20210930Final_Order_No_35184.pdf

ORDER NO. 35184 1

Office of the Secretary
Service Date
September 30, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA
CORPORATION’S ANNUAL POWER COST
ADJUSTMENT (PCA) RATE APPLICATION
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CASE NO. AVU-E-21-09

ORDER NO. 35184

On July 30, 2021, Avista Corporation (“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 other
changes in power contract revenues and expenses.
This year, the Company asks the Commission to approve a PCA surcharge rate of
0.251¢ per kilowatt-hour (“kWh”). Under the Company’s proposal, the PCA surcharge rate for
all customers, including residential customers, would increase rates from the current surcharge of
0.015¢ per kWh to a proposed surcharge of 0.251¢ per kWh (a 0.236¢ per kWh increase in the
customer rate). The Company requests an effective date of October 1, 2021, and that its
Application be processed by Modified Procedure.
On August 18, 2021, the Commission issued a Notice of Application and Notice of
Modified Procedure setting comment and reply comment deadlines. See Order No. 35135. The
Commission granted intervention into this case to Clearwater Paper Corporation. See Order No.
35141. On September 9, 2021, the Commission Staff (“Staff’”) filed comments and was the only
party to do so. The Company did not file reply comments.
Having reviewed the record, the Commission grants the Company’s PCA Application
as discussed in more detail below.
APPLICATION
The Company reported higher overall actual power supply expenses than amounts
included in retail rates. The Company noted increased power supply expenses were driven
primarily by increased thermal generation costs and issues with gas-fired generation of about $12.5
million that was offset by $4.7 million in favorable net purchases and transmission expense. See
Direct Testimony of Annette M. Brandon at p. 9. The Company stated this results in a proposed
net surcharge for Idaho.
Last year, the Company’s PCA application resulted in a surcharge to customers of
0.015¢ per kWh. Application at 6. The Company proposed a PCA surcharge rate of 0.251¢ per

ORDER NO. 35184 2
kWh for all customers beginning October 1, 2021. Id. The proposed rate adjustment would
surcharge customers about $7.6 million. Id. at 5. The net effect of the expiring surcharge and the
proposed surcharge is an overall increase in revenue of about $7.2 million or 2.8%. Id. The
Company asserted the resulting percentage increases will vary by customer rate schedule because
the PCA rate changes are spread on a uniform cents-per kWh basis. Id. The Company asserted
that if its PCA surcharge rate request is approved residential customers using an average of 892
kWhs per month would see their monthly bills increase from $85.63 to $87.74, an increase of
$2.11 per month, or 2.5%. Id. at 5.
STAFF COMMENTS
Staff reviewed the Company’s Application and direct testimony of Company witnesses
Annette Brandon and Kaylene Schultz, along with additional information received during the
ensuing audit and production requests. Based on its review, Staff recommended approval of the
Company’s Application updating Schedule 66, Temporary Power Cost Adjustment - Idaho, which
will increase the Company's revenue by $7.2 million. Staff’s conclusions and rationale are
discussed in further detail below.
1. PCA Deferral
Staff audited the Company’s Net Power Costs (“NPC”) by reviewing samples of the
Company’s natural gas purchases, market purchases, transmission revenues and expenses, and
other deferral items. Staff Comments at 2. Based on its review, Staff was reasonably assured the
various power cost transactions were reasonable, prudently incurred, and complied with previous
Commission orders and the Company’s own risk management policies. Id. The deferral amount
represents the under-recovery of NPC through base rates during the deferral period. Id.
Staff noted the Company made more sales than were included in base rates. Id. at 3.
Based on increased sales, the Load Change Adjustment Rate (“LCAR”) is a credit of $933,482
against the Idaho deferral balance. Id. Staff stated the Company used the correct LCAR of
$22.00/Megawatt-hour (“MWh”), for the months of July 2020 through June 2021. Id.
The net power supply deferral captures the difference between actual NPC and NPC
embedded in base rates for the PCA year ending June 30, 2021. Id. Purchased power costs made
up the largest share of the difference between actual and authorized costs. Id. at 4. During the
PCA year, Idaho’s share of purchased power was $10,848,821 greater than authorized in base
rates. Id. Staff also stated expenses for the Palouse Wind and Rattlesnake Wind projects are

