20140822Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
DATE:AUGUST 21,2014
SUBJECT:AVISTA CORPORATION’S APPLICATION FOR APPROVAL OF AN
ELECTRIC DISTRIBUTION SERVICE AGREEMENT WITH EAST
GREENACRES IRRIGATION DISTRICT,CASE NO.AVU-E-14-08
On August 14,2014,Avista Corporation (“Avista”)filed an Application with the
Commission seeking approval of its second Electric Distribution Service Agreement with East
Greenacres Irrigation District (“Greenacres”).Greenacres operates and maintains two Bureau of
Reclamation-built pumping facilities on the Rathdrum Prairie,providing irrigation and domestic
water supply to approximately 5,300 acres of land.Application at 2.To operate the pumping
facilities,Greenacres receives electric power from the Bureau of Reclamation which is delivered
through Avista transmission and distribution facilities from Avista’s Post Falls Substation to
certain delivery points on the Greenacres system.Id.at 2-3.Avista’s Application concerns
Greenacres’agreement with Avista for transfer of Bureau of Reclamation energy over Avista’s
distribution facilities.Id.at 3.The present Agreement modifies the initial agreement which was
approved by the Commission on April 16,2009,and is set to expire October 1,2014.Order No.
30784 (Case No.AVU-E-09-02).
THE AGREEMENT
In the Application,Avista states that the service provided under the proposed
agreement,as under its initial agreement with Greenacres,is “unique,and therefore more
appropriately provided under a special contract rather than a filed tariff.”Id.at 2.According to
the Application,Avista has delivered approximately 3.8 million kilowatt-hours to Greenacres
pumping facilities each year.Id.at 3.The existing agreement set a distribution service rate of
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$3,622.77 per month or $43,473.24 per year.Id.However,that rate was derived “using a
jurisdictional energy methodology (load ratio share)”rather than a demand methodology.Id.at
4,n.1.
In its Order approving the initial agreement,the Commission stated:
We acknowledge Staffs assessment of Avista’s energy-based methodology as
well as [Avista’s]efforts to develop a more appropriate demand-based
methodology for use in future electric distribution service agreements.Thus
we strongly encourage the Company to offer its full cooperation toward the
development of this alternate methodology.
Order No.30784 at 3.Avista states that,in response to the Commission’s Order,the new
agreement between Greenacres and Avista uses a demand methodology to derive the monthly
rate.Application at 4.That new distribution service rate is $4,231.74 per month or $50,780.88
per year,based on Greenacres’“peak demand-ratio share of Distribution Facilities Costs derived
from Avista’s last cost of service study.”Id.at 3.
Avista maintains that the rates are “consistent with the distribution costs embedded in
Idaho retail rates.”Id.at 4.Avista further states that “the incremental costs associated with
providing service under the Agreement are less than the charge for service,”thus revenue from
the Agreement will help to offset Avista’s fixed costs.Id.The Agreement was executed August
6,2014,and becomes effective upon the Commission’s approval.The term of the Agreement
coincides with the term of Avista’s Transmission Agreement with Greenacres,but may continue
beyond the expiration of that Agreement if Greenacres “continues to purchase transmission
service and additional time is needed to develop a follow-on distribution service agreement.”IcL
at 3.
Avista states that the agreement “is non-discriminatory and is not unreasonably
preferential.”Id at 4.Avista asks that its filing be processed under Modified Procedure.Id.at
2.
STAFF RECOMMENDATION
Staff has reviewed Avista’s Application and recommends that it be processed through
Modified Procedure,i.e.,through a written comment period in lieu of a hearing.Staff
recommends a notice and comment period of 21 days.See IDAPA 31.01 .01.201-204.
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COMMISSION DECISION
Does the Commission wish to process Avista’s Application through Modified
Procedure with a 21-day comment period?
DaphnejHuang
Deputy Attorney General
M:AVU-E-I 4-08_djh
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