20140918final_order_no_33130.pdf

Office of the Secretary
Service Date
September 18.2014
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-14-01
PARTIES ON AN EXTENSION OF THE )
EXISTING RATE PLAN AND AVOID A )ORDER NO.33130
GENERAL RATE CASE )
On May 30,2014,Avista Corporation dba Avista Utilities 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 for its electric and
natural gas services this year.In its Application,Avista expressed an interest in extending its
existing settlement rate plan adopted in the Company’s last rate case.See Order No.32769.The
Company also indicated it had informal discussions with several customers and interest groups
prior to filing its Application.
On June 11,2014,the Commission opened this case and granted intervention to the
parties’that had participated in the informal discussions with Avista.Order No.33051.The
Commission scheduled a settlement conference for June 25,2014,and all the parties attended the
conference.On July 15,2014,Avista filed a proposed “Stipulation and Settlement”(the
“Settlement”)on behalf of all the parties.On July 23,2014,the Commission issued a Notice of
Proposed Settlement and solicited written comments from the parties and the public regarding
the proposed settlement.The Commission received comments from four customers and several
parties.No commenter opposed the settlement.
Based upon our review of the parties’proposed settlement and the written comments,
we approve the settlement and extend the existing freeze in base rates until January 1,2016,as
set out in greater detail below.
THE PROPOSED SETTLEMENT
On July 14,2014,all the parties agreed to fully resolve this case by entering into the
proposed Settlement.In general,the parties agreed to continue the existing “rate freeze”on base
The parties include:Clearwater Paper;Idaho Forest Group;Community Action Partnership of Idaho (CAPAI);
Idaho Conservation League (ICL);Snake River Alliance (SRA);and Commission Staff.
ORDERNO.33130 1
rates2 for electric and natural gas service.The parties assert that the terms of the settlement are
in the public interest and they urged the Commission to adopt the settlement.The Settlement
contains the following provisions agreed to by the parties:
A.Rate Freeze Continuation —Avista shall not increase its electric or natural
gas base rates prior to January 1,2016.The Company may file a rate case
after May 31,2015,but the effective date for any change to base rates
shall not be earlier than January 1,2016.
B.The BPA Credit for electric service and PGA Deferral Credit for natural
gas service will be replaced with other deferral balances so that customers
will not experience rate increases on January 1,2015.The offsetting
changes are:
1.The $653,000 balance in the natural gas Energy Efficiency account
plus the $444,000 deferral from the 2013 natural gas earnings test
shall 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)shall 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 shall 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,shall 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 shall 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 II/Colstrip O&M —The three-year amortization of the
2013 Coyote Springs II and Colstrip O&M deferral balance of $1.253
million ($418,000 per year)will begin January 1,2016,instead of January
1,2015.
2 A customer’s monthly bill is composed of “base”rates and the annual power cost adjustment (PCA)for electricity
or the purchased gas cost adjustment (PGA)for natural gas.This case addresses base rates.PCA rates are
addressed in Case No.AVU-E-14-06 and PGA rates are addressed in Case No.AVU-G-14-04.
ORDERNO.33130 2
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.A return on equity (ROE)deadband”shall be established for 2015
between the Companys 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 shall 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.,if Avista earns more than 9.5%ROE during 2015),
shall 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 shall 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 (DS?v’l)programs for low-
income residential customers.Avista shall 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 shall 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.
The parties acknowledged that the Settlement is subject to the Commission’s
approval.They requested that the Commission process the proposed settlement under Modified
Procedure and that written comments to the proposed settlement be filed no later than August 15,
2014.The Commission agreed and issued Order No.33080 soliciting written comments on the
proposed settlement.
ORDERNO.33130 3
THE PARTIES COMMENTS
The Commission received comments from four public witnesses that generally
opposed any rate increase.The Commission also received comments from several parties
including:CAPAI,Snake River Alliance,Commission Staff,and Avista.The commenting
parties all supported adoption of the proposed settlement.They asserted that extending the rate
freeze for another year is a reasonable alternative to having the Company file a general rate case.
