20150428Comments.pdf

DAPHNE HUANG
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720.0074
(208) 334-03r8
IDAHO BAR NO. 8370
Street Address for Express Mail:
472 W, WASHINGTON
BOISE, IDAHO 83702.5983
Attorney for the Commission Staff
IN THE MATTER OF AVISTA
CORPORATION'S APPLICATION TO
UPDATE ITS ELECTRIC LINE EXTENSION
SCHEDULE 51
r"'11:'lrI .l i t ,
CASE NO. AVU.E.15.O3
COMMENTS OF THE
COMMISSION STAFF
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
The Staff of the Idaho Public Utilities Commission, by and through its Attomey
of Record, Daphne Huang, Deputy Attorney General, submits the following comments in
response to Order No. 33270, issued April 7, 2015.
BACKGROUND
On March 31,2015 Avista Corporation ("Company") filed an Application with
the Idaho Public Utilities Commission ("Commission") proposing various revisions to
Schedule 5l regarding the Company's line extension, conversion, and relocation charges.
In Order No. 28562, issued November 27,2000, the Commission directed Avista to
updateitsSchedule5l chargesonorbeforeApril I eachyear. Thepurposeoftheannual
filing is to update the Company's line extension charges to reflect actual costs incurred in
the previous calendar year. The Company requests an effective date of May 18, 2015.
STAFF COMMENTS APRIL 28,2015
COMPANY APPLICATION
In its Application, the Company stated that it implemented a new work and asset
management system, called Maximo, on February 7,2015. The Company uses Maximo
to create work orders for service and emergency calls, construction jobs for customers,
and Company operations. According to the Company, Maximo corqpares job estimates
to actual job costs, and provides data that enables the Company to perform more precise
Schedule 5l cost estimates.
The Company also proposes updating its residential development costs to reflect
recent changes to construction material costs as detailed below.
Residential Developments
Total Cost per Lot
Less: Service Cost
Developer Responsibility
Developer Refundable payment
Builder Payment
Allowance
Present
$1,596
$ 48s
$1J11
$1,1l l
$46
$1,550
Proposed
$ 1,705
$ 417
ue88
$ 1,288
$ l5s
$ 1,550
Staff notes that in Order No. 33031, the Commission directed the Company to
seek allowance updates after each general rate case. The Company is not proposing to
change the allowance.
The Company proposes to revise the language on Sheet 5l C related to calculation
of exceptional costs for overhead extensions longer than 1,500 feet. According to the
Company, the current method has been confusing for customers and Company
employees, and it shifts some costs to all customers rather than to the customer
requesting service. According to the Company, removing this section would fully assign
exceptional project costs to the customer requesting service.
STAFF COMMENTS APRIL 28,2015
The Company is also proposing that it remove language relating to three phase
primary line extensions entirely from Schedule 51. According to the Company, three
phase line extension costs are not as homogeneous as the costs of residential single phase
line extensions, and are better charged-out on a case-by-case basis.
The Company proposes adding language to its Schedule 5l General Rules (Sheet
51, Section 2.e) to state that when the Company's electric facilities have been removed or
disconnected from a property for longer than 12 months, a customer requesting that
service be re-established will be treated as a new customer and granted an allowance.
The Company also proposes increasing its exception for refunding money to
customers with a share of a previous extension (Sheet 5 I E Section 6). Currently, if the
refund due to an existing customer is less than $50, the new customer is not required to
pay that share, and the existing customer will not receive a refund. Avista proposes
increasing the exception from $50 to $100.
STAFF REVIEW
Staff conducted a thorough review of the Company's proposed Schedule 5l
changes. Staff believes that the language on Sheet 5 1C, related to calculation of
exceptional costs for overhead extensions longer than 1,500 feet, is unnecessarily
complicated, and concurs with the Company's proposal to remove Section 3.b.4j from
Schedule 51. Under this change, charges for all overhead extensions would be calculated
using the same methodology.
Staff also examined the Company's proposed addition of Section 2.e on Sheet 51.
According to the Company, this change is proposed as a result of a case in Avista's
Washington jurisdiction. In that case, the Company had once provided an electric
distribution line to a piece of property. The distribution line was never used, and the
Company removed the line of its own volition. Several years later, a customer purchased
the property, and argued that since the property had once received electric service, and
since the Company had removed the line, the Company should bear the full cost of
reinstalling a distribution line to the property. In that case, the Company was required to
reinstall the distribution facilities, and then estimate the costs of extending the line from
the "existing" distribution facilities. Under Avista's proposed revision, the customer
STAFF COMMENTS APRIL 28,2015
would have been treated as a new customer, and would have paid the entire job cost, less
the allowance. Staff notes that there are tangible costs associated with maintaining
distribution lines, even if those lines are unused and not generating revenue. Staff
believes the Company's policy of removing and reallocating unused equipment is a
prudent and efficient use of resources, and therefore believes that the Company's
proposed language is reasonable.
