20230823Comments of the Commission Staff.pdf

ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION ''
"
i 6
PO BOX 83720
BOISE,IDAHO 83720-0074
[phone]
IDAHO BAR NO.10221
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )OF AVISTA COPORATION FOR AN )CASE NO.AVU-E-23-06
ACCOUNTING ORDER AUTHORIZING )DEFERRAL OF CERTAIN COSTS )ASSOCIATED WITH THE MONTANA )COMMENTS OF THE
RIVERBED LEASE AGREEMENT )COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
through its Attorneyof record,Adam Triplett,Deputy AttorneyGeneral,submits the following
comments.
BACKGROUND
On June 30,2023,Avista Corporation,dba Avista Utilities ("Company")applied for
Commission authorization to defer $1,298,000of approximately $3.8 million of total interest
costs associated with the Montana Riverbed Lease Agreement due to the State of Montana in the
third quarter of 2023 ("Idaho's Share").Application at 7;Attachment A.The Company would
record Idaho's Share of the interest costs as a regulatory asset in FERC Account 182.3-Other
Regulator Assets.The Company requested the Application be processed by Modified Procedure.
STAFF COMMENTS 1 August 23,2023
The Company represented that,on May 4,2023,it received notice funds were released
from an escrow account holding lease payments owed to the State of Montana for the years 2016
through 2020 under the Montana Riverbed Lease Agreement ("Lease").
The Company represented that it also received notice of an additional amount it owes to
Montana consisting of interest on the lease payments.As of February 28, 2023, the additional
amount the Company owed was $3,766,353,which would be payableto Montana within thirty
days of dispersion of the funds held in the escrow account.
The Company represented that the lease payments arise from a settlement agreement
resolving a 2006 lawsuit in which Montana sought past and future rent for a dam owned by the
Company and PPL Montana that allegedly encroached upon the bed and banks of navigable
waters Montana owns.
The Company represented that,after failed attempts to renegotiatethe lease payments in
2016,lease payments for the years 2016 through 2020 were made under protest into an escrow
account.The escrow agreement provided that the Company would owe Montana the lease
payments with interest reflecting the rate of return of the unified investment program
administered by the Montana Board of Investment.
The Company represented that it reached a settlement with Montana in 2021 regarding
the lease payments and began making the payments directly to Montana again.
The Company represented that,although it has been recovering the lease payments from
ratepayers since 2007,deferral of Idaho's Share of the interest costs is necessary to facilitate
recovery of those costs from ratepayers in the future.
The Company proposed recording Idaho's Share of the interest costs as a regulatory asset
in FERC Account 182.3-OtherRegulator Assets until the Company begins recovery of the
interest costs in its next general rate case.
STAFF ANALYSIS
Staff reviewed the Application for an accounting order authorizing Avista to defer certain
costs associated with the Lease and is generally supportive of the Company's request.As noted
in its Application,the Company is requesting authorityto defer the interest costs associated with
the Lease in account 182.3-OtherRegulator Assets. The interest payments would be allocated to
the Washington and Idahojurisdictionsbased on the production/transmission ratio in effect at the
STAFF COMMENTS 2 August 23, 2023
time the payment is made. The Company proposes to record Idaho's share of the interest
payment, approximately $1.3 million of the estimated $3.8 million total, in a subaccount of
FERC Account 182.3. The amortization period for recovery will be established in the
Company's next general rate case.
The Company requested a carrying cost on the Idaho share of the deferral at the
Company's authorize cost of debt to be established in its pending general rate case, Case No.
A VU-E-23-01. As standard in recent accounting orders, Staff does not support a carrying
charge. Granting the Company deferral of expenses that would likely otherwise be
unrecoverable is sufficient relief to the Company. No law directs the Commission to allow a
carrying charge on deferral accounts. The Commission has discretionary authority, affirmed by
the Supreme Court, in determining whether to approve a carrying charge on a deferral account.
See Idaho Power Company v. Idaho State Tax Commission, 141 Idaho 316, 323, 109 P .3d 170,
177 (2005).
STAFF RECOMMENDATION
Staff recommends partial approval of the Company's Application for an accounting order
authorizing Deferral of Certain Costs Associated with The Montana Riverbed Lease Agreement.
Staff recommends permitting the Company to defer Idaho's share of the interest payments on the
Lease and record them in a subaccount ofFERC Account No. 182.3-Other Regulatory Assets.
Recovery of the deferred interest payments should be determined in the Company's next general
rate case. Additionally, Staff recommends that the Company not receive a carrying charge on
the deferred interest expenses.
Respectfully submitted this 23rd day of August 2023.
Deputy Attorney General
Technical Staff: Leena Gilman i:umisc/comments/ avue23.6lgde comments STAFF COMMENTS 3 August 23, 2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23RD DAY OF AUGUST 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION TO AVISTACORPORATION,IN CASE NO.AVU-E-23-06,BY E-MAILING A COPY THEREOF
TO THE FOLLOWING:
PATRICK EHRBAR DAVID J MEYER
DIR OF REGULATORY AFFAIRS VP &CHIEF COUNSEL
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail:[e-mail] E-mail:[e-mail]
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE