20191001final_order_no_34453.pdf

Office of the Secretary
Service Date
October 1,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST )CASE NO.AVU-E-19-09ADJUSTMENT(PCA)ANNUAL RATE )ADJUSTMENT FILING OF AVISTA )CORPORATION )ORDER NO.34453
On July30,2019,Avista Corporation dba Avista Utilities ("Avista"or the "Company")
filed its annual Power Cost Adjustment ("PCA")Application.The PCA is an annual adjustment
mechanism that tracks changes in the Company's hydroelectric generation,secondary prices,
thermal fuel costs,and changes in power contract revenue and expenses.In its Application,the
Company requests Commission authorityto reduce its current PCA rebate rate.Application at 3.
Avista requested an effective date of October 1,2019 for its proposed PCA rebate rate.Id.
On August 20,2019,the Commission issued a Notice of Application and Notice of
Modified Procedure setting comment and replydeadlines.See Order No.34417.The Commission
Staff timely submitted comments and supported the Company's request.Avista did not file reply
comments,and no other comments were received by the Commission.
THE APPLICATION
In this year's PCA Application and supporting testimony,Avista reports it has incurred
lower power supply expenses than are included in retail rates due to lower wholesale electric and
natural gas prices,lower fuel expenses for Colstrip and Kettle Falls generation and fuel expenses
and lower transmission expenses.See Direct Testimony of William G.Johnson at 5-8.Avista
asserts these lower expenses are partially offset by increased hydro generationexpenses,a power
purchase agreement the Company has with the Palouse Wind Project,changes in retail load and
other miscellaneous expenses.Id.The Company asserts the net impact of these matters is a total
deferral of $1,505,903.00,includinginterest,from July 1,2018,through June 30,2019.See Direct
Testimony ofAnnetteM.Brandon at 4.Since this deferral is much less than the previous year's
deferral balance the Company is requestingCommission authorization to decreasethe current PCA
rebate of0.326¢per kilowatt-hour("kWh")to 0.058¢per kWh.Application at 3.Avista states its
proposed,decreased PCA rebate rate,if approved by the Commission,would increase the
Company's revenue by 3.3%or $8.1 million.Id.at 3 and 5.
ORDER NO.34453 1
Avista alleges that because PCA rate changes are spread on a uniform cents-per-kWh basis,
the resulting percentage increases,due to the decreased PCA rebate rate,will vary by customer
rate schedule.Id.at 5.The Company asserts that residential customers using an average of 898
kWh per month would see their monthlybill increase by 2.91%,from $82.57 to $84.97.Id.at 3
and 5.
STAFF COMMENTS
Staff filed the only comments in this case and recommended the Commission approve
the PCA Application.In reviewing the Company's PCA Application,Staff reviewed:(1)actual
and authorized expenses included in the deferral;(2)the deferral calculation method;(3)the
prudence of actual net power costs incurred during the deferral period;(4)the calculation of
balancing accounts and interest used to determine the final PCA rate;and (5)the calculation of the
PCA rate.Staff Comments at 2.
Staff represented that the Company's methodologies were reasonable and compliant
with Commission Orders and that the Company's calculations were accurate.Staff recommended
the Commission authorize $1,505,903 to be refunded to ratepayers through the PCA and that the
Commission approve proposed tariff Schedule 66 as filed in Exhibit A of the Company's
Application.Id.at 3 and 14.
Staff also asserted that the Coyote Springs 2 combined cycle plant ("Coyote Springs
2")has experienced several outages caused by the failure of a generator step-up ("GSU")
transformer which electricallyties the plant to the transmission grid.Id.at 10.Despite Avista's
investigations of these failures,Staff believes that the Company has not done enough to
successfully identifythe reasons for them.Id.at 10-13.Because Staff believes that the priority is
for Avista to have a cost-effective and reliable resource in the future,it recommends that the
Company conduct the necessary investigations and studies about these GSU failures so it can make
decisions that will ultimatelybe in the best interests of customers.Id.
COMMISSION DISCUSSION AND 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,discrirninatory,or in violation of any provision of law,and may fix the
same by order.Idaho Code §§61-502 and 61-503.
ORDER NO.34453 2
The Commission has thoroughly reviewed the record in this case and we find the
Company's methodology adheres to our prior Orders regarding the PCA.Thus,we accept the
deferral balance in the rebate direction for the period of July 1,2018,to June 30,2019,of
$1,505,903.We further find the Company's proposed PCA rebate rate of 0.058¢per kWh to be
just and reasonable and we approve it long with the proposed tariff Schedule 66 which will be
effective October 1,2019.
We further find Staff's concerns about the several GSU failures at Coyote Springs 2 to
be well taken.We remind the Company that it must continuallyundertake efforts to maintain its
utility plant so that the delivery of electric service to its customers is safe,adequate and reliable.
Further,these efforts must also ensure that electric service and its attendant costs are just and
reasonable.Based on the record in this case,the Company has undertaken efforts to identify the
causes for the multiple GSU failures at Coyote Springs 2.However,these efforts may not have
identified the ultimate reasons for these failures.Accordingly,the Company is directed to continue
to monitor,assess and determine the causes for these failures and to identify and implement
solutions that will allow for the provision of safe,adequate and reliable electric service to its
customers in a cost-effective manner.
ORDER
IT IS HEREBY ORDERED that the Company's Application regardingits annual PCA
rate adjustment is approved.The Company's deferred power costs of $1,505,903 from July 1,
2018,to June 30,2019,are approved.The Company is authorized to implement a PCA rebate rate
of 0.058¢per kWh and the Company's proposed Schedule 66 is approved,to be effective October
1,2019.The Company shall file conforming tariffs with the Commission within ten (10)days of
the service date of this Order.
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.
ORDER NO.34453 3
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2019.
PAU KJELLkNl ,PRESIDENT
KRÊTINERAPER,C SIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
I:\Legal\ELECTRIC\AVU-E-19-09\AVUE1909_finalorder_jrh
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