20120731McKenzie Di.pdf

David J. Meyer
Vice President and Chief Counsel for
Regulatory and Governmental Affairs
Avista Corporation
1411 E. Mission Avenue
P. 0. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
RECEIVED
201 JUL 31 AM jQ: 5
1C FU
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST ) CASE NO. AVU-E-12
ADJUSTMENT (PCA) ANNUAL RATE )
ADJUSTMENT FILING OF AVISTA ) DIRECT TESTIMONY OF
CORPORATION ) RONALD L. MCKENZIE
FOR AVISTA CORPORATION
I 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 Avista 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 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 Arts
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 Eastern
11 Washington University in 1989. I have attended several utility accounting and ratemaking
12 courses and workshops. I have held various accounting positions within the Company. I have
13 served in the State and Federal Regulation Department 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, 2012. My testimony also addresses the proposed rebate to be effective October 1, 2012,
19 which will replace the existing surcharge.
20 Q. Are you sponsoring an Exhibit?
21 A. Yes. I am sponsoring Exhibit No. (RLM-1), consisting of a sheet showing the
22 calculation of the proposed uniform cents per kilowatt-hour PCA rebate of 0.0900, as well as the
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I impact of the proposed PCA rate decrease by rate schedule, and the proposed PCA tariff,
2 Schedule 66.
3 Q. Would you please explain the order that was issued regarding Avista's existing
4 PCA methodology?
5 A. Yes. On June 29, 2007 the Commission issued Order No. 30361 in Case No. AVU-
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 annual PCA filings:
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 PCA rate adjustment
13 The Commission also approved a change in the method of PCA deferral recovery from a uniform
14 percentage basis to a uniform cents per kilowatt-hour basis effective with the October 1, 2007
15 rate change. By Order No. 32206 in Case No. GNR-E-10-03 dated March 15, 2011, the
16 Commission modified the retail revenue credit methodology and approved a Load Change
17 Adjustment Rate based on the energy classified portion of embedded production revenue
18 requirement effective April 1, 2011.
19 Q. Would you please summarize the filing and order associated with the existing
20 PCA rate?
21 A. Yes. On July 28, 2011, Avista filed its annual PCA report for the period July 1,
22 2010 through June 30, 2011 and requested a PCA surcharge of 0.0720 per kilowatt-hour
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I effective October 1, 2011. The Commission approved that proposal in Case No. AVU-E- 11-03,
2 by Order No. 32375, dated September 30, 2011.
3 Q. Does the present filing conform to the requirements of the prior orders of the
4 Commission regarding the PCA?
5 A. Yes. The proposed PCA rate adjustment is based on deferrals for the period July 1,
6 2011 through June 30, 2012, as well as the unrecovered balance related to the July 1, 2010
7 through June 30, 2011 deferral period, and interest during the recovery period of October 1, 2012
8 through September 30, 2013. The proposed PCA rebate rate is a uniform cents per kilowatt-hour
9 rate of 0.0900 to be effective October 1, 2012.
10 Q. What were the amounts of deferrals and interest for the period July 1, 2011
11 through June 30, 2012?
12 A. The amounts are shown below:
13 Deferrals (July 2011 - June 2012) $(3,170,099)
14 Interest (21,812)
15 Balance at June 30, 2012 $(3,191,9111
16 Mr. Johnson discusses the components that make up the deferrals shown above. The
17 $(21,812) interest amount represents interest for the twelve-month period July 1, 2011 through
18 June 30, 2012. Interest for the twelve-month period was calculated using the Customer Deposit
19 Rate ofl%.
20 Q. What rebate rate is the Company proposing to be effective October 1, 2012?
21 A. The Company is proposing a uniform cents per kilowatt-hour PCA rebate of 0.0900
22 to be effective October 1, 2012. Page 2 of Exhibit No. (RLM-1) is a copy of the proposed
23 tariff, Schedule 66, which contains the proposed PCA rebate rate. Page 1 of Exhibit No.
24 (RLM- 1) shows the calculation of the proposed rebate. The proposed rebate is designed to pass
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I through deferrals and interest for the July 1, 2011 through June 30, 2012 period, as well as the
2 unrecovered balance related to the July 1, 2010 through June 30, 2011 deferral period, plus an
3 estimate of interest during the recovery period. After applying the conversion factor related to
4 commission fees and uncollectibles, the resulting decrease in revenue requirement of $3,099,000
5 is divided by forecasted kilowatt-hours to derive the proposed rebate rate of 0.0900 per kilowatt-
6 hour.
7 Q. What is the impact of the proposed PCA rate decrease by rate schedule?
8 A. Page 1 of Exhibit No. (RLM-1) shows the effect of the proposed PCA rate
9 decrease by rate schedule. The proposed rebate is 0.0900 per kilowatt-hour, which is 0.1620 per
10 kilowatt-hour less than the existing surcharge of 0.0720 per kilowatt-hour. Column (f) shows the
11 percentage decreases by rate schedule. The overall decrease is 2.17%.
12 Q. What will be the impact of the proposed rebate on an average residential
13 customer?