A.CAPAl Comments
In its comments,CAPAT was appreciative that Avista “went to considerable lengths
to involve and inform all potential stakeholders,including CAPAI,well in advance of the filing
of the Settlement Stipulation ...and [Avista]met individually with each interested stakeholder
before the first settlement conference....“Comments at 1.Avista’s willingness to meet with
the parties in advance allowed CAPAI to explore its low-income issues in greater detail.
Although CAPAI “was initially hesitant”to defer a general rate case in which it could raise all
issues,its settlement discussions with the Company ultimately led CAPAT to decide that the
“proposed settlement was in the best interest of the Company’s low income customers,as well as
the general body of ratepayers.”Id.at 3.
CAPAI noted that the settlement specifically addressed low-income issues.Id.at 4;
see Settlement §F.The settlement provisions addressing low-income issues will allow the
parties to continue to analyze and exchange low-income information.More specifically,Section
F of the proposed settlement provides that Avista and interested parties will meet on or before
October 14,2014,to review several low-income issues.
Given the circumstances of this case,CAPAT stated that the settlement reached by the
parties is “fair,just and reasonable and in the best interest of all ratepayers,including low income
customers.”Id.at 5.Consequently,CAPAI recommended the Commission approve the
Settlement Stipulation as submitted.
B.SRA Comments
SRA joined the other parties in recommending that the Commission approve the
settlement and its terms and conditions.Comments at 1.SRA recognized that the settlement and
its rate freeze do not include the PCA or PGA rates but concluded that the settlement “is in the
best interest of Avista customers in that it extends the current rate freeze for another year.”Id.
ORDERNO.33130 4
While SRA supported the settlement,“it will not come as a surprise to the
Commission that the Alliance has ongoing concerns with certain aspects”of how settlements in
lieu of rate cases are processed.Id.at 2.It remained concerned about the opportunities for
public participation in cases such as this.Although it recognized that the Commission formally
noticed the proposed settlement and invited public comment,it expressed concern that public
participation and settlement meetings may leave the “impression that private settlement
negotiations disadvantages utility customers....“Id.Nevertheless,the Alliance appreciated the
extraordinary amount of effort that Avista and the parties put into reaching settlement in this case
and it fully supported the settlement.
C.Commission Staff Comments
The Staff too supported the settlement and recommended that the Commission adopt
the settlement without change.As is its practice,Staff evaluated the proposed settlement by
comparing the rate impacts of the settlement versus the possible rate impacts that might
otherwise occur if a rate case were filed.Given the uncertainties of issues involved in a general
rate case,Staff recognized the probability that Avista might justify base rate increases for its
electric and natural gas services.Based upon its analysis,Staff estimated that the Company
might justify an electric revenue increase in the $3.5 million range and a natural gas revenue
increase in the $200,000 range.Id.at 8.Given the possibility of this outcome,Staff believes
that the proposed settlement agreed to by all the parties is fair and reasonable,and recommended
the Commission approve the settlement.Id.at 9.
Because Avista customers will not see any base rate increases prior to January 1,
2016,Staff believed that obtaining base rate stability was reasonable and appropriate in this case.
In exchange for such stability,Staff noted that the Company will benefit in three ways.First,the
rate treatment for the Company’s Project Compass (its new customer information system)will be
addressed in a subsequent case.Second,the Company is delaying amortization of its deferred
2013 Colstrip/Coyote Springs II maintenance expenses until January 1,2016.Third,the
Company will be allowed to use any 2014 customer sharing revenues to bolster its return on
equity (ROE)in 2015.Staff Comments at 5.Staff also noted that the settlement provides for
continued customer revenue sharing through 2015 if the Company’s earnings exceed 9.8%ROE.
Id.at6.
