20061031final_order_no_30167.pdf

Office of the Secretary
Service Date
October 31 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION TO INCREASE
THE COMPANY'S ENERGY EFFICIENCY
TARIFF SCHEDULE 191 ORDER NO. 30167
CASE NO. A VU-06-
On September 14, 2006, A vista Corporation dba A vista Utilities filed its Application
to increase the Company s Energy Efficiency Tariff Schedule 191. Schedule 191 is designed to
recover the costs incurred by the Company associated with providing natural gas efficiency
services to customers. The Company requested Modified Procedure and an effective date of the
new tariff of October 13, 2006. On October 4, 2006, the Commission issued a Notice
Application, a Notice of Modified Procedure, and a request for any comments by interested
persons to be filed by October 24 2006. Order No. 30145. The only comments submitted were
filed by Commission Staff. The Commission also suspended the effective date for the proposed
tariff. Id.
BACKGROUND
According to Avista s Application, the proposed increase in the Schedule 191 rate is
necessary to continue to fund ongoing natural gas-efficiency programs as set forth in A vista
more recent Integrated Resource Plan for natural gas service and to amortize a deficiency
balance within the natural gas demand side management (DSM) tariff rider resulting from the
Company s response to customer demand for the services that was higher than expected. The
Company asserted that the proposed increase will not result in a change in profits for the
Company.
A vista stated that the existing and planned expenses for the DSM programs are far
exceeding revenues. The tariff rider for DSM programs had not changed since 2001. A vista
stated that as of the close of August 2006, its natural gas DSM tariff rider balance for Idaho is
negative $1.5 million. The proposed tariff rider increase is estimated to erase this liability
balance by the end of the second quarter of2008.
ORDER NO. 30167
The Application stated that the proposed increase is a 1.4% increase, as expressed as
a percentage of present gas revenue. The proposed rates will result in a 1.75% total charge for
DSM.
A vista further stated that all Schedule 191 funds will remain within the natural gas
efficiency rider programs. A vista will continually assess demand for the services and program
financial balances and propose revisions to Schedule 191 as needed. The Company stated that
the programs are cost-effective and that the additional funding will expand the availability ofthe
programs. The Company provided a copy of its customer notice and press release announcing
the proposed tariff change.
ST AFF COMMENTS
Accounting Issues
Staff reviewed the Company s Application, completed an audit of the accounting
treatment of the DSM expenditures from 2001 to present, and reviewed the Company s DSM
budget for the coming years. The annual revenue received from Idaho customers under the
present DSM tariff rider, currently set at 0.5% of retail rates, is approximately $296 268, while
the Company has currently budgeted approximately $720 000 in Idaho for DSM expenditures in
2007. The proposed tariff rider will generate approximately $1 439 121 in additional Idaho
revenue for the Company. The additional revenue will be used to recover a deferral balance
estimated to reach approximately $1.25 million by end of 2006, at which time, the Company
plans to further increase its DSM expenditures to the level provided by the rider.
Demand Side Management Program
Activities
Expansion of Avista s DSM program as described in the 2006-2008 IRP will include
all identified measures that are cost-effective and those measures which may not have passed a
cost effectiveness test, but which a customer or A vista engineer believe to have significant
potential net value in energy savings. A total of 27 different measures were identified in the IRP
as accepted for development in the Company s Washington and Idaho service territories, based
on either a preliminary evaluation or as evaluated by the computer model used by the Company
for selecting resources appropriate to meet the demand of its customers. These measures total
062 000 first-year therms savings, more than a four-fold increase over the Company s prior
DSM goal.
ORDER NO. 30167
Revenue Use
In addition to direct design and installation of DSM measures with residential
commercial and industrial customers, the program includes significant incentives paid to
customers. These incentives take the form of cash rebates for items such as weatherization, high
efficiency hot water heaters, thermostats, and high efficiency furnaces. The use of Idaho-derived
DSM rider revenues is divided with 79% applied to incentives, 15% to labor, and 7% to
expenses.
