20130910Comments.pdf

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t2
IDAHO BAR NO. 3366
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
,nii 3:89
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION FOR AUTHORITY
TO INCREASE ITS ENERGY EFFICIENCY
RIDER ADJUSTMENT, SCHEDULE 91.
CASE NO. AVU.E-13-05
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of Record,
Donald L. Howell II, Deputy Attorney General, submits the following comments in the above
referenced case.
BACKGROUND
On August 1,2013, Avista Corporation dba Avista Utilities filed an Application requesting
authority to increase the rates contained in electric tariff Schedule 9l (Energy Efficiency Rider
(the "Rider")). Schedule 91 is the funding mechanism that matches future revenue with budgeted
electric energy efficiency expenditures. The Company is not requesting an increase in its natural
gas Schedule 1 9l tariff for its demand-side management (DSM) programs because it is currently
suspended. See Order No. 32650. The Company does not earn a return on its DSM programs.
Avista proposes to increase its Schedule 91 rider rates by l.ZYo of overall billed electric
rates resulting in an estimated annual revenue increase of approximately $2.6 million. Avista
STAFF COMMENTS SEPTEMBER IO,2013
contends the proposed increase in Schedule 9l is necessary to recover an approximate $3 million
deficit in the Rider account over a two-year period and fund ongoing energy efficiency programs
at about $6.4 million in annual revenues. The Company states the increase would result in a
monthly rate increase in the Rider of $0.92 for the average residential electric customer using 930
kWh per month, or 1.77o/o. The table below reflects the proposed increase to the Energy
Efficiency Rider for various customer classes:
SCHEDULE
EXISTING
RATE
PROPOSED
RATE
Residential Customers - Sch. I 0.146i, per kWh 0.245A per kWh
General Service - Sch. 1l & 12 0.162A per kWh 0.27ry per kWh
Larse General Service - Sch. 2l &22 0.125d, per kWh 0.209rt per kWh
Extra Larse Customers - Sch. 25 0.086d per kWh 0.142A per kWh
Clearwater Paper - Sch. 25P 0.08p per kWh 0.13 1l per kWh
Pumping Service - Sch. 3l-32 0.142A per kWh 0.240(, per kWh
Street/Area Lighting - Sch. 4l - 49 1.65%2.67Yo
Schedule 91 Rider funds a variety of electric DSM programs for residential, non-
residential and low-income customers. These programs include rebates for: energy efficiency
appliances, HVAC improvements, lighting measures, electric motor measures, the Northwest
Energy Efficiency Alliance (NEEA), and behavioral conservation programs. The Company has
about 30 programs for customers to utilize. Application at 4. In addition, the Company
encourages its all-electric residential customers to convert to natural gas space and water heating.
rd.
STAFF ANALYSIS
Staff supports the Company's proposal to increase its Schedule 9l tariff. The proposal
continues funding electric energy efficiency programs and offers a reasonable amofiization period
to recoup a $3 million deficit over two years.
Staff verified the Rider balance was underfunded by about $3.0 million as of May 31,
2013. Avista reports that the deficit is projected to be $3.6 million by the end of September 2013.
The deficit is the result of the Company's efforts to accelerate the acquisition of non-residential
lighting, primarily the conversion of T12 fluorescent lighting fixtures to higher efficiency T8
fixtures, for a limited time offer in 2012. The strategy proved to be far more appealing to
customers than the Company had originally anticipated. Avista states it budgeted approximately
STAFF COMMENTS SEPTEMBER IO,2O13
$1.2 million for the program, but ultimately exceeded the budget by paying $5.2 million in
rebates. Avista contends that a significant number of rebate requests were received in the last
month of the progrilm (December 2012). Id. at3. The Company continued to provide incentive
payments in early 2013 to pay for projects completed in late 2012. Further compounding
inadequate revenue collection was the Company's request and subsequent approval of a Rider
decreaseby 1.3% of overall electric rates effective October 1,2012.
