20230731CL_COS_Application.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-3727
Telephone [phone]
Toll Free 800-727-9170

July 31, 2023

State of Idaho
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise, ID 83714

Re: Case No. AVU-E-23-__
Electric Fixed Cost Adjustment Annual Rate Filing of Avista Corporation

Dear Commission Secretary:

Enclosed for electronic filing with the Commission is Avista’s electric Fixed Cost Adjustment
(FCA) annual rate adjustment filing. This filing consists of Avista’s Application, Exhibit A (the
Company’s proposed tariffs), Exhibit B (rate calculations), Exhibit C (12 months ending June 30,
2022 deferral), and Exhibit D (customer communications) in support of the Application. The
Company request that the proposed tariff sheets be made effective October 1, 2023

Electronic versions of the Company’s filing were emailed to the Commission, and the Service List,
on July 31, 2023.

Please direct any questions on this matter to me at [phone] or Joel Anderson at (509) 495-
2811.

Sincerely,

Patrick D. Ehrbar
Director of Regulatory Affairs

Enclosures

CASE NO. AVU-E-23-09
RECEIVED
Monday, July 31, 2023 12:49:52 PM
IDAHO PUBLIC
UTILITIES COMMISSION

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 1
DAVID J. MEYER 1
VICE PRESIDENT AND CHIEF COUNSEL FOR 2
REGULATORY AND GOVERNMENTAL AFFAIRS 3
AVISTA CORPORATION 4
1411 E. MISSION AVENUE 5
P. O. BOX 3727 6
SPOKANE, WASHINGTON 99220 7
PHONE: [phone], FAX: [phone]
9
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION 10
11
IN THE MATTER OF THE FIXED COST ) 12
ADJUSTMENT MECHANISM (FCA) ) CASE NO. AVU-E-23-__ 13
ANNUAL RATE ADJUSTMENT FILING ) APPLICATION OF AVISTA 14
OF AVISTA CORPORATION ) CORPORATION 15
16
17
I. INTRODUCTION 18
In accordance with Idaho Code §61-502, Commission Order No. 33437, and RP 19
052, Avista Corporation, doing business as Avista Utilities (hereinafter “Avista” or 20
“Company”), at 1411 East Mission Avenue, Spokane, Washington, respectfully makes 21
application to the Idaho Public Utilities Commission (“Commission”) for an order 22
approving the level of electric Fixed Cost Adjustment Mechanism (FCA) revenue deferred 23
during the twelve month period from July 2022 through June 2023 and authorizing FCA 24
rates for electric service from October 1, 2023 through September 30, 2024. The FCA rate 25
for the Residential Group (Schedule 1) is proposed to change from a present rebate rate of 26
0.405¢ to a proposed rebate rate of 0.540¢ per kilowatt-hour. The FCA rate for the Non-27
Residential Group (Schedules 11, 12, 21, 22, 31 and 32) is proposed to change from a 28
present rebate rate of 0.034¢ to a proposed rebate rate of 0.048¢ per kilowatt-hour. The 29

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 2
Residential Group rate change represents a $1.7 million, or 1.4%, decrease to Schedule 1 1
customers, and the Non-Residential group rate change represents a $0.2 million, or 0.2% 2
decrease. The combined effect of expiring FCA rates and the proposed 2023 rates are 3
shown on the table below. 4
5
6
7
The Company has requested an October 1, 2023 effective date. 8
The Company requests that this filing be processed under the Commission’s 9
Modified Procedure Rules (RP 201-204). Communications in reference to this Application 10
should be addressed to: 11
David J. Meyer, Esq. 12
Vice President and Chief Counsel for 13
Regulatory & Governmental Affairs 14
Avista Corporation 15
P.O. Box 3727 16
MSC-10 17
1411 E. Mission Ave 18
Spokane, WA 99220-3727 19
Phone: [phone]
[e-mail] 21
22
Patrick Ehrbar 23
Director of Regulatory Affairs 24
Avista Utilities 25
P.O. Box 3727 26
MSC-27 27
1411 E. Mission Ave 28
Spokane, WA 99220-3727 29
Phone: [phone]
[e-mail] 31
32

Expiring Present
FCA Revenue
Proposed FCA
Revenue
Proposed FCA
Decrease
Residential $ (5,216,672) $ (6,955,562) $ (1,738,891)
Non-Residential $ (370,939) $ (523,679) $ (152.740)

