20040802Final Order No 29557.pdf

Office of the Secretary
Service Date
August 2, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FILING BY A VISTA
CORPORATION DBA A VISTA UTILITIES OF
ITS 2003 NATURAL GAS INTEGRATED RESOURCE PLAN (IRP).
CASE NO. A VU-03-
ORDER NO. 29557
On December 30, 2003 , Avista Corporation, dba Avista Utilities (Avista; Company)
filed its year 2003 natural gas Integrated Resource Plan (IRP) with the Idaho Public Utilities
Commission (Commission). The Commission has completed its review of the Company s 2003
Natural Gas Integrated Resource Plan and has considered the filings of record in Case No. A VU-
03-, including the comments of the Commission Staff (Staff). By this Order, the
Commission accepts the filing and acknowledges that it satisfies the Commission s requirements
as set forth in Order No. 25342, Case No. GNR-93-2 (reference PURP A section 303(b )(3),
Energy Policy Act of 1992). The Company is apprised that the Commission s acknowledgement
is not to be interpreted as approval, or as judgment of prudence of the IRP or the prudence of
following or not following the plan. The Commission appreciates the Company s efforts and
hopes that preparation of the document proved to be of operational benefit to the Company.
The Commission notes that Staff provided specific comments regarding the
Company s Idaho tariff Schedule 163 natural gas Benchmark Incentive Mechanism. The
Benchmark Mechanism is a tariff program pursuant to which Avista Energy manages all of
Avista Utilities' natural gas marketing and storage facilities. The program establishes the cost of
natural gas for the states of Washington, Idaho and Oregon. It prices natural gas at the first of
the month price based on an artificial weighting of the three supply basins serving the Northwest
regardless of actual purchase price or delivery location. The Benchmark Incentive Mechanism
also includes storage management, a hedging program and sharing of capacity releases between
A vista Energy and A vista Utilities for all three states.
Staff notes that on February 13, 2004, the Washington Utilities and Transport~tion
Commission (WUTC) in Docket No. UG-021584 found that Avista s Benchmark Mechanism
had not provided adequate safeguards in affiliate transactions between A vista Utilities and A vista
ORDER NO. 29557
Energy nor were there significant measurable benefits to ratepayers.The Washington
Commission directed the Company to file a plan for transitioning from purchasing natural gas
through A vista Energy and the Benchmark Program to the direct purchase of natural gas by
A vista Utilities. The transition plan submitted by A vista to the WUTC calls for A vista Utilities
to contract with A vista Energy to purchase natural gas based on A vista Utilities ' purchase
decisions until March 2005. A vista Utilities proposes to acquire and obtain additional personnel
and return to internally purchasing natural gas for all of its natural gas customers in Oregon and
Idaho effective April 1 , 2005.
Pursuant to Commission Order in Case No. A VU-01-, the Company is to file an
analysis of the Benchmark Program detailing the costs and benefits to customers, to the
Company and to Avista Energy seven (7) months (i., on or before August 31 , 2004) prior to the
contract's termination on March 31 2005. Order No. 28941 at 7. Staff will review the required
filing and continue to monitor the Company s transition actions closely.
Staff notes that A vista s 2003 natural gas IRP only briefly mentions the then pending
actions of the Washington Commission in Appendix G, under evaluation of the previous plan
supply/capacity.Staff believes that the WUTC's rejection of the Benchmark Incentive
Mechanism is a significant event that should be addressed in a supplemental filing associated
with the 2003 IRP.Staff believes that Idaho customers have benefited from some of the
Benchmark components. Staff is concerned that with the loss of the Benchmark Mechanism, a
beneficial program may be lost and additional costs may be shifted to Idaho. Staff recommends
that the Company be directed to provide Staff copies of all Benchmark Mechanism transition
documents submitted in the Company s other jurisdictional states.
The Commission is concerned that the Washington Commission decision to
eliminate the Benchmark Incentive Mechanism may result in increased costs to Idaho. We find
it reasonable to require A vista to supply Staff with copies of all Benchmark transition documents
submitted in the Company s other jurisdictional states. We also find it reasonable to require the
Company in its August 31 , 2004 Schedule 163 Benchmark Program status report filing (Case
No. A VU-01-3) to address the WUTC Benchmark Incentive Mechanism order, the
Company transition plan, and the related regulatory consequences and economic and
operational ramifications in Idaho of terminating the Benchmark Program.
ORDER NO. 29557
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corp dba A vista
Utilities, a natural gas utility, and the issues raised in Case No. A VU-03-2 pursuant to the
jurisdiction granted under Title 61 of the Idaho Code and the Commission s Rules of Procedure
IDAP A 31.01.01.000 et seq.
ORDER
In consideration of the foregoing and as more particularly described above, the
Commission by this Order does hereby acknowledge and accept Avista s Natural Gas 2003
Integrated Resource plan filing.
IT IS FURTHER ORDERED and Avista is directed to provide Commission Staff
with copies of all Benchmark transition documents submitted in the Company other
jurisdictional states.
IT IS FURTHER ORDERED and the Company is directed in its August 31 , 2004
Schedule 163 Benchmark Program status report filing (Case No. A VU-01-3) to address the
WUTC Benchmark Incentive Mechanism order, the Company s transition plan, and the related
regulatory consequences and economic and operational ramifications in Idaho of terminating the
Benchmark Program.
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.
ORDER NO. 29557
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30
day of July 2004.
J. &:Jv
MARSHA H. SMITH, COMMISSIONER
Out of the Office on this Date
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
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ORDER NO. 29557