20080915Revised Application.pdf

RECEiVED ~~~'V'STA.
Corp.
2008 SEP 15 AM 10: 25
IDAHO PUBLIC
UTILITIES COMMISSION
RE: Tariff IPUC No. 27, Natual Gas Servce
The following revised 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
This filing is a revised Purchased Gas Adjustment (PGA), replacing the PGA filing submitted by the company
dated August 15, 2008. This filing requests an overall increase in the company's natual gas rates of 4.0%,
compared to a 14.2% increase reflected in the company's original filing dated August 15,2008.
Since the original fiing, wholesale prices for natual gas have contiued to fall from levels seen earlier in the
year. During that time, the company has purchased additional natual gas for the coming year, both for injection
into underground storage and at (hedged) forward prices for delivery thoughout the year. Ths filing reflects a
lower commodity cost (W ACOG) for these additional purchases/hedges, as well as lower projected prices for gas
that wil be purchased during the forthcoming year. As a result, the proposed W ACOG reflects an increase of
3.102 cents per therm over the WACOG in present rates, as compared to an increase of 14.623 cents per therm
reflected in the company's original fiing.
The other rate components (demand and deferral amortization) reflected in the proposed taff sheets are the
same as those reflected in the company's original filing - only the WACOG has been revised in this revised
filing.
If these tariff sheets are approved as filed, the Company's estimated anual natual gas revenue wil increase by
approximately $3.3 milion or about 4.0%. The average residential customer using 65 therms per month wil see
their monthly bil increase by approximately $2.96 or about 3.9%, from $75.14 to $78.10 per month.
The requested rate changes wil have no effect on the Company's net income.
These revised tariff sheets request an effective date of October 1, 2008 coincident with the proposed effective
date of the rates contained in the settlement stipulation fied with the Commission on August 7, 2008 in Case
Nos. AVU-E/G-08-01.
Regarding customer notice, the company wil issue a media release coincident with this filing. Additionally, the
company wil place an informational ad in the major daily newspapers in Nort Idaho durng the week of
September 15. The bil insert related to the company's original PGA filing was scheduled to continue being
mailed through September 17th, however, it was stopped on September 9th.
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:
~ ,.1- i.
Kelly O. Norwood
Vice President
State and Federal Regulation
Enclosures
RECEIVED
ZUSEP f 5 A" 10: 26
CERTIFICATE OF SERVIC¥iOAHO P ie
UTIUTfES C fSSfON
I HEREBY CERTIFY that I have served Avista Corporation dba Avista Utilties' fiing 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
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 12th day of September 2008.
~~Pattýê
Rates Coordinator
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE REVISED APPLICATION OF )
AVISTA UTILITIES FORAN ORDER APPROVING ) Avu - D -08-03
A CHAGE IN NATUL GAS RATES AN CHARGES )
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 Revised Purchased
Gas Adjustment (PGA) filing be made effective on October 1, 2008. If approved as filed,
the Company's anual revenue wil increase by approximately $3.3 milion or about
4.0%. In support ofthis 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
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
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, W A 99220-3727 g_i:.o ø-): rti1:i -0(fO
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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 Norteastern 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 filed herewith as Exhibit "A". Also included in Exhibit "A" is a copy of Eleventh
Revision Tariff 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 Tariff Sheet 150A with the proposed changes shown by lining over
the curent 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 Tarff Sheet 155 with the changes underlined and a copy of
Seventh Revision Tarff 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 tarffs 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 distributed to varous informational agencies, a copy attached hereto as Exhibit
"E". In addition, a notice ofthe revised request wil be published in the major North
Idaho daily newspapers during the week of September 15th, a copy of which is attached
hereto as Exhibit "B - 1".
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 re-
synchronize the PGA year (November-October) for all the jursdictions 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 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 summarzing
the proposed changes reflected in this filing. Only the estimated commodity costs have
been revised in this supplemental filing (shown in bold) - the proposed demand and
amortization rate components are unchanged from the company's original PGA filing
dated August 15th.
