20080818Application.pdf

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RE: TariffIPUC No. 27, Natual Gas Service
olIo wing tariff sheets are enclosed for filing with the Commission:
Eleventh Revision Sheet 150 canceling Tenth Revision Sheet 150
First Revision Sheet l50A canceling Original Sheet l50A and,
Eighth Revision Sheet 155 canceling Seventh Revision Sheet 155
These tariff sheets request an effective date of October 1, 2008 coincident with the proposed effective date of the
rates contained in the settlement stipulation filed with the Commission on August 7, 2008 in Case Nos. AVU-
E/G-08-0 1. The proposed tariff sheets result from changes in 1) the projected cost of gas purchased and
transported for customer use for the 13-month period October 2008 through October 2009 and 2) the
amortization rate pertining to differences between the actual cost of gas and the amount collected from
customers durng the past year. Use ofthis 13-month period wil allow the Company to synchronize the
November 2009 - October 2010 PGA year for all the jursdictions it serves.
If these tariff sheets are approved as filed, the Company's estimated anual natural gas revenue will increase by
approximately $11.6 million or about 14.2%. This increase results primarily from the increase in the weighted
average cost of gas (WACOG) over the curent effective WACOG, from $0.75544 to $0.90167 per thermo
Wholesale prices reached record high levels this past spring, and while wholesale prices have fallen since early
July, the average wholesale price of natual gas though July of 2008 has been considerably higher than for the
same period last year.
The average residential customer using 65 therms per month will see their monthly bil increase by
approximately $10.44 or about 13.9%, from $75.14 to $85.58 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 information 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:
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Kelly O. Norwood
Vice President
State and Federal Regulation
Enclosures
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation dba Avista Utiities' 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 Utiities Commission
472 W. Washington Street
Boise, ID 83720-5983
Paula Pyron
Northwest Industrial Gas Users
4113 Wolfberry Court
Lake Oswego, OR 97035-1827
Chad Stokes
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
Dated at Spokane, Washington this 15th day of August 2008.
patt~~
Rates Coordinator
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
AVISTA UTILITIES FOR AN ORDER APPROVING ) AvO - 6 -õ~--
A CHANGE IN NATUL GAS RATES AN CHAGES )
Application is hereby made to the Idaho Public Utilities Commission for an Order
approving a revised schedule of rates and charges for natual gas service in the state of
Idaho. The Applicant requests that the proposed rates included in this Purchased Gas
Adjustment (PGA) fiing be made effective on October 1, 2008. If approved as filed, the
Company's annual revenue wil increase by approximately $11.6 milion or about 14.2%.
In support of this Application, Applicant states as follows:
i.
The name of the Applicant is A VISTA UTILITIES, a unit of A VISTA
CORPORATION, a Washington corporation, whose principal business offce is 1411
East Mission Avenue, Spokane, Washington, and is qualified to do business in the state
of Idaho. 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
P.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 &
Governental Affairs
A vista Utilities
P.O. Box 3727
Spokane, WA 99220-3727
III.
The Applicant is a public utility engaged in the distribution of natual gas in
certain portions of Eastern and Central Washington, Northern Idaho and Southwestern
f'-.-I
and Northeastern Oregon, and further engaged in the generation, transmission, and
distribution of electricity in Eastern Washington and Northern Idaho.
IV.
Eleventh Revision Sheet 150, which Applicant requests the Commission approve,
is fied herewith as Exhibit "A". Also included in Exhibit "A" is a copy of Eleventh
Revision Tarff Sheet 150 with the changes underlined and a copy of Tenth Revision
Tariff Sheet 150 with the proposed changes shown by lining over the current language or
amounts.
Additionally, First Revision Sheet 150A, which Applicant requests the
Commission approve, is also filed herewith as Exhibit "A". Also included in Exhibit "A"
is a copy of Original Sheet 150A with the proposed changes shown by lining over the
current language or amounts.
