20220906Comments.pdf

CHRIS BURDTN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLTC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
I I331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FIXED COST
ADJUSTMENT MECHANISM (FCA)
ANNUAL RATE ADJUSTMENT FILING OF
AVISTA CORPORATION
CASE NO. AVU-E-22-I2
COMMENTS OF THE
COMMISSION STAFF
Staff of the Idaho Public Utilities Commission ("Staff'), by and through its Attorney of
record, Chris Burdin, Deputy Attomey General, submits the following comments.
BACKGROUND
On July 29,2022, Avista Corporation ("Company" or "Avista") applied to the Idaho
Public Utilities Commission ("Commission") for approval of defenals for the period of July l,
2021, through June 30, 2022 ("FCA Deferral Period"), and for authorization for an adjustment to
its Fixed Cost Adjustment ("FCA") rates for electric service from October 1,2022, through
September 30.2023.
The Company proposed that the FCA rate for the Residential Group (Schedule 1) change
from a present rebate rate of 0.189 cents to a proposed rebate rate of 0.405 cents per kilowatt-
hour ("kWh"). The Company proposed that the FCA rate for the Non-Residential Group
(Schedules 11,12,21,22,31 and 32) change from a present surcharge rate of 0.197 cents to a
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ISTAFF COMMENTS SEPTEMBER 6,2022
proposed rebate rate of 0.034 cents per kWh. The Company represented that the Residential
Group rate change represents a$2.7 million, or2.4o/o, decrease to Schedule 1 customers, and the
Non-Residential group rate change represents a$2.4 million, or 2.5Yo decrease. The Company
requested that the adjustment have an October 1,2022, effective date and that the Commission
process the request under Modified Procedure.
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 costsl 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. OrderNo. 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.
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 Jlur;re 2022. The Company mostly attributes the proposed changes to drivers including
the weather during the 12 months ending June 30, 2022, energy efficiency, and "other" drivers.
The Company represented that it recorded $5,039,128 in the rebate direction in deferred
revenue for the electric Residential customer group for the FCA Deferral Period. The Company
stated that the proposed rate of 0.405 cents per kWh is designed to rebate $5,074,681 to the
Company's Residential electric customers served under rate Schedule l. The Company
represented that the deferal balance for the FCA Defenal Period, 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.
I "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.
2STAFF COMMENTS SEPTEMBER 6,2022
The Company represented that it recorded $226,046 in the rebate direction in deferred
revenue for the electric Non-Residential Group for the FCA Deferral Period. The Company
stated that the proposed rebate rate of 0.034 cents per kWh is designed to recover $335,554 from
commercial and industrial customers served under rate Schedules I l, 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.
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 these documents, Staff recommends that the Commission
approve the Company's proposed tariff Schedule 75 rebates for the residential and non-
residential customer classes.
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 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 intemal
control processes and the associated intemal audit documents and found them to be compliant.
The Company proposed a rebate rate for both its residential and non-residential electric
customer groups based on the amount of deferred revenue recorded for each group during the
FCA Deferral Period. The Company proposed to change the rate from the present rebate rate of
0.189 cents per kWh to a rebate rate of 0.405 cents per kWh, a decrease of 0.216 cents for
residential customers. This is a decrease of $2.7 million to customers, or 2.4%o. For the Non-
residential Group, the Company proposed to change the present surcharge rate of 0.197 cents per
kWh to a rebate rate of 0.034 cents per kWh, a decrease of 0.231 cents. This is a decrease of
$2.4 million, or 2.5oh. The combined effect of expiring FCA rates and the proposed 2022 rates
JSTAFF COMMENTS SEPTEMBER 6,2022
are shown in the table below
Table No. 1: Present and Proposed FCA Surcharse 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,l2l)(355,554)(2,415,675)
Total (308,064)(5,430,235)(5)1'))1 72)
Energy Consumption Drivers
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. First,
weather was colder than normal during the FCA Deferral Period. Weather fluctuated with
offsetting impacts from heating and cooling throughout the period. This gave rise to a weather
normalization adjustment that required 20.5 million less kWhs for residential usage (15 kWh per
customer) and required 8.6 million less kWhs (27 kwh per customer) for non-residential usage.
The projected FCA revenue surplus associated with weather was approximately $1.3 million for
residential and $0.4 million for nonresidential customers.
