20061004notice_of_application_order_no_30141.pdf

Office of the Secretary
Service Date
October 4, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA UTILITIES FOR AN ORDER
APPROVING A CHANGE IN NATURAL GAS
RATES AND CHARGES (2006 PURCHASEDGAS COST ADJUSTMENT)
CASE NO. A VU-06-
NOTICE OF APPLICATION
NOTICE OF
MODIFIED PROCEDURE
ORDER NO. 30141
On September 14, 2006, Avista Utilities filed its annual Purchased Gas Cost
Adjustment (PGA) Application with the Commission requesting authority to place new rate
schedules in effect as of November 1, 2006 that will increase its annual natural gas revenues by
approximately $2.7 million (3.2%). The PGA mechanism is used to adjust rates to reflect
changes in the costs for the purchase of gas from wholesale suppliers including transportation
storage, and other related costs of acquiring natural gas. A vista s earnings will not be increased
as a result of the proposed changes in prices and revenues.
On September 29, 2006, Avista filed a revised PGA Application and tariff sheets
with the Commission to revise the Company s proposed weighted average cost of gas (W ACOG)
to reflect a further reduction in wholesale natural gas prices. The revised Application proposes
to reduce the Company s estimated annual natural gas revenues by approximately $2.8 million
(3.4%).
With this Order the Commission authorizes the use of Modified Procedure to process
the Company s Application and establishes a deadline for the filing of written comments and/or
protests.
THE REVISED APPLICATION
YOU ARE HEREBY NOTIFIED that according to A vista s Application if the
requested price decrease is approved the Company s annual revenue will decrease by
approximately $2.8 million or about 3.4%.The average residential or small commercial
customer using 65 therms per month would see an estimated decrease of $2.70 per month
(3.4%).
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
YOU ARE FURTHER NOTIFIED that Avista states that it purchases natural gas for
customer usage and transports this gas over various pipelines for delivery to customers. The
Company defers the effect of timing differences due to implementation of rate changes and
differences between the Company s actual WACOG purchased and the WACOG embedded in
rates. A vista also defers the revenue received from the release of its storage capacity as well as
various pipeline refunds or charges and miscellaneous revenue received from gas related
transactions.
YOU ARE FURTHER NOTIFIED that Avista s original Application requested an
increase in the WACOG from its present 78.600 cents per therm to 84.712 cents per thermo The
revised Application requests a decrease in the W ACOG from its present 78.600 cents per therm
to 76.244 cents per thermo The proposed W ACOG is based on a weighting of forward natural
gas prices on September 21 , 2006, for unhedged volumes, and the Company s hedges executed
to date. The Company generally executes hedges to fix the price of gas on approximately 66%
of its estimated annual gas sales for the year, and uses a dollar-cost averaging approach for
volumes to be hedged, with those volumes divided into 45-day execution windows between
February 15 and November 15. The Company states that it has hedged approximately 60% of its
estimated annual gas sales for the forthcoming year. It states it will hedge an additional 20% of
the estimated sales within days of the revised Application filing, in order to take advantage of the
recent sharp drop in forward gas prices.
YOU ARE FURTHER NOTIFIED that this past year the Company has begun
incorporating an amount of longer-term hedges into its purchase portfolio to provide an
additional degree of rate stability. Approximately 11 % of the total purchases for the next year
have been hedged at a three-year fixed price. The Company s plan is to keep layering-in three-
year fixed price hedges until these hedges represent one-third of the portfolio going forward.
This plan has been incorporated into the Company s Risk Management Policy and provided to
Commission Staff.
YOU ARE FURTHER NOTIFIED that the Company s proposed rates in this filing
also incorporate the proposed rate increases filed by the Company s two main pipeline suppliers
Northwest Pipeline and Gas Transmission Northwest. The proposed pipeline rates, while not yet
approved, are set to begin being billed to Avista on January 1 , 2007. The Company states that
while these pipeline rate increases are substantial, the effect on the Company s proposed rates in
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
this filing is completely mitigated by an increase in the estimated revenue to be received from
pipeline capacity releases.
