20110114Avista Initial Comments.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokae. VVashington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
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Januar 13, 2011
Ms. Jean D. Jewell, Secretar
Idaho Public Utilities Commission
P. O. Box 83720
Boise, Idaho 83720-0074
Dear Ms. Jewell:
Re: Case No. GNR-E-10-03, Initial Comments of Avista Corporation
Enclosed are an original and seven copies of the A vista Corporation Initial
Comments in the above referenced case.
If you have any questions, please contact Ron McKenzie at [phone] or
Bil Johnson at [phone].
Sincerely,
71 ~..ww
Kelly Norwood
Vice President State and Federal Regulation
Service List
Enclosure
RM
RE ~\¡
1 David J. Meyer
2 Vice President and Chief Counsel of
3 Regulatory and Governental Affairs
4 A vista Corporation
5 1411 E. Mission Avenue
6 P. O. Box 3727
7 Spokane, Washington 99220
8 Phone: [phone], Fax: [phone]
lOli JAN 14 AM 10: 38
9 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE COMMISSION'S
INQUIRY INO LOAD GROWTH
ADJUSTMENTS THAT AR PART OF
POWER COST ADJUSTMENT
MECHAISMS.
)
) CASE NO. GNR-E-I0-03
)
) INITIA COMMNTS OF
) AVISTA CORPORATION
A vista Corporation, doing business as A vista Utilities (hereinafter A vista or Company),
17 at 1411 East Mission Avenue, Spokane, Washington, respectfully fies its Comments in the
18 above referenced case.
19 BACKGROUND
20 On November 24,2010 the Commission issued Order No. 32124 in the above referenced
21 case. The case is to proceed under Modified Procedure with initial comments due no later than
22 Januar 14,2011, and with responsive comments due no later than January 28,2011. The Order
23 took notice of Avista's compromise proposal offered at the September 28, 2010 workshop as a
24 revision of current methodology. The proposal maintains symetry in growing and declining
25 load scenaros and substantially reduces the rate applied to the change in retail load. The
26 proposal would calculate the load growth adjustment rate (LGAR) based upon the energy
27 classified portion of embedded production revenue requirement as established in the cost of
28 service for each utility. The LGAR would not include demand related costs. The proposal
29 eliminates the argument that the LGAR operates as a decoupling mechanism in periods when
INITIA COMMENTS OF A VISTA PAGE 1
1 loads decline. A vista believes that the terminology should be changed from "Load Growth
2 Adjustment Rate (LGAR)" to "Load Change Adjustment Rate (LCAR)," as the rate is applicable
3 when loads grow or decline. A vista wil use LCAR thoughout the remainder of its comments.
4 WHAT is THE APPROPRIATE LOAD CHANGE ADJUSTMENT RATE?
5 A vista has proposed a LCAR based upon the energy classified portion of embedded
6 production revenue requirement as established in the cost of service study in the most recent rate
7 case for each utility. The LCAR would not include demand related costs. The proposal
8 eliminates the argument that the LCAR operates as a decoupling mechanism in periods when
9 loads decline. If energy costs tum out to be higher or lower than the amount of energy costs
10 embedded in rates, then the difference in energy costs, including the impact of the LCAR, is
11 tracked through the PCA. The Company takes the risk of demand costs being higher or lower
12 than the amount of those costs embedded in rates. Demand costs would be trued-up in a general
13 rate case or some other proceeding.
14 NEED FOR SYMMETRY IN GROWING AND DECLINING LOADS
15 Symmetry is needed in applying the same LCAR when loads increase or decline. In a
16 given twelve-month period retail loads could be higher than authorized in some months, and
17 lower than authorized in other months with the change in load for the twelve-month period being
18 higher, lower, or the same as authorized loads. Not applying a consistent LCAR in every month
19 would produce inequitable results for the company and its customers.
20 When retail loads are higher than authorized loads, there is a higher power supply
21 expense to serve the increase in load that is included in Avista's Power Cost Adjustment (PCA).
22 In Avista's PCA its retail revenue credit, or LCAR, is applied to the increase in load to take into
23 account that there is an increase in retail revenue to correspond with the increase in power supply
INIA COMMENTS OF A VISTA PAGE 2
1 expense. Absent the LCAR adjustment, customers would be overcharged through the PCA for
2 the increase in power supply expense.
3 Likewise, when retail loads are lower than authorized loads, there is a lower net power
4 supply expense to serve the decrease in load that is included in the PCA. Avista's retail revenue
5 credit, or LCAR, is applied to the decrease in load to take into account that there is a decrease in
6 retail revenue that corresponds with the decrease in power supply expense. Absent the LCAR
7 adjustment, customers would receive an undo benefit through the PCA, since the net reduction in
8 power supply expense is directly related to a reduction in retail revenue.
9 WHEN SHOULD THE CHANGE IN THE LCAR BE IMPLEMENTED?
10 The rate that Avista is currently using for its retail revenue credit is $48.00 per megawatt-
11 hour, which includes both demand and energy costs, as established in the cost of service in its
12 last general rate case, A VU-E-I0-0l. Avista's energy portion of embedded production revenue
13 requirement as established in the same case is $30.1 6 per megawatt-hour, or just over 3~ per
14 kilowatt-hour.
15 An energy-based LCAR should only be applied prospectively. Avista proposes that the
16 $30.16 per megawatt-hour LCAR become effective on July 1, 2011, which is the start of the next
17 twelve-month deferral period for Avista's PCA, unless a general rate case is decided before then.
18 If a general rate case is fied and approved prior to July 1, 2011, then the new LCAR established
19 in that case would be effective when rates are made effective from the general rate case. The
20 LCAR, as well as the base level of loads and power supply costs that apply to PCA calculations,
21 would be updated in general rate cases, as they occur, or in some separate proceeding.
INITIA COMMENTS OF AVISTA PAGE 3
1 Dated at Spokane, Washington this 13th day of Januar 2011.
2 AVISTA CORPORATION
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BY~~ døwr
Kelly No od
Vice President
State and Federal Regulation
INITIA COMMENTS OF AVISTA PAGE 4
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VERIICATION
STATE OF WASHINGTON )
)County of Spokane )
Kelly Norwood, being first duly sworn on oath, deposes and says: That he is the
Vice President of State and Federal Regulation of Avista Utilities and makes this verfication for
and on behalf of A vista Corporation, being thereto duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the same
to be true.
2fA dd- i,
SIGNED AN SWORN to before me this 13th day of Januar 2011, by Kelly Norwood.
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INITIA COMMENTS OF A VISTA PAGES
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation's Comments in GNR-E-10-03,
by mailing a copy to the following:
Commission Secretary
Jean D. Jewell
472 W. Washington Street
Boise, ID 83702-5918
Mike Youngblood
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
Mark C. Moench
Daniel E. Solander
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Ted Weston
Rocky Mountain Power
201 S. Main Street, Suite 2300
Salt Lake City, UT 84111
Dated at Spokane, Washington this 13th day of January 2011.
a..~
Patty o~s, Rates Coordinator
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