20160526Ehrbar Direct.pdf

DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
[e-mail]

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-16-03
OF AVISTA CORPORATION FOR THE )
AUTHORITY TO INCREASE ITS RATES ) DIRECT TESTIMONY
AND CHARGES FOR ELECTRIC SERVICE ) OF
TO ELECTRIC CUSTOMERS IN THE ) PATRICK D. EHRBAR
STATE OF IDAHO )
)

FOR AVISTA CORPORATION

(ELECTRIC)

Ehrbar, Di 1
Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, business address and 2
present position with Avista Corporation? 3
A. My name is Patrick D. Ehrbar and my business
address is 1411 East Mission Avenue, Spokane, Washington. I
am presently assigned to the State and Federal Regulation
Department as Senior Manager of Rates and Tariffs.
Q. Would you briefly describe your duties? 8
A. Yes. My primary areas of responsibility include
electric and natural gas rate design, customer usage and
revenue analysis, and tariff administration.
Q. Please briefly describe your educational 12
background and professional experience? 13
A. I am a 1995 graduate of Gonzaga University with a
Bachelors degree in Business Administration. In 1997 I
graduated from Gonzaga University with a Masters degree in
Business Administration. I started with Avista in April
1997 as a Resource Management Analyst in the Company’s DSM 18
Department. Later, I became a Program Manager, responsible
for energy efficiency program offerings for the Company’s 20
educational and governmental customers. In 2000, I was
selected to be one of the Company’s key Account Executives. 22
In this role I was responsible for, among other things,
being the primary point of contact for numerous commercial
Ehrbar, Di 2
Avista Corporation
and industrial customers, including delivery of the
Company’s site specific energy efficiency programs.
I joined the State and Federal Regulation Department as
a Senior Regulatory Analyst in 2007. Responsibilities in
this role included being the discovery coordinator for the
Company’s rate cases, the development of line extension 6
policy tariffs, as well as addressing miscellaneous
regulatory issues. In November 2009, I was promoted to my
current role.
Q. What is the scope of your testimony in this 10
proceeding? 11
A. My testimony in this proceeding will cover the
spread of the proposed annual electric revenue increase of
$15,433,000, or 6.3%, among the Company’s electric general 14
service schedules. My testimony will also describe the
changes to the rates within the Company’s electric service 16
schedules.
Q. Are you sponsoring any Exhibits that accompany 18
your testimony?
A. Yes. I am sponsoring Exhibit No. 13, Schedules 1
through 3 related to the proposed electric increase. These
exhibits were prepared by me or under my supervision. A
table of contents for my testimony is as follows:
Ehrbar, Di 3
Avista Corporation
Table of Contents Page
I. Introduction 1

II. Proposed Electric Revenue Increase 3
Summary of Rate Schedules and Tariffs 3
Proposed Rate Spread (Increase by Schedule) 5
Proposed Rate Design (Rates within Schedules) 7

