20150507final_order_no_33294.pdf

Office of the Secretary
Service Date
‘v1ay 7,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION’S APPLICATION TO )CASE NO.AVU-E-15-03
UPDATE ITS ELECTRIC LINE EXTENSION )
SCHEDULE 51 )ORDER NO.33294
________________________________________________________________________________________
)
On March 31,2015,Avista Corporation filed Tariff Advice No.ADV 15-0l-E.The
Company’s tariff advice proposed to revise Electric Line Extension Schedule 51 with updates to
line extension,conversion,and relocation charges based on costs incurred in 2014.Avista
initially requested an effective date of May 18,2015.The Company and Commission Staff later
agreed that Avista’s filing —which proposes to remove “three-phase”industrial and commercial
customers from Schedule 51,among other revisions —should be processed as an application to
afford interested persons an opportunity to comment on the proposed changes.
On April 7,2015,the Commission issued a Notice of Application and Notice of
Modified Procedure,setting a 21-day comment period.Commission Staff was the only party to
file written comments.Avista filed a reply indicating it agrees with Staff comments,and
attached Revised Tariff Sheets 511 and 51 J that incorporate the agreed changes.As set forth in
more detail below,the Commission approves Avista’s Application and its revisions to Schedule
51.
THE APPLICATION
The Company proposes several revisions to Schedule 51 based on costs incurred in
2014.See Advice Letter.The revisions include updated line extension costs based on updates to
the Company’s Construction &Material Standards,and actual average costs of all material and
labor used in line extensions during 2014.Id.at 1.Many of the cost differences from the
Company’s 2014 filing are due to implementation of Avista’s new work and asset management
system,“Maximo.”Id.
1.Maximo.Avista uses Maximo to create work orders for service and emergency
calls,construction jobs for customers,and Company operations.Id.at 1-2.Maximo compares
The Notice of Application inadvertently characterized the three-phase industrial and commercial customers (that
Avista proposes to remove)as “large.”Order No.33270 at 1-2.The three-phase customers referenced in tariff
Schedule 5 1 are in fact small industrial and commercial customers.
ORDER NO.33294 1
job estimates to actual job costs,and provides data that enables the Company to set Schedule 51
costs that more precisely reflect actual costs.Id.at 2.
2.Residential Line Extension Charges.According to the Company,its residential
development costs,updated for the most current Construction &Material Standards and average
2014 construction costs,are as follows:
Residential Developments
Present Proposed
Total Cost per Lot $1,596 $1,705
Less:Service Cost $485 $417
Developer Responsibility $1,111 $1,288
Developer Refundable Payment $1,111 $1,288
Builder Payment $46 $155
Allowance $1,550 $1,550
Advice Letter at 2.
3.Exceptional Costs for Overhead Extensions.On Third Revision Sheet SiC,the
Company proposes to remove language related to the calculation of the “exceptional”costs for
overhead extensions longer than 1,500 feet.Exceptional costs include such costs as boring,
removing pavement,surveying,and removal of trees and shrubs.With this change,any
exceptional costs estimated for a specific project would be fully assigned to that project.Id.at 2.
According to the Company,the current method has caused confusion for customers and Avista
employees,and that confusion will be remedied by the proposed change.
4.Requests to Re-establish Service after Disconnection of 12 Months or More.On
Third Revision Sheet 51,Section 2.e,the Company proposes to add language stating that,when
electric facilities have been removed or disconnected from a property for more than 12 months,a
request to re-establish service will be treated as a new customer request (which comes with a line
extension allowance).Tariff Sheet 51.
5.Lower-limit for Refund from New Customer to Existing Customer.On Eighteenth
Revision Sheet 51E,Section 6,the Company proposes to change the language to provide that a
new customer need not pay,and an existing customer will not receive from Avista,a share of a
previous line extension that is less than $100.Tariff Sheet 51E.
6.Three-Phase Electric Service.Finally,on First Revision Sheet 51M,the Company
proposes to remove costs related to three-phase electric service.Advice Letter at 2.The
ORDER NO.33294
Company believes that three-phase service for industrial and commercial customers “does not
lend itself to be charged out on an average basis”because such projects “are not as homogenous
as single phase,residential type jobs.”Id.According to the Company,estimating three-phase
service costs “on a site specific basis is a more reasonable and fair approach for those
customers.”Id.
STAFF COMMENTS AND COMPANY REPLY
Staff thoroughly reviewed the Company’s proposed Schedule 51 changes and
believes the Company’s proposed revisions are reasonable,as described more fully below.Staff
also suggested that Avista retain some of the language that the Company proposed to remove.In
its reply,Avista stated it agrees with Staffs suggestions to retain some of the language.
1.Maximo.Staff analyzed Avista’s new asset management system,Maximo,and
believes that its methodology for determining facilities installation costs is reasonable.As with
Avista’s prior system (which the Commission found reasonable in Order No.28562),Maximo
uses cost-averaging,so that “exceptional and extra-ordinary customer-requested work is
excluded”from basic cost calculations.Staff Comments at 4.
2.Residential Line Extension Charges.Staff reviewed Avista’s workpapers and
proposed adjustments to residential line extension charges.Staff believes that the proposed
adjustments are consistent with methodologies prescribed by the Commission in Order Nos.
28562 and 33031.Id.at5.