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 3
II. BACKGROUND 1
The purpose of the electric FCA is to adjust the Company’s Commission-2
authorized revenues from kilowatt-hour (“kWh”) sales, such that the Company’s revenues 3
will be recognized based on the number of customers served under the applicable electric 4
service schedules. The FCA allows the Company to: 1) defer the difference between actual 5
FCA-related revenue received from customers through volumetric rates, and the FCA-6
related revenue approved for recovery in the Company’s last general rate case on a per-7
customer basis; and 2) file a tariff to surcharge or rebate, by rate group, the total deferred 8
amount accumulated in the deferred revenue accounts for the prior January through 9
December time period. 10
In Case Nos. AVU-E-15-05 and AVU-G-15-01, the Commission in Order No. 11
33437 approved for Avista a Fixed Cost Adjustment Mechanism. On page 10 of Order 12
No. 33437, the Commission stated: 13
The parties have also agreed upon a three-year1 FCA pilot for electric and natural 14
gas operations. The FCA will compare actual FCA revenues to allowed FCA 15
revenues determined on a per-customer basis. Any differences will be deferred for 16
a rebate or surcharge. There are a number of customer safeguards, including that an 17
FCA surcharge cannot exceed a 3% annual rate adjustment. Any unrecovered 18
balances will be carried forward to recover in future years. Further, there is no limit 19
to the level of the FCA rebate. As part of the Stipulation, Staff and other interested 20
parties, will review the efficacy of the FCA after its second full year to ensure it is 21
functioning as intended. Fixed cost adjustment mechanisms are intended to 22
encourage conservation and allow customers more control over their bills. Further, 23
the proposed FCA will remove any financial disincentive of the Company to 24
encourage energy conservation. 25
26
Section 13 of the Stipulation and Settlement, as amended by Addendum to the Stipulation 27

1 On June 15, 2018, the Idaho Public Utilities Commission approved an Addendum to the Stipulation
which extended the term of the pilot for an additional year by Order No. 34085.

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 4
approved by the Commission in Order No. 34085 on June 15, 2018, provided further 1
details, reproduced below, regarding the mechanics of the fixed cost adjustment 2
mechanism. 3
A. FCA Mechanisms Term. The Parties agree to an initial FCA term of 4 years, 4
with a review of how the mechanisms have functioned conducted by Avista, Staff, 5
and other interested parties following the end of the third full year. Avista may 6
seek to extend the term of the mechanism prior to its expiration. 2 7
8
B. Rate Groups. There will be two rate groups established for both the electric 9
FCA and natural gas FCA: 10
11
Electric Customer Rate Groups: 12
1. Residential – Schedule 1 13
2. Commercial – Schedules 11, 12, 21, 22, 31, 32 14
15
Natural Gas Rate Groups: 16
1. Residential – Schedule 101 17
2. Commercial – Schedules 111 and 112 18
19
C. Existing Customers and New Customers. The Parties have agreed that revenue 20
related to certain items discussed below would not be included in the FCA for new 21
customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer 22
for new customers will be less than the Fixed Cost Adjustment Revenue-Per-23
Customer for existing customers. For new electric customers added after the test 24
period, recovery of incremental revenue related to fixed production and 25
transmission costs would be excluded from the electric FCA. For new natural gas 26
customers added after the test period, recovery of incremental revenue related to 27
fixed production and underground storage facility costs would be excluded. These 28
modifications are included in Appendices B and C to the Stipulation. 29
30
D. Quarterly Reporting. Avista will file, within 45 days of the end of each quarter, 31
a report detailing the FCA activity by month.3 The reporting will also include 32
information related to the deferrals by rate group, what the deferrals would have 33
been if tracked by rate schedule, use and revenue-per-customer for existing and 34
new customers, and other summary financial information. Avista will provide such 35

2 Review of the mechanisms took place at a workshop March 27, 2019, and the Company filed a
separate application with the Commission which extended the term of the FCA Mechanisms through
March 31, 2025. See also discussion starting at page 6 of this application.
3 As stated in Order No. 34502 Case No. AVU-E-19-06, the Company altered its quarterly reporting
from 45 days to 60 days from the end of each quarter.

