20070917Application.pdf

Avista Corp.
1411 East Mission PO Box 3727
Spokane. Washington 99220.3727
Telephone [phone]
Toll Free 800-727-9170
HECEI\lC~ An."~lrV'ST..
2007 SEP I 7 PI'f 9: 27
Corp.
September 14, 2007
r e. , . L)Fd"I\J PUFIj If'UTILITIES' COl'ifi~1ISS1G.
State of Idaho
Idaho Public Utilities Commission
Statehouse
Boise, Idaho 83720 Avu-d7-
Attention: Ms. Jean D. Jewell
Advice Number 07-01-
RE: TariffIPUC No. 27. Natural Gas Service
The following tariff sheets are enclosed for filing with the Commission:
Tenth Revision Sheet 150 canceling Ninth Revision Sheet 150 and
Seventh Revision Sheet 155 canceling Sixth Revision Sheet 155
These tariff sheets request an effective date of November 1 , 2007 and result from changes in the projected cost of
gas purchased and transported for customer use for the November 2007 through October 2008 period and in the
amortization rate pertaining to differences between the actual cost of gas and the amount collected from
customers.
If these tariff sheets are approved as filed, the Company s estimated annual natural gas revenue will decrease
approximately $4.0 million or about 4.6%. This decrease results primarily from a substantial reduction in the
amortization rate(s) to surcharge/refund prior gas cost differences under Schedule 155. The present amortization
rate for fmn sales customers is approximately a 3.4 cent per thenn surcharge while the proposed amortization
rate is a 2.4 cents per them refund rate to pass back approximately $1.7 million. Additionally, the proposed
weighted average cost of gas (W ACOG) reflected in this filing is slightly less (0.5 cents per thenn) than the
W ACOG reflected in current rates.
The average residential customer using 65 thenns per month will see their monthly bill decrease by
approximately $3.65 or about 4., from $78.79 to $75.14 per month. The requested rate changes will have no
effect on the Company s net income.
Also enclosed are an Application and workpapers that provide infonnation supporting this proposed rate change.
If you have any questions regarding this filing, please feel free to call Craig Bertholf at [phone] or Brian
Hirschkom at [phone].
Sincerely:
Kelly O. Norwood
Vice President
State and Federal Regulation
Enclosures
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation dba Avista Utilities' filing with Tariff
IPUC No. 27 Natural Gas Service by mailing a copy thereof, postage prepaid to the following:
Jean D Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83720-5983
Paula Pyron
Northwest Industrial Gas Users
4113 Wolfberry Court
Lake Oswego , OR 97035-1827
Edward A. Finklea
Cable Huston Benedict Haagensen &
Lloyd , LLP
1001 SW 5th , Suite 2000
Portland , OR 97204-1136
Curt Hibbard
St. Joseph Regional Medical Center
PO Box 816
Lewiston , ID 83501
Stimson Lumber
O. Box 7400
Coeur d'Alene, ID 83816
Dated at Spokane , Washington this 14th day of September 2007.
Rates Coordinator
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
Application is hereby made to the Idaho Public Utilities Commission for an Order
approving a revised schedule of rates and charges for natural gas service in the state of
Idaho. The Applicant requests that the proposed rates included in this Purchased Gas
Adjustment (PGA) filing be made effective on November 1 , 2007. If approved as filed
the Company s annual revenue will decrease by approximately $4.0 million or about
6%. In support of this Application, Applicant states as follows:
The name of the Applicant is A VISTA UTILITIES , a unit of A VISTA
CORPORATION, a Washington corporation, whose principal business office is 1411
East Mission Avenue, Spokane, Washington, and is qualified to do business in the state
ofIdaho. Applicant maintains district offices in Moscow, Lewiston, Coeur d'Alene, and
Kellogg, Idaho. Communications in reference to this Application should be addressed to:
Kelly O. Norwood
Vice President - State & Federal Regulation
A vista Utilities
O. Box 3727
Spokane, W A 99220-3727
II.
Attorney for the Applicant and his address is as follows:
David J. Meyer
Vice President and Chief Counsel for Regulatory &
Governmental Affairs
A vista Utilities
O. Box 3727
Spokane, W A 99220-3727
III.
The Applicant is a public utility engaged in the distribution of natural gas in
certain portions of Eastern and Central Washington, Northern Idaho and Southwestern
and Northeastern Oregon, and further engaged in the generation, transmission, and
distribution of electricity in Eastern Washington and Northern Idaho.
IV.
Tenth Revision Sheet 150 , which Applicant requests the Commission approve, is
filed herewith as Exhibit ". Also included in Exhibit "A" is a copy of Tenth Revision
Tariff Sheet 150 with the changes underlined and a copy of Ninth Revision Tariff Sheet
150 with the proposed changes shown by lining over the current language or amounts.
Additionally, Seventh Revision Sheet 155 , which Applicant requests the
Commission approve, is also filed herewith as Exhibit ". Also included in Exhibit "
is a copy of Seventh Revision Tariff Sheet 155 with the changes underlined and a copy of
Sixth Revision Tariff Sheet 155 with the proposed changes shown by lining over the
current language or amounts.
The existing rates and charges for natural gas service on file with the Commission
and designated as Applicant's TariffIPUC No. 27, which will be superseded by the rates
and charges filed herewith, are incorporated herein as though fully attached hereto.
VI.
Notice to the Public of Applicant's proposed tariffs is to be given simultaneously
with the filing of this Application by posting, at each ofthe Company s district offices in
Idaho, a Notice in the form attached hereto as Exhibit "B" and by means of a press
release distributed to various informational agencies, a copy attached hereto as Exhibit
. In addition, a separate notice to each Idaho gas customer will be included in their
current billing, a copy of which is attached hereto as Exhibit "B - 1"
VII.
The circumstances and conditions relied on for approval of Applicant's revised
rates are as follows: Applicant purchases natural gas for customer usage and transports it
over Williams Pipeline West (d.a. Northwest Pipeline Corporation), Gas Transmission
Northwest (GTN), TransCanada (Alberta), TransCanada (BC) and Westcoast Pipeline
systems and defers the effect of timing differences due to implementation of rate changes
and differences between Applicant's actual weighted average cost of gas (W ACOG)
purchased and the W ACOG embedded in rates. Applicant also defers various pipeline
refunds or charges, miscellaneous revenue received from gas related transactions and the
revenue received from Cascade Natural Gas for the release of storage capacity at the
Jackson Prairie Storage Facility. However, the Company recalled the release of storage
capacity at Jackson Prairie Storage Facility to Cascade Natural Gas effective April 30
2007.
This filing reflects the Company s proposed annual Purchased Gas Cost Adjustment
(PGA) to: 1) pass through changes in the estimated cost of natural gas for the forthcoming
year (Schedule 150), and 2) revise the amortization rate(s) to refund or collect the balance
of deferred gas costs (Schedule 155). Below is a table summarizing the proposed changes
reflected in this filing.
Commodity Demand Total Sch. 155 Total Rate
Sch.Change Change Sch. 150 Amort.Change Percent
Service No.per therm per therm Chanqe per therm per therm Chanqe
General 101 $0.005 $0.007 $0.002 $0.058 $0.056
Lg. General 111 $0.005 $0.007 $0.002 $0.058 $0.056
Ex. Lg. Gen.121 $0.005 $0.007 $0.002 $0.058 $0.056
Interruptible 131 $0.005 $0.005 $0.005
Transport 146 $0.000
Commodity Costs
As shown in the table above, the estimated commodity cost (W ACOG) change is
a decrease of approximately $0.005 (five-tenths of a cent) per thermo The proposed
W ACOG is $0.75544 compared to the present W ACOG of $0.76085 included in rates.
Overall, while the wholesale natural gas market remains volatile, we have seen an
increased level of price stability during the 2006-2007 period, as compared to recent prior
years.
