20230731Schultz Direct Testimony.pdf

DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
1411 E. MISSION AVENUE
P. O. BOX 3727
SPOKANE, WASHINGTON 99220
PHONE: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER COST ) CASE NO. AVU-E-23-__
ADJUSTMENT (PCA) ANNUAL RATE )
ADJUSTMENT FILING OF AVISTA ) DIRECT TESTIMONY OF
CORPORATION ) KAYLENE J. SCHULTZ
FOR AVISTA CORPORATION
08

Schultz, Di 1
Avista Corporation
Q. Please state your name, present position with Avista Corporation, and 1
business address. 2
A. My name is Kaylene J. Schultz. I am employed by Avista Corporation as 3
Manager of Regulatory Affairs in the Regulatory Affairs Department. My business address 4
is 1411 East Mission, Spokane, Washington. 5
Q. Would you briefly describe your educational background and 6
professional experience? 7
A. Yes. I am a graduate from Gonzaga University with a Bachelor of Business 8
Administration degree, majoring in both Accounting and Business Administration, with a 9
concentration in Management Information Systems. After spending nearly eight years in 10
the banking and capital markets sector, I joined Avista in September 2015 as a Natural Gas 11
Analyst in the Company’s Gas Supply Department, now Energy Supply. In January 2019, 12
I joined the Regulatory Affairs Department as a Regulatory Affairs Analyst where I was 13
responsible for preparing various annual filings and applications. In my current role as 14
Manager of Regulatory Affairs, my primary areas of responsibility include preparation of 15
general rate case filings, annual power supply related filings, among other things. 16
Q. What is the scope of your testimony in this proceeding? 17
A. My testimony provides a summary of the accounting entries and account 18
balances related to the PCA for the 12-months ended June 30, 2023. My testimony also 19
addresses the proposed surcharge to be effective October 1, 2023, which will replace the 20
existing surcharge that went into effect on October 1, 2022. 21
Q. Are you sponsoring any Exhibits? 22
A. Yes. I am sponsoring Exhibit No. KJS-1. Page 1 of that exhibit details the 23

Schultz, Di 2
Avista Corporation
calculation of the proposed uniform cents per kilowatt-hour PCA surcharge of 0.499¢, as 1
well as the impact of the proposed PCA surcharge rate by rate schedule. Page 2 is the 2
proposed PCA tariff, Schedule 66. 3
Q. Would you please provide an overview of the most recent history of 4
Avista’s PCA methodology that has been approved by the Idaho Public Utilities 5
Commission (“IPUC”)? 6
A. Yes. On June 29, 2007, the Commission issued Order No. 30361 in Case 7
No. AVU-E-07-01. That case dealt with the review of the PCA methodology and method 8
of recovery. The Commission approved a change in the PCA methodology from a trigger 9
and cap mechanism to a single annual PCA rate adjustment filing requirement. 10
The Commission also approved a change in the method of the PCA deferral rate 11
adjustment from a uniform percentage basis to a uniform cents per kilowatt-hour basis, 12
effective with the October 1, 2007 rate change. By Order No. 32206 in Case No. GNR-E-13
10-03 dated March 15, 2011, the Commission modified the retail revenue credit 14
methodology and approved a Load Change Adjustment Rate based on the energy-classified 15
portion of embedded production revenue requirement effective April 1, 2011. 16
The Commission approved the following procedural schedule for administering the 17
annual PCA filings: 18
August 1 Company filing for prior July – June deferral period 19
20
September 1 Review and comments by Staff and other interested 21
parties 22
23
October 1 Commission Order and effective date of PCA rate 24
adjustment 25
26
Q. Would you please summarize the filing and Order associated with the 27

