20190730Brandon Direct.pdf

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DAVID J. MEYER
VICE PRESIDENT AND CHIEF COLINSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
I4I I E. MISSION AVENUE
P.O.BOX3727
SPOKANE, WASHINGTON 99220
PHONE: [phone], FAX: [phone]
RECEIVED
?OI9 JUL 30 Pil 2: I
i '.'tr-. i LJilLttr: i ii: :ri i:r_l),1],llS$l
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
TN THE MATTER OF THE POWER COST
ADJUSTMENT (PCA) ANNUAL RATE
ADJUSTMENT FILTNG OF AVISTA
CORPORATION
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CASE NO. AVU-E- I9- 01
DIRECT TESTIMONY OF
ANNETTE M. BRANDON
FOR AVISTA CORPORATION
I Q. Please state your name, business address and present position with
2 Avista Corporation?
3 A. My name is Annette M. Brandon and my business address is l41l East
4 Mission Avenue, Spokane, Washington. I am presently assigned to the Regulatory Affairs
5 Department as a Manager of Regulatory Affairs.
6 Q. Would you briefly describe your educational background and
7 professional experience?
8 A. Yes. I am a 2002 graduate of Eastern Washington University with a
9 Bachelor of Arts degree in Business Administration - Professional Accounting. I started
l0 with Avista in January 1999 as a Budget Analyst in the Company's Transmission
1l department. I spent three years in the Company's Tax Department before moving to
12 Resource Accounting for the next eight years. In this role, I was primarily responsible for
l3 accounting for natural gas and associated budgeting and reporting requirements. I joined
14 the Regulatory Affairs department as a Regulatory Analyst in 2012 and was promoted to
15 my current role in 2013. My primary responsibilities relate to natural gas procurement
l6 (including purchase gas adjustment filings), monthly/annual Washington Energy Recovery
17 Mechanism (ERM) filings and Idaho Power Cost Adjustment (PCA) filings. I am also the
l8 Regulatory Affairs lead for the Company's labor, compensation and benefits programs.
19 a. What is the scope of your testimony in this proceeding?
20 A. My testimony provides a summary of the accounting entries and account
2l balances related to the Power Cost Adjustment (PCA) for the l2-months ended June 30,
22 2019. My testimony also addresses the proposed rebate to be effective October 1,2018,
23 which will replace the existing rebate.
Brandon, Di
Avista P. I
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a. Are you sponsoring an Exhibit?
A. Yes. I am sponsoring Exhibit No. AMB-1. Page 1 details the calculation of
the proposed uniform cents per kilowatt-hour PCA rebate of 0.0581, as well as the impact
of the proposed PCA rebate rate by rate schedule. Page 2 is the proposed PCA tariff,
Schedule 66.
a. Would you please provide an overview of the most recent history of
Avista's PCA methodology that has been approved by the Idaho Public Utilities
Commission ("IPUC")?
A. Yes. On June29,2007 the Commission issued Order No. 30361 in Case No.
AVU-E-07-01. That case dealt with the review of the PCA methodology and method of
recovery. The Commission approved a change in the PCA methodology from a trigger and
cap mechanism to a single annual PCA rate adjustment filing requirement.
The Commission also approved a change in the method of the PCA deferral rate
adjustment from a uniform percentage basis to a uniform cents per kilowatt-hour basis,
effective with the October 1,2007 rate change. By Order No. 32206 in Case No. GNR-E-
10-03 dated March 15, 2011, the Commission modified the retail revenue credit
methodology and approved a Load Change Adjustment Rate based on the energy-classified
portion of embedded production revenue requirement effective April I ,2011.
The Commission approved the following procedural schedule for administering the
annual PCA filings:
August I Company filing for prior July - June deferral period
September I Review and comments by Staff and other interested parties
October I Commission Order and effective date of PCA rate
adjustment
Brandon, Di
Avista P. 2
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a. Would you please summarize the filing and Order associated with the
existing PCA rate?
A. Yes. On July 30, 2018, Avista filed its annual PCA rate adjustment for the
period July 1,2017 through June 30,2018 and requested a PCA rebate rate of 0.326(, per
kilowau-hour effective October 1,2018. The Commission approved that request in Case
No. AVU-E-18-07, by OrderNo. 34159, dated September 28,2018.
a. Does the present filing conform to the requirements of the prior
Commission Orders regarding the PCA?
A. Yes. Consistent with prior years, the proposed PCA rate adjustment is based
on the following:
. Deferrals for the period July I , 201 8 through June 30,2019, including interest,
Unamortized balance remaining from the period October l, 201 8 through June
30,2019, including interest, and
Forecast amortization and interest from July I ,2019 through September 30,
2020.
a. What were the amounts of deferrals and interest for the period July 1,
2018 through June 30,2019?
