20090625Norwood Direct re Stipulation.pdf

..i:CEI\lr-r;
f\ c. . ... ... . ì 'eJ "," '~'C
inn9 JUN 25 M.t 9: 21
\DAHOl'
Ul'Ul\ES co
. Jewell
ission Secretar
aho Public Utiliies Commssion
472 W. Washington Street
Boise, ID 83702
Re: Case Nos. A VU-E-09-01 and A VU-G-09-01
Testimony in Support of the Stipulation and Settlement
Dear Ms. Jewell:
~~~'V'ST.:
Corp.
Enclosed for filing with the Commission in the above-referenced docket are the original
and nine (9) copies (one (1) copy designated as reporter's copy) plus a computer disk as
required by Rule 231.05. of Kelly Norwood's Direct Testimony in Support of the
Stipulation and Settlement.
Sincerely,
~ dl1Ln
Kelly O. Norwood
Vice President
Enclosures
c: Service List
CERTIFICATE OF SERVICE RECE!VED
I HEREBY CERTIFY that I have this 24th day of June, 2009, serveq..K~llY.u .... . ~ .
Norwood's Testimony in Support of the Stipulation and Settlement i~'Rö.At1 9. 27
AVU-E-09-01 and AVU-G-09-01 upon the following parties, by mailing ~ PU ie
thereof, property addressed with postage prepaid to: UTtllTIES CO ¡SalON
Jean D Jewell, Secretary
Idaho Public Utilities Commission
Statehouse
Boise, ID 83720-5983
Donald L. Howell, II
Kristine A. Sasser
Deputy Attorneys General
Idaho Public Utiliies Commission
472 W. Washington Street (83702-5918)
PO Box 83720
Boise, ID 83720-0074
Email: don.howell(gpuc.idaho.gov
Email: kris.sasser uC.idaho. ov
Dean J. Miller
McDevitt & Miler, LLP
420 W. Bannock St. (83702)
PO Box 2564
Boise, ID 83701-2564
Email: .oemcdevitt-miler.com
Scott Atkison
President
Idaho Forest Group, LLC
171 Highway 95 N.
Grangevile, ID 83530
Email: scottaidahoforestrou.com
Rowena Pineda
Idaho Community Action Network
3450 Hil Road
Boise, Idaho 83702-4715
Email: Rowena idahocan.or
Brad M. Purdy
Attorney at Law
2019 N 1 ih Street
Boise, ID 83720
Email: bmurdhotmail.com
Conley E. Ward
Michael C. Creamer
Givens Pursley LLP
601 W. Bannock St. (83702)
PO Box 2720
Boise, ID 83701-2720
Email: cew(ggivenspursley.com
Email: mcc(ggivenspursley.com
Dennis E. Peseau,
Utiity Resources, Inc.
1500 Liberty Street SE
Suite 250
Salem, OR 97302
Email: deseauexcite.com
Betsy Bridge
Idaho Conservation League
710 N. Sixth Street (83702)
PO Box 844
Boise, ID 83701
Email: bbrid e wildidaho.or
Carrie Tracy
1265 S. Main Street, #305
Seattle, WA 98144
Email: carrie(gnwfco.org
~~~ Patty Olsness
Rates Coordinator
DAVID J. MEYER
VICE PRESIDENT, CHIEF COUNSEL FOR REGULATORY
GOVERNENTAL AFFAIRS
AVISTA CORPORATION
P . O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: ( 509) 495 - 4 316FACSIMILE: [phone]
RECEtV
ioø~ JUN 25 AM 9: 21& ... 'C'tOA,HO p í~ . 0... . .
UTlUTIES C ¡sst N
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN THE
STATE OF IDAHO
CASE NO. AVU-E-09-01
CASE NO. AVU-G-09-01
DIRECT TESTIMONY
OF KELLY O. NORWOOD
IN SUPPORT OF THE
STIPULATION AND
SETTLEMENT
FOR AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
1
2
I . INTRODUCTION
Q.Please state your name, employer and business
3 address.
4 A.My name is Kelly O. Norwood and I am employed as
5 the Vice-President of State and Federal Regulation for
6 Avista Utilities (~Company" or ~Avista"), at 1411 East
7 Mission Avenue, Spokane, Washington.
8 Q.Would you briefly describe your educational
9 background and professional experience?
10 A.Yes.I am a graduate of Eastern washington
11 university with a Bachelor of Arts Degree in Business
12
13
Administration, majoring in Accounting.I joined the
Company in June of 1981.Over the pas t 28 years, I have
14 spent approximately 17 years in the Rates Department with
15
16
involvement in cost of service,rate design,revenue
requirements and other aspects of ratemaking.I spent
17 approximately 11 years in the Energy Resources Department
18 (power supply and natural gas supply) in a variety of roles,
19 with involvement in resource planning, system operations,
20 resource analysis, negotiation of power contracts, and risk
21 managemen t .I was appointed Vice-President of State &
22 Federal Regulation in March 2002.
23 Q.What is the scope of your pre-filed testimony in
24 thi s proceeding?
Norwood, Di 1
Avista Corporation
1 A.The purpose of my testimony is to describe and
2 support the Stipulation and Settlement (~Stipulation") ,
3 filed on June 16, 2009 between the Staff of the Idaho Public
4 Utilities Commission (~Staff"), Clearwater Paper Corporation
5 (~Clearwater"), Idaho Forest Group, LLC (~Idaho Forest"),
6 the Community Action Partnership Association of Idaho
7 (~CAPAI"), the Idaho Community Action Network (~ICAN"), the
8 Idaho Conservation League (~Conservation League"), and the
9 Company, which, if approved by the Commission, would resolve
10 all of the issues in the Company's filing.These entities
11 are collectively referred to as the ~Parties," and represent
12 all parties in the above-referenced cases.
13 The Stipulation is the product of settlement
14 discussions held in the Commission offices on June 5, 2009,
15 which was attended by representati ves of all Parties, with
16 the exception of the Conservation League.The Stipulation
17 between the Parties resolved all issues associated with the
18 calculation of the Company's requested cost of capital,
19 including capital structure and cost components,and
20 resolved all revenue requirement, rate spread and rate
21 design issues.
22 The Stipulation represents a compromise among differing
23 points of view.Concessions were made by all Parties to
24 reach a balancing of interests. As will be explained in the
25 following testimony, the Stipulation represents a fair, just
Norwood, Di 2
Avista Corporation
1 and reasonable compromise of the issues and is in the public
2 interest.
3
4
Q.Are you sponsoring any exhibits?
A.Yes.I am sponsoring Exhibit No.1, which
5 consists of a spreadsheet that shows the proposed electric
6 changes in rates/revenues by service schedule.
7 Q.Please explain how the Parties arrived at the
8 Stipulation in this proceeding.
9 A.The Stipulation is the end result of extensive
10 audi t work conducted through the discovery process and hard
11 bargaining by all Parties in this proceeding.I would like
12 to express my appreciation to all Parties involved in this
13 proceeding for their efforts in arriving at this
14 Stipulation and to this Commission for your willingness to
15 hear this matter promptly, in light of the proposed Augut 1
16 effective date.
17
18
Q.Would you briefly sumarize the Stipulation?
A.Yes. Under the terms of the settlement agreement,
19 Avista will be allowed to implement revised tariff schedules
20 designed to recover $12,548,000 in additional annual
21 electric revenue, which represents a 5.70% increase in
22 electric annual base tariff revenues.Offsetting the
23 electric increase will be an overall 4.2% decrease in the
24 current Power Cost Adjustment (PGA) surcharge. As a result
25 of the two adjustments, a residential customer using an
Norwood, Di 3
Avista Corporation
1 average of 982 kilowatt hours per month would see a $1.50,
2 or 1.9%, increase per month for a revised monthly bill of
3 $79.97.
