20140917Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 8370
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION FOR APPROVAL OF
AN ELECTRIC DISTRIBUTION SERVICE
AGREEMENT WITH EAST GREENACRES
IRRIGATION DISTRICT.
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. AVU.E.I4.O8
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Daphne Huang, Deputy Attorney General, and in response to the Notice of
Modified Procedure issued in Order No. 33106, submits the following comments.
BACKGROUND
On August 14,2014, Avista Corporation ("Avista" or "Company") filed an Application
with the Commission seeking approval of its Electric Distribution Service Agreement
("Agreement") with East Greenacres Irrigation District ("East 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 at2. To operate the pumping facilities, Greenacres receives electric power from the
Bureau of Reclamation which is delivered through Avista's transmission and distribution
facilities. Id. at 2-3. Greenacres and Avista have entered into a second Agreement for transfer of
Bureau of Reclamation energy over Avista's distribution facilities. Id. at 3. The Agreement
STAFF COMMENTS SEPTEMBER 17,2014
modifies an initial agreement approved by the Commission in April 2009, and that is set to
expire October I,2014. OrderNo. 30784.
The parties executed the new Agreement on August 6,2014, and have stipulated to an
effective date of October I ,2074, or such other date specified by the Commission. The
Agreement does not contain a fixed termination date. The Agreement provides for the continued
delivery of United States Bureau of Reclamation energy over Avista-owned and operated
distribution facilities from Avista's Post Falls Substation to certain delivery points on the East
Greenacres system.
Avista states in its Application that the distribution rate contained in the new Agreement
is "consistent with distribution charges embedded in current Idaho retail rates." Applicationat2.
The distribution rate set out in the Agreement provides that Greenacres pay Avista
54,231.74 per month or $50,780.88 per year to receive electric service over Avista's
distribution system. Revenue received from the Agreement will help to offset Avista's fixed
costs.
STAFF REVIEW
In the previous East Greenacres' Distribution Services Agreement, Avista computed rates
using a "Load Ratio Share" methodology based on the ratio of East Greenacres'annual energy
consumption to Idaho's normalized annual energy consumption. In Order No. 30784 approving
the previous Agreement, the Commission acknowledged Avista's energy-based methodology as
well as the Company's efforts to develop a more appropriate 'demand-based methodology' for
future electric distribution service agreements. The Commission encouraged the Company to
develop a demand-based methodology. Consistent with this recommendation, the Company in
this case has employed a demand-based methodology using East Greenacres' average share of l2
non-coincident monthly peaks (12NCP method). The 12NCP cost-allocation method is
consistent with general methods used by the Company for allocating distribution costs among
other customer classes.
East Greenacres'last Agreement excluded certain cost categories from its methodology
including: customer service, information, and sales costs. Staff agrees with continuing
exclusions because these costs are not relevant to the distribution facilities being used to deliver
energy to East Greenacres. In this case, the Company also proposes excluding costs associated
STAFF COMMENTS SEPTEMBER 17,2OI4
with secondary distribution, because Avista provides no secondary distribution lines or
transformers to East Greenacres. It is Staffs opinion that this exclusion is also appropriate.
Staff verified the values used in the rate calculation using Avista's 2012 Cost of Service
Study (AVU-E-12-08). East Greenacres' 12NCP demand share is 0.00137799, and was
computed using the ratio of East Greenacres'average l2-month peak load (850 kW) to the Idaho
retail average l2-month peak load (615,990 kW). The basis used to compute East Greenacres'
share of distribution costs is $36,851,385, which was computed by subtracting customer service,
information, and sales costs of $4,578,320, and secondary distribution facility costs of
$16,722,216 from total Idaho Distribution costs of $58,121,920. Multiplying the 12NCP
demand share (0.0013779) by the distribution cost basis ($36,851,385), yields an annual
distribution service charge equal to $50,781, or $4,232 monthly. Staff believes the methodology
used to compute East Greenacres'distribution service charge to be just and reasonable.
Otherwise, the Terms and Conditions of this Agreement are identical to those of the previous
agreement. Staff therefore recorlmends that the proposed Agreement be approved.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Electric Distribution Service
Agreement without changes or condition, with an effective date of October 1,2014.
Respecttully submitted this t/ry day of September 2014.
Technical Staff: Mike Morrison
i:umisc/commentVavuel4.8djhmm comments
STAFF COMMENTS SEPTEMBER I7 ,2014
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS I7', DAY oF SEPTEMBER 2014,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAF'F, IN
CASE NO. AVU-E-14.08, BY E-MAILING AND MAILING A COPY THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPoKANE W A 99220-3727
E-MAIL: [e-mail]
PATRICK EHRBAR
MGR. RATES & TARIFFS
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA99220-3727
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE