20110128Avista Reply Comments to ICIP, Staff.pdf

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JlrVISTA-
Corp.
A vista Corp.
1411 East Mission P.O. Box 3727
Spokane. VVashington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
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Januar 27,2011
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, Reply Comments of Avista Comoration
Enclosed are an original and seven copies of the Avista Corporation Reply
Comments in the above referenced case.
If you have any questions, please contact Ron McKenzie at [phone] or
Bil Johnson at [phone].
Sincerely,
?a ,J~ i-
Kelly Norwood
Vice President State and Federal Regulation
Service List
Enclosure
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1 David 1. 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]
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9 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE COMMISSION'S
INQUIRY INO LOAD GROWT
ADWSTMENTS THAT AR PART OF
POWER COST ADWSTMENT
MECHANISMS.
)
) CASE NO. GNR-E-I0-03
)
) REPLY COMMNTS OF
) A VISTA CORPORATION
A vista Corporation, doing business as A vista Utilties (hereinafter A vista or Company),
17 at 1411 East Mission Avenue, Spokane, Washington, respectfully files its Reply Comments in
18 the above referenced case.
19 REPLY TO THE INDUSTRIAL CUSTOMERS OF IDAHO POWER'S COMMENTS
20 The Industrial Customers of Idaho Power ("ICIP") propose a load growth adjustment rate
21 ("LGAR") that is based on the marginal cost of energy, and that is asymetrcal in its
22 application, such that the rate only applies when loads increase, but not when loads decline.
23 ICIP is the only party to this proceeding that is taking these positions. The other paries,
24 including Commission Staff, all take the position that the LGAR should be the energy classified
25 portion of the embedded production revenue requirement as established in the cost of service
26 from each utility, and that the rate be applied symmetrcally when loads increase, or decline.
27 In support of its asymetrcal argument ICIP contends that, "A vista and the other utilties
28 have not demonstrated that (sic) what costs they are recovering though the LGAR at times of
29 declining loads." As explained at the workshops and in Avista's opening comments, when retail
REPLY COMMENTS OF A VISTA PAGE 1
1 loads are lower than authorized loads, there is a lower net power supply expense to serve the
2 decrease in load that is included in Avista's Power Cost Adjustment ("PCA"). Avista's retail
3 revenue credit, or load change adjustment rate ("LCAR") is applied to the decrease in load to
4 take into account the fact that there is a decrease in retail revenue that corresponds with the
5 decrease in power supply expense. Absent the LCAR adjustment, customers would receive an
6 undue benefit through the PCA, since the net reduction in power supply expense is directly
7 related to a reduction in retail revenue. Application of the LCAR needs to be symmetrcal to
8 avoid passing through undue benefits when loads decline, and to avoid the over-collection of
9 costs when loads increase.
10 Commission Staff agrees that the LCAR needs to be symetrcal. At page 5 of their
11 opening comments they state: "The Staff believes that to remove over-recovered NPSE (net
12 power supply expense) when load grows and to not restore under-recovered NPSE when load
13 declines is unbalanced and unfair. Staff believes that fairness demands the symetrcal
14 application ofload growth adjustment methodology in growing and declining load situations."
15 The energy classified portion of production costs is an appropriate rate to use. Those
16 costs are built into base rates. When loads increase or decline, those costs are either over-
17 recovered or under-recovered, and that over- or under-recovery is what the utility experences.
18 In order for the PCA to produce a fair result, when loads increase, the over-recovered production
19 costs need to be subtracted from the additional power supply costs incured to serve the
20 increased load. Likewise, when loads decline, the under-recovered production costs need to be
21 added to the reduced power supply costs resulting from the reduced load. Marginal costs of
22 power have nothing to do with the over-recovery or under-recovery of production costs that are
23 buil into base rates. Base rates do not recover marginal costs.
REPLY COMMENTS OF A VISTA PAGE 2
1 The arguents and positions of ICIP are without merit. A LCAR that is based upon the
2 energy-classified portion of the embedded production revenue requirement as established in the
3 cost of service for each utility is an appropriate rate to use and should be used symetrically
4 when loads increase or decline. A vista has had a symetrcal load adjustment in place since
5 Januar 1, 2001. The Staff supported a symmetrcal load adjustment when the PCA was
6 modified back in 2001, and they support a symmetrcal adjustment now. A symetrcal load
7 adjustment is stil essential to assure fairness to customers and the Company.
8 REPLY TO THE COMMISSION STAFF'S COMMENTS
9 Avista agrees with Staffs comments except for their proposal to implement the new rate
10 beginning the first of the month following the Commission's order. Avista proposed in its
11 Opening Comments that its $30.16 per megawatt-hour LCAR become effective on July 1, 2011,
12 which is the star of the next twelve-month deferral period for Avista's PCA, unless a general
13 rate case is decided before then. It is unlikely that a general rate case wil be filed and approved
14 prior to July 1, 2011, but it is appropriate to update the LCAR if and when rates are made
15 effective from a general rate case. The LCAR, as well as the base level of loads and power
16 supply costs that apply to PCA calculations, would, and should, all be updated in general rate
17 cases, since base rates are reset as a result of the general rate case. Absent a general rate case
18 being decided before July 1, 2011, A vista believes that the new LCAR should be implemented at
19 the star of the next twelve-month PCA deferal period, which begins on July 1, 2011. This
20 would allow for the rate to be consistently applied until the end of the deferral cycle, and avoid
21 any inconsistencies that would be caused by changing the rate durng the deferral cycle. Idaho
22 Power Company is also requesting that their new rate be implemented at the star of their next
23 PCA year, which for Idaho Power begins on April 1,2011.
REPLY COMMENTS OF A VISTA PAGE 3
1 Dated at Spokane, Washington this 27th day of January 2011.
2 AVISTA CORPORATION
By~Mt ~~
Kelly Norwood
Vice President
State and Federal Regulation
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REPLY COMMENTS OF A VISTA 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 Utiliies and makes this verification for
and on behalf of Avista Corporation, being thereto duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the same
to be tre.
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SIGNED AN SWORN to before me this 2ih day of Januar 2011, by Kelly Norwood.
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NOT AR PUBLIC in and for the State of
Washington, residing at Spokane.
Commission Expires: Novt('Obf( 78114/3
REPLY COMMENTS OF AVISTA PAGE 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation's Reply Comments in
GNR-E-10-03, by mailing a copy to the following:
Commission Secretary
Jean D. Jewell
472 W. Washington Street
Boise, 10 83702-5918
Mike Youngblood
Idaho Power Company
PO Box 70
Boise, 10 83707-0070
Donovan E. Walker
Lisa D. Nordstrom
Idaho Power Company
PO Box 70
Boise, 10 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 27th day of January 2011.
Patty Olsnes , Rates Coordinator
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