Approximately 70% of estimated annual load requirements for the PGA year
(Nov '07-0ct '08) will be hedged at a fixed price, comprised of: 1) approximately 41 % of
volumes hedged for a term of one year or less, 2) approximately 18% hedged for a three-
year term, and 3) 11 % of volumes in Jackson Prairie storage. This planned level of
hedging is similar to the prior year. During 2006, the Company began incorporating
three-year (fixed price) hedges into its portfolio to provide additional rate stability going
forward. Through the end of August, approximately two-thirds of planned hedge
volumes (excluding storage) for the PGA year have been executed at a weighted average
price of$7.94 per decatherm ($0.794 per therm). All executed hedges are allocated
between the three states the Company serves (W A, ill & OR) based on projected load
requirements.
The Company used a 60-day historical average of monthly forward prices
(through the end of August) by supply basin to develop an estimated cost associated with
unhedged volumes (planned hedges, first-of-the-month, and spot purchases). These
volumes represent approximately 45% of annual volumes at the time of this filing. The
monthly prices by basin were weighted 50% AECO, 25% Sumas and 25% Rockies to
approximate the Company s supply sources. The weighted (60-day) average monthly
forward price was then applied to the unhedged volumes by month to estimate the
monthly gas cost for these volumes. The result is a weighted average price for unhedged
volumes of$7.37 per decatherm ($0.737 per therm).
The Company continuously reviews its procurement strategy and makes changes
that it believes are appropriate. The Company modified its procurement plan for the Nov
07-0ct '08 PGA year to: 1) extend the overall hedging period, and 2) shorten the time
period of the hedging "windows . In previous years , the Company had 45-day hedging
periods, or windows, that extended from February 15 through October 15. Under this
prior plan, there was typically a 15-day overlap between hedge windows, which could
potentially result in a substantial volume of gas being purchased on a single day. The
company shortened the term of its hedging windows to 30-day periods with no overlap,
thereby eliminating the possibility of purchasing gas for two hedge window periods on a
single day. The company also extended its hedging period through December 15, in
order to further diversify its purchases. While the Company s procurement plan
generally uses a "dollar-cost averaging" approach to procure gas for the coming year, the
Company has and will continue to exercise discretion and flexibility based on changes in
the wholesale market.
In May 2007, the Company s useable Jackson Prairie (JP) storage capacity
(working gas as opposed to cushion gas) increased by 4.8 million therms resulting from a
recalled storage release to Cascade Natural Gas. This recalled release increased storage
capacity from approximately 25 million to 30 million therms for its Washington/Idaho
customers, an increase from 9% to 11 % of annual load requirements. As of the end of
August, the Company s JP storage capacity was nearly full at an average cost of $4.
per decatherm ($0.487 per therm). In May 2008 , the Company will receive an additional
23 million therms of capacity related to a recalled storage release to Terasen (BC
Hydro/Gas).
Demand Costs
The Demand Cost shown in the table primarily represents the cost of pipeline
transportation to the Company s system. As shown in the table above, there is an
increase of approximately seven-tenths of a cent per therm proposed change in the
demand cost included in rates. Overall, total demand costs reflected in this PGA filing
were essentially flat as compared with the total costs reflected in the 2006 PGA filing.
However, projected firm sales volumes are substantially lower in this filing as compared
to the projected volumes in the 2006 filing. Therefore, a similar level of dollars is
recovered over a lower level of volumes, thus resulting in the proposed increase per
thermo
Related to pipeline transportation costs, both Northwest Pipeline (NWP) and Gas
Transmission Northwest (GTN) filed general rate increases in 2006, and the proposed
rates went into effect January 1 2007 , subject to refund. These proposed rates were
reflected in the Company s 2006 PGA filing for ten ofthe twelve months (Jan. - Oct.) for
the '06-07 PGA year. The NWP case was settled and new rates became effective April
, 2007. The GTN case has not been settled as of the date of this filing. The new rates
for NWP represent a decrease to the demand costs included in the present rates , however
this decrease is offset by the inclusion of an additional two months (Nov.Dec.) of higher
GTN rates, as well as increases in Canadian pipeline charges. Additionally, during 2007
the Company terminated its agreement related to the Plymouth LNG (peaking) facility,
resulting in a savings of$124 000 per year in (fixed) demand costs.
