20220929Final_Order_No_35540.pdf

ORDER NO. 35540 1

Office of the Secretary
Service Date
September 29, 2022
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE FIXED COST
ADJUSTMENT MECHANISM (FCA)
ANNUAL RATE ADJUSTMENT FILING OF
AVISTA CORPORATION
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CASE NO. AVU-E-22-12

ORDER NO. 35540

On July 29, 2022, Avista Corporation (“Company” or “Avista”) applied to the Idaho Public
Utilities Commission (“Commission”) for approval of deferrals for the period of July 1, 2021,
through June 30, 2022, and for authorization for an adjustment to its Fixed Cost Adjustment
(“FCA”) rates for electric service from October 1, 2022, through September 30, 2023.
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 costs1 of providing service, thus decoupling
the utility’s revenues from its customers’ energy usage. This decoupling removes a utility’s
incentive to increase sales to increase revenue and profits and encourages energy conservation.
The Commission originally approved a three-year pilot program of the Company’s FCA as part of
the approved settlement of the Company’s 2015 rate case. Order No. 33437 at 10. 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 the program was functioning as intended. On June 15, 2018, the Commission
approved an addendum to the settlement that 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 extend its FCA mechanism for both gas and electric customers through March 31,
2025. Order No. 34502.
APPLICATION
The Company proposed a rate rebate for its Residential and Non-Residential electric
customer groups based on the amount of deferred revenue recorded for each group between July
2021 and June 2022. The Company mostly attributed the proposed changes to drivers including
the weather during the 12 months ending June 30, 2022, energy efficiency, and “other” drivers.

1 “Fixed costs” are a utility’s costs to provide service, such as infrastructure and customer service, which do not vary
with energy use, output, or production, and remain relatively stable between rate cases.
ORDER NO. 35540 2

The Company represented that it recorded $5,039,128 in the rebate direction in deferred
revenue for the electric Residential customer group for the 12 months ending June 30, 2022. The
Company stated that the proposed rate of 0.405¢ per kWh was designed to rebate $5,074,681 to
the Company’s Residential electric customers served under rate Schedule 1. The Company
represented that the deferral balance for the 12 months ending June 30, 2022, plus interest through
September, and any outstanding balance approved for recovery in the prior year FCA rate filing
would be transferred into a regulatory liability balancing account, and the balance in the account
would be reduced each month by the revenue collected under the tariff.
The Company represented that it recorded $226,046 in the rebate direction in deferred
revenue for the electric Non-Residential Group for the 12 months ending June 30, 2022. The
Company stated that the proposed rebate rate of 0.034¢ per kWh was designed to recover $335,554
from commercial and industrial customers served under rate Schedules 11, 12, 21, 22, 31, and 32.
The Company represented that the deferral balance, plus interest through September, would be
transferred into a regulatory asset balancing account, and the balance in the account would be
reduced each month by the revenue collected under the tariff.
The Company submitted its Residential and Non-Residential rate calculations, support for
its deferrals, and its proposed FCA Schedule 75 with its Application. The Company requested that
the adjustment have an October 1, 2022, effective date and that the Commission process the request
under Modified Procedure.
STAFF COMMENTS
Staff reviewed the Company’s Application, the calculations of its residential and non-
residential FCA rates, and the Company’s workpapers and responses to production requests. Staff
reviewed the FCA deferral balances and associated rates for both 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
that the authorized amounts used to calculate the deferral were the same amounts used to determine
base rates authorized during the deferral period. Staff also examined the internal control processes
and the associated internal audit documents and found them to be compliant.
The following table presents the combined effect of expiring FCA rates and the proposed
2022 rates.
ORDER NO. 35540 3

Table No. 1: Present and Proposed FCA Surcharge Changes
Expiring Present
FCA Revenue
Proposed FCA
Revenue
Change in FCA
Revenue
Residential (2,368,185) (5,074,681) (2,706,497)
Non-Residential (2,060,121) (355,554) (2,415,675)
Total (308,064) (5,430,235) (5,122,172)