Additionally, Eighth Revision Sheet 155, which Applicant requests the
Commission approve, is also filed herewith as Exhibit "A". Also included in Exhibit "A"
is a copy of Eighth Revision Tariff Sheet 155 with the changes underlined and a copy of
Seventh Revision Tariff Sheet 155 with the proposed changes shown by lining over the
current language or amounts.
V.
The existing rates and charges for natural gas service on file with the Commission
and designated as Applicant's Tariff IPUC No. 27, which wil 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 of the Company's district offices in
Idaho, a Notice in the form attached hereto as Exhibit "B" and by means of a press
release distrbuted to various informational agencies, a copy attached hereto as Exhibit
"E". In addition, a separate notice to each Idaho gas customer wil be included in their
current biling, a copy of which is attached hereto as Exhibit "B - 1". The customer
notice wil begin being mailed to customers on August 19th, with the final mailing date of
the notice on September 17th.
VII.
The proposed effective date of October 1 st for the PGA rates is simultaneous with
the proposed effective date of the rates contained in the settlement stipulation filed with
the Commission on August 7, 2008 in Case No. A VU-E/G-08-01. The proposed PGA
rates reflect a thirteen-month gas cost and amortization period October 2008 - October
2009. As compared to the normal twelve-month PGA period, use of a thirteen-month
period does not materially change the proposed rates and wil allow the Company to
synchronize the PGA year (November-October) for all the jurisdictions it serves in 2009.
VIII.
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 Wiliams Pipeline West (d.b.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 and miscellaneous revenue received from gas related transactions
including pipeline capacity releases.
IX.
This filing reflects the Company's proposed anual 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 summarzing
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 Change per therm per therm Change
General 101 $0.14623 $0.00777 $0.15400 $0.00664 $0.16064 13.9%
Lg. General 111 $0.14623 $0.00777 $0.15400 $0.00664 $0.16064 15.7%
Interruptible 131 $0.14623 $0.14623 $0.00664 $0.15287 16.5%
Transport 146 $0.00000 0.0%
X.
Commodity Costs
As shown in the table above, the estimated commodity cost (W ACOG) change is
an increase of$0.14623 per thermo The proposed WACOG is $0.90167 compared to the
present WACOG of$0.75544 included in rates. This past spring, wholesale natural gas
prices were at record levels (for that time of the year). While wholesale prices have
fallen considerably since early July, the average wholesale price of natural gas through
July of 2008 has been considerably higher than for the same period of 2007.
Approximately 67% of estimated annual load requirements for the PGA year
(Nov '08-0ct '09) wil be hedged at a fixed price, comprised of: 1) volumes hedged for a
term of one year or less, 2) longer term (three-year) hedges executed in prior years, and
3) volumes in Jackson Prairie storage. This planed level of hedging is slightly less than
the prior year (70%). The remaining 33% of estimated load requirements wil be met
with first-of -the-month or daily (spot) purchases. The table below shows the
composition of the company's gas procurement portfolio to meet estimated load
requirements for the Nov. '08 - Oct. '09 PGA year:
Short-term hedges (one year or less) 26%
Long-term hedges from prior years 20%Jackson Prairie Storage 21 %Spot Purchases 33%Total 100%
XI.
In May 2008, the Company's Jackson Prairie (JP) storage capacity (working gas)
increased by 23 milion therms resulting from a recalled storage release to Terasen. This
recalled release increased storage capacity from approximately 30 milion to 53 milion
therms for its Washington/Idaho customers, an increase from 12% to 21 % of annual load
requirements. As of the end of July, the Company's JP storage capacity was 64% full at
an average cost of$8.81 per dekatherm ($0.881 per therm). As a result ofthe high gas
prices this spring, the company reduced its normal level of storage injections - during
August; the company has increased the level of injections which should reduce this
average cost of gas in storage going into the winter. The company is aggressively
optimizing storage to provide additional benefits to customers beyond the winter/summer
price differential and supply reliability.
XII.
Though mid-August, approximately 82% of planned short-term hedge volumes
( excluding storage) for the PGA year have been executed. The weighted average price of
the short-term and longer term (3-year) hedges executed in prior years is $9.08 per
dekatherm ($0.908 per therm).