Schedule 155 / Amortization Rate Chan2e
As shown in the table above, the decrease reflected in this PGA filing results from
a substantial decrease in the amortization rate(s) to surcharge/refund prior gas cost
differences under Schedule 155. The present amortization rate for firm sales customers is
approximately a 3.4 cent per therm surcharge which was approved as part of the
Company s 2006 PGA filing to recover a deferred gas cost balance of approximately $2.
million over a one-year period. The proposed decrease in the amortization rate(s) result
in a refund rate of approximately 2.4 cents per therm to pass back estimated over-
collected gas costs of approximately $1.7 million at November 1 , 2007. This over-
collection results from lower gas prices during the September-October 2006 period as
compared to the W ACOG reflected in rates at that time (prior to Nov. 1 , 2006 PGA rate
change).
The average residential or small commercial customer using 65 therms per month
will see an estimated decrease of $3.65 per month, or approximately 4.6%. The present
bill for 65 therms is $78.79 while the proposed bill is $75.14. The average percentage
changes for the various Schedules are shown on Exhibit ", page 2.
VIII.
Exhibit "C" attached hereto contains support for the rates proposed by Applicant
contained in Exhibit "
IX.
Applicant is requesting that Applicant's rates be approved to become effective on
November 1 , 2007. Applicant requests that, if appropriate, the Commission adopt the
procedures prescribed by Rule 201-210, Modified Procedure. Applicant stands ready for
immediate consideration on its Application.
WHEREFORE, Applicant requests the Commission issue its Order finding
Applicant's proposed rate to be just, reasonable, and nondiscriminatory and to become
effective for all natural gas service on and after November 1 , 2006.
Dated at Spokane, Washington, this 14th day of September 2007.
VISTA UTILITIES
?d; ~,.. w-rmJ
Kelly O. Norwood
Vice President, State and Federal Regulation
VERIFICATION
STATE OF WASHINGTON)
County of Spokane
, Brian Hirschkorn, being first duly sworn on oath, deposes and says: That he is
the Manager, Retail Pricing, at phone number [phone] , for Avista Corporation
and makes this verification for and on its behalf of said corporation, being thereto duly
authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be true.
~1(~
SIGNED AND SWORN to before me this 14th day of September 14 2007 , by Brian
Hirschkorn.
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Commission Expires:.!l-/=z d-j
A VIST A UTILITIES
Exhibit "
Proposed Tariff Sheets
September 14 2007
I.P.C. No.
Tenth Revision Sheet 1
Canceling
Ninth Revision Sheet 150
AVISTA CORPORATION
d/b/a Avista Utilities
150
SCHEDULE 150
PURCHASE GAS COST ADJUSTMENT -IDAHO
APPLICABLE:
To Customers in the State of Idaho where Company has natural gas service
available.
PURPOSE:
To pass through changes in costs resulting from rate adjustments imposed by the
Company s suppliers, to become effective as noted below.
RATE:
(a)The rates of firm gas Schedules 101 , 111, 112 , 121 and 122 are to be
increased by 30.822i per therm in all blocks of these rate schedules.
(b)The rates of interruptible Schedules 131 and 132 are to be increased by
30.555i per thermo
(c)The rate for transportation under Schedule 146 is to be decreased by
OO.OOOi per thermo
WEIGHTED AVERAGE GAS COST:
The above rate changes are based on the following weighted average cost of gas
per therm as of the effective date shown below:
Schedules 101
Schedules 111 and 112
Schedules 121 and 122
Schedules 131 and 132
Demand
590i
590i
590i
000i
Commodity
75.544i
75.544i
75.544i
75.544i
Total
84.134i
84.134i
84.134i
75.544i
BALANCING ACCOUNT:
The Company will maintain a Purchase Gas Adjustment (PGA) Balancing
Account whereby monthly entries into this Balancing Account will be made to reflect
differences between the actual purchased gas costs collected from customers and the
actual purchased gas costs incurred by the Company. Those differences are then
collected from or refunded to customers under Schedule 155 - Gas Rate Adjustment.