Schultz, Di 3
Avista Corporation
existing PCA rate? 1
A. Yes. On July 29, 2022, Avista filed its annual PCA rate adjustment for the 2
period July 1, 2021 through June 30, 2022, and requested a PCA surcharge rate of 0.150¢ 3
per kilowatt-hour effective October 1, 2022. The Commission approved that request in 4
Case No. AVU-E-22-11, by Order No. 35543, dated September 29, 2022. 5
Q. Does the present filing conform to the requirements of the prior 6
Commission Orders regarding the PCA? 7
A. Yes. Consistent with prior years, the proposed PCA rate adjustment is based 8
on the following: 9
• Deferrals for the period July 1, 2022 through June 30, 2023, including interest, 10
11
• Unamortized balance remaining from the period October 1, 2022 through June 12
30, 2023, including interest, and 13
14
• Forecast amortization and interest from July 1, 2023 through September 30, 15
2023. 16
17
Q. Were there additional directives in the last case, Case No. AVU-E-22-18
11, that the Company was ordered and complied with? 19
A. Yes. In Case No. AVU-E-22-11, Order No. 35543, the Company was 20
directed to explain how its methodology for measuring Energy Imbalance Market (EIM) 21
benefits, and how that method differs from CAISO’s method, in a compliance filing 15 22
days from the date of Order No. 35543. On October 11, 2022, the Company filed a 23
Compliance Filing regarding this matter. Per Order No. 35606, the Company complied with 24
this directive. 25
Q. What were the amounts of deferrals and interest for the period July 1, 26
2022 through June 30, 2023? 27

Schultz, Di 4
Avista Corporation
A. Table No. 1 below summarizes the charges for this period: 1
Table No. 1 – Summary of Deferral Balance 2
3
4
5
Company witness Mr. Holland discusses the components that make up the 6
$17,262,258 deferral balance shown above. The $1,423,542 credit for Renewable Energy 7
Credit Retirement benefits is to credit Idaho customers for benefits related to the renewable 8
energy credits (REC) retired to meet Washington’s renewable portfolio standards (RPS). 9
The RECs used to meet Washington RPS are tracked 100% in the PCA. The credit is based 10
on the Idaho allocation of RECs that were retired to meet Washington RPS that would have 11
been otherwise sold. The $178,285 interest amount represents interest for the twelve-12
month period July 1, 2022 through June 30, 2023. Interest for the 12-month period was 13
calculated using the Customer Deposit Rate of 1% for July 2022 through December 2022, 14
and 2% for January 2023 through June 2023, per prior Commission order. 15
Q. What surcharge rate is the Company proposing to be effective October 16
1, 2023? 17
A. The Company is proposing a uniform cents per kilowatt-hour PCA 18
surcharge rate of 0.499¢ to be effective October 1, 2023. Page 1 of Exhibit No. KJS-1 19
shows the calculation of the proposed rate. The proposed rate is designed to surcharge the 20
following as shown in Table No. 2 below: 21
Deferrals (July 2022 - June 2023)17,262,258$
Renewable Energy Credit Retirement Benefit (1,423,542)$
Interest 178,285$
Total Deferral Balance 16,017,001$

Schultz, Di 5
Avista Corporation
Deferrals (July 2022 - June 2023)17,262,258$
RPS Compliance (1,423,542)$
Renewable Energy Credit Retirement Benefit 178,285$
Total Deferral Balance 16,017,001$
Unamortized Balance from Previous Deferrals (prior to July 1, 2022)6,359,332$
Amortization July 2022 - June 2023 (5,767,058)$
Interest 44,262$
Total Remaining Amortization Balance 636,536$
Projected Amortization and Total Interest (July 2023-September 2023)(1,048,689)$
TOTAL BALANCE FOR AMORTIZATION 15,604,848$
Table No. 2 – Amortization Balance Calculation 1
2
3
4
5
6
7
8
9
10
After applying the conversion factor related to commission fees and uncollectible 11
customer accounts to the “Total Balance for Amortization” shown above, the resulting 12
balance of $15,664,011 is divided by forecasted kilowatt-hours to derive the proposed 13
surcharge rate of 0.499¢ per kilowatt-hour.1 14
Q. What is the impact of the proposed PCA rate increase by rate schedule? 15
A. Table No. 3 below shows the effect of the proposed PCA rate increase by 16
rate schedule. The proposed surcharge rate is 0.499¢ per kilowatt-hour, which is 0.349¢ 17
per kilowatt-hour more than the existing surcharge rate of 0.150¢ per kilowatt-hour. The 18
overall increase in revenue is 4.3%, or $11.0 million. 19

