20230412Comments.pdf

MICHAEL DUVAL
DEPUTY ATTORNEY GENERAL .cIDAHOPUBLICUTILITIESCOMMISSION
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.l1714
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-ABOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER AVISTA'S ANNUAL RATE )ADJUSTMENT FILING FOR ELECTRIC )CASE NO.AVU-E-23-03LINEEXTENSIONSCHEDULE51)
)COMMENTS OF THE
)COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission,by and through its Attorneyof
record,Michael Duval,Deputy AttorneyGeneral,submits the followingcomments.
BACKGROUND
On March 1,2023,Avista Corporation dba Avista Utilities ("Company")applied for
Commission approval to update costs and make administrative changes to the Company's
Electric Line Extension Schedule 51 ("Schedule 51")("Application").The Company requested
a May 1,2023,effective date.
Schedule 51 incorporates average costing for electrical facilities commonly used to
extend service.The Company stated that Schedule 51 sets forth "Basic and Exceptional Costs"
that have a fixed and variable component,with the variable component stated on a cost-per-foot
basis.Application at 2.The Company represents average costing has worked well and is not
proposing to change the conceptual structure of the tariff in the Application.Id.
STAFF COMMENTS 1 APRIL 12,2023
STAFF REVIEW
Staff has reviewed the Application,accompanying workpapers,and responses to Staff's
production requests.As a result of its investigation,Staff concludes the Company's method for
calculating average costs is consistent with past Schedule 51 filings and believes that the
proposed construction allowances are based on embedded line extension costs from the last
general rate case and are reasonable.Staff recommends approval of the update in average costs
and construction allowances in the Company's Electric Line Extension Schedule 5 l.
Update Calculation
Construction Allowances
The Company updated the allowances applicable to new residential,commercial,and
industrial customer services.The Company continues to use an embedded cost method for
calculating the revised allowances that is designed to ensure similar investment in
distribution/terminal facilities as those in current facilities are reflected in base rates.The
followingtable summarizes the proposed allowance changes.
Table No.1:Proposed Allowance Changes
Service Schedule Existing Proposed
Schedule 1 Individual Customer (per unit)$2,065 $2,095
Schedule 1 Duplex (per unit)$1,650 $1,675
Schedule 1 Multiplex(per unit)$1,240 $1,260
Schedule l1/12 (per kWh)$0.16674 $0.16986
Schedule 21/22 (per kWh)$0.15360 $0.15731
Schedule 31/32 (per kWh)$0.26623 $0.27217
Staff verified that the Company utilized its Cost of Service Study from its most recent
general rate case filing,which is updated with the base rates approved in Order No.35156 as the
basis of the embedded cost calculation.Staff reviewed the calculations for the proposed
allowances and believes the allowances are accurate.
STAFF COMMENTS 2 APRIL 12,2023
Average Costs
In its Application,the Company proposed updates to primary,secondary,service and
transformer average costs.These costs are calculated using recent average actual costs for
components includingtransformers and PVC Sweeps which are commonly used for line
extensions.The Company has used this method to update its line extension costs previously for
Schedule 51.The Company proposes to update both overhead and underground circuit line
extensions for primary and secondary voltages,as well as service for either underground or
overhead installations.Pad-mount and overhead transformer costs were also updated.
Subsequently,residential development costs were updated to reflect these revised costs.
The Company indicates that increased costs in materials,labor,and transportation are the
primary drivers of the update.Demand from competing markets,supply chain disruptions,and
the conflict in Ukraine have increased the costs of materials such as electric steel and aluminum.
Additionally,supply shortages in resin and thermo-plastics have increased the prices of PVC
products.These increases are demonstrated by large increases in individual component costs
such as transformers,meters,pipe,conduit,and sweeps.A comparison of the largest individual
component cost increases is shown in Table No.2 below.
Table No.2:Summary of Individual ComponentCost Increases
December 2021 December 2022 mTransformer-25KVA $1,700 $4,820 183.5%Transformer -50KVA $2,255 $5,660 151.0%Sweep PVC 3inch $10.32 $26.72 158.9%
Staff confirmed this informationand believes the Company's basis for the increase in
costs are reasonable.Both the present and proposed costs includingthe percent change are
shown in Table No.3 below.