Customers have realized energy efficiency savings from participation in the Company's
Demand Side Management programs. Estimated cumulative savings since the test year (derived
from the Idaho 2019,2020 and 2021 DSM Annual Reports) for residential customers is
approximately l6 million kWh and non-residential customers is approximately 46 million kWh.
The estimated FCA revenue shortfall associated with energy efficiency programmatic savings is
$0.1 million residential and $0.3 million non-residential.
The "other" drivers are related to items not easily quantifiable, such as the effects of non-
programmatic energy efficiency, changes in business cycles, etc. The following table
summarizes the impact of these drivers on the FCA Revenues received from customers in202l.
4STAFF COMMENTS SEPTEMBER 6,2022
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 Qe)$0.2
Table No. 2: Effects of the Drivers on UPC and FCA Revenue ($ in Million)
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Each document addresses the following cases: this case (AW-E-22-12), the natural gas FCA
(AVU-G-22-04), the PCA (AVU-E-22-11), the BPA Residential and Small Farm credit (AVU-
E-22-10), and the Electric Energy Efficiency Adjustment (AYU-E-22-09). Staffreviewed the
documents and determined both meet the requirements of Rule 125 of the Commission's Rules of
Procedure. See IDAPA 3 I .0 I .01 . 125. The notice was included with bills mailed to customers
beginning August 11,2022, and ending September 9 ,2022.
The Commission set a comment deadline of September 6, 2022. Some customers in the
last billing cycles will not have received 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. Staffrecommends that the Commission accept late filed
comments from customers. As of September 5, 2022, no customer comments had been filed.
Overall Impact of Four Filings Effective October 1,2022
The Company proposed four electric rate adjustments effective October I,2022. In this
case, AVU-E-22-12, if approved, the FCA proposal will decrease electric revenue by about
$5.1 million(2.O% decrease). In the second proposed filing, AVU-E-22-11, the Company's
proposal for the Power Cost Adjustment ("PCA") filing, will decrease the electric revenue by
approximately $3.0 million, or a (l .2o/o deuease). In the third proposed filing, the Residential
and Farm Energy Rate Adjustment or Residential Exchange Program ("ResEx"), AVU-E-22-10,
if approved, will decrease electric revenues by $0.1 million (0.1% decrease). The final proposed
filing, Schedule 91, Energy Efficiency Rider Adjustment ("EE Rider"), AVU-E-22-09,if
approved, will decrease electric revenues for participants by $3.6 million (l .4% decrease). The
5STAFF COMMENTS SEPTEMBER 6,2022
net effect of Company's four filings (FCA, PCA, ResEx, and EE Rider) will decrease electric
revenues by nearly $12.0 million (4.7% decrease). The average residential electric customer's
monthly bill may decrease by $a.10 or 4.8oh. Table No. 3 summarizes the overall impact to
electric revenues of the four filings.
Table No.3: Summarv of Overall Imnact to Electric Revenues
Filing Change in Revenues o/o Change
PCA ($3,099,000)-1.2%
FCA ($5,122,171)-2.0%
ResEx Credit ($129,655)-0.r%
EE Rider ($3,626,534)-r3%
Total ($11,977,360)-4.70h
STAFF RECOMMENDATION
Staff recommends 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 recommends the Commission approve the
proposed Schedule 75 Fixed Cost Adjustment Mechanism - Electric tariff as filed, establishing
rebates of 0.405 cents per kWh for the Residential customer class and 0.034 cents per kWh for
the Non-residential customer class. Additionally, Staff recommends the Commission consider
any late filed customer comments.
(rtLRespectfully submitted this day of September 2022
Chris Burdin
Deputy Attomey General
Technical Staff: Robin Maupin
Curtis Thaden
Travis Culbertson
i :umisc/commensl avue22.llcbrbcttnc comments
6STAFF COMMENTS SEPTEMBER 6,2022
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 6tr DAY OF SEPTEMBER 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU.E-22.12, BY E.MAILING A COPY THEREOF, TO THE
FOLLOWING:
PATRICK EHRBAR
DIRECTOR REGULATORY AFFAIRS
AVISTA CORPORATION
PO BOX3727
SPOKANE WA99220-3727
E-mail : [e-mail]
dockets @avi stacoro. com
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX3727
SPOKANE W499220-3727
E-mail: [e-mail]
CERTIFICATE OF SERVICE