4 Included in the rates are relicensing costs for the
5 company's Spokane River hydropower proj ects .The parties
6 had agreed in the Stipulation that if Avista received
7 approval from the Federal Energy Regulatory Commission
8 (FERC) for the relicensing of its Spokane River hydropower
9 proj ects before July 22nd, the relicensing costs would be
10 included in the electric rate . 1increase.Avista received
11 FERC approval of the license on June 18, 2009.
12 Avista will also be allowed to implement revised tariff
13 schedules designed to recover $1,939,000 in additional
14 annual natural gas revenue, which represents a 2.11%
15 increase in natural gas annual base tariff revenues.
16 Offsetting the natural gas rate increase for residential
17 customers will be an equivalent PGA decrease. As a result,
18 a residential customer using an average of 65 therms per
19 month would see no change in their $78.23 per month bill.
20 Other customer classes, except transportation customers,
21 will also see an offsetting PGA rate decrease.
22 In determining these revenue increases, the Parties
23 have agreed to various adjustments to the Company's filing,
1 The Stipulation includes information and data in the event that FERC did not issue the license prior to
July 22nd.
Norwood, Di 4
Avista Corporation
1 which are summarized in the Stipulation, and described
2 further below in testimony.
3 The Stipulation calls for an overall rate of return of
4 8.55%, determined using a capital structure consisting of
5 50% common stock equity and 50% long-term debt,an
6 authorized return on equity of 10.50% and the cost of debt
7 of 6.60%.
8 The Stipulation also addresses accounting treatment of
9 the Spokane River Relicensing costs and I will provide
10 detail later in my testimony.
11 As part of the Stipulation, the funding level of the
12 existing low-income Demand Side Management programs and the
13 funding to assist low-income outreach and education
14 concerning conservation will continue.
15 II. HISTORY OF FILING
16 Q.Please describe the Company's general raté case
17 request, as filed.
18 A.On January 23, 2009, Avista filed an Application
19 with the Commission for authority to increase revenue from
20 electric and natural gas service in Idaho by 12.8% and 3.0%,
21 respectively.If approved, the Company's revenues for
22 electric base retail rates would have increased by $31.2
23 million annually; Company revenues for natural gas service
24 would have increased by $2.7 million annually.Coincident
25 with the effective date of new electric retail rates from
Norwood, Di 5
Avista Corporation
1 this general rate case filing, Avista proposed a reduction
2 in the current Power Cost Adjustment (PCA) surcharge of
3 5.0%.
4 The Company proposed to spread the electric revenue
5 increase by rate schedule on a basis which: 1) moved the
6 rates for nearly all the schedules closer to the cost of
7 providing service, and 2) resulted in a reasonable range in
8 the (net) proposed percentage increase across the schedules.
9 The PCA surcharge was applied on a uniform cents per kwh
10 basis across all schedules and resulted in a different
11 percentage increase by schedule depending on the level of
12 base tariff rates /revenue.By including the proposed
13 decrease in the current PCA surcharge during 2009, an
14 opportuni ty was presented to move base tariff rates closer
15 to the cost of providing service. The Company also proposed
16 to raise the monthly electric residential basic charge to
17 $5.00 from the current $4.60 charge.
18 The Company proposed utilizing the results of the
19 natural gas cost of service study, sponsored by Company
20 witness Knox, as a guide in spreading the overall revenue
21 increase to its natural gas service schedules and proposed
22 to raise the natural gas residential basic charge to $4.25
23 from the current $4.00.
24 Q.What are the primary factors causing the Company's
25 request for an electric rate increase in this filing?
Norwood, Di 6
Avista Corporation
1 A. This case is about more than just year-over-year
2 changes in utility operating costs, such as power costs,
3 fuel, materials and supplies, and labor.We are also
4 investing large amounts of capital to preserve and upgrade
5 our existing utility infrastructure to meet growing customer
6 demand. We are also continuing to experience major cost
7 impacts related to meeting new reliability standards,
8 environmental compliance, and litigation related to the
9 preservation of what have historically been our low-cost
10 resources we have used for decades to serve our customers,
11 as explained in the Company's original filing.
12 Q.What are the primary factors driving the Company's
13 request for a natural gas rate increase?
