28496.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION DBA AVISTA UTILITIES — WASHINGTON WATER POWER DIVISION FOR AN ORDER APPROVING A CHANGE IN NATURAL GAS RATES AND CHARGES.
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CASE NO. AVU-G-00-3

ORDER NO. 28496

On July 31, 2000, Avista Corporation dba Avista Utilities — Washington Water Power Division (Avista) applied to the Idaho Public Utilities Commission (Commission) for authority to implement new rates and charges for natural gas service in the state of Idaho. Avista serves approximately 54,126 customers in Idaho. Over 53,541 of those customers are residential. As computed by the company, the total requested net annual revenue increase in Idaho is $9,941,262 (29.04%). The increase in price per therm to residential customers is approximately 27.75%. Residential customers using an average of 75 therms per month under the Company’s proposal can expect an increase in their average monthly bill of $10.78. The change in rates and charges to other customers will vary according to customer class and usage.
The overall effect of the proposed changes, if authorized, would be to increase customer rates per therm in the follow amounts:

Class Description
& Schedule

$ Per Therm
General/Large General & Commercial
(Schedules 101,111 &121)

Large General & Commercial Receiving Lump Sum Bill
Credits or Charges
(Schedules 112 & 122)

Interruptible Service & Interruptible Service Receiving Lump Sum Bill Credits or Charges
(Schedules 131 & 132)

Transportation
(Schedule 146)

$0.14436

$0.14436

$0.11763

$Ø Schedule 155Gas Rate Adjustment
Schedule 155Gas Rate Adjustment (Idaho) is used by the Company to pass through any under- or over-collection of gas costs since its last tracker filing. The Company in this filing proposed no adjustment or changes to its tariff Schedule 155 rates.

Schedule 150Permanent Gas Cost Changes
Schedule 150Permanent Gas Cost Changes (Idaho) is used by the Company to reflect continuing changes in the cost of purchasing and transporting gas for customers. Since rates were last approved, the net change in commodity, demand and storage gas costs results in an increase of $0.14436/therm for firm gas Schedules 101 through 122; an increase of $0.11763/therm for interruptible Schedules 131 and 132; and no change for transportation Schedule 146. As per the Company’s Application, the resultant annual net increase in annual revenue requirement (Idaho) related to Schedule 150 changes is $9,941,262. The Company calculates its current weighted average cost of gas (WACOG) to be $0.31109, an increase of $0.11801 from the previous $0.19308.
The Company also requested that its Application be processed under the Commission’s Rules of Modified Procedure, i.e., by written submission rather than by hearing, IDAPA 31.01.01.201-204. The Company has requested an effective date of September 1, 2000.
On August 9, 2000, the Commission issued Notices of Application and Modified Procedure in Case No. AVU-G-00-3. The deadline for filing written comments or protests was August 30, 2000.
The Commission Staff was the only party to file formal comments and as mentioned previously, thirteen letters were received from Avista customers which were placed in the file. Based on its investigation and analysis, Staff recommends approval of the Company’s Application.
Staff Comments
In its comments, Staff notes that natural gas prices in the Northwest appear to be trending up. A major factor cited for the increase is the addition of new pipeline capacity connecting the Canadian Provinces of British Columbia and Alberta to the mid-west and eastern U.S. markets. Previous to this addition, Canadian gas was locked in the Northwest and California markets. This is no longer the case as Canadian gas is being sold in more lucrative markets elsewhere. Additional factors in the rising cost of gas are: 1) price increases in demand for gas used in peaking gas-fired turbines in California; 2) late injections into gas storage facilities; 3) expectations for a cold winter; and 4) increase prices of heating oil.
The Staff recommends that if this rate increase is approved Avista be directed to provide information to its customers concerning the availability of levelized payment plans and assistance programs for needy customers such as Project Share and Low Income Heating Energy Assistance Program (“LIHEAP”). Avista participates in these two energy assistance programs. Staff also recommends that Avista revise the Comfort Level Billing amount (level payment plan) for those customers already on the program to reflect the increased rates. According to Staff adjusting payments now will prevent participating customers from accumulating arrearages in level pay accounts during the winter heating season. Customers also should be given the opportunity to stop participating and resume regular payment procedures. Staff finally recommends that Avista provide information concerning demand side management and conservation changes that customers can implement before the winter heating season commences to reduce their use of gas.
As of August 30, 2000, the Commission received and placed in its formal case file thirteen (13) written comments from Avista customers. All opposed the proposed rate increase. One customer requested that the Commission give careful consideration to the business practices of senior officers of Avista before approving the increase in rates, specifically referencing the class action suit filed on behalf of stockholders of Avista who purchased their common stock between April 7, 2000 and June 21, 2000. A second customer states that the proposed increase is to “pay off debt that was incurred by bad investments, and will hurt a good majority of Avista customers particularly those on fixed incomes.” Finally, a third customer argued that rates should not be increased when Avista is losing money and is paying its Chief Executive Officer handsomely.
COMMISSION FINDINGS
The Commission has reviewed and considered the Company’s Application in Case No. AVU-G-00-3 together with the attached exhibits and workpapers. The Commission has also considered the comments and recommendations of Staff related to the Company’s Application. We further acknowledge the receipt of a number of letters, faxes and e-mails from Avista customers protesting the proposed increase. Despite the concerns raised by the Company’s customers, we find that the public interest regarding the requested change in rates does not require a public hearing to consider the issues presented. Reference IDAPA 31.01.01.204.
The Commission appreciates the concerns raised by customers who oppose the rate increase. We note that the Company’s Application is a limited gas tracker and not a general rate case. As this Commission in prior Orders has previously observed, the nature of costs included in the Company’s gas tracker Applications are generally external costs over which the Company has little or no control. Although we recognize the Company maintains an element of control in its contracting practices, the Commission has confidence that should the Company’s actions appear out of ordinary or imprudent that the review process would reveal same. We continue to find the annual tracker mechanism to be a useful regulatory vehicle for tracking and adjusting for gas-related costs. In some years PGA trackers result in rate increases, in other years rate decreases. The most recent history is as follows:

