20200710Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLAI{DER
COMMISSIOIYER RAPER
COMMISSIONER AI\DERSON
COMMISSION SECRETARY
COMMISSION STAFF
f,.ROM:JOHN R. HAMMOND JR.
DEPUTY ATTORNEY GEIYERAL
DATE: JULY 10,2020
SUBJECT: AVISTA,S APPLICATION TO IMPLEMENT FCA RATES FOR ELECTRIC
SERVICE FROM OCTOBER I, 2O2O THROUGH SEPTEMBER 30, 2021;
cAsE NO. AVU-E-20-06
On June 30,2020, Avista Corporation ("Company") applied to the Commission for and
order approving the level of electric Fixed Cost Adjustment Mechanism ("FCA") revenue deferred
during the 2019 calendar year and authorizing implementation of FCA rates for electric service
effective from October 1,2020 through September 30,2021. Application at l. The Company also
requests authorization to make corresponding modifications to Schedule 75, "Fixed Cost Adjustment
Mechanism - Electric," and to update language in Schedule 75 to reflect the approved extension of the
FCA through March 3l , 2025 , as authorized by Order N o. 34502. Id. at I -2 . The Company separately
applied to implement FCA rates for electric service in Case No. AVU-G-20-05.
The Company proposes to reduce its present surcharge rate for residential customers from
0.1581 to a proposed surcharge rate of 0.028 cents per kilowatt hour. Id at l. The Company also
proposes to reduce the present surcharge rate for non-residential customers from 0.145 cents to a
proposed surcharge rate of 0.01 I cents per kilowatt-hour. Id. at l-2. The Company's Application, if
approved, would result in a $ 1.6 million revenue decrease from residential customers and a $ L4 million
revenue decrease from non-residential customers. Id- at 2. If the Application is approved the
residential customers using an average of 898 kilowatt-hours per month would see their monthly bills
decrease by $ I . 17 per month, or I .4o/o. Id. at 12. The Company asks that its Application be processed
by Modified Procedure and requests an effective date of October 1,2020. Id. at2.
THE APPLICATION
In its filing, the Company proposes a rate surcharge for its residential electric customer
group and its non-residential electric customer groups based on the amount of deferred revenue
recorded for each group between January l, 2019 and Decemb er 3l , 2019 . Id. at 12. The Company
represents the major drivers for the proposed changes to FCA rates were, cooler weather, energy
DECISION MEMORANDUM
efficiency savings and other matters that are not easily quantifiable according to the Company, but
include the effects of non-programmatic energy efficiency and changes in business cycles. Id. at7-8.
The Company recorded 5337,502 in the surcharge direction in deferred revenue for its
electric residential customer group in20l9. Id. at8 (table includes: 2018 residual balance, interest,
and revenue-related expenses). After considering the 2018 residual balance of -$9,294 and other
adjustments, the Company proposes a surcharge of $333,905, at a proposed rate of 0.028 cents per
kilowatt-hour, to the Company's residential electric customers served under rate Schedule l. Id. at l,
8-9; see c/so Exhibit B.
For its electric non-residential customer groups, the Company recorded $109,351 in the
surcharge direction for deferred revenue in 2019. Id. (table includes: 2018 residual balance, interest,
and revenue-related expenses). After considering the 2018 residual balance of $7,242, and other
adjustments, the Company proposes a surcharge of $116,684, at a proposed rate of 0.011 cents per
kilowatt-hour, to the Company's commercial and industrial electric customers served under rate
Schedules 11,72,21,22,31, and 32. Id. at 9-10; see also Exhibit B.
The Company also proposed to update language in its tariff Sheet 75 to include the
modifications authorized by Order No .34502. Order No. 34502 authorized the Company to: (l ) extend
its FCA mechanism for both gas and electric through March 3l , 2025, (2) alter the first deferral period
of the FCA extension by using a one-time, l8-month deferral period from January 1,2020 through
June 30, 2021, and (3) alter its quarterly FCA reporting mandate to 60 days after the end of each
quarter.
With its Application, the Company submitted its residential and non-residential rate
calculation, support for the Company's deferrals, and its proposed FCA tariff Sheet 75, including
updated language to incorporate modifications authorized by Order No. 34502.
The Company also represents that its Application will be brought to the attention of
customers by news releases and a customer notice that is attached to the Application as Exhibit D.
The Company states the news release was to be issued on June 30,2020, and the customer notice
will be inserted in customer bills starting in the July timeframe and will run for a full billing cycle.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure with a comment
deadline of September 9,2020, for Staff and any other interested persons and parties and reply deadline
of September 16,2020 for the Company.
2DECISION MEMORANDUM
COMMISSION DECISION
Does the Commissionwishtoprocessthis caseunderModifiedhocedure with acomment
deadline of Septcmber 9,2020, and reply deadline of September 16,2020?
R. llammond Jr.
Atlomey Creneral
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3DECISION MEMORA}IDUM