3.Exceptional Costs for Overhead Extensions.Staff agreed with the Company that
language in the current Sheet SiC (about calculation of exceptional costs for overhead
extensions longer than I ,500 feet)was unnecessarily complicated.Staff believes Avista’s
proposal to remove Section 3.b.4.j,such that all overhead extensions would be calculated under
the same methodology,is reasonable.Id.at 3.
4.Requests to Re-establish Service after Disconnection of 12 Months or More.Staff
noted that the Company’s proposal to add new Section 2.e on Sheet 51 resulted from a case in
Avista’s Washington jurisdiction.Id.at 3.In that case,a customer purchased property that had
received electric service years before,but from which Avista had removed the line.Id.The
Company was required to re-install a distribution line at the Company’s expense.Id.Under the
proposed change,the customer “would have been treated as a new customer,and would have
paid the entire job cost,less the allowance.”Id.at 3-4.
ORDER NO.33294 3
Staff noted “there are tangible costs associated with maintaining distribution lines,
even if those lines are unused and not generating revenue.”Id.at 4.Thus,Staff believes that
removal and re-allocation of unused equipment,as was done in the Washington jurisdiction case,
is “a prudent and efficient use of resources.”Id.Staff therefore believes the proposed language
is reasonable.Id.
5.Lower-Limit for Refund from New Customer.Under Schedule 51,new customers
must pay their proportionate share of a previously installed line extension to Avista,which then
refunds the proportionate share to the existing customers who fully paid for the previous line
extension.Id.at 4.In the current Schedule 51,existing customers are entitled to their share of a
previous extension,but only if the refund amount is more than $50.Id.The proposed change
increases that lower-limit to $100.Id.Staff noted that the existing lower-limit of $50 has been
in force for at least 15 years.Id.Accordingly,Staff believes the increase to $100 is reasonable.
Id.
6.Three-Phase Electric Service.Staff examined the Company’s proposal to remove
all language relating to three-phase extensions from Schedule 51.Staff agreed that the cost of a
three-phase extension “is likely to be unique to a particular job,”and is therefore “less amenable
to Schedule 51’s cost estimation methodology.”Id.at 5.Accordingly,Staff does not oppose
Avista’s proposal to “conduct an independent cost estimate for each three-phase job,”rather than
prescribing costs through tariff Schedule 51.Id.However,Staff was concerned that Schedule
51 should provide some guidance for potential three-phase customers,and thus urged the
Company to retain language from prior Sheets 511 and 5 1J.
7.Avista’s Reply and Conforming Tariff Sheets.In its reply,the Company agreed
with Staff’s comments,including Staff’s suggestion to retain Sheets 511 and 51J.Avista
attached Revised Sheets 511 and 51J to its reply.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Avista and the issues in this case under the
authority granted by Title 61 of the Idaho Code,specifically Idaho Code §61-336,61-502,and
6 1-622.The Commission has reviewed the record,including the Application,Staff comments,
the Company’s reply,and the proposed revised tariff sheets.
We note that Avista’s new “Maximo”asset management system continues to use a
cost-averaging method for determining facilities installation costs,which we have found
ORDER NO.33294 4
reasonable in the past.Order No.28562.According to Avista,Maximo provides more accurate
data than the Company’s prior system,thus providing a better basis for setting Schedule 51 costs.
Application at 2.We find that the Company’s proposed adjustments to line extension costs,as
calculated through implementation of Maximo,are reasonable and consistent with
methodologies we have previously prescribed.See Order Nos.28562,33031.
We further find that the Company’s proposed revision to its Schedule 51 provision
about exceptional costs for overhead extensions clarifies an existing ambiguity,and is
reasonable.As to the provision in Schedule 51 about requests to re-establish service after 12
months or more,we find that the Company’s proposed revision,to treat such request as a new
customer request,is also reasonable and appropriate.In addition,we find reasonable the
Company’s proposed update to the lower threshold required to refund an existing customer his or
her proportionate share of a previously installed line extension from a new customer.We find
that Avista’s proposed change,increasing the threshold to $100,is appropriate considering
administrative costs and the fact that the existing limit of $50 has been in place for at least 15
years.
Finally,we find that the Company’s proposed change to remove three-phase
customers from Schedule 51 is reasonable.Due to the complexity of three-phase line extensions,
they are less amenable to Schedule 51’s cost estimation methodology.We find it is appropriate,
as proposed by Avista,for the Company to conduct an independent cost estimate for each three-
phase job rather than prescribing costs for three-phase line extensions in the Schedule 51 tariff.
However,we find it reasonable to provide guidance to potential three-phase customers in the
Schedule 51 tariff sheets.Thus,we approve Staff’s proposal and Avista’s revision of Sheets 511
and 5 lJ as submitted by Avista in its Reply.
In summary,we approve as fair,just,and reasonable the revisions and updates to
Avista’s Schedule 51,as more fully described herein.We approve the changes with a May 18,
2015 effective date.
ORDER
IT IS HEREBY ORDERED that Avista Corporation’s Application to update its
Electric Line Extension Schedule 51 is approved.The Commission hereby adopts the revised
Schedule 51 Tariff Sheets filed by the Company on March 31 and April 29,2015.These
changes shall take effect May 18,2015.
ORDER NO.33294 5
THIS IS A FIIAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21)days of the service date of this Order.Within seven (7)
days after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of May 2015.
K’PAUL LLAN1R,PRESIDENT
MACK A.REDFORD,COMMISSIONER
KRdTINE RAPER,CO MISSIONER
ATTEST:
.tn D.Jewell(.)
Commission Secretary
O:AVU-E-1 5-03_djh2
ORDER NO.33294 6