ORDER NO. 35184 3
included in the Purchased Power costs. Id. In Case No. AVU-E-19-04, Palouse Wind and
Rattlesnake Wind projects were not included in base rates and the expenses continue to be
recovered through the PCA. Id. This expense treatment requires Avista shareholders to cover
10% of the Idaho jurisdictional costs of Palouse Wind and Rattlesnake Wind projects. Id.
Staff noted the revenue generated from the Company’s sales of renewable energy
credits (“RECs”) was more than the amounts authorized in base rates. Id. Idaho customers are
credited $970,811 for REC revenues which offset the deferral balance. Id.
In Order No. 34252, the Commission authorized a Power Purchase and Sale Agreement
(“PPA”) between the Company and Clearwater Paper Corporation (“Clearwater”). Id. Clearwater
owns and operates four thermal electric generating units rated at 132.2 Megawatts. Id. The units
are cogeneration qualifying facilities (“QF”) under the Public Utility Regulatory Policies Act of
1978. Id. The PPA allows the Company to purchase the energy and capacity from Clearwater and
directly assign it to the Idaho jurisdiction. Id. Any monthly difference between actual Clearwater
power purchase expense and the amount embedded in the base retail rates developed in the AVU-
E-19-04 general rate case, is tracked through the PCA. Id. at 4-5. Parties and ratepayers benefit
from the Company selling bundled RECs under the new PPA. Id. at 5. Bundled RECs generally
command a higher price than unbundled RECs. Id. Idaho customers received a benefit of
$166,974 from the PPA during the PCA year which helped offset the deferral balance. Id.
Staff noted the $446,075 credit for REC Retirement benefits is to credit Idaho
customers for benefits related to the RECs retired to meet Washington’s Renewable Portfolio
Standard (“RPS”). Id. The RECs used to meet Washington RPS are tracked 100% in the PCA.
Id. The credit is based on the Idaho allocation of RECs that were retired to meet Washington RPS
(WA I-937) that otherwise would have been sold. Id.
2. Prudency of NPC
Staff believed the Company’s actual NPC during the PCA year (July 2020 through June
2021) is reasonable. Id. For accounts that make up NPC, Staff compared the actual amount of
generation and unit costs to amounts used in base rates. Id. Because the PCA deferral consists
primarily of authorized versus actual NPC, the analysis helped explain this year’s surcharge. Id.
Based on the analysis, Staff believed the Company dispatched its available resources, purchased
power from the wholesale market, and transacted off-system sales to serve customer load in a
prudent manner. Id.

ORDER NO. 35184 4
Staff noted the three major drivers affecting NPC in this year’s PCA were planned
maintenance downtime for Coyote Springs 2 from March 2021 through June 2021, an increase in
market purchases and a reduction in off-system sales, and an increase in thermal fuel costs when
compared to amounts assumed in base rates. Id. at 5-6.
3. Analysis of PCA Rates
Staff verified the Company’s calculation of its proposed PCA rate was accurate and
would reasonably charge customers for under-collection of actual NPC during the PCA year.1 Id.
at 6-7.
4. Impact of the Company’s Rate Adjustment Applications
Staff discussed the aggregate effect of the Company’s Fixed Cost Adjustment (“FCA”)
and the Bonneville Power Administration Residential and Small Farm Energy Rate Adjustment
(“BPA”) filings, that are also proposed to be effective October 1, 2021. Id. at 7-8. The Company’s
FCA filing, AVU-E-21-08, if approved would decrease electric revenues by about $0.7 million
(0.2% decrease). The BPA credit, AVU-E-21-10, if approved would decrease electric revenues
by approximately $0.5 million (0.4% decrease). The $7.2 million increase in electric revenues
from the proposed PCA filing represents a 2.8% revenue increase. The net effect of the Company’s
three filings (FCA, PCA, and BPA credit) if approved as filed would increase electric revenues by
$5.9 million or a 2.1% increase.
5. Customer Notice
The Company’s press release and customer notice were included with its Application.
Staff noted each document addresses the PCA, FCA and BPA credit cases. Id. at 8. Staff reviewed
the documents and determined both met the requirements of Rule 125 of the Commission’s Rules
of Procedure. See IDAPA 31.01.01.125. Id.
The Commission set a comment deadline of September 9, 2021. Id. Staff noted some
customers in the last billing cycles will not have received/and or had adequate time to submit
comments before the deadline. Id. Staff believed customers must have the opportunity to file
comments and have those comments considered by the Commission. Id. Staff recommended that
the Commission accept late filed comments from customers. Id. As of September 17, 2021, no
customer comments had been filed in this case.

1 Staff comments included Table No. 4 with details of how the new rate in Schedule 66 would affect different classes
of consumers.

ORDER NO. 35184 5
6. Staff Recommendation
Based on its review of the Application and an audit of the PCA components, Staff
recommended that the Commission approve the Company’s request to revise its tariff Schedule
66, Temporary Power Cost Adjustment - Idaho, as filed in Exhibit A of the Application, which
will allow the Company to collect a surcharge of 0.251¢ per kWh. Id. at 9. Additionally, Staff
recommended that the Company continue to file monthly PCA expense reports. Lastly, Staff
recommended the Commission accept late-filed comments from customers. Id.
COMMISSION FINDINGS AND DECISION
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, 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 methodology
adheres to the Commission’s prior orders regarding the PCA. Thus, we accept the deferral balance
in the surcharge direction for the period of July 1, 2020 to June 30, 2021, of $7,469,770. We
further find the Company’s proposed PCA surcharge rate of 0.251¢ per kWh to be just and
reasonable and we approve it along with the proposed tariff Schedule 66 which will be effective
October 1, 2021.
We are aware that some customers may not have received notice of the Application in
time for them to comment on it by the comment deadline. Had any comments been filed between
then and the date of this Order, we would have considered them. No customer comments have
been filed in this case.
O R D E R
IT IS HEREBY ORDERED that the Company’s Application regarding its annual PCA
rate adjustment is approved. The Company’s deferred power costs of $7,469,770 from July 1,
2020 through June 30, 2021, are approved. The Company may implement a PCA surcharge rate
of 0.251¢ per kWh and the Company’s proposed Schedule 66 is approved, to be effective October
1, 2021.
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 regarding any matter

ORDER NO. 35184 6
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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30th day
of September 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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