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 5
other information as may be reasonably requested, from time to time, in the future 1
quarterly reports. 2
3
E. Annual Filings. On or before July 1, the Company will file a proposed rate 4
adjustment surcharge or rebate based on the amount of deferred revenue recorded 5
for the prior January through December time period.4 The rate adjustment would 6
be calculated separately for each Rate Group, with the applicable surcharge or 7
rebate recovered from each group on a uniform cents per kWh or per therm basis. 8
The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas) 9
included with that filing would include a rate adjustment that recovers/rebates the 10
appropriate deferred revenue amount over a twelve-month period effective on 11
October 1 for electric (to match with Power Cost Adjustment and Residential 12
Exchange annual rate adjustments time period) and November 1st for natural gas 13
(to match with the annual Purchased Gas Cost Adjustment rate adjustment time 14
period). The deferred revenue amount approved for recovery or rebate would be 15
transferred to a balancing account and the revenue surcharged or rebated during the 16
period would reduce the deferred revenue in the balancing account. After 17
determining the amount of deferred revenue that can be recovered through a 18
surcharge (or refunded through a rebate) by Rate Group, the proposed rates under 19
Schedules 75 and 175 would be determined by dividing the deferred revenue to be 20
recovered by Rate Group by the estimated kWh sales (Electric FCA) or therm sales 21
(Natural Gas FCA) for each Rate Group during the twelve-month recovery period. 22
Any deferred revenue remaining in the balancing account at the end of the 23
amortization period would be added to the new revenue deferrals to determine the 24
amount of the proposed surcharge/rebate for the following year. 25
26
F. Interest. Interest will be accrued on the unamortized balance in the FCA 27
balancing accounts at the Customer Deposit Rate. 28
29
G. Accounting. Avista will record the deferral in account 186 – Miscellaneous 30
Deferred Debits. The amount approved for recovery or rebate would then be 31
transferred into a Regulatory Asset or Regulatory Liability account for 32
amortization. On the income statement, the Company would record both the 33
deferred revenue and the amortization of the deferred revenue through Account 456 34
(Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub-35
accounts. The Company would file quarterly reports with the Commission showing 36
pertinent information regarding the status of the current deferral. This report would 37
include a spreadsheet showing the monthly revenue deferral calculation for each 38
month of the deferral period (January - December), as well as the current and 39
historical monthly balance in the deferral account. 40
41

4 As stated in Order No. 34502 Case No. AVU-E-19-06, The company altered the deferral period of
its FCA extension to July through June by using a one-time 18-month deferral period of January 1,
2020 through June 30, 2021. See also discussion starting at page 6 of this application.

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 6
H. 3% Rate Increase Cap. An FCA surcharge, by rate group, cannot exceed a 3% 1
annual rate adjustment, and any unrecovered balances will be carried forward to 2
future years for recovery. There is no limit to the level of the FCA rebate. 3
4
5
III. DRIVERS OF ELECTRIC FCA DEFERRALS 6
The FCA rebate deferrals for residential customers for 12 months ended June 30, 7
2023 were the result of higher monthly use-per-customer than the use-per-customer that 8
was embedded in the 2019 test year (i.e., the FCA base). The FCA rebate deferrals for 9
non-residential customers for 12 months ended June 30, 2023 were the result of slightly 10
lower monthly use-per-customer than the use-per-customer that was embedded in the 2019 11
test year (i.e., the FCA base). 12
The primary driver for the change in use-per-customer was a colder than normal 12 13
months ended June 30, 2023, fluctuating with offsetting impacts from heating and cooling 14
throughout the period. Also, since the 2019 test year used to set 2022 rates, Idaho 15
customers have achieved energy efficiency savings from participation in the Company’s 16
Demand Side Management programs. 17
18
IV. RESIDENTIAL GROUP RATE DETERMINATION 19
The Company recorded $7,180,059 in the rebate direction in deferred revenue for 20
the electric residential customer group for 12 months ended June 30, 2023. The proposed 21
rate of 0.540 cents per kWh is designed to rebate $6,955,562 to the Company’s residential 22
electric customers served under rate Schedule 1. The following table summarizes the 23
components of the Company’s request for rebate: 24
25