Total
Commodity Demand Total Sch.155 Rate
Sch.Change Change Sch,150 Amort.Change Percent
Service No.pertherm per therm Change per therm pertherm Change
General 101 $0.03102 $0.00777 $0.03879 $0.00664 $0,04543 3.9%
Lg. General 111 $0,03102 $0.00777 $0.03879 $0.00664 $0.04543 4,4%
Interruptible 131 $0.03102 $0,03102 $0.00664 $0.03766 3.5%
Transport 146 $0,00000 0.0%
Commodity Costs
As shown in the table above, the estimated commodity cost (W ACOG) change is
an increase of $0.031 02 per therm, as compared to the W ACOG increase of $0.14623
reflected in the company's initial PGA fiing. The proposed WACOG is $0.78646
compared to the present W ACOG of $0.75544 included in rates. Since the company's
initial PGA filing, wholesale natural gas prices have continued to fall. During that time,
the company has purchased/edged additional gas for the coming year. Further, the
company is reflecting these lower prices in the estimated cost of (spot) gas that wil be
purchased throughout the year. However, this past spring wholesale natural gas prices
were at record levels and, while wholesale prices have fallen considerably since early
July, the average wholesale price of natural gas through August of 2008 has been higher
than for the same period of 2007.
Approximately 67% of estimated annual load requirements for the PGA year
(November '08-0ctober '09) have been 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 at the time the
gas is needed. The table below shows the composition of the company's gas
procurement portfolio to meet estimated load requirements for the November. '08-
October. '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%
x.
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 anual load
requirements. As of the end of August, the Company's JP storage capacity was nearly
full at an average cost of$7.96 per dekatherm ($0.796 per therm). As a result of the high
gas prices this spring, the company reduced its normal level of storage injections - during
August, the company maximized injections at lower prices (as compared to this past
spring) which reduced the overall cost of gas in storage as compared to the original filing.
The company is also aggressively optimizing storage to provide additional benefits to
customers beyond the winter/summer price differential and supply reliability.
XI.
All of the planned short-term hedge volumes (excluding storage) for the PGA
year have been executed. The weighted average price ofthe short-term and longer term
(3-year) hedges executed in prior years is $8.92 per dekatherm ($0.892 per therm).
The Company used a 30-day historical average of forward prices (August 4 ~
September 2) by supply basin to develop an estimated cost associated with unhedged
volumes (spot purchases). The estimated monthly volumes to be purchased by basin are
multiplied by the (30-day) average price for the corresponding month and basin. The
result is a weighted average price for unhedged volumes of$6.68 per decatherm ($0.668
pertherm).
(Note: Sections XII -Xiv. Are unchangedfrom the August 15th PGAfiling)
XII.
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
arse in the market. The Company modified its procurement plan for the November '07-
October '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.
XIII.
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.
XIV.
Schedule ISS/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 October. '08 - October. '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.
xv.
The average residential or small commercial customer using 65 therms per month
wil see an estimated increase of$2.96 per month, or approximately 3.9%. The present
bil for 65 therms is $75.14 while the proposed bil is $78.10. The average percentage
changes for the various Schedules are shown on Exhibit "C", page 2.
XVI.
Exhibit "C" attached hereto contains support for the rates proposed by Applicant
contained in Exhibit "A".
XVII.
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.
XVIII.
WHEREFORE, Applicant requests the Commission issue its Order finding
Applicant's proposed rates 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 12th day of September 2008.
A VISTA UTILITIES
BY
~ ,.1- i.
Kelly O. Norwood
Vice President, State and Federal Regulation
STATE OF WASHINGTON )
) ss.County of Spokane )
Brian Hirschkorn, being first duly sworn, on oath deposes and says: that he is the
Manager of Retail Pricing of Avista Utilities; that he has read the above and foregoing
Application, knows the contents thereof, and believes the same to be true.
~~'
Brian Hirschkorn
Manager, Retail Pricing
SUBSCRIBED and sworn to before me this iih day of September 2008.
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