With respect to energy consumption, the residential customer FCA rebate deferrals, for the
FCA Deferral Period, were the result of higher monthly use-per-customer (“UPC”) than what was
embedded in the 2019 test year. Residential average monthly use per-customer was 45 kWh higher
than the 2019 UPC. The FCA rebate deferrals for non-residential customers were the result of
slightly lower monthly use-per-customer than what was embedded in the 2019 test year. Non-
residential average monthly use-per-customer was 29 kWh lower.
The Company identified the primary drivers for the change in use-per-customer as
Weather, Energy Efficiency, and Other. The following table summarizes the impact of these
drivers on the FCA Revenues received from customers in 2021.
Table No. 2: Effects of the Drivers on UPC and FCA Revenue ($ in Million)
Source Residential Non-Residential
UPC (kWh) FCA Revenue UPC (kWh) FCA Revenue
Weather 15 $1.3 28 0.4
Energy Efficiency (2) ($0.1) (20) ($0.3)
Other 32 $3.9 (37) $0.1
Total 45 $5.1 (29) $0.2

Staff reviewed the Company’s press release and customer notice that were included with
its Application. The notice was included with bills mailed to customers between August 11, 2022,
and September 9, 2022. Staff believed that both met the requirements of Rule 125 of the
Commission’s Rules of Procedure and provided customers a reasonable opportunity to file timely
comments with the Commission by the October 4, 2022, deadline.
Staff reviewed the combined impact of the Company’s three other proposed rate
adjustments effective October 1, 2022: the Company’s proposed Power Cost Adjustment (“PCA”)
filing, AVU-E-22-11; the Residential and Farm Energy Rate Adjustment or Residential Exchange
Program (“ResEx”), AVU-E-22-10; and, the Schedule 91, Energy Efficiency Rider Adjustment
ORDER NO. 35540 4

(“EE Rider”), AVU-E-22-09. Table No. 3 summarizes the overall impact to electric revenues of
the four filings.
Table No. 3: Summary of Overall Impact to Electric Revenues
Filing Change in Revenues % Change
PCA ($3,099,000) -1.2%
FCA ($5,122,171) -2.0%
ResEx Credit ($129,655) -0.1%
EE Rider ($3,626,534) -1.4%
Total ($11,977,360) -4.7%

STAFF RECOMMENDATION
Staff recommended that the Commission approve the Company’s Application allowing the
Company to rebate $2,706,497 to the Residential customer class and $2,415,615 to the Non-
residential customer class. Additionally, Staff recommended the Commission approve the
proposed Schedule 75 Fixed Cost Adjustment Mechanism – Electric tariff as filed, establishing
rebates of 0.405¢ per kWh for the Residential customer class and 0.034¢ per kWh for the Non-
residential customer class.
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 0.405¢ per kWh, and FCA Non-Residential Group
(Schedules 11, 12, 21, 22, 31 and 32) rebate rate of 0.034¢ 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, 2022.
ORDER
IT IS HEREBY ORDERED that the Company’s FCA deferrals for the period of July 1,
2021, through June 30, 2022, are approved.
ORDER NO. 35540 5

IT IS FURTHER ORDERED that the Company’s request for a FCA rebate rate of 0.405¢
per kWh for the Residential Group, and a FCA rebate rate of 0.034¢ per kWh for the Non-
Residential Group, both to become effective October 1, 2022, is approved.
IT IS FURTHER ORDERED the Company’s proposed tariff modifications to Tariff Sheet
75 are approved 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 upon this Order regarding 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 and 62-619.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 29th day of
September 2022.

ERIC ANDERSON, PRESIDENT

JOHN CHATBURN, COMMISSIONER

JOHN R. HAMMOND JR., COMMISSIONER
ATTEST:

Jan Noriyuki
Commission Secretary

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