Priorities
While each measure pursued must be cost-effective, A vista looks at individual
categories within each measure to determine priorities.By working with customers and
engineering, A vista determines which categories and sub-categories have the highest potential.
Results
In 2001 A vista set a goal of annually achieving DSM results that save a minimum of
240 000 first-year therms within its combined Washington and Idaho service territory. The
Company has met or exceeded that goal in each of the five years prior to 2006. These measures
total 1 062 000 first-year therms savIngs.
Company s prior DSM goal.
This is more than a four-fold increase over the
DSM Rider Tariff Determination
The Company has proposed to change not only the rate of the rider adjustment
Schedule 191 , but to also change how that rate is defined. In 2001 , the rider was set equivalent
to 0.50% of the retail rates, but it is tariffed and billed in cents per therm increments. The
Company proposes to describe the rider as only a fixed rate per therm that may change when an
application is filed by the Company and approved by the Commission.
Proposed DSM Rider Rates
The rider adjustment proposed by the Company is an increase from $0.00426 per
therm to $0.02063 per therm for residential rates (Schedule No.1 01). Changes in other tariff
schedules are similar to the Schedule 101 change. All of the proposed rider changes are
presented below.
ORDER NO. 30167
Schedule No. 101
Schedule No. 111 & 112
Schedule No. 121 & 122
Schedule No. 131 & 132
Present
$0.00426/therm
$0.00373
$0.00354
$0.00294
Proposed
$0.02063/therm
$0.01827
$0.01739
$0.01523
The proposed tariff is calculated to pay for the increased costs associated with the
increased scope and effort of the energy efficiency program going forward, and to recover the
costs of recent past DSM efforts that have been insufficiently funded by the existing rider. The
proposed Idaho portion ofDSM expenditures, starting January 1 2007, is $720 095 annually and
the amount for recovery of past Idaho expenses is $1 242 805, as estimated to exist by December
, 2006. The Company expects the tariff to recover the accrued past costs by about July 2008.
Staff Recommendations
Staff recommended approval of the energy efficiency tariff rider rates and
determination of those rates as requested in the Company s Application, and that the
Commission Order contain language encouraging all customers to participate in Avista s DSM
programs. Staff further requested clarification that the Company did not request that the DSM
program and activities be reviewed for their prudence, and that the Staff makes no
recommendation regarding whether the Company s DSM program expenses are prudent.
FINDINGS OF FACT
The Commission finds that the proposed rates for Avista s energy efficiency rider
adjustment, Tariff Schedule 191 , are just and reasonable. These rates will provide needed
funding for the Company s prior and current DSM activities and will allow the Company to
investigate further improvements to its program. We expect that once the Company has received
the monies to cover its current deferral balance that it will come before the Commission with a
proposed tariff to cover the costs of its DSM activities on a going-forward basis. The
Commission wishes to commend the Company for meeting and exceeding the goals of its DSM
program and encourages A vista s customers to take advantage of the opportunities presented by
the Company to conserve natural gas resources. However, the Commission does not make any
finding or determination regarding the reasonableness or prudence of any of the Company
individual DSM activities or expenses.
ORDER NO. 30167
CONCLUSIONS OF LAW
The Commission has jurisdiction over A vista, a natural gas utility, and the issues
raised in Case No. A VU-06-04 pursuant to the jurisdiction granted under Title 61 Idaho
Code ~~ 61-117, 61-129, 61-307, and 61-623 , and the Commission s Rules of Procedure
IDAPA 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that Avista Corporation dba Avista Utilities be
authorized to adjust its Idaho rates and charges in the manner requested in its Application and as
reflected in the tariff schedules submitted in Case No. A VU-06-4 to be effective on November
2006.
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. 30167
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 3/
sf"
day of October 2006.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:A VU-06-cg2
ORDER NO. 30167