The Company used a 30-day historical average of forward prices (July 7 - August
5) by supply basin to develop an estimated cost associated with unhedged volumes (spot
purchases). The monthly prices by basin were weighted 50% AECO, 25% Sumas and
25% Rockies to approximate the Company's pipeline transportation available by supply
basin. The weighted (30-day) average forward price was then applied to the
unhedgedlspot purchase volumes by month to estimate the monthly gas cost for these
volumes. The result is a weighted average price for unhedged volumes of $9.15 per
decatherm ($0.915 per therm).
XIII.
The Company continuously reviews its procurement strategy and makes changes
that it believes are appropriate. The company meets with the Commission Staff several
times throughout the year to discuss the state of the wholesale market and the status of
the company's procurement plan. In addition, the company communicates with the Staff
when it believes it makes sense to deviate from its procurement plan or opportunities
arise in the market. The Company modified its procurement plan for the Nov '07-0ct '08
PGA year to: 1) reduce the percentage of the short-term hedges (one year or less) relative
to the increase in underground storage capacity, and 2) change the methodology used to
execute long-term hedges. Long-term hedges are more discretionary than in the past,
utilizing several price targets established early in the year. The hedge volumes associated
with these targets increase as the price decreases. While the Company's procurement
plan generally uses a diversified approach to procure gas for the coming year, the
Company has and wil continue to exercise discretion and flexibility based on changes in
the wholesale market.
XIV.
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 eight-tenths of a cent per therm in the demand cost included in
rates. There were numerous items affecting the total demand cost/rate, some of which
increased the cost and some reduced the cost. A notable item that increased the cost is a
new contract with Northwest Pipeline for a relatively small amount of incremental firm
transportation capacity that wil fulfill a need set forth in the company's Integrated
Resource Plan. The cost associated with this capacity should be more than offset by a
reduction in other gas costs to customers. Another item that resulted in an increase in
projected demand costs is a lower Canadian exchange rate caused by the lower (relative)
value of U.S. currency.
XV.
Schedule 155 / Amortization Rate Change
As shown in the table above, the proposed amortization rate reflects an increase of
seven-tenths of a cent per thermo The proposed amortization rate is a refund rate of 1.727
cents per therm compared to the present refund rate of2.391 cents per thermo The
proposed rate reflects an estimated (refund) balance of $1.3 milion at the end of
September '08 to be credited to customers over the Oct. '08 - Oct. '09 period.
Approximately $1.1 milion of the balance is related to an over-collection of pipeline
demand costs during the past year resulting from higher than projected customer gas
usage (colder than normal weather) and a jurisdictional reallocation of Canadian pipeline
costs (cost reduction for Idaho). Total commodity costs over the year were relatively
close to the cost (W ACOG) reflected in rates.
XVI.
The average residential or small commercial customer using 65 therms per month
wil see an estimated increase of$10.44 per month, or approximately 13.9%. The present
bil for 65 therms is $75.14 while the proposed bil is $85.58. The average percentage
changes for the various Schedules are shown on Exhibit "C", page 2.
XVII.
Exhibit "C" attached hereto contains support for the rates proposed by Applicant
contained in Exhibit "A".
XVIII.
Applicant is requesting that Applicant's rates be approved to become effective on
October 1,2008. 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.
XVIV.
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 October 1, 2008.
Dated at Spokane, Washington, this 15th day of August 2008.
AVISTA UTILITIES
BY
~ ~,.i.
Kelly O. Norwood
Vice President, State and Federal Regulation
STATE OF WASHINGTON )
) ss.County of Spokane )
Elizabeth M. Andrews, being first duly sworn, on oath deposes and says: that she
is the Manager of Revenue Requirement of Avista Utilities; that she has read the above
and foregoing Application, knows the contents thereof, and believes the same to be tre.
~~~.
Elizabeth M. Andrews
Manager, Revenue Requirement
SUBSCRIBED and sworn to before me this 15th day of August 2008.
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