Additional debits or credits for Pipeline refunds or charges, Pipeline capacity
release revenues and miscellaneous revenues or expenses directly related to the
Company s cost of purchasing gas to meet customer requirements will be recorded in the
Balancing Account.
Issued September 14 2007 Effective November 1 , 2007
Issued by Avista Utilities
By
:Jr;:.1
rwOOd - Vice-President, State & Federal Regula'ion
I.P.C. No.
Seventh Revision Sheet 155
Canceling
Sixth Revision Sheet 155
AVISTA CORPORATION
d/b/a Avista Utilities
155
SCHEDULE 155
GAS RATE ADJUSTMENT -IDAHO
AVAILABLE:
To Customers in the State of Idaho where Company has natural gas service
available.
PURPOSE:
To adjust gas rates for amounts generated by the sources listed below.
MONTHLY RATE:(a) The rates of firm gas Schedules 101 , 111 and 121 are to be
decreased by 2.391 ~ per therm in all blocks of these rate schedules.
The rate of interruptible gas Schedule 131 is to be decreased by
391 per thermo
(b)
SOURCES OF MONTHLY RATE:
Changes in the monthly rates above result from amounts which have been
accumulated in the Purchase Gas Adjustment (PGA) Balancing Account as
described in Schedule 150 - Purchase Gas Cost Adjustment.
SPECIAL TERMS AND CONDITIONS:
The above Monthly Rate is subject to the provisions of Tax Adjustment Schedule
158.
Issued September 14, 2007 Effective November 1 2007
Issued by Avista Utilities
~'t..
' Vice President, State & Federal Regulation
I.P.C. No.
Tenth Revision Sheet 150
Canceling
Ninth Revision Sheet 150
AVISTA CORPORATION
d/b/a Avista Utilities
150
SCHEDULE 150
PURCHASE GAS COST ADJUSTMENT -IDAHO
APPLICABLE:
To Customers in the State of Idaho where Company has natural gas service
available.
PURPOSE:
To pass through changes in costs resulting from rate adjustments imposed by the
Company s suppliers, to become effective as noted below.
RATE:
(a)The rates of firm gas Schedules 101 , 111 , 112 , 121 and 122 are to be
increased by 30.822 per therm in all blocks of these rate schedules.
The rates of interruptible Schedules 131 and 132 are to be increased by
555ft er thermo
(b)
(c)The rate for transportation under Schedule 146 is to be decreased by
OO.OOOi per thermo
WEIGHTED AVERAGE GAS COST:
The above rate changes are based on the following weighted average cost of gas
per therm as of the effective date shown below:
Schedules 101
Schedules 111 and 112
Schedules 121 and 122
Schedules 131 and 132
Demand
590i
590
590
000i
Commodity
75.544
75.544
75.544
Total
84.134
84.134
84.134
75.544
BALANCING ACCOUNT:
The Company will maintain a Purchase Gas Adjustment (PGA) Balancing
Account whereby monthly entries into this Balancing Account will be made to reflect
differences between the actual purchased gas costs collected from customers and the
actual purchased gas costs incurred by the Company. Those differences are then
collected from or refunded to customers under Schedule 155 - Gas Rate Adjustment.
Additional debits or credits for Pipeline refunds or charges, Pipeline capacity
release revenues and miscellaneous revenues or expenses directly related to the
Company s cost of purchasing gas to meet customer requirements will be recorded in the
Balancing Account.
Issued September 14 2007 Effective November 1 2007
Issued by Avista Utilities
~,..
Norwood - Vice-President, State & Federal Regulation
I.P.C. No.
Seventh Revision Sheet 155
Canceling
Sixth Revision Sheet 155
A VISTA CORPORATION
d/b/a Avista Utilities
155
SCHEDULE 155
GAS RATE ADJUSTMENT -IDAHO
AVAILABLE:
To Customers in the State of Idaho where Company has natural gas service
available.
