20170905Comment.pdf

Michael A Neher
6056 N.Colfax
Dalton Gardens.ID 83815
August 31,2017
Diane Hanian,Commission Secretary
Idaho Public Utilities Commission
RO.Box 83720
Boise,11)837204)074
Re:Avista Coxporation Rate Cases AVLJ E 17 04,AVU E 17 01,AVU G 17 OL AVU G 1703
Dear Ms.Hanian:
I would like to make the following statement regarding the above named open rate cases.As a
consumer and customer of Avista,I deeply appreciate and depend upon Avista for natural gas and
electricity to support the well being of my family.Our livelihood,health and safety greatly depend on
the reliable services that Avista provides.The community’s heat,cooling,cooking,food storage,water
supply,sewage treatment,commerce,medical services and transportation all depend on AVista Avist&s
responsibilities are very gieat.indeed,and similar to those of local government,though more narrowly
focused.
As a retiree,I am acutely aware of our family budget.Avista’s request to increase power rates caught
my attention when the local paper recent}y reported the costly effect on the average consumer’s energy
bill.When the general inflation rate has been around 1%for many years past and is expected to remain
low going forward,and when Social Security and pension inflation adjustments have been and are
expected to be In line with the rate of Inflation,Avista’s request to raise utility rates by many times the
inflation rate is indeed eye catching.
I am a simple lay person,and maybe because I’m retired,I have a little more time to look Into andrespondtothismatter...more so than working families who are busy raising kids and earning a living,but who will be equally affected by the proposed rates.The following comments pertain to all of the
referenced rate cases because they affect our overall energy and living expense.I don’t have the willorexpertisetodelveintoallthedetailsofAvista’s rate requests and operations,and am hoping the
PUC does and will.I can’t evaluate the legal and technical justifications Avista has put forward in itsrateapplications;I must depend on the PUC to do that for me.But I do have questions and concerns.
My overarching request is for the PUC to scrutinize all aspects of Avista’s operation to ensure it ismriningasefficientlyandcost-effectively as possible,as if it were a competitively priced utility
service,and to make public the PUC’s findings on the PUC and Avista websites.After all,as a
regulated monopoly,Avista enjoys exclusive service territory without free market forces,and thereforeitscustomersarewhollydependentonthePUCtoensurefairenergypricingandreliability
Avista serves its customers as a privileged franchised monopoly,thus avoiding competitive forces toprovideefficientmarkedpricingtotheconsumer.Even so,Avista is covered by a government
approved return on assets as part of its rate approval process before the PUC.This is a level of
financial security that few other commercial industries enjoy.Therefore,it is imperative that the PUC
make every effort to ensure that Avista operates efficiently first and foremost in the interest of the
consumer.If the company expects to receive a minimum return on equipment,operations and
infrastructure,then it must justify to the PUC every line item in its budget to ensure the costs are
minimized and truly necessary for reliable customer service.The governing board of Avista,as a
regulated monopoly,is not beholden to Avista’s customers,but to its stock and bond holders.Whereas,
for a municipal utillt the governing board must answer directly to the customer..citizens who vote
them in or out of office.Therefore,the PUC must exert extraordinary oversight and dedication to
ensure the regulated monopoly is efficient as if it was a competitive enterprise.
The following questions may be useful in evaluating Avista’s operating efficiency.
Executive and Employee Compeusation -Fair and Reasonab1e
“Avista Corp.paid its top executive about $5.5 million in total compensation (in 2014),..A typical
household pays about 24 cents each month on their bills for Avista’s top five executives’salaries and
cash awards,Wuerst said.”
Source:httpi/www.spokestnan.com/storiesi20l5/feb/28/avistas-top-executive-eams-55-million-in-
20141
Notice how the total compensation for these executives has jumped by 56%to over $8.6 million in FY
2016:
NameIThle Thtal Cash Equity Other Thtal
Compensation
1883564 1878223 11925 3773712Chainnan,President &CEO ‘‘‘‘
K.S.Feltes
Sr.Vice President &cmo $586,976 $466,520 $11,925 $1,065,421
Sr.Vice President,General Counsel,Corporate $645,717 $466,520 $11,925$1,124,162
Secretary &CCO
$748072 $596958 $15900$1360 930Sr.Vice President,CFO &Treasurer ‘‘
DJ1..Y.Emd]1ia 720677 08106 $15000 1343783Sr.Vice President &ECO ‘‘
Source:.Ex Cu S .iaries tini
By contrast the CEOs (City Administrators)of cities in Avista’s service area range from City of
Spokane ($131,934;2014 source:Hwww.s kesmn.corn/data/cit’e.ovee.ries/J,City of
Post Falls ($123,028;
a1J),and Coeur d’Alene ($108,097 to 152,069;2017 source:City of Coeur d’Alene).The 10 to 20-
fold difference in CEO compensation begs the question,how fiscally responsible is Avista relative to its
municipal counterparts who provide not only utility services,but public safety,recreation,
transportation and other services to a combined customer base similar to Avista’s?Idaho customers of
Avista amount to 29%of the company’s total customer base (source:Avista Corp)of 359,000 electric
and 320,000 natural gas customers (source:h s:f/en.wiedlaocgLiniki/..ta).I assume that the
total number of individual service locations would be amund 359,000 if such locations have both gas
and electric services from Avista,
Proposed Merger With Hydro-One
Although the proposed merger might not directly pertain to the proposed rate cases,I think the PUC
should carefully consider the state and national interest in assuring safe and reliable energy supplies.
Avista is hoping to get its merger with Hydro One approved by the various regulatory agencies and
close the deal by end of 2018.The share price for AVA on July 6,2017,was $41.39;after the
announcement to be purchased by Hydra One for $53 per share,it jumped to $52.35,a 26%increase.
Avista’s (AVA)PIE is now an alarmingly high 24,indicating investors’great optimism about the
profitability of this utility.Although there may be no legal connection,to the casual eye there seems to
be a nexus between the proposed rate increase and the merger,begging the question once again:is
Avista operating as cost effectively as it should for the benefit of the consuming public?
The energy sector is one of several that were deemed “critical infrastructure”by the Patriot Act,and I
think one must be very careful when considering the transfer of “critical infrastructure”to foreign
controL As with defense,food,forests,energy resources,water,land and minerals,we need “extreme
vetting”of ownership and control of basic resources in order to maintain security of our country
Summary
As an Avista customer,I value and depend on reliable energy delivery But I am perturbed by the
proposed rapid rise in rates,which seems incongruous with the general rates of inflation and
commodity gas prices.Thus,one is compelled to ask what is going on that is not so apparent in the
operation ofAvista?Without definitive proof that Avista is operating as cost-effectively as possible,the
PUC should deny Avista’s rate proposals.
Sincerely
F
Michael A.Neher