1999
1998
1997
1996
1995
1994 $2,708,000 or 8.58% increase
$1,117,000 or 4.04% increase
$3,972,000 or 15.6 % increase
$2,338,601 or 8.5 % decrease
$4,850,000 or 16.68% decrease
$1,026,000 or 3.98% decrease Order No. 28189
Order No. 27816
Order No. 27261
Order No. 26662
Order No. 26283
Order No. 25708
There is equity in approving increases as well as decreases.
Given the specific customer concerns we wish to make clear that no portion of this proposed rate increase is to pay executive officers of Avista; to pay debts arising from poor investments; or to mitigate effects from pending or future stockholder derivative suits.
The rate increase in this case is solely related to the recovery of costs from the increased price of natural gas. Avista will receive no additional profits from the increased rates as any adjustment is offset by the cost of gas purchased. That being said, we still recognize that the rate increase is substantial. Unfortunately, there is little choice but to approve the Application.
In mitigation of the effects of this rate increase the Commission also finds Avista shall provide information to customers concerning the availability of levelized payment plans and assistance programs for qualifying customers such as Project Share and LIHEAP. Customers eligible for LIHEAP may receive assistance for payment of their heating bills. Low-income eligible customers should contact the community action agencies in northern Idaho. Avista shall also revise its Comfort Level Billing amount (level payment plan) for those customers already on the program to reflect the increased rates. We also find that Avista shall provide information concerning demand side management and conservation changes that customers can implement before the winter heating season commences to reduce their use of gas. Finally, we recognize the need for Avista customers to receive adequate notice regarding proposed and approved changes in rates. In this regard we direct Avista to review and revise its customer notice procedures in conformance with the Commission’s customers relation rules, IDAPA 31.21.02. We also recommend that Avista review Intermountain Gas’s energy conservation and energy assistance information that will soon be provided to its customers during the winter months.
The Company in this case has requested a net annual revenue increase in Idaho of $9,941,262 (29.04%). Based on the Commission’s review and consideration of the Application and record in Case No. AVU-G-00-3, we accept the Company’s proposed rates, charges and adjustments as fair, just and reasonable. We further find to be reasonable an implementation date for new tariffs of September 1, 2000.

CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and Avista Corporation dba Avista Utilities—Washington Water Power Division, a gas utility, pursuant to the authority and power granted under Title 61, Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED that Avista Corporation dba Avista Utilities—Washington Water Power Division be authorized to increase (change) its rates and charges in the manner requested in its Application and as reflected in the tariff schedules submitted in Case No. AVU-G-00-3 for effective date for implementation of September 1, 2000.
IT IS FURTHER ORDERED that Avista comply with the other directives explicitly set out above in the Commission’s Findings section of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of August 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/O:AVU-G-00-3_sw

ORDER NO. 28496 1

Office of the Secretary
Service Date
September 1, 2000