ORDERNO.33130 5
As part of the settlement discussions,Staff noted that the parties had considered and
discarded certain issues.In particular,there was discussion to include 100%of Palouse Wind
project costs in the PCA as opposed to the current 90%amount.Id.at 6.The parties did not
adopt this suggestion.The final settlement provisions agreed to by the parties all benefit
ratepavers.
D.A vista comments
Avista asserted that the Settlement Stipulation was derived through a give-and-take”
negotiation,and the end result is reasonable and in the public interest.Avista Comments at 1.
The Company specifically noted that the settlement continues revenue sharing so that customers
share equally with any earnings that exceed a 9.8%ROE during 2015 based upon actual,
consolidated results of operations.Id.at 2.
The Company recommended the Commission approve the settlement and asserted
that the settlement “strikes a reasonable balance between the interest of the Company and its
customers.”Id.at 8.The settlement extends the current base rate freeze for an additional year
while continuing the revenue sharing plan.
conimission Fiiidings:Rule 276 provides that the Commission is not bound by the
parties’settlement.IDAPA 31.01.01.276.The Commission will “independently review any
settlement proposed to it to determine whether the settlement is just,fair and reasonable,in the
public interest,or otherwise in accordance with law or regulatory policy.”Id.The Commission
may accept,reject,or modify settlement provisions.Moreover,the proponents of a proposed
settlement carry the burden of showing that the settlement is reasonable and in the public
interest.Rule 275.The Commission will also prescribe an appropriate procedure to examine a
proposed settlement.
In this case,the parties recommended that the proposed settlement be processed under
Modified Procedure,and that the Commission solicit written comments regarding the Settlement.
After having reviewed the proposed settlement and the written comments,we find that the
settlement is fair,just and reasonable,and in the public interest.Moreover,no one opposed the
Settlement.As noted above,the parties agreed in the stipulation that there will be no increase to
base rates for either electric or natural gas service until January 1,2016.In addition,we find
other provisions of the Settlement including the revenue sharing and the deferral balances
ORDERNO.33130 6
represent significant benefits to customers.Consequently,the Commission approves the
Settlement.
INTERVENOR FUNDING
On August 29,2014,the Community Action Partnership Association of Idaho
(CAPAI)filed a timely Petition for Intervenor Funding.CAPAI sought to recover $9,920 in
costs.
A.Legal Standards
The standards for awarding intervenor funding are set out in Idaho Code §61-617A
and the Commission’s corresponding Rule 165.The purpose of intervenor funding is to
encourage participation at all stages of all proceedings before the Commission so that all
affected customers receive full and fair representation in those proceedings.”Idaho Code §61-
617A(1).When reviewing petitions for intervenor funding,the Commission utilizes the
following criteria:
(a)the intervenor has materially contributed to the decision rendered by the
Commission;
(b)the costs of intervention are reasonable in amount and represent a
significant financial hardship for the intervenor;
(c)the recommendation made by the intervenor differed materially from the
testimony and exhibits of the Commission Staff;and
(d)the intervenor addressed issues of concern to the general body of users or
consumers.
Idaho Code §61-617A(2);Rule 165.01,IDAPA 3 1.01.01.165.01.
B.CAPAI’s Petition
CAPAI stated that it actively participated in this case and was primarily focused on
low-income customer issues.CAPAI participated in the settlement conference on June 25,2014.
Both its counsel (Mr.Purdy)and Executive Director (Christina Zamora)attended the settlement
conference.CAPAI also filed comments supporting the Settlement.
In preparation for the settlement conference,CAPAI “analyzed in considerable detail
and discussed [low-income issues]with Avista,the Commission Staff,and other parties.In
short,the majority of the same work that CAPAI must invest in preparing to go to hearing is
required to determine whether to join in an extended-term rate settlement.”Petition at 7.
ORDERNO.33130 7
CAPAI indicated that it “invested considerable time working”with the Commission Staff the
utility,and other parties in addressing Avista’s low-income programs.In addition to the work
performed by its attorney.CAPAI asserted that its Executive Director contributed “substantial
amounts of time and resources.”Id.at 8.