YOU ARE FURTHER NOTIFIED that the Company is also proposing a change in
the present amortization rate, which is used to refund or surcharge customers the difference
between actual gas costs and projected gas costs from the last PGA filing over the past year.
Avista proposes to decrease the amortization rate from the present surcharge of 5.027 cents per
therm to 3.420 cents per thermo The Company states it has an estimated deferred gas cost
balance of approximately $2.8 million as of October 31 , 2006, reflecting higher gas costs than
projected during the past year. The proposed amortization rate of 3.420 cents per therm is
expected to recover this balance over 12 months.
YOU ARE FURTHER NOTIFIED that the Company states that notice of its
proposed increase in price has been accomplished by posting a notice at each of the Company
district offices in Idaho, a press release distributed to various informational agencies, and a
separate notice to each of its Idaho gas customers included in their billing. A vista attached
copies of these notices to its Application.
YOU ARE FURTHER NOTIFIED that the Application, supporting workpapers
testimonies, and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices.The Application and
testimonies are also available on the Commission s web site at www.puc.idaho.gov under the
File Room" icon.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the filing and
revised filing of record in Case No. A VU-06-03. The Commission has preliminarily
determined that the public interest may not require a hearing to consider the issues presented in
this case and that issues raised by the Company s filing may be processed under Modified
Procedure. , by written submission rather than by hearing. IDAPA 31.01.01.201-204. In so
doing, the Commission notes that Modified Procedure and written comments have proven to be
an effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that the Commission may 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. IDAPA 31.01.01.203.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
YOU ARE FURTHER NOTIFIED that if no protests or written comments are
received within the deadline, the Commission will 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, in its discretion, set the matter for hearing or decide the matter and issue
its Order on the basis of the written positions before it. IDAPA 31.01.01.204.
NOTICE OF COMMENT/PROTEST DEADLINE
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments
or protests with respect to the Application and the revised Application as well as the
Commission s use of Modified Procedure in Case No. A VU-06-03 is October 24, 2006.
Persons desiring a hearing must specifically request a hearing in their written protests or
comments.
YOU ARE FURTHER NOTIFIED that written comments concerning this case
should be mailed to the Commission and to the Company at the addresses reflected below.
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address For Express Mail:
472 W. Washington Street
Boise, ID 83702-5983
Kelly O. Norwood, Vice President
State & Federal Regulation
A vista Utilities
PO Box 3727
Spokane, W A 99220-3727
E-mail kelly .norwood~avistacorp.com
David J. Meyer
Vice President and Chief Counsel for
Regulatory and Governmental Affairs
A vista Utilities
PO Box 3727
Spokane, W A 99220-3727
E-mail dmeyer~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 homepage located at www.puc.idaho.gov . 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 A vista at the e-mail addresses listed above.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
FIND IN GS/CO N CL USI 0 NS
The Idaho Public Utilities Commission has jurisdiction over A vista Utilities, its
Application for an Order approving a change in natural gas rates and charges, and the issues
involved in this case by virtue of Title 61 , Idaho Code, specifically Idaho Code ~ ~ 61-129, 61-
117 and 61-307, and the Commission s Rules of Procedure, IDAPA 31.01.01.000 et seq.
The Commission has preliminarily determined that the public interest may not
require a hearing to consider the issues presented in this case, and that issues raised by the
Company s filing may be processed under Modified Procedure , by written submission
rather than by hearing. IDAPA 31.01.01.201-204. In so doing, the Commission notes that
Modified Procedure and written comments have proven to be an effective means for obtaining
public input and participation.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Persons interested in submitting written comments regarding this case or protesting the use
Modified Procedure should do so no later than October 24 2005.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this '-I-H...
day of October 2006.
ATTEST:
lSJell
Mmission Secretary
O:A VU-06-03 dw
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 30141
~rt
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSE , COMMISSIONER