20150930final_order_no_33389.pdf

Office of the Secretary
Service Date
September 30,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION FOR )CASE NO.AVU-E-15-07
AUTHORITY TO AMEND ITS ANNUAL )
POWER COST ADJUSTMENT (PCA)RATES )ORDER NO.33389
_________________________________________________________________________________
)
On July 31,2015,Avista Corporation filed its annual Power Cost Adjustment (PCA)
Application.This year,Avista asked the Commission to approve a PCA rebate of 0.0320 per
kilowatt-hour (kWh)to be effective October 1,2015.Under Avista’s proposal,the PCA rate for
all customers,including residential customers,would decrease from a surcharge rate of 0.2520
per kWh to a rebate rate of 0.0320 per kWh (a decrease of 0.2840 per kwh).
Avista relates that,because the PCA rate adjustments are spread on a uniform cents
per-kWh basis,the resulting percentage decreases vary by rate schedule,with an overall decrease
of 35%.Avista stated that if the Commission approves the Application,the average residential
customer using 929 kWh per month will see a $2.64 per month decrease,from $85.24 to $82.60
(or 3.1%).The Company requested the Commission approve the new PCA rates with an
October 1,2015 effective date.
On August 26,2015,the Commission issued a Notice of Application and Notice of
Modified Procedure that set a September 15,2015 comment deadline.See Order No.33368.
Clearwater Paper Company and Idaho Forest Group (IFG)intervened in the case.Staff filed
written comments supporting the Company’s Application.No other comments were received,
and the Company did not reply.
The Company’s PCA mechanism tracks changes in the Company’s revenues and
costs due to changes in hydropower generation,power market purchases and sales,fuel costs,
and other miscellaneous revenues and costs.when actual net power costs are greater than those
recovered through base rates,customers are surcharged the difference.However,if net power
costs are less,as is the case in this year’s filing,then customers receive a rebate.
The Company proposed an overall rate decrease to customers of 3.5%as reflected by
the schedule below:
ORDERNO.33389 1
Type of Service Schedule Billed Revenue %Increase
Residential 1 -3.20%
General Service 11,12 -2.73%
Large General Service 21,22 -3.42%
Extra Large General Service 25 -5.16%
Clearwater 25P -5.17%
Pumping Service 31,32 -2.87%
Street and Area Lights 41-49 -1.09%
Total -3.48%
According to the Company,the overall decrease is approximately 0.2840 per kilowatt-hour.Of
this decrease,88%of the reduction is due to removal of last year’s surcharge,while 22%is
attributed to the rebate in this year’s PCA.
THE COMMENTS
Staff thoroughly examined the Company’s PCA Application by reviewing the
following:(1)actual and authorized expense;(2)net deferral activity;(3)deferral calculation
methodology;(4)actual to authorized net power supply expense (NPSE);and (5)other
adjustments.Staff supported the Company’s Application.Staff’s comments are summarized
below.
A.Actual aiidAuthorized Expense Audit
Commission Staff conducted an on-site audit during August 2015.While there,Staff
examined the deferred balance amounts included in the current filing.The on-site review
covered expenses incurred for the period of July 2014 through June 2015.The Staff examined a
representative cross section of transactions included in the Purchased Power account (FERC
555),Thermal Fuel account (FERC 501),Combustion Turbine Fuel account (FERC 547),and
the Sales for Resale account (FERC 447).
After a thorough review,Staff concluded that the power cost transactions that were
audited were reasonable at the time they were made.Staff also reviewed the other PCA
calculations and amounts,including the Natural Gas Transport Costs.Staff verified that Avista’s
booked amounts and other calculations were correctly reflected.