9
II. PROPOSED ELECTRIC REVENUE INCREASE 10
Summary of Electric Rate Schedules and Tariffs 11
Q. Would you please explain what is contained in 12
Schedule 1 of Exhibit No. 13? 13
A. Yes. Schedule 1 is a copy of the Company’s 14
present and proposed electric tariffs, showing the changes
(strikeout and underline) proposed in this filing.
Q. Could you please describe what is contained in 17
Schedule 2 of Exhibit No. 13?
A. Yes. Schedule 2 contains the proposed (clean)
electric tariff sheets incorporating the proposed changes
included in this filing.
Q. What is contained in Schedule 3 of Exhibit No. 13?
A. Schedule 3 contains information regarding the
proposed spread of the electric revenue increase among the
service schedules and the proposed changes to the rates
within the schedules. Page 1 shows the proposed general
revenue and percentage increase by rate schedule compared to
the present revenue under base tariff and billing rates.
Ehrbar, Di 4
Avista Corporation
Page 2 shows the rates of return and the relative rates of
return for each of the schedules before and after
application of the proposed general increase. Page 3 shows
the present rates under each of the rate schedules, the
proposed changes to the rates within the schedules, and the
proposed rates after application of the changes. These
pages will be referred to later in my testimony.
Q. Would you please describe the Company's present 8
rate schedules and the types of electric service offered 9
under each? 10
A. Yes. The Company presently provides electric
service under Residential Service Schedule 1, General
Service Schedules 11 and 12, Large General Service Schedules
21 and 22, Extra Large General Service under Schedule 25 and
Schedule 25P (Clearwater Paper’s Lewiston Plant), and
Pumping Service Schedules 31 and 32. Additionally, the
Company provides Street Lighting Service under Schedules 41-
46, and Area Lighting Service under Schedules 47-49.
Schedules 12, 22, 32, and 48 cover residential and farm
service customers who qualify for the Residential Exchange
Program operated by the Bonneville Power Administration.
The rates for these schedules are identical to the rates for
Schedules 11, 21, 31, and 47, respectively, except for the
Residential Exchange rate credit.
Ehrbar, Di 5
Avista Corporation
Rate Schedule No. of Customers
Residential Schedule 1 104,610
General Service Schedules 11/12 21,042
Large General Service Schedules 21/22 1,156
Ex. Lrg. General Service Schedule 25 9
Clearwater Paper Schedule 25P 1
Pumping Service Schedules 31/32 1,436
Table No. 1 below shows the type and number of
customers served in Idaho (as of December 2015) under each
of the electric service schedules:
Table No. 1 – Electric Customers by Service Schedule 4

Proposed Electric Rate Spread 10
Q. For 2016, what is the proposed electric revenue 11
increase, and how is the Company proposing to spread the 12
increase by rate schedule? 13
A. The proposed electric increase is $15,433,000, or
6.3% over present base tariff rates in effect. The proposed
general increase over present billing rates, including all
other rate adjustments (such as DSM and Residential
Exchange), is also 6.3%. The proposed percentage increase
by rate schedule is shown in Table No. 2 below:
Ehrbar, Di 6
Avista Corporation
Rate Schedule
Increase
in Base
Rates
Increase in
Billing
Rates
Residential Schedule 1 7.8%7.7%
General Service Schedules 11/12 4.6%4.5%
Large General Service Schedules 21/22 5.7%5.6%
Ex. Lrg. General Service Schedule 25 4.8%4.7%
Clearwater Paper Schedule 25P 4.5%4.5%
Pumping Service Schedules 31/32 7.6%7.5%
Street & Area Lights Schedules 41-49 8.3%8.2%
Overall 6.3%6.3%
Table No. 2 – Proposed % Electric Increase by Schedule 1

The Company used the results of the electric cost of
service study (sponsored by Company witness Ms. Knox) as a
guide to spread the general increase. The spread of the
proposed increase generally results in the rates of return
for the various electric service schedules moving
approximately 25% closer to the overall rate of return
(unity). While we believe it is reasonable and appropriate
to use the cost of service study results as the basis for
rate spread, we have tempered the amount of movement toward
unity proposed in this case due primarily to the impact such
movement would have between the rate schedules. The Company
may propose additional movement toward unity in future
proceedings.
The relative rates of return before and after
application of the proposed increases by schedule are shown
in Table No. 3 below:
Ehrbar, Di 7
Avista Corporation
Present Proposed
Relative Relative
Rate Schedule ROR ROR
Residential Schedule 1 0.74 0.81
General Service Schedules 11/12 1.39 1.29
Large General Service Schedules 21/22 1.19 1.14
Ex. Lrg. General Service Schedule 25 1.23 1.17
Clearwater Paper Schedule 25P 1.23 1.17
Pumping Service Schedules 31/32 0.91 0.93
Street & Area Lights Schedules 41-49 1.01 1.01
Overall 1.00 1.00
Table No. 3 – Present & Proposed Relative Rates of Return 1