PURPOSE:
To adjust gas rates for amounts generated by the sources listed below.
MONTHLY RATE:(a) The rates of firm gas Schedules 101 , 111 and 121 are to be
decreas 391 per therm in all blocks of these rate schedules.
The rate of interruptible gas Schedule 131 is to be decreased by
391 rt er thermo
(b)
SOURCES OF MONTHLY RATE:
Changes in the monthly rates above result from amounts which have been
accumulated in the Purchase Gas Adjustment (PGA) Balancing Account as
described in Schedule 150 - Purchase Gas Cost Adjustment.
SPECIAL TERMS AND CONDITIONS:
The above Monthly Rate is subject to the provisions of Tax Adjustment Schedule
158.
Issued September 14, 2007 Effective November 1 2007
Issued by Avista Utilities
By
L:':::;OOd,
Vice President, State & Federai Regulation
I.P.C. No.
Ninth Revision Sheet 150
Canceling
Eighth Revision Sheet 150
A VISTA CORPORATION
d/b/a Avista Utilities
150
SCHEDULE 150
PURCHASE GAS COST ADJUSTMENT - IDAHO
APPLICABLE:
To Customers in the State of Idaho where Company has natural gas service
available.
PURPOSE:
To pass through changes in costs resulting from rate adjustments imposed by the
Company s suppliers, to become effective as noted below.
RATE:
(a)The rates of firm gas Schedules 101 , 111 , 112, 121 and 122 are to be
increased by 626~per therm in all blocks of these rate schedules.
(b)The rates of interruptible Schedules 131 and 132 are to be increased by
006~per thermo
(c)The rate for transportation under Schedule 146 is to be decreased by
OO.OOO~ per thermo
WEIGHTED AVERAGE GAS COST:
The above rate changes are based on the following weighted average cost of gas
per therm as of the effective date shown below:
Schedules 101
Schedules 111 and 112
Schedules 121 and 122
Schedules 131 and 132
Demand
863~
g5d~
853~
OOO~
Commodity
085~
086~
085~
085i
Total
~38i
038~
8:3.~38~
08S~
BALANCING ACCOUNT:
The Company will maintain a Purchase Gas Adjustment (PGA) Balancing
Account whereby monthly entries into this Balancing Account will be made to reflect
differences between the actual purchased gas costs collected from customers and the
actual purchased gas costs incurred by the Company. Those differences are then
collected from or refunded to customers under Schedule 155 - Gas Rate Adjustment.
Additional debits or credits for Pipeline refunds or charges, Pipeline capacity
release revenues and miscellaneous revenues or expenses directly related to the
Company s cost of purchasing gas to meet customer requirements will be recorded in the
Balancing Account.
Issued September 28 , 2006 Effective November 1 , 2006
Issued by Avista Utilities
By ~~orwood - Vice-President, State & Federal Regulation
I.P.C. No.
Sixth Revision Sheet 155
Canceling
Fifth Revision Sheet 155
AVISTA CORPORATION
d/b/a Avista Utilities
155
SCHEDULE 155
GAS RATE ADJUSTMENT - IDAHO
AVAILABLE:
To Customers in the state of Idaho where Company has natural gas service
avaihable.
PURPOSE:
To adjust gas rates for amounts generated by the sources listed below.
MONTHLY RATE:(a) The rates of firm gas Schedules 101 , 111 and 121 are to be
increased by J.'12Qi per therm in all blocks of these rate schedules.
The rate of interruptible gas Schedule 131 is to be incrom:od
120~per thermo
(b)
SOURCES OF MONTHLY RATE:
Changes in the monthly rates above result from amounts which have been
accumulated in the Purchase Gas Adjustment (PGA) Balancing Account as
described in Schedule 150 - Purchase Gas Cost Adjustment.
SPECIAL TERMS AND CONDITIONS:
The above Monthly Rate is subject to the provisions of Tax Adjustment Schedule
158.
Issued September 28, 2006 Effective November 1 , 2006
Issued by Avista Utilities
By
~ J:.11y
:::/,~
Vice President, State & Federal Regulation