20160822_5038.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:MARK ROGERS
DATE:AUGUST 17,2016
SUBJECT:AVISTA ADVICE NO.16-02-E;RESIDENTIAL AND FARM ENERGY
RATE ADJUSTMENT CREDIT
On July 29,2016,Avista Corporation (“Avista”)filed a Tariff Advice with the Commission
to revise its Tariff Schedule 59 Residential and Farm Energy Rate Adjustment.In this Tariff
Advice,Avista proposes that the rate credit be increased from the existing 0.0210 per kWh to
0.0600 per kWh to be effective October 1,2016.
BACKGROUND
This rate credit is designed to pass through to qualifying customers the Residential
Exchange Program (REP)benefits Avista receives from the Bonneville Power Administration
(BPA).The REP was designed to allow residential and farm customers of Investor Owned Utilities
(IOU5)in the northwest to share in the benefits of the Federal Columbia River Power System.
Avista passes these benefits to its qualifying customers through a rate credit on monthly electric
bills.The rate credit applies to residential and farm customers served under Schedules 1,12,22,
32,and 48.
The BPA calculates the total amount of REP benefits every two years in conjunction with
a BPA rate case.The REP benefits for each IOU was updated in 2015,and will remain in place
until the rate is recalculated in the BPA’s 2017 rate case.As REP benefits will not change until
2017,this Tariff Advice does not impact the FY 2016-2017 REP benefits,rather,it only trues-up
the under-refunded balance in the Idaho Residential Exchange Account due to the size and timing
of when Avista received its final two 2015 REP benefit payments.
DECISION MEMORANDUM 1 August 17,2016
THE TARIFF ADVICE
Avista submits monthly invoices to the BPA for REP benefits;however,the credits
received by Avista from the BPA are subject to a two month lag.In October and November of
2015 (billed in August and September),Avista received benefit amounts of $184,570 and
$182,460.These payments were the last two payments for the Companys FY20 14-2015 benefits.
Given the two month lag,the payments were received after the October 1,2015 start of the new
FY 2015-2016 rate.Because the 2015-2016 REP benefit amount was reduced substantially from
the previous period,these two payments created an under-refunded balance that was not thIly
credited to customers.Consequently,the Company proposes to credit customers during FY20 16-
2017,before the new REP benefits are calculated in 2017.
STAFF ANALYSIS
In review of the Company’s Advice and supporting work papers,Staff finds the proposed
rate adjustment reasonable.As it stands,the total proposed rate decrease equates to $474,768.
This includes the under-refunded balance from the timing of the two REP benefit payments,as
well as an under-refunded balance that has been occurring in the account since October 1,2015.
The resulting credit will be refunded to customers at a rate of S0.039Ø per kWh.This,combined
with the current BPA rate ofSO.021 0 per kWh,results in a total Residential and Small Farm Energy
Rate Adjustment of S0.060e per kWh.Staff notes that true-up’s to the Residential Exchange
Account are typically done even’two years in conjunction with a BPA rate case,and true-up’s
between BPA rate adjustments are rare.However,given the large change that occurred between
the previous rate and the current rate,Staff believes the true-up is warranted.Staff recommends
approving the Company’s proposed Tariff Schedule 59 rate adjustment as filed.
COMMISSION DECISION
Does the Commission wish to approve Avista’s proposed change to its Tariff Schedule 59
Residential and Farm Energy Rate Adjustment from the existing credit of 0.0210 per kWh to
0.0600 per kWh October 1,2016?
Jors
DECISION MEMORANDUM 2 August 17,2016