20010205jh.doc

SUPPLEMENTAL DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
TERRI CARLOCK
ALDEN HOLM
BEVERLY BARKER
TONYA CLARK
WORKING FILE

FROM: JOHN R. HAMMOND

DATE: FEBRUARY 5, 2001

RE: SUPPLEMENT TO FEBRUARY 1, 2001, DECISION MEMORANDUM IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION FOR A DEFERRED ACCOUNTING ORDER. CASE NO. AVU-G-00-7.

On December 21, 2000, Avista Corporation filed its Application for a Deferred Accounting Order. Through this Application the Company seeks to defer the revenues and expenses associated with fixed price transactions for the period of January 1, 2001 to March 31, 2002. On January 9, 2001, the Commission issued Notice of Application and Notice of Modified Procedure which amongst other things required the parties to file written comments on or before January 30, 2001. Order No. 28608. The Commission Staff was the only party to file comments. the Company.
On February 1, 2001, Staff filed a Decision Memorandum which calculated, based on futures prices as of January 8, 2001, that the Company’s fixed price transactions will cost Idaho customers about $83,400 to have a portion of their gas prices fixed.
Based on subsequent information received, Staff has updated the estimates of the premiums associated with the fixed price transactions referenced in this case. Based on current and future prices as of January 30, 2001, Staff submits the following premiums estimated to be paid by the Company below or (above) market prices for the fixed price transactions referenced in this case:

January Savings (Premiums) $219,254.78
February Savings (Premiums) ($525,149.52)
March Savings (Premiums) ($575,447.11)
Total Savings (Premiums) ($881,341.85)

This revised estimate does not change Staff’s recommendation because the recommendation is to allow for deferral only. This will provide the Company the opportunity to recover the costs with each transaction reviewed for prudency when the Company seeks to include the amount as part of the Purchased Gas Costs Adjustment (PGA) filing.

_____________________________
John R. Hammond
Deputy Attorney General

M:avug007_jh2
SUPPLEMENTAL DECISION MEMORANDUM 2