14 A.The Company's natural gas request is primarily
15 driven by changes in various operating cost components,
16 mainly distribution operation and maintenance and
17 administrative and general expenditures.This causes an
18 increase in the ownership and operating costs of providing
19 natural gas service to customers.
20 III. REVENUE REQUIREENT ELEMENTS OF THE STIPULATION
21 Q.Please explain the derivation of the Electric and
22 Natural Gas Revenue Requirements outlined in the
23 Stipulation.
24 A.The Parties agreed that Avista will reduce its
25 electric revenue increase request to reflect the adjustments
Norwood, Di 7
Avista Corporation
1 shown on the table on Page 1 of Appendix 1 to the
2
3
Stipulation.While Avista' s filing requested an electric
revenue requirement increase of $31.233 million,the
4 adjustments, including the agreed-upon rate of return,
5 reduce this amount by $18.685 million, resulting in a
6 recommended electric revenue requirement increase of $12.548
7 million.
8 Similarly, as shown on the table on Page 6 to the
9 Stipulation, while the Company requested a natural gas
10 revenue requirement increase of $2.74 million, the agreed-
11 upon adjustments serve to reduce this amount by $.801
12 million, resulting in a recommended natural gas revenue
13 requirement increase of $1.939 million.
14 As can be seen by a quick review of the individual line
15 descriptions,the adjustments accepted for settlement
16 purposes cover a broad range of revenue and cost categories,
17 including the authorized rate of return.The individual
18 adjustments should not be viewed in isolation; rather, they
19 should be viewed in total as part of the entire Stipulation,
20 and are the result of hard bargaining and compromise.
21 Q.Please explain the Parties' agreement in regards
22 to an Authorized Rate of Return, including the Return on
23 Equity.
24 A.The Parties have agreed to a revenue requirement
25 which produces an overall rate of return of 8.55%, based on
Norwood, Di 8
Avista Corporation
1 a return on equity of 10.5% and an equity component at 50%.
2 By comparison, the Company's original filing requested an
3 overall rate of return of 8.80%, a return on equity of 11.0%
4 and an equity component of 50%.The cost of debt of 6.60%
5 and long-term debt component of 50% included in the original
6 filing was agreed to in the Stipulation.
7 Q.What is the proposed effective date of the
8 Stipulation?
9 A.The Parties have requested implementation of the
10 Stipulation on August 1, 2009. This proposed effective date
11 is an integral part of the Stipulation that was part of the
12 negotiated resolution of all of the issues.
13 Q.Please explain the accounting treatment related to
14 the Spokane River Relicensing costs.
15 A.Given the fact that FERC issued the license on
16 June 18, 2009, the Parties have agreed to include costs
17 associated with relicensing through December 31, 2009.The
18 parties agree that the costs included in the Company's
19 filing associated with the relicensing of the Company's
20 hydroelectric proj ects on the Spokane Ri ver are deemed
21 prudent and recoverable subj ect to an audit review of the
22 fìnal costs. In this case these costs should be included as
23 part of the base rate increase. The capital costs that were
24 pro formed were revised for estimated costs through June 30,
25 2009.In addition, the annual Protection, Mitigation and
Norwood, Di 9
Avista Corporation
1 Enhancement (PM&E) costs that were pro formed in the
2 Company's filing have been revised to remove all 2010 costs
3 and revised to include annual 2009 labor costs that were not
4 otherwise reflected in the original filing.The net effect
5 of these revisions is a reduction to revenue requirement for
6 PM&E costs of $263,000. All PM&E costs incurred during the
7 six months ended June 30, 2010, will be deferred with a
8 carrying charge for subsequent recovery in rates, as part of
9 the Company's next general rate case.The annual carrying
10 charge shall be the then-current customer deposit rate.
11 Q.Please provide an overview of the revenue
12 requirement adjustments agreed to by the parties.
13
14
A.A number of the adjustments were standard-type
adjustments that adjusted estimates to actual amounts.A
15 description of other adjustments follows:
16 (a.) Power Supply.The power supply adjustment
17 proposed by the Company in the original filing was adjusted
18 for the following:
19
20
21
22
23
24
(i. )To adopt Staff's position to remove
short-term contracts already entered into for the pro
forma period, reflecting an approximate reduction in
revenue requirement of $6.8 million. These costs will
be recovered through the PCA, subject to the 90/10
percent sharing.
