20180726notice_of_application_order_no_34112.pdf

Office of the Secretary
Service Date
July 26,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )CASE NO.AVU-E-18-06
CORPORATION'S APPLICATION TO )IMPLEMENT FIXED COST ADJUSTMENT )NOTICE OF APPLICATION
RATES FOR ELECTRIC SERVICE FROM )OCTOBER 1,2018 THROUGH )NOTICE OF
SEPTEMBER 30,2019 )MODIFIED PROCEDURE
)ORDER NO.34112
On July 2,2018,Avista Corporation (Avista)applied to the Commission for
authorization to implement Fixed Cost Adjustment (FCA)rates for electric service from October
1,2018,through September 30,2019,and to approve its corresponding modifications to Schedule
75,"Fixed Cost Adjustment Mechanism -Electric."The Company separately applied to
implement FCA rates for natural gas service in Case No.AVU-G-18-03.The Company requests
that the Commission issue an order approving FCA deferrals for the period January 1,2017,
through December 31,2017,and approve a per kilowatt-hour (kWh)FCA rebate rate of -0.176
cents for its Residential Group and a per kilowatt-hourFCA surcharge rate of 0.056 cents for its
Non-Residential Group from October 1,2018,through September 30,2019.Application at 1.
Avista asks that its Application be processed by Modified Procedure,and requests an effective
date of October 1,2018.Id.at 2;14.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that an FCA is a rate adjustment mechanism
designed to break the link between the amount of energy a utility sells and the revenue it collects
to recover fixed costs'of providing service,thus decoupling the utility's revenues from its
customers'energy usage.Id.at 3-4.This decoupling is intended to remove a utility's incentive
to increase sales as a means of increasing revenue and profits,and to encourage energy
conservation.Id at 4.
YOU ARE FURTHER NOTIFIED that the Commission approved Avista's FCA as a
three-year pilot program,and part of the approved settlement of Avista's 2015 general rate case.
I "Fixed costs"are a utility's costs to provideservice that do not vary with energy use,output,or production,and
remain relativelystable between rate cases -for example,infrastructure and customer service.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34112 1
See Case Nos.AVU-E-15-05,AVU-G-15-01;Application at 3;and Order No.33437 at 10.In the
Order approving the FCA program,the Comrnission noted that the parties to Avista's rate case
agreed to review the program's effectiveness at the end of its second full year,to ensure it is
functioningas intended.See Application at 3-4.The Order also set forth how the FCA mechanism
works,including treatment of existing versus new customers,quarterly reporting,annual filings,
interest,accounting,and 3%rate increase cap.Id at 4-6.
On June 15,2018,the Commission approvedan addendum to the settlement stipulation
approved in AVU-E-15-05 and AVU-G-15-01,which extended the term of the Company's FCA
pilot for an additional year.See Order No.34085.As a result,the Company updated its Tariff
Sheet 75 to reflect,among other changes:(1)an FCA mechanism term of four years;and (2)
interested parties will conduct an effectiveness review at the end of the third year of the pilot.Id.
YOU ARE FURTHER NOTIFIED that in its electric FCA filing Avista proposes to
decrease rates for its electric residential customer group and increase rates for its non-residential
electric customer groups based on the deferred revenue recorded for January through December
2017.The Company mostly attributes these proposed changes to drivers such as abnormally cold
weather in January and February 2017,and hot weather during the summer of 2017,and savings
from energy efficiencyprograms in 2017.Id.at 7-8.The Company states that other drivers are
not easily quantifiable but include,among others,the effects of non-programmatic energy
efficiency and changes in business cycles.Id.at 8.
YOU ARE FURTHER NOTIFIED Avista recorded $2,816,256in the rebate direction
in deferred revenue for its electric residential customer group in 2017,which includes the actual
2016 Carry Over Balance of $788,461.Id at 9 (table includes carry over balance,interest and
revenue-relatedexpenses).The Company's proposed rate of -0.176 cents per kWh is designed to
rebate $2,071,515 to the Company's residential electric customers served under rate Schedule 1.
Id.at 9;Exhibit B.If approved by the Commission,the Company would record this amount in a
regulatory liability balancing account and reduce the account balance each month by the rebate
received by customers under the tariff.Id.at 10.
YOU ARE FURTHER NOTIFIED that for its non-residential group,Avista recorded
$610,929 in surcharge deferred revenue in 2017.Id.at 10-11 (table includes carry over balance,
interest and revenue-relatedexpenses).The Company proposes to increase non-residential rates
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34112 2
by 0.056 cents per kWh,to recover $603,669 from commercial and industrial customers.Id at
10-11;Exhibit B.If approved by the Commission,the Company would record this amount in a
regulatory asset balancing account,with any outstanding balance from the surcharge approved in
Case No.AVU-E-17-04,and reduce the account balance each month by the revenue collected
under the tariff.Id.at l1.
YOU ARE FURTHER NOTIFIED that the Application,Exhibit A (the Company's
proposed tariffs),Exhibit B (rate calculations),Exhibit C (2017 deferral),and Exhibit D (customer
communications)have been filed with the Commission and are available for public inspection
during regular business hours at the Commission offices.The Application and attachments are
also available on the Commission's web site at www.puc.idaho.gov.Click on the "File Room"
tab at the top of the page,scroll down to "Open Electric Cases,"and then click on the case number
as shown in the caption to this document.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the public
interest may not require a formal hearing in this matter and will proceed under Modified Procedure
pursuant to Rules 20 l through 204 of the Idaho Public Utilities Commission's Rules of Procedure,
ID APA 31.01.01.201-204.The Commission notes that Modified Procedure and written comments
have proven to be an effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or in opposition with the Commission by no
later than September 13,2018.The comment must contain a statement of reasons supporting
the comment.Persons desiring a hearing must specifically request a hearing in their written
comments.Written comments concerning this Application may be mailed to the Commission and
Avista Corporation at the addresses reflected below:
Commission Secretary David J.Meyer,Esq.
Idaho Public Utilities Commission Avista Corporation
PO Box 83720 P.O.Box 3727
Boise,ID 83720-0074 1411 E.Mission Ave,MSC-27
Spokane,WA 99220-3727
Street Address for Express Mail:email:[e-mail]
472 W.Washington Street
Boise,ID 83702-5918
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34112 3
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission's home page located at www.puc.idaho.gov.Click the "Case Comment or Question
Form"under the "Consumers"tab,and complete the form using the case number as it appears on
the front of this document.These comments must also be sent to the Company at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that Avista may file reply comments,if necessary,
no later than September 20,2018.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received
within the time limit set,the Commission will consider this matter on its merits and enter its Order
without a formal hearing.If written comments are received within the time limit set,the
Commission will consider them and,in its discretion,may set the same for formal hearing.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code,and specifically Idaho
Code §61-503.The Commission may enter any final Order consistent with its authority under
Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted
pursuant to the Commission's Rules of Procedure,IDAPA 31.01.01.000,et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure,
Rule 201-204 (IDAPA 31.01.01.201 -.204).Parties and persons shall have until September 13,
2018,to file written comments,and the Company shall have until September 20,2018,to file a
reply,if any.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34112 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of July 2018.
PAUL JELLÁN ,PRESIDENT
KRÍShÑE RAPEll,CGMMISSIONER
ERI DERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
1:\Legal\ELECTRICAVU-E-IS-06\Orders\AVUE1806_NtcofApp.Modsc.doex
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34112 5