B.Net DeferralActivity
Net deferral activity represents the Idaho share of the difference in power costs and
associated revenue adjustments deferred under the PCA mechanism for the 12-month-period
ending June 30,2015.A component of the net deferral is the net change in Power Supply Costs
ORDER NO.33389 2
(FERC Accounts 555,501.547.and 447).Along with the costs of serving load using Company-
owned resources.these PCA accounts also include additional power purchase costs when market
prices are lower than generation costs.After reviewing the amounts calculated by Avista,Staff
concluded that the proposed deferral amount (-$821,579 without interest;-$819,879 with
interest)was reasonable under the circumstances and meets the terms of the Comrnissions prior
Orders.
C.Methodology
Staff reviewed Avista’s overall deferral calculation methodology to ensure that it
conformed to established methods and relevant past Commission Orders.After reviewing
Avista’s methodology,Staff found that Avista’s PCA methodology complies with all past
Commission Orders,and that the result provides an adjustment to base rates similar to the
amount recovered by Avista,and no more or less than the actual power supply costs paid,minus
sharing.
D.Net Power Supply Expense
Staff also performed an analysis of Avista’s actual net power supply expense NPSE)
as it compares with NPSE embedded in base rates.There,Staff found that Avista was able to
take advantage of higher power prices by selling over 120%more power on the open market at
prices 14%higher than those that were assumed in base rates.Further,and at the same time,
Avista was able to minimize the impact of higher power prices by purchasing additional power
needed to meet load at a 5%higher rate.With regard to fuel costs,Avista benefited from a 10%
lower thermal fuel cost when it increased the amount of actual generation by 6%over those
assumed in base rates.Avista also reacted favorably to higher natural gas prices by slightly
reducing the amount of natural gas-fired generation.
After study,Staff concluded that Avista’s actual net power supply expense costs were
reasonably incurred.
E.Other Adjustments
Staff has highlighted two items that are not normally included in a PCA deferral and
rate calculation case.First,Avista claimed an adjustment to correct an error related to the
Production and Transmission Ratio used for jurisdictional allocation purposes.According to the
Company,it inadvertently used a ratio of 35.29%instead of 34.76%which was approved in
Commission Case No.AVU-E-12-08.This error resulted in a correction of $5,800 made during
ORDER NO.33389 3
the month of January 2015.Second,Avista logged another adjustment relating to a
Commission-approved settlement with Bonneville Power Administration for the latter’s use of
the former’s transmission system.See Case No.AVU-E-12-08.As approved in Commission
Order No.32769,Avista is allowed to true-up any residual balances between those allowed in
base rates and actual rebate amounts.Accordingly,the Company transferred a balance of this
amount into the PCA deferral reducing it by $382,725.
After reviewing those adjustments favorably,Staffs calculation of Avista’s PCA rate
matches the rate proposed by the Company.Likewise,Staff believes that Avista’s calculation is
accurate and that it complies with all previous Commission Orders.As a result,Staff
recommended the Commission accept the deferral balance of ($819,879,with interest)and
approve Schedule 66 rates as filed in Exhibit A of Avista’s Application with an October 1,2015
effective date.This will result in a PCA rebate of 0.0320 per kWh.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Avista and the issues presented in this case
pursuant to Idaho Code,Title 61,and specifically Idaho Code §61-307,61-503 and 61-622.
After reviewing the Application and the comments filed in this case,we find that the Company’s
Application is reasonable and adheres to our prior Orders regarding the method to be used for the
recovery or reimbursement of deferred net power supply costs incurred by the Company.Thus,
the Commission accepts the deferral balance of ($819,879)and finds it fair,just and reasonable
to approve a PCA rebate of 0.0320 per kilowatt-hour with an October 1,2015 effective date.
ORDER
IT IS HEREBY ORDERED that the Company’s Application is approved.The
Company is authorized to issue a PCA rebate of 0.0320 per kWh.The Company’s proposed
schedules are approved as filed,with new rates to take effect on October 1,2015.
THIS IS A FINAL 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 §6 1-626.
ORDER NO.33389 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 3O
day of September 2015.
ATTEST:
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ARSHA H.SMITH,COMMISSIONER
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KRI NE RAPER,COM&SIONER
Je11
mmission Secretary
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ORDER NO.33389 5