20040729Notice of Application Order No 29554.pdf

Office of the Secretary
Service Date
July 29 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
VISTA UTILITIES FOR AUTHORITY TO
INCREASE ITS PURCHASED GAS COSTADJUSTMENT (PGA) RATE.
CASE NO. A VU-O4-
NOTICE OF APPLICATION
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF
COMMENT DEADLINE
ORDER NO. 29554
On July 23, 2004, Avista Utilities filed its annual Purchased Gas Cost Adjustment
(PGA) Application with the Commission for authority to place into effect on September 9, 2004
new rate schedules that will increase its annualized revenues by $7.8 million. A vista states that
any increases resulting from this PGA filing directly result from the cost of gas purchased in the
marketplace; Avista Utilities makes no additional profits from the PGA rate change. If this
Application is approved, A vista states that Company revenues will increase by approximately
14.2%. In this Order the Commission processes this filing under Modified Procedure and
establishes an August 26, 2004 written comment deadline.
THE APPLICATION
YOU ARE HEREBY NOTIFIED that Avista Utilities, a unit of Avista Corporation
a Washington Corporation, offers gas distribution services to customers in Washington, Oregon
Idaho and California. A vista provides natural gas service to approximately 60 000 customers in
northern Idaho.
YOU ARE FURTHER NOTIFIED that Avista believes this Application should be
approved because it purchases natural gas from a subsidiary of A vista Corporation, A vista
Energy, under the provisions of tariff Schedule 163 (the Natural Gas Benchmark Mechanism).
Avista transports this gas over Williams Pipeline West (d.a. Northwest Pipeline Corporation)
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
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ORDER NO. 29554
and Westcoast Pipeline systems and defers the effect of timing differences due to
implementation of rate changes and differences between A vista s actual weighted average cost of
gas (W ACOG) purchased and the W ACOG embedded in rates. A vista also defers the revenue
received from Cascade Natural Gas for the release of storage capacity at the Jackson Prairie
Storage Facility, various pipeline refunds or charges, and miscellaneous revenue received from
gas-related transactions.
YOU ARE FURTHER NOTIFIED that Avista filed proposed tariff sheet 150, which
increases the prospective natural gas cost component included in the rates charged to customers
by 11.730 cents per thermo This requested rate change consists of an increase of 10.750 cents per
therm related to the (variable) commodity cost of purchasing and transporting gas for customer
usage and an increase of .980 cents per therm related to fixed pipeline costs.
YOU ARE FURTHER NOTIFIED that the commodity cost increase is based on a
proposed increase in the present W ACOG included in the Company s gas service schedules.
Gas prices have increased markedly since the fall of 2003. The Company s present W ACOG
included in its gas sales rates is 44.989 cents per therm, which was approved by Commission
Order No. 29342. The ACOG proposed in this requested increase is 55.739 cents per therm
reflecting the first-of-the-month (FOM) forward gas prices as of July 13, and hedges executed to
date. FOM forward prices, weighted by basin, are multiplied by the monthly proj ected load
requirements, less volumes hedged to date. The Company has executed three hedges to date for
the coming winter (November-March) at an average price of 58.4 cents per thermo Additional
hedges will be executed prior to this winter, with total hedged volumes representing
approximately 50% of the total annual projected load requirements for the July 2004-June 2005
period. Should future FOM or hedged prices substantially change the W ACOG requested in this
filing, A vista committed to revise this filing or submit an additional PGA filing to reflect those
changes.
YOU ARE FURTHER NOTIFIED that in this filing, Avista is not proposing to
change the present amortization rate( s) set forth under Schedule 155. This amortization rate is
used to refund or surcharge customers the difference between actual gas costs and proj ected gas
costs (from the last PGA filing) over the past year. The Company has a deferred gas cost
balance of approximately $3.3 million, as of June 30, 2004, reflecting higher gas costs than
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
projected during the past year. However, the present amortization rate is a surcharge of 3.093
cents per therm, which would recover the present deferral balance over an approximate 18-month
period. The Company believes this estimated recovery period is reasonable and, given the
substantial increase proposed in the W ACOG, is not proposing a change to the amortization rate.
YOU ARE FURTHER NOTIFIED that if the Commission approves the proposed
increase, firm sales customers on Schedules 101 , 111 , 112, 121 and 122 will see a rate increase
of 11.730 cents per thermo Interruptible sales customers on Schedules 131 and 132 will see a
rate increase of 10.750 cents per thermo The Application presumes that upon completion of this
PGA tracker case, the Company s tariff Schedule 150 will be changed to appropriately address
both base rate and PGA tracker changes.
YOU ARE FURTHER NOTIFIED that Avista proposes that large transportation and
interruptible customers be given the option of receiving/paying their portion of the deferred gas
costs either through a lump sum credit/charge or through an amortization rate. If these customers
choose the lump sum method, A vista proposes to adjust these billings credits/charges by the
amount of interest that accumulates from the end of the test period used in this filing to the date
of actual settlement. This proposal would clear out the small residual balances related to interest
charges that are carried forward between PGA filings for large customers.
