20210929Final_Order_No_35183.pdf

ORDER NO. 35183 1
Office of the Secretary
Service Date
September 29, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA’S
APPLICATION TO IMPLEMENT FCA
RATES FOR ELECTRIC SERVICE FROM
OCTOBER 1, 2021 THROUGH
SEPTEMBER 30, 2022
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CASE NO. AVU-E-21-08

ORDER NO. 35183

On July 30, 2021, Avista Corporation dba Avista Utilities (“Company”) applied to the
Commission for authorization to implement Fixed Cost Adjustment (“FCA”) rates for electric
service effective from October 1, 2021 through September 30, 2022, and approve its corresponding
modifications to Schedule 75 “Fixed Cost Adjustment Mechanism – Electric.” The Company also
asks that the Commission approve as prudently incurred the level of electric FCA revenue deferred
during the 18-month deferral period from January 1, 2020 through June 30, 2021 (“deferral
period”).1 The Company separately applied to implement FCA rates for natural gas service in Case
No. AVU-G-21-06. The Company proposes per kilowatt-hour (“kWh”) FCA rebate rates for its
residential electric customers and surcharge rates for its non-residential electric customers. The
Company’s Application, if approved, would decrease overall electric revenues by about $0.8
million. The monthly bill of an average residential electric customer would decrease by about
$1.94, or 2.3%. The Company requested that its Application be processed by Modified Procedure
and that the proposed rates take effect October 1, 2021.
On August 18, 2021, the Commission issued a Notice of Application and Notice of
Modified Procedure establishing a public comment period and Company reply deadline. Staff filed
the only public comments. The Company did not file a reply.
Having reviewed the record in this case, the Commission issues this Order approving
the Company’s Application.
BACKGROUND
The FCA is a rate adjustment mechanism designed to break the link between the energy
a utility sells and the revenue it collects to recover fixed costs2 of providing service, thus

1 In Order No. 34502, the Commission authorized the Company to modify its electric and natural gas deferral periods
one-time to run from January 1, 2020, through June 30, 2021.
2 “Fixed costs” are a utility’s costs to provide service that do not vary with energy use, output, or production, and
remain relatively stable between rate cases – for example, infrastructure and customer service.

ORDER NO. 35183 2
decoupling the utility’s revenues from its customers’ energy usage. Order No. 33437 at 3. This
decoupling removes a utility’s incentive to increase sales to increase revenue and profits and
encourages energy conservation. The Commission originally approved the Company’s FCA as a
three-year pilot program, and part of the approved settlement of its 2015 rate case. 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 Commission noted that the parties to the Company’s rate case
agreed to review the program’s effectiveness at the end of its second full year, to ensure it is
functioning as intended. The settlement stipulation in those cases and Schedule 75 also set forth
how the FCA mechanism works, including treatment of existing versus new customers, quarterly
reporting requirements, annual filings, interest, accounting, and a 3% rate increase cap.
On June 15, 2018, the Commission approved an addendum to the settlement stipulation
approved in Case Nos. AVU-E-15-05 and AVU-G-15-01, which extended the term of the
Company’s FCA pilot for an additional year. Order No. 34085.
On December 13, 2019, the Commission authorized the Company to: (1) extend its
FCA mechanism for both gas and electric customers through March 31, 2025; (2) alter the first
deferral period of the FCA extension by using a one-time, 18-month deferral period from January
1, 2020, through June 30, 2021; and (3) alter its quarterly FCA reporting requirement to 60-days
after the end of each quarter. Order No. 34502; Case Nos. AVU-E-19-06 and AVU-G-19-03.
APPLICATION
In its filing, the Company proposes a rate rebate for its residential electric customers
and a rate surcharge for its non-residential electric customer groups based on the amount of
deferred revenue recorded for each group between January 1, 2020, and June 30, 2021. The
Company mostly attributes the proposed changes to drivers including warmer than normal weather
during the deferral period, energy efficiency, and “other” drivers.
The Company recorded $2,260,697, in the rebate direction in deferred revenue for its
electric residential customer group for the deferral period. After considering the prior year residual
balance of $35,117, the Company proposes to return $2,323,407, at a proposed rebate rate of 0.189
cents per kWh, to the Company’s residential electric customers served under rate Schedule 1. See
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 amount returned to
customers under the tariff.