14 A. Under the Company's proposal, the PCA rate for all customers, including
15 -residential customers will decrease from a 0.0720 per kilowatt-hour surcharge to a 0.0900 per
16 kilowatt-hour rebate, or a decrease of 0.1 620 per kilowatt-hour. Residential customers using an
17 average of 939 kilowatt-hours per month would see their monthly bills decrease from $80.56 to
18 $79.04, a decrease of $1.52 per month, or 1.89%.
19 Q. Is the Company continuing with its customer bill paying assistance programs?
20 A. Yes. The Company has several programs available to assist customers with paying
21 their bills. Avista' s Comfort Level Billing program offers the option for customers to pay the
22 same bill amount each month of the year by averaging their annual usage. Under this program,
23 customers can avoid unpredictable winter heating bills. The CARES (Customer Assistance
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1 Referral and Evaluation Services) program provides assistance to special-needs customers
2 through access to specifically trained CARES representatives who provide referrals to area
3 agencies and churches for help with housing, utilities, medical assistance, etc. LIHEAP (Low
4 Income Heating Energy Assistance Program) is a Federal program aimed to help low income
5 customers pay their electric and gas bills. These funds are distributed through local agencies.
6 Project Share is a voluntary contribution option allowing customers to contribute donations that
7 are distributed through local community action agencies to customers in need. Idaho customers
8 who have children, elderly or infirm persons in the household may qualify for the Winter
9 Moratorium plan. From December 1 through February 28, customers are not required to pay
10 their bills in full and can defer payment or make partial payments. In addition, the Winter
11 Payment Plan provides for lower winter bill payments by allowing customers to make monthly
12 payments equal to one-half of the levelized bill amounts, with balance in full or a new payment
13 arrangement due by April 1st The Company also works out payment arrangements with
14 customers having difficulty paying their bills.
15 In addition, the Company has convenience options that help those who need flexibility,
16 but are generally able to pay. APS, or automatic payment service (money is deducted from a
17 customer's checking account automatically each month), is one example. Other services include
18 debit and credit card service, check-by-phone or over the web, preferred due date (the customer
19 picks a more convenient date to pay than the one the Company states on the bill), and e-billing.
20 Q. Does that conclude your prefiled direct testimony?
21 A. Yes it does.
McKenzie, Di
Avista
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David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
Avista Corporation
1411 E. Mission Avenue
P. 0. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
RECEIVED
2017 JUL 31 AM tO: 5
IDANC FU3Lk UTiL1]ES COMMJS.SJ
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST ) CASE NO. AVU-E-12-O,
ADJUSTMENT (PCA) ANNUAL RATE )
ADJUSTMENT FILING OF AVISTA ) EXHIBIT NO. (RLM-1)
CORPORATION ) RONALD L. MCKENZIE
FOR AVISTA CORPORATION
AVISTA UTILITIES
IDAHO ELECTRIC
IMPACT OF PROJECTED SCHEDULE 66 PCA DECREASE
PROPOSED RATE TO BE EFFECTIVE OCTOBER 1. 2012
(000s of Dollars)
(000s of kWh) Total Billed Percent
Revenue Proposed Decrease
Line Type of Schedule Pro Forma at Present Sch. 66 on Billed
No. Service Number Kilowatt-hours Rates Decrease Revenue
(a) (b) (c)(1) (d)(1) (e) (f)
I Residential 1 1,152,311 $100,142 -$1,867 -1.86%
2 General Service 11,12 344,750 34,561 -559 -1.62%
3 Large General Service 21,22 695,050 53,772 -1,126 -2.09%
4 Extra Large General Service 25 331,442 17,781 -537 -3.02%
5 Clearwater 25P 843,005 42,020 -1,366 -3.25%
6 Pumping Service 31,32 61,356 5,366 -99 -1.85%
7 Street & Area Lights 41-49 13,918 3,087 -23 -0.73%
8 Total 3,441,832 $256,729 -$5,577 -2.17%
9 Proposed rebate rate -$0.00090 -$3,099
10 Existing surcharge rate 0.00072 $2,478
11 Decrease in surcharge rate -$0.00162 -$5,577
Proposed rebate rate
12 Deferrals including interest 7/1/11-6/30/12 -$3,192
13 Interest 7/1/12-9/30/12 -8
14 Projected under-recovered balance 128
15 Forecasted interest 10/1/12-9/30/13 -15
16 Total to rebate including interest -$3,087
17 Conversion factor 0.996296
18 Revenue requirement -$3,099
19 kWh's from above 3,441,832
20 Proposed rebate rate 10/1/12 -$0.00090
(1) Source: Revenue forecast for the twelve month period October 1, 2012 - September 30, 2013.
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-1)
Case No. AVU-E-12-t
Avista
Page 1 of
Fourteenth Revision Sheet 66
Canceling
LP.U.C. No.28 Thirteenth Revision Sheet 66 66
AVISTA CORPORATION
d/b/a Avista Utilities
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 decreased by 0.0900 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 decreased by 0.090 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.
Exhibit No. (RLM-1)
Case No. AVU-E-12-Vj
Avista
Page 2 of 2
Kelly 0. Norwood .- Vice President, State & Federal Regulation
July 30, 2012
Issued by Avista Utilities
By
October 1, 2012