A. The table below summarizes the charges for this period:
Company witness Mr. Johnson discusses the components that make up the
$1,508,657 deferral balance shown above. The Company experienced outages at Coyote
Springs II and Colstrip Units 3 & 4 during the PCA period. Company witness Mr. Dempsey
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Avista P. 3
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$
$
Defenals (July 201 8 - Jme 20 19)( 1,508,659)
756Interest
Total Deferral Bahnce
I provides additional detail concerning those outages. The $2,7541 interest amount
2 represents interest for the twelve-month period July l, 201 7 through June 30,2018. Interest
3 for the 6-month period was calculated using the Customer Deposit Rate of l% for July
4 2018 through December of 2018, and 2Yofor January 2019 through June 2019, per prior
5 Commission order. The increase in the interest rate on January l, combined with the
6 increased volatility during the twelve-month period, resulted in a net debit (surcharge)
7 related to interestrate, on the total credit (rebate) deferral balance.
8 Q. What rebate rate is the Company proposing to be effective October 1,
9 2019?
l0 A. The Company is proposing a uniform cents per kilowatt-hour PCA rebate rate
ll of 0.0580 to be effective October 1,2019. Page 1 of Exhibit No. AMB-I shows the
12 calculation of the proposed rebate. The proposed rebate is designed to rebate the following:
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2t After applying the conversion factor related to commission fees and uncollectible
customer accounts, the resulting rebate of $1,746,190 is divided by forecasted kilowatt-
I A correction entry will be recorded in July 20 I 9 for $701 . This represents $345 in interest which should
have been recorded as a debit, but was recorded as a credit (for a $690 adjustment) plus compounding
interest of $l l, for a total adjustment of $701.
Brandon, Di
Avista P. 4
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Balance from Previous Defenals (prior to July l, 201 8)
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TOTAL BALANCE FOR AMORTIZATION
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$735 996
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Unarnortized
Amortizatbn Interestand 20 9-2 I0(JuVProjected September 9\
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(2,550,6
(1,508,659)
(1,505,903
Deferrals (July 2018 - Jme 2019)
Interest
Total Deferral Bahnce
Amortization Juty 2018 - June 2019
Interest
Total Rernaining Amortization Bahnce
(1 1,488,758)
9,040,914
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2,756
I hours to derive the proposed rebate rate of 0.0581 per kilowatt-hour.2
2 a. What is the impact of the proposed PCA rate increase by rate schedule?
3 A. Page I of Exhibit No. AMB-I shows the effect of the proposed PCA rate
4 increase by rate schedule. The proposed rebate rate is 0.058d per kilowatt-hour, which is
5 0.268p per kilowatt-hour less than the existing rebate rate decrease of 0.326(, per kilowatt-
6 hour. Column (g) shows the percentage increase by rate schedule. The overall increase in
7 revenue is 3.3olo, or $8,062,000.
8 Q. What will be the impact of the proposed rebate on an average residential
9 customer?
10 A. Under the Company's proposal, the PCA rebate rate for all customers,
1l including residential customers, will go from a 03260 per kilowatt-hour rebate to a 0.0581
12 per kilowatt-hour rebate, an increased rebate of 0.268(, per kilowatt-hour. Residential
l3 customers using an average of 898 kilowatt-hours per month would see their monthly bills
14 increase from $82.57 to $84.97, an increase of $2.40 per month, or 2.91o/o.
15 O. Is the Company continuing with its customer bill paying assistance
16 programs?
17 A. Yes. The Company has several programs available to assist customers with
l8 paying their bills. Avista's Comfort Level Billing (CLB) plan is based on historical charges
19 or an estimate of future charges and will approximate a monthly average of the customer's
20 estimated annual billings. The concept of this plan is to help the customer budget for their
21 utility bills throughout the year by leveling out seasonal highs and lows in their monthly
22 utility bills. The Customer Assistance Referral and Evaluation Services (CARES) program
23 provides assistance to special-needs customers through access to specifically trained
2 Total Balance for Amortization $1,735,996 divided by conversion factor 0.994162: $1,746,190
Brandon, Di
Avista P. 5
I CARES representatives who provide referrals to area agencies and churches for help with,
2 among other things, housing, utilities and medical assistance.
3 The Low Income Home Energy Assistance Program (LIHEAP) is a Federal
4 program aimed to assist low income customers pay their electric and natural gas bills.
5 These funds are distributed through local agencies. Project Share is a voluntary
6 contribution option allowing customers to contribute donations that are distributed through
7 local community action agencies to customers in need.
8 Idaho customers who have children, elderly or infirmed persons living in the
t household may qualify for the Winter Moratorium plan. From December I through
l0 February 28, customers are not required to pay their bills in full and can defer payment or
I I make partial payments. In addition, the Winter Payment Plan provides for lower winter
12 bill payments by allowing customers to make monthly payments equal to one-half of the
l3 levelized bill amounts, with the balance in full or a new payment arrangement due by April
14 I't. The Company also works out payment arrangements with customers having difficulty
l5 paying their bills.
16 In addition, the Company has convenient options that help those who need
17 flexibility, but are generally able to pay. APS, or automatic payment service (money is
l8 deducted from a customer's checking account automatically each month), is one example.
19 Other services include debit and credit card service, check-by-phone or over the web,
20 preferred due date (the customer picks a more convenient date to pay than the one the
21 Company states on the bill), and e-billing.
22 a. Does that conclude your pre-filed direct testimony?
23 A. Yes, it does.
Brandon, Di
Avista P. 6