1 Total Balance for Amortization $15,604,848 divided by conversion factor 0.996223 = $15,664,011.

Schultz, Di 6
Avista Corporation
Schedule Percent change
Type of Service Number on Billed Revenue
Residential 1 3.8%
General Service 11,12 4.0%
Large General Service 21,22 4.2%
Extra Large General Service 25 6.1%
Clearwater 25P 7.6%
Pumping Service 31,32 3.8%
Street & Area Lights 41-49 0.9%
Total 4.3%
Table No. 3 – Revenue Impact by Rate Schedule 1
2
3
4
5
6
7
8
Q. What will be the impact of the proposed change on an average 9
residential customer? 10
A. Residential customers using an average of 927 kilowatt-hours per month 11
would see their monthly bills increase from $85.40 to $88.63, an increase of $3.23 per 12
month, or 3.8%. This bill impact does not consider the effects of other filings Avista has 13
made that will go into effect on October 1, 2023. 14
Q. What programs are in place to help Avista customers pay or manage 15
their bills? 16
A. The Company has several programs available to assist customers with 17
managing their utility bills. Avista’s Comfort Level Billing (CLB) plan, based on historical 18
charges or an estimate of future charges,2 approximates a monthly average of the 19
customer’s estimated annual billings. The concept of this plan is to help the customer 20
budget for their Avista bill throughout the year by leveling out the seasonal highs and lows 21
of their monthly bills. Additionally, the Company’s Customer Assistance Referral and 22

2 Estimates of future charges are only used when the premise does not have adequate usage history to
determine approximate annual average use.

Schultz, Di 7
Avista Corporation
Evaluation Services (CARES) program provides specialized assistance to customers 1
encountering medical crises, unemployment, or other personal or financial hardships. This 2
program offers customers access to specifically-trained CARES representatives who 3
provide support to the customer by way of payment arrangements, medical certificates, or 4
referrals to local Community Action Agencies (CAAs, or Agencies) or other organizations 5
for help with—among other things—housing, utilities, and medical assistance. 6
Idaho customers who have children, elderly or infirmed persons living in the 7
household may also qualify for Winter Moratorium between the months of December 8
through February each year. From December 1 through February 28, customers are not 9
required to pay their bills in-full and can instead opt to defer payment throughout these 10
winter months or make partial payments. The Winter Payment Plan, offered from 11
November 1 through March 31 annually, provides for lower winter bill payments by 12
allowing customers to make monthly payments equal to one-half of the levelized bill 13
amounts, with the balance then due in-full, or a new payment arrangement established on 14
the balance, by April 1st. In addition, the Company also offers flexible due dates and both 15
short-term as well as long-term payment arrangements for customers having difficulty 16
paying their bills. 17
Avista also has many convenient billing and payment options available for its 18
customers. For billing purposes, all customers have the opportunity to designate their 19
preferred communication method for their billing and associated reminders—such options 20
include paper copy, e-mail, or even text messaging. For payments, the Automatic Payment 21
Service (APS) allows customers to opt to have their monthly utility bill deducted directly 22
from their checking account or credit card automatically each month. Other payment 23

Schultz, Di 8
Avista Corporation
services include debit and credit card service, check-by-phone or over the web, preferred 1
due date, electronic billing, pay-by-text, as well as many local drop boxes or pay stations 2
for cash or check payments. 3
For Avista’s low-income customers, the Federal Low-Income Home Energy 4
Assistance Program (LIHEAP) provides funding to assist them in paying their electric and 5
natural gas bills. These funds are distributed through local CAAs. Additionally, Idaho’s 6
Housing Preservation Program offers emergency assistance for utility and/or rental 7
payments for qualifying low-income households.3 Lastly, Avista’s Project Share is a 8
voluntary contribution option allowing customers to contribute donations that are then 9
distributed through local Agencies to customers experiencing financial hardship. 10
Q. Does that conclude your pre-filed direct testimony? 11
A. Yes, it does. 12

3 The Housing Preservation Program, offered by Idaho Housing and Finance Association (by award from the
U.S. Department of the Treasury), can provide up to 15 months of utility and/or rental payment assistance for
Idaho renters who earn less than 80% of the Area Median Income (AMI). www.idahohousing.com/hpp/