20230907Comments of the Commission Staff.pdf

ADAM TRIPLETT
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
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
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FIXED COST )ADJUSTMENT MECHANISM (FCA))CASE NO.AVU-E-23-09
ANNUAL RATE ADJUSTMENT FILING OF )AVISTA CORPORATION )
)COMMENTS OF THE
)COMMISSION STAFF
COMMISSION STAFF ("STAFF")OF the Idaho Public Utilities Commission,by and
through its Attorneyof record,Adam Triplett,Deputy Attorney General,submits the following
comments.
BACKGROUND
On July 31,2023,Avista Corporation ("Company"or "Avista")applied to the
Commission for an order (1)approving Fixed Cost Adjustment ("FCA")deferrals for July 1,
2022,through June 30,2023;(2)authorizing an adjustment to its FCA rates for electric service
from October 1,2023,,through September 30,2024;and (3)approving its proposed
correspondingmodifications to Tariff Sheet 75.
The FCA rate for the Residential Group (Schedule 1)is proposed to change from a
present rebate rate of 0.405¢per kilowatt-hour ("kWh")to a proposed rebate rate of 0.540¢per
kWh.The FCA rate for the Non-Residential Group (Schedules l1,12,21,22,31 and 32)is
STAFF COMMENTS 1 SEPTEMBER 7,2023
proposed to change from a present rebate rate of 0.034¢per kWh to a proposed rebate rate of
0.048¢per kWh.The Schedule 1 rate change represents a $1.7 million,or 1.4%,decrease to
Residential customers,and the Non-Residential group rate change represents a $0.2 million,or
.2%decrease,for Schedules 11,12,21,22,31,and 32.If approved,the monthlybill of an
average residential customer would decrease by $1.25.
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 costs'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 approveda three-year pilotprogram of the Company's
FCA as part of the approved settlement of the Company's 2015 rate case.Order No.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 functioningas intended.In 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.In 2019,the Commission authorized the
Company to extend its FCA mechanism for both gas and electric customers through March 31,
2025.Order No.34502.
STAFF ANALYSIS
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 all these documents,Staff recommends that the Commission
approve the Company's proposed Tariff Schedule 75 rebates for the Residential customer class
and the Non-Residential customer class.
Staff reviewed the FCA deferral balances and associated rates for both residential and
non-residential 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
i "Fixed costs"are a utility's costs to provideservice,such as infrastructure and customer service,which do not vary
with energy use,output,or production,and remain relativelystable between rate cases.
STAFF COMMENTS 2 SEPTEMBER 7,2023
deferral were the same used to determine base rates authorized during the deferral period.
Further,Staff examined the internal control processes and the associated internal audit
documents and found them to be compliant.
In its Application,the Company proposed a rebate for both its residential electric
customers and its non-residential electric customer groups based on the amount of deferred
revenue recorded for each group between July 1,2022,and June 30,2023.For the Residential
customers,the Company proposed to change from a present rebate rate of 0.405¢to a proposed
rebate rate of 0.540¢per kWh,a decrease of 0.135 cents.For the Non-Residential customers,the
Company proposed to change from a present rebate rate of 0.034¢to a proposed rebate rate of
0.048¢per kWh,a decrease of 0.014 cents.The Residential Customer Class rate change
represents a $1.7 million,or 1.4%,decrease to Schedule 1 customers,and the Non-Residential
Customer Class rate change represents a $.2 million,or .2 %decrease.The combined effect of
expiring FCA rates and the proposed 2023 rates are shown on Table No.1 below:
Table No.1:Present and Proposed Changes
Expiring Present Proposed FCA Change in FCA
FCA Revenue Revenue Revenue
Residential (5,216,672)(6,955,562)(1,738,891)
Non-Residential (370,939)(523,679)(152,740)
Total (5,587,611)(7,479,241)(1,891,631)
Energy ConsumptionDrivers
The proposed FCA rebate deferrals for residential electric customers are the result of
higher monthlyuse-per-customer than the use-per-customer that was embedded in the 2019 test
year.The FCA rebate deferrals for non-residential electric customers were also due to slightly
higher monthlyuse-per-customer than the use-per-customer that was embedded in the 2019 test
year.