YOU ARE FURTHER NOTIFIED that if the Application is approved, A vista states
that the Company s estimated annual natural gas revenue will increase by approximately $7.
million (14.2%). Avista estimates that the average residential customer using 70 therms per
month would see their monthly bill increase by approximately $8.21 (14.2%).Larger
commercial customers would experience an average increase between 15.9% and 17., with
the higher increase percentages due to lower base rates. Incorporating its proposed changes to
Rate Schedules 150, A vista recommends the following annualized change in PGA rates per
customer class:
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NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
Proposed Estimated Proposed
Average Increase Average Increase Average Price
Customer Class Schedule ~/Therm % Change ~/Therm
General 101 11.7~14.89.4~
Large General 111 11.7~15.90/0 85.4~
Commercial 121 11.7~17.79.
Large General 112 11.7~17.78.
Interruptible 131 10.18.70.
Interruptible 132 10.19.66.
Transportation 146 none none 10.
YOU ARE FURTHER NOTIFIED that when combined with the base rate increase
requested in pending Case No. A VU-04-, Company revenues could increase by
approximately 22%. The 22% combined increase is comprised of a 14.2% PGA revenue
increase in this case and the 7.82% base rate increase requested in the Company s rebuttal
testimony filed in Case No. A VU-04-
YOU ARE FURTHER NOTIFIED that the Company requests these rates be
approved to become effective September 9, 2004 and that this matter be handled under Modified
Procedure pursuant to Rules 201-210 of the Commission s Rules of Procedure.
YOU ARE FURTHER NOTIFIED that the Company s Application to increase its
rates is merely a proposal subject to public review and Commission approval.
YOU ARE FURTHER NOTIFIED that the Commission has jurisdiction over this
matter and A vista Utilities, a gas utility, pursuant to the authority and power granted under Title
61 of the Idaho Code and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
NOTICE OF MODIFIED PROCEDURE
A vista requests that its Application be processed under Modified Procedure , by
written submission rather than by hearing. Commission Rules of Procedure, IDAP
31.01.01.201-204. The Company has requested an effective date of September 9 2004.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filings of
record in Case No. A VU-04-2. The Commission notes that the annual PGA tracker reflects
only those changes in gas costs that are generally recognized as outside the Company s control.
The Commission has preliminarily determined that the public interest may not require workshops
or hearings to consider the issues presented in this case, and that the issues raised by the
Company s filing may be processed under Modified Procedure. IDAPA 31.01.01.125. In so
doing, the Commission notes that Modified Procedure and written comment has proven to be an
effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that the Commission will not hold a hearing in
this proceeding unless it receives written protests or comments opposing the use of Modified
Procedure and stating why Modified Procedure should not be used.
31.01.01.203.
Reference IDAP A
YOU ARE FURTHER NOTIFIED that if no protests or comments are received
within the deadline, the Commission may consider the matter and enter its Order without a
hearing. If protests or comments are filed within the deadline, the Commission will consider
them and may set the matter for hearing or may decide the matter and issue its Order on the basis
of the written positions before it. Reference IDAP A 31.01.01.204.
NOTICE OF COMMENT DEADLINE
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or
protests with respect to the Application and the use of Modified Procedure in Case No. A VU-
04-2 is Thursday, August 26, 2004. IDAP A 31.01.01.202.02. Persons desiring a hearing must
specifically request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that written comments concerning this
Application must be mailed to the Idaho Public Utilities Commission and A vista Utilities at the
following addresses:
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Kelly O. Norwood
Vice President - Rates & Regulation
Avista Utilities
PO Box 3727
Spokane, W A 99220-3727
Email: kelly.norwood~avistacorp.com
472 W Washington Street
Boise, ID 83702-5983
David J. Meyer
Senior Vice President
A vista Utilities
PO Box 3727
Spokane, W A 99220-3727
Email: david.meyer~avistacorp.com
These comments should contain the case caption and case number shown on the first page of this
document.Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the Applicant at the e-mail addresses listed
above.
YOU ARE FURTHER NOTIFIED that Avista Utilities shall have until August 30
2004 at 10 a.m. to file a written response to any comments, if it so desires.
YOU ARE FURTHER NOTIFIED that the Application in Case No. A VU-04-
together with accompanying exhibits and workpapers can be reviewed at the Commission
office and at the principal office of A vista Utilities during regular business hours. A vista Utilities
is located at 1411 Mission Avenue in Spokane, Washington (509-495-4817). In addition, the
Application and testimonies (excluding exhibits) are available on the Commission s Website at
www.puc.state.id.under the "File Room" icon.
ORDER
IT IS HEREBY ORDERED that the foregoing scheduling be adopted.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this J.. 9f1'-
day of July 2004.
ATTEST:
~lQ.Je . Jewell
Commission Secretary
O:A VUGO402 In
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE
ORDER NO. 29554
MARSHA H. SMITH, COMMISSIONER
Out of the Office on this Date
DENNIS S. HANSEN, COMMISSIONER