20140723notice_of_proposed_settlement_order_no_33080.pdf

Office of the Secretary
Service Date
July 23.2014
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION TO INITIATE )CASE NOS.AVU-E-14-05
DISCUSSIONS WITH INTERESTED )AVU-G-14-O1
PARTIES ON AN EXTENSION OF THE )
EXISTING RATE PLAN AND AVOID A )NOTICE OF
GENERAL RATE CASE )PROPOSED SETTLEMENT
)
)NOTICE OF
)MODIFIED PROCEDURE
)
______________________________
)ORDER NO.33080
On July 15,2014,Avista Corporation dba Avista Utilites (on behalf of all the
parties1)submitted a Joint Motion requesting that the Commission accept a proposed
“Stipulation and Settlement”(the “Settlement”)in lieu of Avista filing a general rate case to
increase its rates for electric and natural gas services in Idaho.The parties request that the
Commission process the proposed Settlement under Modified Procedure.Rule 201,et seq.
BACKGROUND
On May 30,2014,Avista filed an Application requesting that the Commission open a
case to allow interested parties to participate in settlement discussions regarding alternatives to
the utility filing a general rate case this year.In its Application,Avista expressed an interest in
extending its existing settlement rate plan adopted in Order No.32769 for another year as an
alternative to filing a general rate case.The Company indicated it had informal discussions with
several customers and interest groups (the parties).
On June 11,2014,the Commission issued Order No.33051 opening a case and
scheduled a settlement conference for June 25,2014.The Order granted intervention to the
listed parties and otherwise set a deadline for intervention of June 20,2014.All the parties
attended the settlement conference.
The parties joining in the Motion and Settlement include:Clearwater Paper;Idaho Forest Group;Community
Action Partnership of Idaho (CAPAI);Idaho Conservation League (ICL);Snake River Alliance (SRA);and
Commission Staff.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33080 1
A.The Current Rate Plan
In March 2013 the Commission issued Order No.32769 approving a settlement in
Avista’s last general rate case in AVU-E-12-08/AVU-G-12-07.The approved settlement in the
prior rate case contained the following elements:
A.Rate Freeze —No new electric or natural gas general rate increases to
become effective prior to January 1,2015.
B.BPA Credit —Avista’s electric customers currently receive a rate rebate
totaling $3.865 million related to a prior settlement with the Bonneville
Power Administration (BPA).The 1 5-month rate credit expires January 1,
2015.All other things being equal,expiration of the BPA credit would
result in an increase in retail electric rates of 1.3%effective January 1,
2015.
C.PGA Deferral Credit —Avista’s natural gas customers are currently
receiving a rebate of $1.55 million related to its purchased gas cost
adjustment (PGA)scheduled to expire on December 31,2014.All other
things being equal,expiration of the PGA deferral credit would result in a
1.7%increase in retail natural gas rates effective January 1,2015.
D.2013 Earnings Test —If Avista’s earnings exceed a 9.8%return on equity
(ROE)on a consolidated basis,then the Company refunds one half of the
excess to customers.For the 2013 earning test,Avista deferred a benefit
of $3.914 million for electric customers and $444,000 for natural gas
customers.
E.Natural Gas Energy Efficiency Balance —Avista currently has a balance of
$653,000 in its Schedule 191 Natural Gas Energy Efficiency account.
This balance represents a benefit to customers.
NOTICE OF PROPOSED SETTLEMENT
YOU ARE HEREBY NOTIFIED that the parties agreed to continue the “freeze”on
base rates for electric and natural gas service.On July 14,2014,the parties agreed to fully
resolve this case by entering into a Stipulation and Settlement.The proposed Settlement
contains the following terms:
A.Rate Freeze Continuation —Avista would not increase its electric or
natural gas base rates prior to January 1,2016.The Company could file a
rate case after May 31,2015,but the effective date for any change to base
rates would not be earlier than January 1,2016.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33080 2
B.The BPA Credit and PGA Deferral Credit would be replaced with other
deferral balances so that customers would not experience rate increases in
January 1,2015.
1.The $653,000 balance in the natural gas Energy Efficiency account
plus the $444,000 deferral from the 2013 natural gas earnings test
would be used to replace the projected 1.7%increase in retail
natural gas rates that would otherwise be effective January 1,2015.
2.A portion of the 2013 electric Earnings Test deferral ($3.201
million)would be used to replace the 1.3%increase in retail
electric rates to be effective January 1,2015.The remaining
$713,000 of the 2013 electric Earnings Test deferral would be
credited to customers over 12 months through the Company’s next
PCA case beginning October 1,2014.
3.Any difference between the estimated 2015 electric and natural gas
credits and the actual amount rebated to customers through
December 31,2015,would be added or subtracted to the PCA and
PGA deferral balances,respectively.
C.Project Compass —Project Compass is the replacement of Avista’s out
dated customer information system.Eighty percent of the revenue
requirement associated with Project Compass during 2015 would be
deferred for recovery in a future proceeding.The deferral is due in part to
the uncertainty of the timing of the in-service date for Project Compass.
D.Coyote Springs IllColstrip O&M —The three-year amortization of the
2013 Coyote Springs II and Coistrip O&M deferral balance of $1 .253
million ($418,000 per year)would begin January 1,2016,instead of
January 1,2015.
E.2014 Earnings Test —Any earnings test deferral for 2014 would be used to
support the one-year extension of the existing rate plan as set out below:
1.An ROE “deadband”would be established for 2015 between the
authorized ROE of 9.8%and 9.5%.
2.During calendar year 2015,if Avista earns less than 9.5%ROE (on
an actual consolidated basis for electric and natural gas),any
earnings test deferral balance from 2014 would be used to move
Avista’s earnings up to 9.5%ROE on an actual consolidated basis.
3.Any 2014 earnings test balance not needed to achieve a 9.5%ROE
for 2015 (i.e.,Avista earns more than 9.5%ROE during 2015),
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33080 3
would continue to be held as a deferral for future credit to
customers.
4.During calendar year 2015,if Avista earns more than a 9.8%ROE
(on an actual consolidated basis),Avista would defer for future
credit to customers half of any earnings above 9.8%.
F.Low-income Issues —On or before October 1,2014,the parties will meet
to review the following issues:
1.The cost-effectiveness and appropriate funding of natural gas and
electric demand-side management (DSM)programs for low-
income residential customers.Avista will provide the parties with
data and its analysis of when and under what conditions natural gas
DSM programs will become cost-effective and funding for these
programs may resume.
2.Electric and natural gas usage by low-income customers in the
Idaho service territory.Avista will provide usage data and consult
with parties to identify their specific data requirements.
3.No later than December 1,2014,the parties will determine if a
formal filing with the Commission is warranted based upon review
of the information set out above.
YOU ARE FURTHER NOTIFIED that the parties assert that the terms of the
settlement are in the public interest and they urge the Commission to adopt the Settlement.The
parties recognize that the Settlement is subject to the Commission’s approval.Rule 276.As set
out in the parties’Joint Motion,they request that the proposed settlement be processed under
Modified Procedure and that written comments in support or opposition to the proposed
settlement be filed no later than August 15,2014.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal hearing in this matter and will proceed under Modified
Procedure pursuant to Rules 201 through 204 of the Idaho Public Utilities Commission’s Rules
of Procedure,IDAPA 31.01.01.201 through .204.The Commission notes that Modified
Procedure and written comments have proven to be an effective means for obtaining public input
and participation.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFiED PROCEDURE
ORDER NO.33080 4
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission no later
than August 15,2014.The comment must contain a statement of reasons supporting the
comment.Persons desiring a hearing must specifically request a hearing in their written
comments.Written comments concerning this Application shall be mailed to the Commission
and Avista at the addresses reflected below:
Commission Secretary David J.Meyer
Idaho Public Utilities Commission Vice President &Chief Counsel
P0 Box 83720 Reg.&Gov’t Affairs
Boise,ID 83720-0074 Avista Corporation
P0 Box 3727
Street Address for Express Mail:1411 East Mission Avenue
Spokane,WA 99220-3 727
472 W.Washington Street E-mail:david.meyer(avistacorp.com
Boise,ID 83702-5918
Kelly Norwood,Vice President
State &Federal Regulation
Avista Utilities
P0 Box 3727
1411 East Mission Avenue
Spokane,WA 99220-3 727
E-mail:[e-mail]
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission’s home page located at www.puc.idaho.gov.Click the “Case Comment or Question
Form”under the “Consumers”tab,and complete the comment form using the case number as it
appears on the front of this document.These comments must also be sent to Avista at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set,the Commission will consider this matter on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion,may set the same for formal
hearing.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33080 5
YOU ARE FURTHER NOTIFIED that the Application,the Settlement Agreement
and Joint Motion are available for public inspection during regular business hours at the
Commission offices.The Application,the Settlement Agreement and Joint Motion are also
available on the Commission’s web site at \vww.nucidahoo\.Click on the “File Room”tab at
the top of the page,scroll down to “Open Electric Cases,”and then click on the case number as
shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commissions jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §61-503 and 61-622.The Commission may enter any final Order consistent with
its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that the Commission is not bound by the parties’
Settlement.It will independently review any proposed settlement to determine whether the
settlement is just,fair and reasonable,in the public interest,or otherwise in accordance with law
or regulatory policy.The proponents of a proposed settlement carry the burden of showing that
the settlement is reasonable,in the public interest,or otherwise in accordance with law or
regulatory policy.
ORDER
IT IS HEREBY ORDERED that this matter be processed under Modified Procedure.
Interested persons must file comments in opposition or in support of the proposed settlement no
later than August 15,2014.All requests for a public hearing must be received by August 15,
2014.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MOD IFIED PROCEDURE
ORDER NO.33080 6
DONE by Order of the Idaho Public Utilities Commission at Boise.Idaho this
day of July 2014.
PAUL KJELLAN PRESIDENT
MACK A.REDFO ,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Jean D.Jewell
Cmmission Secretary
bls/O:AVU-E-1 4-O5AVU-G-14-01 dh2
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
ORDER NO.33080 7