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 7
Summary
07.2022 - 06.2023 Deferred Revenue ($7,180,059)
Add Prior Year Residual Balance $351,473
Add Interest through 09/30/2024 ($99,787)
Add Revenue Related Expense Adj.($27,189)
Total Requested Recovery ($6,955,562)
Customer Rebate Revenue ($6,955,562)
Carryover Deferred Revenue $0
1
2
3
4
5
Exhibit B, page 1 shows the derivation of the proposed rate to rebate revenue of $6,955,562 6
based on projected sales volumes for Schedule 1 customers during the rebate/amortization 7
period (October 2023 through September 2024). As identified on tariff Sheet 75B under 8
Step 7 of “Calculation of Monthly FCA Deferral”, interest on the deferred balance accrues 9
at the Customer Deposit Interest Rate.5 If the proposed rebate is approved by the 10
Commission, the 12 months ended June 30, 2023 deferral balance, plus interest through 11
September, and any outstanding balance approved for recovery in the prior year FCA rate 12
filing will be transferred into a regulatory liability balancing account. The balance in the 13
account will be reduced each month by the revenue collected under the tariff. 14
15
V. NON-RESIDENTIAL GROUP RATE DETERMINATION 16
The Company recorded $555,724 in the rebate direction in deferred revenue for the 17
electric Non-Residential Group for 12 months ended June 30, 2023. The proposed rebate 18
rate of 0.048 cents per kWh is designed to recover $523,679 from commercial and 19
industrial customers served under rate Schedules 11, 12, 21, 22, 31, and 32. The following 20
table summarizes the components of the Company’s request for recovery: 21

5 The Customer Deposit Interest Rate was 1.00% beginning January 2021 and 2.00% beginning January
2023. The current rate of 2.00% has been used as an estimate for purposes of this rate determination.

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 8
Summary
07.2022 - 06.2023 Deferred Revenue ($555,724)
Add Prior Year Residual Balance $38,943
Add Interest through 09/30/2024 ($8,013)
Add Revenue Related Expense Adj.$1,115
Total Requested Recovery ($523,679)
Customer Rebate Revenue ($523,679)
Carryover Deferred Revenue $0
1
2
3
4
5
Exhibit B, page 3 shows the derivation of the proposed Rebate rate to return revenue 6
of $523,679 based on projected sales volumes for Schedules 11, 12, 21, 22, 31, and 32 7
during the surcharge/amortization period (October 2023 through September 2024). As 8
identified on tariff Sheet 75B under Step 7 of “Calculation of Monthly FCA Deferral”, 9
interest on the deferred balance accrues at the Customer Deposit Interest Rate. If the 10
proposed surcharge is approved by the Commission, the deferral balance, plus interest 11
through September, will be transferred into the regulatory asset balancing account. The 12
balance in the account will be reduced each month by the revenue collected under the tariff. 13
Support showing the monthly calculation of the deferral balances for both the 14
Residential and Non-Residential Groups is provided as Exhibit C. These calculations were 15
also provided to the Commission in quarterly reports (except April through June which will 16
be provided in the Q2 report by the end of August). 17
18
VI. 3% ANNUAL RATE INCREASE TEST 19
FCA rate adjustment surcharges are subject to a 3% annual rate increase limitation. 20
There is no limit to rebate rate adjustments, therefore the reversal of any rebate rate is not 21
included in the incremental surcharge test. As described in tariff Schedule 75 (see First 22
Revision Sheet 75C), the 3% annual rate increase limitation will be determined by dividing 23

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 9
the incremental annual revenue to be collected (proposed surcharge revenue less present 1
surcharge revenue) under this Schedule by the total “normalized” revenue for the two Rate 2
Groups for the most recent January through December time period. Normalized revenue 3
is determined by multiplying the weather-corrected usage for the period by the present rates 4
in effect. If the incremental amount of the proposed surcharge exceeds 3%, only a 3% 5
incremental rate increase will be proposed, and any remaining deferred balance will be 6
carried over to the following year. 7
Exhibit B, page 6 shows the 3% test for the two rate groups. The incremental 8
change from the existing rebate to the proposed rebate for the residential group is a decrease 9
of $1.7 million or approximately 1.4%. For the Non-Residential group, the incremental 10
change from the existing rebate to the proposed rebate is a decrease of $0.2 million or 11
approximately 0.2%. As the Residential deferral incremental change is a decrease and the 12
Non-Residential deferral incremental change is also a decrease for 12 months ended June 13
30, 2023 there is no proposed carry over for either rate class. 14
15
VII. EXISTING CUSTOMERS AND NEW CUSTOMERS 16
The mechanism approved by the Commission requires that electric customers that 17
have been added since the test year are subject to an FCA Revenue-Per-Customer that 18
excludes incremental revenue related to fixed production and transmission costs. Separate 19
calculations for new versus existing customers are clearly identified in the FCA base that 20
was approved in Order No. 35156 for rates effective since September 1, 2021. 21
Due to this segregation, Avista tracks the usage of new customers since January 1, 22