Proposed Rate Design 9
Q. Where in your Exhibit do you show a comparison of 10
the present and proposed rates within each of the Company’s 11
electric service schedules? 12
A. Page 3, Schedule 3 of Exhibit No. 13 shows a
comparison of the present and proposed rates within each of
the schedules, which I will describe below. Column (a)
shows the rate/billing components under each of the
schedules, column (b) shows the present base tariff rates
within each of the schedules, column (c) shows the present
rate adjustments applicable under each schedule, and column
(d) shows the present billing rates. Column (e) shows the
proposed general rate increase to the rate components within
each of the schedules, column (f) shows the proposed billing
rates and column (g) shows the proposed base tariff rates.
Q. Is the Company proposing any changes to the 24
Ehrbar, Di 8
Avista Corporation
existing rate structures within its electric rate schedules? 1
A. No. The Company is not proposing any changes to
the present rate structures within its electric schedules.
Q. Turning to Residential Service Schedule 1, would 4
you please describe the present rate structure under this 5
schedule? 6
A. Yes. Residential Schedule 1 has a present
customer or basic charge of $5.25 per month and two energy
rate blocks: 0-600 kWhs and over 600 kWhs. The present
base tariff rate for the first 600 kWhs per month is 8.224
cents per kWh and 9.183 cents for all kWhs over 600.
Q. How does the Company propose to spread Schedule 12
1’s proposed general revenue increase of $8,223,000 to the 13
rates within that schedule? 14
A. The Company proposes to increase the monthly
customer charge by $1.00 per month, from the present level
of $5.25 per month to $6.25 per month. The remaining
revenue increase for the schedule is proposed to be
recovered through a uniform percentage increase of
approximately 7.1% applied to the two energy block rates.
The proposed increase for the first 600 kWhs used per month
under the schedule is 0.580 cents per kWh, and an increase
of 0.647 cents per kWh for usage over 600 kWhs per month.
Q. Why is the Company proposing to increase the 24
Ehrbar, Di 9
Avista Corporation
monthly customer charge from $5.25 to $6.25 per month? 1
A. A significant portion of the Company’s costs are 2
fixed and do not vary with customer usage. These fixed
costs include fixed generation, transmission, distribution
and other common costs which provide reliable service to
customers. While a majority of the Company’s costs are fixed
in nature and lend themselves to be recovered in monthly
basic charges or demand charges, the Company recovers most
of those costs in its variable energy rates.
Upon evaluation of only the total customer allocated
costs for Schedule 1, as shown in Schedule 3 of Ms. Knox’s 11
Exhibit No. 12, page 4, line 26, those costs are $18.10 per
customer per month. Factoring in distribution demand costs
per customer per month of $23.18, as shown in Schedule 3 of
Exhibit No. 13, page 4, line 28, the total customer and
distribution demand monthly cost per customer is $41.28.
These are essentially the fixed distribution costs for
providing service to customers.
The Company believes that an increase in the basic
charge is warranted given the large disparity between the
level of the monthly basic charge and the level of fixed
costs incurred by the Company to serve customers.
Q. What is the average monthly electric usage for a 23
residential customer, and what is the effect of the proposed 24
Ehrbar, Di 10
Avista Corporation
increase on a customer’s bill? 1
A. The average monthly usage for a residential
customer is 918 kWhs. Based on the proposed increase, the
average monthly increase would be $6.54, or 7.7%. The
present monthly bill for 918 kWhs of usage is $84.72 and the
proposed monthly bill would be $91.26.
Q. Turning to General Service Schedules 11/12, would 7
you please describe the present rate structure and rates 8
under that schedule? 9
A. Yes. General Service Schedule 11/12 is the
service schedule typically applicable to customers with an
average demand of less than 20 kW per month, such as small
retail establishments (Schedule 11), or shops for
residential customers which requires a separate service
(Schedule 12). The present rate structure under the
schedules includes a monthly customer charge of $10.00, an
energy rate of 9.686 cents per kWh for all usage up to 3,650
kWhs per month, and an energy rate of 7.216 cents per kWh
for usage over 3,650 kWhs per month. There is also a demand
charge of $5.25 per kW for all demand in excess of 20 kW per
month. There is no charge for the first 20 kW of demand.
Q. How is the Company proposing to apply the proposed 22
general revenue increase of $1,648,000 to the rates within 23
Schedules 11/12? 24
Ehrbar, Di 11
Avista Corporation
A. The Company is proposing that the customer charge
increase by $2.00 per month, from $10.00 to $12.00 per
month. The Company is also proposing that the variable
demand rate increase from $5.25/kW to $5.75/kW. The
remaining revenue increase for those schedules is proposed
to be recovered through a 0.394 cent per kWh, or 4.1%,
increase to the first energy block (the first 3,650 kWhs
used per month). The Company is proposing to leave the
second energy block unchanged in order to provide a more
meaningful separation between the blocks, and to ensure that
the higher load factor customers served on those schedules
do not pay a melded rate per kWh that is higher than
customers with poor load factors.
Q. Why is the Company proposing to increase the 14
demand charges for Schedules 11, 21, 25 and 25P? 15
A. The system allocated demand cost from the cost of
service study is $11.24 per kilowatt (kW) month.1 The
Company’s present monthly demand charges range from
$4.50/kVA to $5.25/kW. While the exact level of costs
classified as demand-related can be debated, clearly the
levels of demand charges will continue to be well below
demand-related costs.
In addition and as noted earlier, the Company’s 23