Schedule 51 Section 3.b.6 describes policies for refunding customers who are
entitled to a share of a previous extension: New customers pay a share to Avista, and
Avista refunds this amount to the existing customer. Currently, if the amount to be
refunded is less than $50, the new customer is not required to pay, and the existing
customer does not receive a refund. Citing the costs of accounting, collecting, and
disbursing the refund, the Company proposes raising this limit from $50 to $100. Staff
notes that the $50 limit has been in force since 1999, or earlier. Staff believes an increase
from $50 to $100 is reasonable.
Assessment of Maximo
Based on its analysis, Staff has concluded that the costing methodology used by
Maximo is consistent with Commission Order No. 28562, which found Avista's use of
average unit cost to be a reasonable method for determining facilities installation costs.
Maximo continues the use of cost-averaging, and tracks the individual materials and costs
used in each job, so that exceptional and extra-ordinary customer requested work is
excluded from its basic cost calculations.
Analysis of Line Extension Costs
Staff reviewed the Company's proposed adjustments to line extension charges,
including adjustments to basic costs, developer costs, and builder costs. Citing
improvements in its engineering design systems, the Company proposes decreasing its
design charge from $185 to $150.
According to the Company, Maximo provides estimates that are more precise and
reflective of recent costs than estimates obtained by the previous spreadsheet-based
system. The Company states that Maximo is the primary factor driving this year's cost
STAFF COMMENTS APRIL 28,2015
adjustments. The Company's proposed adjustments range from a decrease of 7 .7%o for
single phase overhead transformers to an increase of 29.2% for the fixed costs associated
with secondary circuits. Under the Company's proposal, basic cost for a residential
development would increase 6.8yo, from $l ,596to $1,705. Service Cost would decrease
14.|yo, from $485 to $417, and the developer's (refundable) responsibility would increase
from $1,111 to $1,288. The builder's payment would increase from $46 to $155.
Under the Company's proposed tariff changes, per-foot charges for single phase
overhead primary installations would decrease by 3.7%o, to $7.63, and per-foot charges
for underground primary installations would increase by 3.4o/o, to $9.91 per foot.
Staff has reviewed the Company's workpapers, and concludes that the Company's
proposed adjustments to its line extension charges are consistent with the methodologies
prescribed in Commission Order Nos. 28562 and 33031.
Analysis of Proposal to Remove Three Phase Line Extensions from Schedule 51
The Company does not track the number of three phase line extensions conducted
under Schedule 51, but believes that over the past 5 years, there have been between 75
and 100 Schedule 51 three phase extension jobs. According to the Company, three phase
extensions are more heterogeneous in their complexity than single phase extensions, and
thus less amenable to Schedule 51's cost estimation methodology. The Company
proposes that language relating to three phase extensions be removed entirely from
Schedule 51. Rather than prescribing costs in the Tarifl the Company would conduct an
independent cost estimate for each three phase job. Staff agrees with the Company's
assertion that the cost of a three phase extension is likely to be unique to a particular job,
and does not oppose the Company's proposal; however, Staff believes that Schedule 51
should continue to include guidance for potential three phase customers. Staff has
discussed this with the Company, and concurs with the Company's proposal to retain the
following language (Section 5.c) on Sheets 5lI and J:
STAFF COMMENTS APRIL 28,2015
Three-Phase Extensions: For Customers requiring three-phase service, as
determined by the Company, before the start of construction, the Customer must
submit a written application for service and pay an extension cost to the
Company which is computed as follows:
Total Estimated Extension Cost- Allowance+ Customer-Requested Costs- Cost Reductions- (one) Design Fee of $150 (if paid)+ Share of Previous Extension
extension cost
l) The TotalEstimated Extension Cost shall include all costs which are
necessary to provide service to the Customer, as determined by the
Company. The amount of the Allowance will be determined
individually for each Customer based on the Company's estimate of
the Customer's annual energy usage and an allowance per kWh based
on the applicable service schedule.
RECOMMENDATIONS
Staff believes the Company's proposals to be reasonable, and in conformance with
Commission Order Nos. 28562 and 33031. Staff recommends that the Company's 2015
Schedule 51 Tariff update costs be adopted, and that the Company retain Section 5.c on
pages 511 and J ofthe current Tariff.
c.
Respecttully submitted this ?gb day of Apr il,2ol5
Technical Staff: Michael W. Morrison
i :umisc/comments/avue I 5.3djhmm comments
6STAFF COMMENTS APzuL 28,2015
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28,, DAY oF APRIL 2015,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-E-I5-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWNG:
DAVID J MEYER
VP & CHIEF COLTNSEL
AVISTA CORPORATION
PO BOX3727
SPoKANE W A 99220-3727
E-MAIL: [e-mail]
PATRICK EHRBAR
JOE MILLER
AVISTA CORPORATION
PO BOX3727
SPoKANE WA99220-3727
E-MAIL : patrick. [e-mail]
j [e-mail]
SECRETARY
CERTIFICATE OF SERVICE