Weather is a significant factor in the FCA.During the FCA deferral period,Avista's
service territory experiencedan extremely cold winter,and then a short period of mild weather,
followed by a very hot summer.This caused residential and non-residential customers to use
larger amounts of electricitythan during normal weather.Residential energy usage is relatively
sensitive to weather fluctuations,thus the higher usage than Non-Residential.
STAFF COMMENTS 3 SEPTEMBER 7,2023
Overall Impactof Four Filings Effective October 1,2023
The Company proposed four electric rate adjustments effective October 1,2023.In this
case,the proposed FCA,if approved,will decrease electric revenues by about $1.9 million ,0.7%
decrease.The Company's Power Cost Adjustment ("PCA"),if approved,will increase the
Company's electric revenues by $11.0 million 4.3%increase.The third proposed filing,
Residential and Farm Energy Rate Adjustment or Residential Exchange Program ("ResEx"),if
approved,will increase electric revenues by $0.2 million 0.1%increase.The final proposed
filing,Schedule 91,Energy EfficiencyRider Adjustment ("EE Rider"),if approved,will
decrease electric revenues for participants by $3.1 million 1.2%decrease.The net effect of
Company's four filings will increase electric revenues by about $6.1 million 2.4%.The average
residential electric customer's monthlybill may increase by $1.14 or 1.3%.Table No.2
summarizes the overall impact to electric revenues of the four filings:
Table No.2:Summary of Overall Impactto Electric Revenues
Filing Change in Revenues %Change Case No.
FCA ($1.9 million)-0.7%AVU-E-23-09
PCA $10.9 million 4.3%AVU-E-23-08
ResEx Credit $0.2 million 0.1%AVU-E-23-11
EE Rider ($3.1 million)-1.2%AVU-E-23-10
Total $6.1 million 2.4%
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Each document addresses the followingfive cases:(1)this case (AVU-E-23-09),(2)the natural
gas FCA (AVU-G-23-05),(3)the PCA (AVU-E-23-08),(4)the Electric Energy Efficiency
Adjustment (AVU-E-23-10),and (5)the BPA Residential and Small Farm credit (AVU-E-23-
11).Staff reviewed the documents and determined the press release and notice meet the
requirements of Rule 125 of the Commission's Rules of Procedure.See IDAPA 31.01.01.125.
The notice was included with bills mailed to customers beginning August 7,2023,and ending
September 7,2023.
The Commission set a comment deadline of September 7,2023.Some customers in the
last billing cycles will not have had adequate time to submit comments before the deadline.
Customers must have the opportunityto file comments and have those comments considered by
STAFF COMMENTS 4 SEPTEMBER 7,2023
the Commission.Staff recommends that the Commission consider late filed comments from
customers.As of September 6,2023,no customer comments had been filed.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company's FCA application.
Specifically,Staff recommends that the Commission approve the Company's proposed Tariff
Schedule 75,as filed,with a Residential rebate rate of 0.540¢per kWh and Non-Residential
surcharges rate of 0.048¢per kWh for electric service from October 1,2023,through September
30,2024.
Respectfully submitted this 7th day of September 2023.
Adam Triplett
Deputy AttorneyGeneral
Technical Staff:Laura Conilogue
Leena Gilman
Travis Culbertson
Dylan Moriarty
Curtis Thaden
i:umisc/comments/avue23.9aticlgtncetdmcomments
STAFF COMMENTS 5 SEPTEMBER 7,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 7th DAY OF SEPTEMBER 2023,SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
AVISTA CORPORATION,IN CASE NO.AVU-E-23-09,BY E-MAILING A COPYTHEREOFTOTHEFOLLOWING:
PATRICK EHRBAR DAVID J MEYERDIROFREGULATORYAFFAIRSVP&CHIEF COUNSELAVISTACORPORATIONAVISTACORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail:[e-mail] E-mail:david.meyer avistacorp.com
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE