20130826press release.pdf

Idaho Public Utilities Commission
Case Nos. AVU-E-13-04, Order No. 32873
AVU-E-13-05, Order No. 32878
AVU-E-G-13-01, Order No. 32874
August 26, 2013
Contact: Gene Fadness [phone], 890-2712

Workshops to explain Avista rate adjustments

Staff from the Idaho Public Utilities Commission will be in Coeur d’Alene on Thursday, Sept. 5,
to explain three Avista Utilities’ annual rate adjustments – two increases and one decrease –
that are proposed to become effective Oct. 1. The commission is also taking written comment
on the proposed adjustments through Sept. 11.

None of the adjustments increase Avista earnings. Two are annual adjustments made every
Oct. 1 to account for those portions of electric and gas rates that change every year due to
factors like weather conditions and fuel prices. When those factors cause prices to go lower
than anticipated, customers get a one-year credit. When those factors cause an increase in
costs above what is already included in base rates, customers get a one-year surcharge. The
revenue collected from the electric and gas surcharges goes into a deferred account and can be
used only to paying electric and gas supply expense not already included in customer rates. The
account is audited by the commission.

Avista’s annual gas cost adjustment results in a proposed 6.8 percent increase for residential
and small commercial gas customers. Avista’s annual electric adjustment is a proposed 0.83
percent decrease to residential and small-commercial customers.

Avista also proposes a third adjustment, an increase to its Energy Efficiency Rider by 1.2
percent.

A fourth adjustment, a reduction in the credit Avista customers get from the Bonneville Power
Administration, would result in an increase of 1.1 percent. The reduction in the BPA credit is a
federal “pass through” not subject to the Idaho Commission’s approval or disapproval.

Overall, the three electric adjustments would increase electric rates by about 1.5 percent.
However, customers should also be aware that the Oct. 1 adjustments also include a 3.1 base
rate increase as part of the settlement of a base rate case that utility filed with the commission
in August 2012. The combined increase, including the rate case settlement already approved,
would increase a residential bill from about $78.69 to $81.94 (4.1 percent) for a customer who
uses the system average of 930 kilowatt-hours per month.

On the gas side, a residential customer who uses the average of 60 therms per month, would
see an increase in the monthly bill from $55.37 to $59.48, or 7.4 percent. For all customers
classes combined, the average increase is 6.8 percent.

Here are more details about each of the adjustments:

ELECTRIC ADJUSTMENTS

Energy Efficiency Rider (1.2 percent increase or an average 92-cent increase) – The rider, now
set at 0.146 cents per kWh, funds about 30 programs that increase energy efficiency or shift
electric demand from peak-use times when electricity is more expensive. The fund currently
has a $3 million deficit. Avista proposes to increase the rider to 0.245 cents per kWh, which
would pay down the deficit over a two-year period and provide about $6.4 million in annual
revenue to fund ongoing energy efficiency programs.

All of the programs included in the rider must pass cost efficiency tests that demonstrate that
all customers benefit from the programs, not just those who directly participate in them. In
other words, without the programs in place rates for all electric customers would be higher.

Most of the underfunded amount in the rider account is the result of Avista’s efforts to incent
customers to switch to higher efficiency fluorescent lighting fixtures. During 2012, the utility
issued rebates to 4,740 customers who switched from the T12 fixtures to T8 fixtures. Other
programs include rebates for energy efficiency appliances, HVAC improvements and electric
motor measures. Another program offers rebates to residential customers who convert from
electric to natural gas for space and water heating.

During 2012, the programs resulted in Idaho electric savings of 24,183 megawatt-hours in
addition to another 15,942 MWh in savings through Avista’s participation in the regional
Northwest Energy Efficiency Alliance, which is also funded by the rider.

Power Cost Adjustment (0.83 percent decrease, or an average 58-cent decrease) – Since 1989,
the PCA adjusts rates up or down to reflect changes in costs the Avista incurs to provide power
supply to its customers. Costs of power supply vary from year to year depending to changes in
streamflows, thermal fuel costs, market prices of power and changes in power contract
revenues and expenses.

During the 2012-13 PCA year, power costs decreased by about $3.8 million, which would
increase the existing customer credit of 0.09 cents per kWh to 0.152 cents per kWh.

BPA Residential Exchange Program (1.1 percent increase due to reduction in size of credit) –
The 1980 Northwest Power Act requires that residential and small-farm customers in the
Northwest share in the benefits of the federal hydroelectric projects located in the region. That
benefit is shared with customers through a bill credit. However, BPA is reducing the level of
benefits to Avista’s Idaho customers by about $1.1 million. Customers still get a credit, but the
size of the credit is reduced.

NATURAL GAS ADJUSTMENT
Purchased Gas Cost Adjustment (6.8 percent increase, or an average $3.80 per month
increase ) – Like the Power Cost Adjustment, the PGA is adjusted up or down at least annually
to reflect that portion of gas rates that change from year to year, due to changing market prices
and fuel and transportation costs.
In recent years, lower demand, higher production rates and record high storage levels, drove
prices to the lowest they’ve been in a decade. However, for most of 2013, prices began an
upward trend, caused primarily by the late, colder-than-normal winter. Consequently, Avista
proposes to increase the portion of rates that accounts for variable changes from 33.3 cents per
therm to 37.4 cents. The variable portion of rates accounts for more than half of the total
proposed rate of 63.37 cents per therm.
To protect customers from wholesale market swings in gas prices, Avista engages in “hedging,”
or buying gas while prices are lower and storing it for use during higher-priced periods. Avista
said it will hedge about 38 percent of its estimated annual load requirements for the next PGA
year.

PUBLIC INVOLVEMENT
The workshop on September 5 begins at 7 p.m. at the Molstead Library on the campus of North
Idaho College, 1000 W. Garden Ave. in Coeur d’Alene. The workshop will deal primarily with the
proposed increase in the Energy Efficiency Rider and the proposed natural gas increase. The
Power Cost Adjustment is a decrease and the commission has no authority to modify the BPA
credit or the rate adjustment that is the result of a settlement in the 2012 rate case. Staff
members will have a brief presentation and that take questions. Representatives from Avista
may also be on hand to answer questions.
The commission is also taking written comment on the energy efficiency rider, Power Cost
Adjustment and Purchased Gas Cost Adjustment through Sept. 11. Comments are accepted via
e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Case
Comment or Question Form,” under the “Consumers” heading. Fill in the case number (AVU-E-
13-05 for the energy efficiency rider; AVU-E-13-04 for the Power Cost Adjustment and AVU-G-
13-01 for the Purchased Gas Cost Adjustment) and enter your comments. Comments can also
be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to [phone].

The commission’s orders, along with other documents related to these cases, are available on
the commission’s Web site. Click on “Open Cases” under either the “Electric” or “Gas” headings
and scroll down to the applicable case number.

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