28654.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR A
DEFERRED ACCOUNTING ORDER

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CASE NO. AVU-G-00-7

ORDER NO. 28654

On February 12, 2001, the Commission issued Order No. 28639 granting Avista Corporation’s Application for a deferred accounting order allowing it to defer revenues and expenses associated with fixed price transactions used to purchase natural gas for the period of January 1, 2001 to March 31, 2002.
On February 16, 2001, Avista filed a petition seeking clarification of a portion of Order No. 28639. Specifically, Avista requests clarification of the last two sentences of the first paragraph on page 4 of the Order, which reads:
Thus, because of the risk of these transactions, it would clearly be unfair for Avista’s customers to bear it alone. Accordingly, the Company should share the benefits and risks of these transactions with its customers.

Order No. 28639 at 4.
COMMISSION FINDINGS
By its Petition, Avista appears to be concerned that this language from Order No. 28639 establishes a “sharing mechanism” by which it will have to share with its customers the actual gains and losses which might be realized from entering into fixed price transactions for the purchase of gas. Establishing such a mechanism for fixed price transactions at this time might deter the Company from entering into purchasing arrangements which are beneficial to customers.
The Commission by its Order No. 28639 did not establish a mechanism for sharing the risk of fixed priced transactions between the Company and its customers. Rather, its aim by including the sentences above was to recognize the risk inherent in the gas purchase choices made by the Company and the need to identify methods of sharing those risks. In addition, the intent was also to reinforce that the Company must demonstrate the prudency of entering into fixed price transactions for the purchase of natural gas, as it would with any other purchase strategy, when its seeks recovery of any deferred amounts related to them. Thus, the Commission through this language did not establish a “sharing mechanism.”
O R D E R
IT IS HEREBY ORDERED that while Order No. 28639 recognizes the risks associated with gas purchase choices made by the Company and the need to identify methods of sharing those risks with its customers the Order itself does not establish a “sharing mechanism.” Any such proposal to establish this type of mechanism will be investigated in a separate PGA review proceeding. Furthermore, and most importantly, the prudence of all transactions must be demonstrated prior to recovery of the costs in rates.
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 February 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

O:avug007_jh3
ORDER NO. 28654 1

Office of the Secretary
Service Date
February 26, 2001