1 See Schedule 3 of Exhibit No. 12, p. 3, ln 28.
Ehrbar, Di 12
Avista Corporation
transmission and distribution system is constructed to meet
the collective peak demand of its customers. Further, the
Company must have adequate resources available to meet peak
demand. If customers reduce their peak demand, it will
reduce the need for additional investment in these
facilities and resources. Customers need to receive the
proper price signal to encourage a reduction in their peak
demand, i.e., higher demand charges.
Q. Turning to Large General Service Schedules 21/22, 9
would you please describe the present rate structure under 10
that schedule and how the Company is proposing to apply the 11
increase of $2,954,000 to the rates within those schedules?
A. Yes. Large General Service Schedules 21/22 are
the service schedules applicable to customers with monthly
demands over 50 kW, but less than 3,000 kW. Typical
customers served under Schedule 21 are grocery stores,
schools, and office buildings. Typical customers served
under Schedule 22 are retirement homes and other qualifying
residential load.
These schedules consist of a minimum monthly charge of
$350.00 for the first 50 kW or less, a demand charge of
$4.75 per kW for monthly demand in excess of 50 kW, and two
energy block rates: 6.344 cents per kWh for the first
250,000 kWhs per month, and 5.414 cents per kWh for all
Ehrbar, Di 13
Avista Corporation
usage in excess of 250,000 kWhs.
The Company is proposing to increase the present
minimum demand charge (for the first 50 kW or less) by $50
per month, from $350.00 to $400.00, and increase the demand
charge from $4.75/kW to $5.25/kW for reasons previously
discussed. The remaining revenue increase for the schedules
is proposed to be recovered through a uniform percentage
increase of approximately 3.9% applied to the two energy
block rates. The proposed increase for the first 250,000
kWhs used per month under the schedules is 0.249 cents per
kWh, and an increase of 0.213 cents per kWh for usage over
250,000 kWhs per month.
Q. Turning to Extra Large General Service Schedule 13
25, would you please describe the present rate structure 14
under that schedule, and how the Company is proposing to 15
apply Schedule 25’s increase of $924,000 to the rates within 16
the schedule?
A. Yes. Schedule 25 is applicable for customers with
demands in excess of 3,000 kVa per month, such as large
industrial customers and universities. Extra Large General
Service Schedule 25 consists of a minimum monthly charge of
$12,500.00 for the first 3,000 kVa or less, a demand charge
of $4.50 per kVa for monthly demand in excess of 3,000 kVa,
and two energy block rates: 5.251 cents per kWh for the
Ehrbar, Di 14
Avista Corporation
first 500,000 kWhs per month and 4.446 cents per kWh for all
usage in excess of 500,000 kWhs.
The Company is proposing that the present minimum
demand charge of $12,500 be increased by $1,000 to $13,500
per month. Further, the Company is proposing to increase
the volumetric demand charge from $4.50/kVA to $4.75/kVA for
reasons discussed earlier in my testimony. The remaining
revenue increase for the schedule is proposed to be
recovered through a uniform percentage increase of
approximately 4.3% applied to the two energy block rates.
The proposed energy rate increase for the first 500,000 kWhs
used per month is 0.227 cents per kWh and the increase for
usage over 500,000 per month is 0.191 cents per kWh.
Q. Would you please describe the service the Company 14
provides to Clearwater Paper’s Lewiston Plant?
A. Yes. In Commission Order No. 32841, dated June
28, 2013, the Commission approved a five-year Electric
Service Agreement (Agreement) between Avista and Clearwater,
applicable to its Lewiston Plant. The Agreement became
effective July 1, 2013 and expires June 30, 2018.2 The
Agreement provides for Clearwater to use its on-site
generation to serve its own load, and for Clearwater to