ORDER NO. 35183 3
For its electric non-residential customer groups, the Company recorded $2,011,841 in
the surcharge direction in deferred revenue for the deferral period. After considering the prior year
residual balance of $18,516, the Company proposes to recover $2,049,329 from the Company’s
commercial and industrial electric customers served under rate Schedules 11, 12, 21, 22, 31 and
32, at a proposed surcharge rate of 0.197 cents per kWh. See Exhibit B. If approved by the
Commission, the Company would record this amount in a regulatory asset balancing account and
reduce the account balance each month by the amount collected from customers under the tariff.
With its Application, the Company submitted its residential and non-residential rate
calculations, support for its deferrals, and its proposed FCA Schedule 75.
COMMENTS
Commission Staff recommended the Commission approve the Company’s Application
and proposed Schedule 75 as filed. Staff verified that the Company correctly calculated its deferral
balances. Staff recommended the Commission allow the Company to return $2,323,407 to its
residential customer group with a rebate rate of 0.189 cents per kWh and recover $2,049,329 from
its non-residential customer group with a surcharge rate of 0.197 cents per kWh.
According to the Company, the proposed residential FCA rebate deferrals are the result
of increases in use-per-customer (“UPC”) from 2018 test-year levels used to establish the FCA
base period. For non-residential customers the surcharge deferrals were due to lower UPC than
embedded in the 2018 test-year levels.
The monthly UPC during the deferral period increased by 16 kWh for residential
customers and was primarily driven by the “other” category. For non-residential customers, the
monthly UPC during the deferral period decreased by 193 kWh and the primary drivers were
energy efficiency and the “other” category. The "other" category drivers have a more significant
impact on the non-residential customers than on the residential customers and weather is generally
a more significant driver for residential customers, although not as much in this filing.
Regarding the Company’s customer notice and press release, Staff expressed that the
Company satisfied Commission Rule of Procedure 125. The Company filed its Application with
the Commission on July 30, 2021, and included its draft customer notice and press release,
complying with Commission Rule of Procedure 125.04 and .05, IDAPA 31.01.01.125.04-.05. The
Company mailed its customer notice during its regular billing cycle to affected customers between

ORDER NO. 35183 4
August 12, 2021 and September 9, 2021. Due to the public comment deadline of September 8,
2021, Staff recommended the Commission accept any late filed comments.
COMMISSION DISCUSSION AND FINDINGS
The Commission has jurisdiction over the Company and this matter pursuant to Idaho
Code §§ 61-336, 61-502, 61-503, and 61-622. 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 and finds the Company's requested FCA
Residential Group (Schedule 1) rebate rate of 0.189 cents per kWh, and FCA Non-Residential
Group (Schedules 11, 12, 21, 22, 31 and 32) surcharge rate of 0.197 cents per kWh to be fair, just,
and reasonable. The Commission finds the Company correctly calculated its deferral balances.
The Commission thus approves the Company's Application and proposed revisions to Schedule
75, as filed, effective October 1, 2021.
O R D E R
IT IS HEREBY ORDERED that the Company's Application is approved as described
above. The Company’s FCA Filing for Electric Service from October 1, 2021 through September
30, 2022, is granted as requested, effective October 1, 2021. The Commission approves the
Company’s Tariff Sheet 75 as filed.
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. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
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ORDER NO. 35183 5
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 29th day
of September 2021.

__________________________________________
PAUL KJELLANDER, PRESIDENT

__________________________________________
KRISTINE RAPER, COMMISSIONER

__________________________________________
ERIC ANDERSON, COMMISSIONER

ATTEST:

_______________________
Jan Noriyuki
Commission Secretary

I:\Legal\ELECTRIC\AVU-E-21-08 FCA\orders\AVUE2108_final_dh.docx