20210908Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03t2
IDAHO BAR NO. 9917
IN THE MATTER OF AVISTA'S
APPLICATION TO IMPLEMENT FCA
RATES FOR ELECTRIC SERVICE FROM
ocToBER 1, 2021, THROUGH
SEPTEMBER30,2022
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Street Address for Express Mail:
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BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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CASE NO. AVU.E.2T-08
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attorney
of record, Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
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 l8-month deferral period ended June 30, 2021.1 The Company
separately applied to implement FCA rates for natural gas service in Case No. AVU-G-21-06.
I In Order No. 34502, the Commission authorized the Company to modifi its electric and natural gas deferral periods
one-time to run from January 1,2020, through June 30,2021.
1STAFF COMMENTS SEPTEMBER 8,202I
The Company proposed a per kilowatt-hour ("kWh") FCA rebate rate of 0.189 cents per
kWh for its residential electric customers and a surcharqe rate of 0.197 cents per kWh for its non-
residential electric customers. The Company's Application, if approved, would decrease overall
electric revenues by about $0.7 million. The monthly bill for an average residential electric
customer using 892 kWh per month would decrease by $1.94, from $85.63 to 83.69, or 2.3o/o.2
The Company mostly attributes the proposed changes to factors including warmer than normal
weather during the 18 months ended June 30, 2021, energy efficiency, and "other" factors.
Overview of Avista's FCA
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 the fixed costs3 of providing service, thus
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, as part of the approved settlement of its 2015 rate case. See Case Nos.
AVU-E-15-05;AVU-G-15-01;Applicationat3;andOrderNo.33437at10. IntheOrder
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 Tariff 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 3o/o rate increase cap.
On June 15,2018, the Commission approved an addendum to the settlement stipulation
approved in Case Nos. AVU-E-I5-05 and AVU-G-I5-01, 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: (l) 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, l8-month deferral period from January 1,2020, through June 30, 2021; and (3)
2 The Company's Application states Schedule I customers' rates will decrease by 2.2% on page 2 and2.3oh on page l23 "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.
2STAFF COMMENTS SEPTEMBER 8,2021
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-I9-03.
STAFF REVIEW
Staff reviewed the Company's Application and calculations of its residential and non-
residential FCA rates, along with the Company's workpapers and responses to production
requests. After an examination of all these documents, Staff recommends that the Commission
approve the Company's proposed Tariff Schedule 75 rebates for the Residential customer class
and surcharge for the Non-Residential customer class.
Staff reviewed the FCA deferral balances and associated rates for both residential and
non-residential classes to confirm they have been calculated correctly by the Company. Staff
reviewed the amortization from the prior deferral balance, the kWh sales for the FCA year, new
and existing customer counts, the revenue from fixed costs collections, the interest calculations,
and the submitted revenue reports. Staff verified the authorized amounts used to calculate the
deferral were the same used to determine base rates authorized during the deferral period.
Further, Staffexamined the internal control processes and the associated internal audit documents
and found them to be compliant.
In its Application, the Company proposed 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 7,2020, and June 30,2021.
For the Residential customers (Schedule 1), the Company proposed to change the rate from a
present surcharge rate of 0.028 cents per kWh to a rebate rate of 0.189 cent per kWh, a decrease
of 0.217 cents, to refund approximately $2.3 million to the residential class. For the Non-
Residential Group (Schedules ll,12,29,21,22,31 and 32), the Company proposed to change the
present surcharge rate of 0.01I cents per kWh to a surcharge rate of 0.197 cents per kWh, an
increase of 0.186 cents. The increase will allow the Company to recover the approximately $2.0
million deferral balance from the Non-Residential Customer Group. The Residential Customer
Class rate change represents a52.7 million, or 2.2 oZ, decrease to Schedule I customers, and the
Non-Residential Customer Class rate change represents a $1.9 million, or 2.0 o/o increase. The
combined effect of expiring FCA rates and the proposed 2021 rates are shown on Table No. I
below:
3STAFF COMMENTS SEPTEMBER 8,202I
Table No. 1: Present and Pronosed Chanses
Expiring Present
FCA Revenue
Proposed
FCA Revenue
Change in
FCA Revenue
Residential $344.208 $2.323.407\(s2.667.615\
Non-Residential $114,430 $2,049,329 $r,934,900
Total $458.638 ($274.078)($732.715)
Energy Consumption Drivers
The proposed FCA rebate deferrals for residential electric customers are the result of
increases in monthly use-per-customer ("UPC") from the 2018 test-year levels used to establish
the FCA base period. The FCA surcharge deferrals for non-residential electric customers were
due to lower UPC than was embedded in the 2018 test year levels.
When compared to the base period, monthly UPC increased by 16 kwh for Residential
customers but decreased by 193 kwh for the Non-Residential groups. These changes were
caused by (l) changes in the weather, (2) Energy Efficiency Programs, and (3) other factors,
which are items that are more difficult to quantifr, such as the effects of non-programmatic
energy efficiency, changes in business cycles, and non-quantifiable effects related to COVID-19.
The "Other" factors have a more significant impact on the non-residential group than on the
residential group. The Weather, on the other hand, is a more significant factor for the residential
group than for the non-residential group. This is expected because residential energy usage is
relatively sensitive to weather fluctuations as demonstrated during the l8 months ending June 30,
2021. Table No. 2 below shows the Company's estimates of these factors on UPC in kWh and
FCA revenue in million dollars. The results demonstrate that energy efficiency is not the sole
factor of declining energy sales, and that the FCA mechanism provides fixed cost recovery for a
wide range of factors.
4STAFF COMMENTS SEPTEMBER 8,2021
Table No.2: Effects of the Drivers on UPC and FCA Revenue ($ in Million)
Source
Residential Non-Residential
UPC
&wh)FCA Revenue
UPC
ftwh)FCA Revenue
Weather -2 (0.s0)7 $0.30
Enersy Efficiency -ll Q.40\-tt2 (4.10)
Other 29 $s.20 -88 $1.80
Total t6 $2.30 -193 (2.00)
Overall Impact of Three Filings (PCA, BPA and FCA) Effective October 1,2021
The Company has proposed two other rate adjustment applications, also effective
October I,2021. The Company's proposed Power Cost Adjustment ("PCA") filing,
AVU-E-21-09, if approved, will increase Idatro electric revenues by approximately $7.2 million
or 2.8Yo. The second proposed filing is for the Bonneville Power Administration ("BPA")
Residential and Small Farm Energy Rate Adjustment, AVU-E-21-10. If this filing is approved, it
will increase Idaho electric revenues by approximately $0.1 million increase or 0.1 percent.
When combined with the current FCA filing in this case, the net effect of the three requests is an
increase in the overall Company's electric revenue by approximately $6.6 million or 2.6%o
effective October 1,2021, as shown on Table No. 3 below:
Table No.3: Summarv of Overall Impact to Idaho Electric Revenue
Filing 2020 2021 Net Effect Y" Change
PCA $ 459,391 $ 7,646,804 $ 7,187,413 2.8%
BPA (4,188,620)(4,057,098)131,522 0.1%
FCA 458,638 (274,078)(732,7t6)-0.2%
Total (3,270,591)3,315,628 6,596,219 2.7o/"
CUSTOMER NOTICE AI\D PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Each document addresses the following casesr this case, AVU-E-21-08, the natural gas FCA,
AVU-G-21-06, the PCA, AVU-E-21-09, the BPA Residential and Small Farm credit,
5STAFF COMMENTS SEPTEMBER 8,2021
AVU-E-21-10. Staff reviewed the documents and determined both meet the requirements of Rule
125 of the Commission's Rules of Procedure. See IDAPA 31.01.01 .125. The notice was included
with bills mailed to customers beginning August 12,2021, and ending September 9,2021.
The Commission set a comment deadline of September 8, 2021. Some customers in the
last billing cycles will not have received/and or had adequate time to submit comments before the
deadline. Customers must have the opportunity to file comments and have those comments
considered by the Commission. Staff recommends that the Commission accept late filed
comments from customers. As of September 7,2021, no customer comments had been filed.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company's FCA filing. Specifically,
Staff recommends that the Commission approve the Company's proposed Tariff Schedule 75 with
a Residential rebate rate of 0.189 cents per kWh and Non-Residential surcharges rate of 0.197
cents per kWh for electric service from October 1,2021, through September 30,2022.
80,.Respectfu lly submitted this day of September 2021.
Deputy Attomey General
Technical Staff: Johan Kalala-Kasanda
Kevin Keyt
Curtis Thaden
i :umisc/comments/avue2 l.Sdhjkkkct comments
6STAFF COMMENTS SEPTEMBER 8,202I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 8th DAY OF SEPTEMBER 2021,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. AVU.E-21-08, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
PATRICK EHRBAR
DIR OF REGULATORY AFFAIRS
AVISTA CORPORATION
PO BOX3727
SPoKANE WA99220-3727
E-MAIL : [e-mail]
dockets@avi stacorp. com
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA99220-3727
E-MAIL : [e-mail]
CERTIFICATE OF SERVICE