2 On May 13, 2015, Avista and Clearwater filed with the Commission a
Joint Petition requesting, among other things, approval of a contract
amendment which would extend the length of the Agreement to June 30,
2021 (Case No. AVU-E-15-06). The Commission approved the filing on July
30, 2015.
Ehrbar, Di 15
Avista Corporation
purchase from Avista all of the electric power requirements
that exceed the electric power generated by Clearwater.
Avista serves Clearwater’s load requirements under Schedule
25P.
Q. Would you please describe the application of the 5
proposed Schedule 25P increase of $955,000 to the rates 6
within the schedule?
A. Yes. Like Schedule 25, the Company is proposing
that the present minimum demand charge of $12,500 be
increased by $1,000 to $13,500 per month. Further, the
Company is proposing to increase the volumetric demand
charge from $4.50/kVA to $4.75/kVA for all kVA between 3,000
and 55,000 for reasons discussed earlier in my testimony.
The Company is proposing to increase the volumetric demand
charge for all kVA over 55,000 by $0.25/kVA, from $2.00/kVA
to $2.25/kVA. The remaining revenue increase for the
schedule is proposed to be recovered through an increase of
0.171 cents per kWh to the energy charge. 18
Q. Turning to Pumping Schedules 31/22, would you 19
please describe how the Company is proposing to apply the 20
increase of $436,000 to the rates within those schedules?
A. The Company is proposing that the customer charge
of $8.00 per month be increased by $2.00, to $10.00 per
month, and that the remaining revenue increase be spread on
Ehrbar, Di 16
Avista Corporation
a uniform percentage basis of approximately 7.2% to the two
energy rate blocks under the schedules. The proposed
increase in the first block rate is 0.673 cents per kWh and
the increase in the second block rate is 0.573 cents per
kwh.
Q. How is the Company proposing to spread the 6
proposed revenue increase of $293,000 applicable to Street 7
and Area Light schedules to the rates contained in those 8
schedules (Schedules 41-48)? 9
A. The Company proposes to increase present street
and area light (base) rates on a uniform percentage basis.
The proposed increase for all lighting rates is 8.3%. The
(base tariff) rates are shown in the tariffs for those
schedules, contained in Exhibit No. 13, Schedule 2.
Q. Did the Company file a new electric fixed cost 15
adjustment exhibit which reflects the update baseline 16
values? 17
A. No, the Company did not file exhibits detailing
the new electric fixed cost adjustment baseline values. The
reason why new baseline values were not filed is because the
final approved revenue requirement will be different from
the Company’s request. Therefore, the Company would, as a 22
part of the Compliance Filing, provide the final baseline
values prior to new rates going into effect as a result of
Ehrbar, Di 17
Avista Corporation
this general rate case.
Q. Does this conclude your pre-filed, direct 2
testimony? 3
A. Yes, it does.