STAFF COMMENTS 3 APRIL 12,2023
Table No.3:Summaryof Proposed Cost Changes
Present Proposed %Change
Overhead Primary Circuit
Fixed Cost $4,521 $4,875 7.8%
Variable Cost $8.75 $9.63 10.1%
UndergroundPrimary Circuit
Fixed Cost $1,958 $2,232 14.0%
Variable Cost $11.15 $13.07 17.2%
UndergroundSecondary Circuit
Fixed Cost $39 $600 53.0%
Variable Cost $11.55 $14.38 24.5%
Overhead Secondary Circuit
Fixed Cost $1,843 $1,976 7.2%
Overhead Service Circuit $3.96 $4.04 2.0%
UndergroundService Circuit $9.14 $l1.41 24.8%
Overhead Transformer $2,508 $3,615 44.1%
Pad mount Transformer $3,597 $7,598 111.2%
The Company asserts that because of these increases,residential development costs are
also higher as shown in Table No.4 below.Staff believes that the proposed updates reflect the
increases in cost inputs.
Table No.4:Residential Development Cost Changes
Residential Developments Present Proposed
Total Cost per Lot $2,070 $2,947
Less:Service Cost $458 $572
Developer Responsibility $1,612 $2,375
Developer Refundable Payment $1,612 $2,095
Builder Non-Refundable Payment $5 $852
Allowance $2,065 $2,095
STAFF COMMENTS 4 APRIL 12,2023
Each year,standard labor hours,materials,and vehicle support are combined with the
work management system's latest cost averages and overhead to produce the various line
extension cost estimates.Throughdiscovery,the Company states that the inputs for
developmentwork orders are based on informed judgement of employees with recent
construction experience.See Response to Production Request No.2 (c).From this response,
Staff assumes that the labor hours,materials,and vehicle support for each type of line extension
work were estimated based on employee experience.After a review of the information,Staff
believes that the estimates are reasonable;however,the qualityof evidence for these estimates
could be improved by providing actual data,and/or third-partyreputable benchmarks to support
the estimates.For future updates,Staff recommends that the Company clearly identify the hours,
materials,and vehicle support it assumed for each type of line extensionwork,it identify any
changes from the previous year,and it provide evidence and justification for the changes.
Specifically,Staff recommends that the Company provide actual work order examples for each
type of line extension work to provide confirmation of the standard estimates.
Customer Notice
The Company's customer notice was included with its Application.Staff reviewed the
document and determined that it meets the requirements of Rule 125 of the Commission's Rules
of Procedure (IDAPA 31.01.01).The notice was mailed to the relevant customers on March 8,
2023,providing a reasonable opportunity to file timely comments with the Commission by the
April 12,2023,comment deadline.As of April 11,2023,the Commission has received no
comments from customers.
STAFF RECOMMENDATIONS
Staff believes the Company's proposals are reasonable and conform with Commission
Order No.28562.Staff recommends the Company's proposed costs and allowances be
approved.Additionally,for future updates,Staff recommends that the Company clearly identify
the hours,materials,and vehicle support it assumed for each type of line extension work,identify
any changes from the previous year,provide evidence and justification for the changes,and
provide actual work order examples for line extension work.
STAFF COMMENTS 5 APRIL 12,2023
Respectfully submitted this day of April 2023.
Michael Duval
Deputy AttorneyGeneral
Technical Staff:Jason Talford
Matt Suess
Joseph Terry
Ty Johnson
Curtis Thaden
Kevin Keyt
i:umisc/comments/avue23.03mdjjtcomments
STAFF COMMENTS 6 APRIL 12,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 12th DAY OF APRIL 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,INCASENO.AVU-E-23-03,BY E-MAILING A COPY THEREOF TO THEFOLLOWING:
PATRICK EHRBAR DAVID J MEYERDIROFREGULATORYAFFAIRSVP&CHIEF COUNSELAVISTACORPORATIONAVISTACORPORATIONPOBOX3727POBOX3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727E-mail:[e-mail] E-mail:[e-mail]
[e-mail]
CERTIFICATE OF SERVICE