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 10
2019 as compared with existing customers.6 In general, the average usage of new 1
customers is lower compared to the average usage of existing customers. Avista has found 2
that new customer meters, on average, have less usage in the first six to 12 months after 3
meter installation, then generally see increases in their usage until their usage is more in 4
line with the average usage of existing customers after 12 months of service. This is due, 5
in part, to the lag that occurs between when a meter is installed and billing commences, 6
and when a customer moves into the premises. Avista will continue to track the usage of 7
new customers over the Fixed Cost Adjustment term. 8
9
VIII. PROPOSED RATES TO BE EFFECTIVE OCTOBER 1, 2023 10
The Company is proposing a per kilowatt-hour FCA rebate rate of 0.540¢ for the 11
Residential Group, and a per kilowatt-hour FCA rebate rate of 0.048¢ for the Non-12
Residential Group, both to become effective October 1, 2023. Exhibit B to this Application 13
provides the Residential and Non-Residential Rate Calculation, and Exhibit C provides the 14
support for the deferrals for the July 1, 2022 through June 30, 2023 deferral period. Exhibit 15
A is a copy of the proposed tariff, Schedule 75, which contains the proposed FCA rates. 16
Exhibit A also includes the proposed changes to Schedule 75 in strike/underline format. 17
Residential customers using an average of 927 kilowatt-hours per month would see 18
their monthly bills decrease from $85.40 to $84.15, a decrease of $1.25 per month, or 1.5%. 19

6 “Existing customers” were part of the test year used to set the September 1, 2021 rates (2019 calendar
year). “New customers” consist of all new hookups after the test year.

AVISTA’S ELECTRIC FCA ANNUAL RATE ADJUSTMENT FILING PAGE 11
IX. COMMUNICATIONS AND SERVICE OF APPLICATION 1
In conformance with RP 125, this Application will be brought to the attention of 2
the Company’s customers. First, the Company has served a copy of this Application upon 3
the service list in Case Nos. AVU-E-15-05 and AVU-G-15-01, the cases that gave rise to 4
the FCA mechanisms. Second, a copy of Company’s news release and customer notice is 5
provided as Attachment D. The news release will be issued in July, and the customer notice 6
will be inserted in customer bills starting in August and will run for a full billing cycle. 7
8
X. REQUEST FOR RELIEF 9
The Company requests that the Commission issue an order approving FCA 10
deferrals for the period July 1, 2022 through June 30, 2023 and approve a per kilowatt-11
hour FCA rebate rate of 0.540¢ for the Residential Group, and a per kilowatt-hour FCA 12
rebate rate of 0.048¢ for the Non-Residential Group, both to become effective October 1, 13
2023. The Company also requests that the Commission approve the proposed tariff 14
modifications to tariff Sheet 75. The Residential Group rebate represents a $1.7 million, 15
or 1.4%, decrease to Schedule 1 customers, and the Non-Residential group rebate results 16
in a $0.2 million, or 0.2%, decrease. The Company requests that the matter be processed 17
under the Commission’s Modified Procedure rules through use of written comments. 18
Dated at Spokane, Washington this 31st day of July 2023. 19
AVISTA CORPORATION 20
21
BY /s/ Patrick Ehrbar 22
Patrick D. Ehrbar 23
Director of Regulatory Affairs 24

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that I have this 31st day of July, 2023, served the Application of Avista
Corporation – Fixed Cost Rate Adjustment, upon the following parties, by mailing a copy
thereof, properly addressed with postage prepaid to:

Idaho Public Utilities Commission
11331 W. Chinden Blvd
Bldg 8 Suite 201-A
Boise, ID 83714

Karl Klein
Brandon Karpen
Deputy Attorneys General
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83702-0659
[e-mail]
[e-mail]

Peter J. Richardson
Greg M. Adams
Richardson Adams
515 N. 27th Street
PO Box 7218
Boise, ID 83702
[e-mail]
[e-mail]

Bradley R. Mullins
Principal Consultant MW Analytics
Tietotie 2, Suite 208
Oulunsalo, Finland FI-90460
[e-mail]
Andrew Moratzka
Stoel Rives LLP
33 S. Sixth Steet Springs
Minneapolis, MN 55402
[e-mail]

Larry A. Crowley
The Energy Strategies Institute, Inc.
3738 S. Harris Ranch Ave.
Boise, ID 83716
[e-mail]

Marie Callaway Kellner
Brad Heusinkveld
Idaho Conservation League
710 N. 6th St.
Boise, ID 83702
[e-mail]
[e-mail]

Dr. Don Reading
280 S. Silverwood Way
Eagle, Idaho 83616
[e-mail]

Clearwater Paper
[e-mail]
[e-mail]
[e-mail]

Paul Kimball
Manager of Discovery & Compliance