CAPAI maintained that Mr.Purdy’s legal rate is less than the average first year
associate practicing in Boise.Mr.Purdy has more than 20 years of public utility work
experience and his hourly rate is two to three times less than the rate of other utility lawyers.Id.
at 9.As set out in the Petition,Mr.Purdy’s hourly rate is $150.
As noted above,CAPAI’s primary focus in this case was a host of low-income issues.
This focus on low-income issues is reflected in section F of the proposed settlement in which the
Company will produce and the parties will evaluate low-income information.More specifically,
such information includes:(1)the cost-effectiveness and appropriate funding of natural gas and
electric DSM programs for low-income residential customers;(2)usage information for both
electric and natural gas used by low-income customers in Idaho;and (3)an agreement among the
parties to “determine if a formal filing ...is warranted based on review of the information set
out above.”Proposed Settlement at §F(3).CAPAI represented that these provisions differed
from the positions that Staff presented in the settlement conference.
In summary,CAPAI requests to recover the following costs:
Costs —Photocopying/postage $35.00
Fees:Legal —Mr.Purdy,65.9 hours $150/hr $9,885.00
Total $9,920.00
Commission Findings:The Commission finds that CAPAI’s Petition satisfies the
requirements for an award of intervenor funding.CAPAI actively participated in the settlement
conference,filed comments,and developed low-income,residential customer issues.We also
find that CAPAI has materially contributed to the Commission’s decision in this case.CAPAI’s
focus in this case was to obtain and analyze low-income data,and review DSM programs for
low-income customers.The parties also agreed to review the cost-effectiveness and appropriate
funding of natural gas and electric DSM programs for low-income residential customers.
CAPAI’s participation addressed these specific issues affecting low-income customers.
ORDERNO.33130 8
We further find that CAPAT’s request for costs and attorney fees is reasonable in
amount,and that CAPAI would suffer financial hardship if the request is not approved.
Accordingly,we approve CAPAI’s Petition for Intervenor Funding in the amount of $9,920.
ULTIMATE FINDINGS OF FACT
AND CONCLUSIONS OF LAW
Avista Corporation dba Avista Utilities is an electric and gas corporation providing
service to the public within the State of Idaho,and is operating as a public utility.Idaho Code §§
61-117,61-119,and 61-129.
The Commission has jurisdiction over this matter as authorized by Title 61 of the
Idaho Code and more particularly Idaho Code §61-503 and 61-622.
The Commission finds that the parties’Stipulation and Settlement is reasonable and
in the public interest,and we adopt it.Rule 276,IDAPA 3 1.01.01.276.
ORDER
IT IS HEREBY ORDERED that the parties’Joint Motion for Approval of Stipulation
and Settlement is granted.The Commission approves the Stipulation and Settlement supported
by all the parties.Avista’s base rates for electric and natural gas service shall remain at their
existing level until January 1,2016.
IT IS FURTHER ORDERED that the Company shall file tariffs,if necessary,to
implement the provisions of the approved Stipulation and Settlement
IT IS FURTHER ORDERED that CAPAT’s Petition for Intervenor Funding is
granted in the amount of $9,920.00.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)or in interlocutory Orders previously issued in this Case Nos.AVU-E-14-
05 and AVU-G-14-01 may petition for reconsideration within twenty-one (21)days of the
service date of this Order with regard to any matter decided in this Order or in interlocutory
Orders previously issued in these cases.Within seven (7)days after any person has petitioned
for reconsideration,any other person may cross-petition for reconsideration.See Idaho Code §
61-626.
ORDERNO.33130 9
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this /3
day of September 2014.
L 4
PAUL KJELLANDEI(/PRESIDENT
r
MAC A.REDFORD,C MMISSIONER
b
MARSHA H.SMITH,COMMISSIONER
ATTEST:
/
Jean D.Jewell
Commission Secretary
bls/O:AVU-E-14-05 AVU-G-14-O1 dh3
ORDERNO,33130 10