO. _ (RLM-l)
RONALD L. MCKENZIE
FOR AVISTA CORPORATION
AVISTA UTILITIES
IDAHO ELECTRIC
IMPACT OF PROJECTED SCHEDULE 66 PCA DECREASE
PROPOSED RATE TO BE EFFECTIVE OCTOBER 1. 2011
(OOOs of Dollars)
(OOOs of kWh)Total Billed Percent
Revenue Proposed Decrease
Line Type of Schedule Pro Forma at Present Sch.66 on Biled
No.Service Number Kilowatt-hours Rates Decrease Revenue
(a)(b)(c)(d)(1 )(e)(f)
1 Residential 1 1,149,176 $101,881 -$5,283 -5.19%
2 General Service 11,12 307,317 31,451 -1,413 -4.49%
3 Large General Service 21,22 679,496 54,504 -3,124 -5.73%
4 Extra Large General Service 25 265,733 15,215 -1,222 -8.03%
5 Clearwater 25P 889,447 46,441 -4,089 -8.80%
6 Pumping Service 31,32 53,936 4,713 -248 -5.26%
7 Street & Area Lights 41-49 13,822 3,372 -64 -1.88%
8 Total 3,358,927 $257,577 -$15,441 -5.99%
9 Proposed surcharge rate $0.00072 $2,428
10 Existing surcharge rate 0.00532 $17,869
11 Decrease in surcharge rate -$0.00460 -$15,441
Proposed surcharge rate
12 Deferrals including interest 7/1/10-6/30/11 $2,085
13 Interest 7/1/11-9/30/11 5
14 Projected under-recovered balance 317
15 Forecasted interest 10/1/11-9/30/12 12
16 Total to recover including interest $2,419
17 Conversion factor 0.996296
18 Revenue requirement $2,428
19 kWh's from above 3,358,927
20 Proposed surcharge rate 10/1/11 $0.00072
(1) Source: Pat Ehrbar's Exhibit No. 13, Schedule 3, page 1 of 3 in Case No. AVU-E-11-01.
Includes all present rate adjustments: Schedule 59 - Residential and Farm Energy Rate
Adjustment, Schedule 66 - Temporary Power Cost Adjustment, Schedule 91 - Energy
Efficiency Rider Adjustment, and Schedule 99 - Deferred State Income Tax Adjustment.
Exhibit No. _ (RLM-l)
ease No. AVU-E-ll-
Avista
Page 1 of2
I.P.U.C. NO.28
Thirteenth Revision Sheet 66
Canceling
Twelfth Revision Sheet 66
AVISTA CORPORATION
dlbla 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.072Ø 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.072Ø 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 _, 2011 Effective October 1, 2011 Exhbit No. __ (RLM-l)
ease No. AVU-E-ll-
Avista
Page 2 of2
Kelly O. Norwood - Vice President, State & Federal Regulation
Issued by Avista Utiities
By