20180926final_order_no_34155.pdf

Office of the Secretary
Service Date
September 26,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE RESIDENTIAL )
AND SMALL FARM ANNUAL RATE )CASE NO.AVU-E-18-08
ADJUSTMENT FILING OF AVISTA )CORPORATION )ORDER NO.34155
On July 31,2018,Avista Corporation dba Avista Utilities applied to the Commission
for authorization to implement a Residential and Small Farm Energy credit rate for rate schedules
1,12,22,32,and 48,of 0.069 cents per kilowatt-hour (kWh).Application at 1.Avista states that
this rate represents an increase of $0.1 million to qualifyingcustomers.Id at 1-2.Avista requested
that the Application be processed under Modified Procedure,with an effective date of October 1,
2018.Id The Commission issued a Notice of Application and Notice of Modified Procedure
setting a comment deadline.Order No.34127.Commission Staff timely filed comments.No
other comments were received.
Having reviewed the record,the Commission enters this Order approving Avista's
Application,witi the new rate to be effective October 1,2018.The Commission's decision is set
out more fully below.
BACKGROUND
This Application results from the Bonneville Power Administration's (BPA)
Residential Exchange Program.The Residential Exchange Program was established by Section
5(c)of the Northwest Electric Power Planning and Conservation Act.16 U.S.C.§839c(c).That
section makes low-cost power from the federal Columbia River power system available to
investor-owned utilities in the Northwest.See Assoc.of Pub.Agency Customers v.Bonneville
Power Admin.(APAC v.BPA),733 F.3d 939,945 (9th Cir.2013).The statute permits utilities to
"exchange power they have purchased or generated for lower-cost power generated by BPA."
Portland Genera!Elec.Co.v.Bonneville Power Admin.(PGE v.BPA),501 F.3d 1009,1015 (9th
Cir.2007).The exchange is a paper transaction-a utility may offer to sell power to BPA at the
utility's average system cost (ASC)for producing power,which BPA compares to a Priority Firm
(PF)Exchange Rate that BPA calculates for purposes of the exchange.See id.,APAC v.BPA,733
F.3d at 945-46.If BPA's PF Exchange Rate is lower than the utility's ASC,then the utility is
entitled to a benefit from BPA.APAC v.BPA,733 F.3d at 946.Generally,the utility benefit is
ORDER NO.34155 1
the difference between BPA's PF Exchange Rate and the utility'sASC,multipliedby the utility's
residential load.Id at 945.The utility must pass the benefit on to its qualifying (residential and
small farm)customers.See id (citing 16 U.S.C.§839c(c)(3)).The implementation of the
exchange has been litigated over the years;the current implementation results from a settlement
that took effect in 2012.See id at 946-47 (describing litigation and settlement).
THE APPLICATION
In its Application,Avista summarized the ResidentialExchange Program.Application
at 2-3.Avista passes the benefits it receives under the program to qualifying customers via the
residential and small farm energy credit rate.Id
The current residential and small farm energy credit rate is 0.078 cents per kWh.Id
at 3.The current BPA benefit passed to Avista's Idaho customers is about $0.94 million.Id.
The proposed credit rate is 0.069 cents per kWh.Id The proposed credit rate of 0.069
cents per kWh is designed to pass through approximately $0.84 million,which is the Idaho portion
of BPA benefits offset by the over-refunded balance from the prior year,starting in October 2018.
Id While the level of BPA benefits is consistent with what is currently being passed back to
customers today,the offset by the over-refunded balance results in the reduced credit.Id at 3.The
Company states that the overall increase to qualifying customers under the proposed credit rate is
$0.1 million,or 0.1%.Id.at 4.The Company explained that the change in the credit rate does not
affect its net income.Id at 3.
The Company's Application included workpapers that calculate the residential and
small farm energy credit rate.Application Attachment A (Workpapers).The Company requested
that the rate be effective from October 1,2018 through September 30,2019.Id.at 1.The
Company indicated that it will bring the Application to the attention of its customers via a news
release and a customer notice explaining each of several rate filings.Id.at 5.
STAFF COMMENTS
Staff explained the calculation of the BPA benefit.Staff Comments at 2.The
calculation of the BPA benefit for residential and small farm customers has two inputs.Id The
first input is the usage by Avista's residential and small farm customers over the previous two
years,in this case 2015 and 2016,which is then averaged to create an annualized usage.Id The
second input is the difference between two variables calculated by BPA:Avista's ASC rate and
the PF Exchange Rate.Id These variables are calculated by BPA every two years.Id The
ORDER NO.34155 2
difference between these two rates is multipliedby the annualized usage to calculate the BPA
benefit to be passed on to qualifyingcustomers for each of the next two years.Id Currently,the
Company is in year 2 of the current credit.Id The BPA credit is allocated between Washington
and Idaho based on the actual usage in eachjurisdiction.Id
Avista's Residential and Small Farm credit rate is calculated by taking the projected
remaining balance of the BPA benefit from the previous year and adding the BPA benefit for the
next year.Id In this filing,the amount from the previous year was over-refunded because
customers used more electricitythan was projected.Id The total is then divided by the projected
annual kWh sales to residential and small farm customers to calculate the rate.Id
Staff audited the inputs to the calculations and independently recalculated the rate.Id.
Staff reviewed the methodology and calculation of the proposed Residential and Small Farm credit
rate and the approach is consistent with the terms and conditions of Schedule 59 -Residential and
Farm Energy Rate Adjustment -Idaho.Id Staff recommends the proposed rate of 0.069 cents per
kWh be approved.Id
Staff also reviewed the Company's customer notice and draft press release,which were
included with the Company's Application,and the Company's final press release that addressed
this Application,which was filed in Case No.AVU-E-18-08 (the press release addressed both
cases and two others).Id Staff determined that the customer notice and final press release
complied with Rule 125 of the Commission's Rules of Procedure.IDAPA 31.01.01.125.
COMMISSION FINDINGS
The Commission has jurisdiction over this matter under Idaho Code §§61-502 and 61-
503.The Commission has the express statutory authority to investigate rates,charges,rules,
regulations,practices,and contracts of public utilities and to determine whether they are just,
reasonable,preferential discriminatory,or in violation of any provision of law,and may fix the
same by Order.Idaho Code §§61-502 and 61-503.The Commission has reviewed the record,
including the Application and comments.
We find that the proposed credit rate of 0.069 cents per kWh is just and reasonable.
We therefore approve the Application and the proposed tariff Schedule 59,to be effective October
1,2018.
ORDER NO.34155 3
ORDER
IT IS HEREBY ORDERED that the Application of Avista Corporation dba Avista
Utilities to implement a new residential and small farm energy credit rate is approved.The
Company is authorized to implement its proposed credit rate of 0.069 cents per kWh and the
proposed tariff Schedule 59 is approved,to be effective October 1,2018.
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 with regard to any
matter decided in this Order.Within seven (7)days after any person has petitioned for
reconsideration,any other person may cross-petition for reconsideration.See Idaho Code §61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 2
day of September 2018.
PAUL K LLAN ,PRESIDENT
ERIC ANDERSON,COMMISSIONER
Diane M.Hanian
Commission Secretary
L\Legal\ELECTRICiAVU-E-18-08\orders\AVU-E-18-08final ep docx
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