Existing DSM Rider Rates
Staff calculated the projected DSM Rider revenues over two years (October 2013 -
September 2015 test year) using the existing Rider rate. Utilizing this methodology, the Company
would collect approximately $7.7 million ($3,856,558 from October 2013 - September 2014;
53,877 ,070 from Octob er 2014 - September 2015).
For the same two-year test period, the Company forecasts total DSM expenditures of about
$9.2 million ($4,723,137 from October 2013 - September 2014;94,537,437 from October 2014 -
September 2015). Calculating the expenditures with the existing Rider rates, and including the
$3.6 million projected deficit, Staff analysis concludes the Rider balance would be underfunded by
$5,173,407 as of September 2015.
Total Revenues (existing rates): $7,733,629
Total Forecasted Expenditures : (59,260,57 4)
Projected September 2013 Rider carryover balance: ($3,646,462)
Forecasted September 2015 Rider balance: ($5,173,407)
Proposed DSM Rider Rates
To fund DSM at the aforementioned expenditure levels and amortize a$3.6 million
projected deficit over two years, a total increase of $5.2 million ($2.6 million annually) over the
existinq Rider revenues is required. The increase yields total revenues of $ 12,907 ,036
($6,436,372 from October 2013 - September 2014;56,470,664 from October 2014 - September
20 I s).
Total Revenues (proposed rates): $12,907,036 ($5.2 million + $7,733,629)
Total Forecasted Expenditures: 99,260,57 4
Projected September 2013 Rider deficit balance: $3,646,462
Forecasted September 2015 Rider balance: $0
STAFF COMMENTS SEPTEMBER IO,2O13
By subtracting the total expenditures from the total revenues, the difference is the $3.6 million
projected deficit.
Staff concludes that the existing Rider revenues will not adequately fund forecasted
expenditures and reduce the deficit. While Staff considered amortizing the deficit over a longer
time period, Staff ultimately believes a two-year period to recover a forecasted $3.6 million deficit
is reasonable. While Schedule 91 authorizes funding for the Company to pursue all cost-effective
DSM, the Company is not limited by the amount of revenues actually collected. Should the
proposed Rider adjustment provide disproportionate funding in the near future, it is incumbent
upon the Company to apply for modifications with the Commission.
The scope of this filing precluded a review of the Company's prudently-incurred costs.
Consistent with previous Staff comments, Staff will conduct an extensive review of the merits and
allocation methodology of the Company's DSM expenses when Avista submits a DSM prudency
filing.
Public Comments
As of September g,2}l3, the Commission has received two public comments opposing
any Avista rate increases, regardless of the nature of the increase.l To date, the Commission has
not received a petition to intervene by any parties for this proceeding.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Company application to increase
Schedule 91 by I .2Yo of overall billed electric rates effective October 1,2013.
' On July 30 and 3l,2Ol3,Avista also filed three other proposals to change its electric and gas rates. First, the
Company proposed to increase its Power Cost Adjustment (PCA) rebate in tariffSchedule 66 in Case No. AVU-E-13-
04. Secondly, Avista proposed to adjust its Residential Exchange Program (REP) credit (tariff Schedule 59) to reflect
a decrease in BPA-derived benefits from the federal Columbia River power system to residential and small farm
customers. Avista Tariff Advice No. 13-05-E. Thirdly, Avista applied to increase its annual Purchased Gas Cost
Adjustment (PGA) by about $4.9 million (7.5%) in annual revenues. Case No. AVU-G-13-01. The requested
effective date for the three rate changes is October 1,2013 - the same requested effective date for the electric Energy
Effrciency Rider.
STAFF COMMENTS SEPTEMBER 1O,20I3
Respecttullysubmittedthis nfi dayofSeptember 2013.
Teehnical Staff: Nikki Karpavich
ilumicdcmtncnB/avucl3.sdh&nk commeilts
Deputy Attorney General
STAFF COMMENTS SEPTEMBER IO,2013
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS IOTH DAY oF SEPTEMBER 2013,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-13-05, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COLINSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-MAIL: [e-mail]
LINDA GERVAIS
MGR REGULATORY POLICY
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-MAIL: linda. [e-mail]
SECRETARY
CERTIFICATE OF SERVICE