Norwood, Di 10
Avista Corporation
1
2
3
4
5
6
7
(ii. )To Use a one-month average natural gas
price as proposed by Staff but for a more current
period of May 1 through May 31, 2009 of $4.79/Dth, as
compared to the cost of $7.67 /Dth, for the unhedged
portion of the generation, reflecting an approximate
reduction in revenue requirement of $7.1 million.
(b. ) Executive Compensation and Incentives.
8 Subsequent to the filing of this case, the executives of
9 Avista agreed to forego any increases in base salary in
10 2009. Due to this, the Parties agreed to remove all of the
11 2009 propos ed salary increas es for execu t i ve labor to
12 reflect this decision, and to remove the estimated increases
13 for 2010. Also, the base salaries of all executives as of
14 March 31, 2009, were annualized to reflect a full twelve
15 months of their current pay.In addition, all executive
16 incentives included in the Company's test period were
17 removed.
18 Staff witness Mr. English described Staff's approach in
19 analyzing the reasonableness of the executive compensation
20 package and its impact on residential customer rates. Staff
21 concluded that the level of executive salaries included in
22 the current case is comparable to the level approved in the
23 previous general rate case.Staff also concluded that
24 Avista's executive salaries, when compared to other utility
25 providers of comparable size, are paid below the average for
Norwood, Di 11
Avista Corporation
1 the management of a business with $1.5 billion annual
2 revenue.
3 (c.) Remove 2010 Costs. - In the original filing, the
4 Company pro formed several costs to the level of expense
5 that the Company expects during the rate year (July 1, 2009
6 through June 30, 2010), including Colstrip Mercury Emissions
7 costs,annual Protection,Mitigation and Enhancement
8 (PM&E) costs required with the FERC Spokane River License,
9 and Generation O&M costs.The Company agreed to adopt
10 Staff's proposal to include only 2009 costs and exclude the
11 2010 expense level pro formed by the Company.
12
13
(d.) Efficiency Gains.Avista utilities has
undertaken a number of improvements and efficiency
14 initiatives throughout our service area that are focused on
15 either increasing customer service and satisfaction, or
16 increasing productivity and reducing operating costs.The
17 integrated Voice Response System, the Outage Management
18 System, and the Mobile Dispatch Program are a few of these
19 programs that are detailed further in Company witness Mr.
20 Kopczynski's direct testimony.We believe these measures
21 have served to mitigate the impact on customers of the
22 proposed rate increase. The Company agreed to adopt Staff j s
23 proposal to reflect certain reductions to costs for
24 efficiency gains from implementing new Information Systems
25 procedures and Asset Management Program procedures.
Norwood, Di 12
Avista Corporation
1 (e.) Miscellaneous Costs. - The Company adopted, for
2 settlement purposes, Staff's proposal to remove various
3 administrative and general costs,including
4 dues/sponsorships ($70,000 electric / $11,000 natural gas),
5 50% of Board of Director expenses ($151,000 electric /
6 $37,000 natural gas), non-recurring costs for the design of
7 the Ross Court building ($138,000 electric), and certain
8 non-recurring legal expenses ($12,000 electric / $23,000
9 natural gas).
10 iv. OTHER ELEMENTS OF THE STIPULATION
11 Q.Please explain the settlement terms relating to
12 the recovery of Lancaster costs.
13 A.The Lancaster power plant is a 275 MW gas-fired
14 combined cycle combustion turbine located in Rathdrum,
15 Idaho. Avista Utili ties will purchase all of the output of
16 the plant through 2026. The Company requested the recovery
17 of the costs associated with the Lancaster Tolling Agreement
18 through the PCA.Staff has reviewed the purchase of the
19 output from Lancaster and has found it reasonable , and has
20 agreed to the recovery of these costs through the PCA, with
21 full recovery of the fixed costs2, but with the variable
22 fuel costs subject to the 90/10 sharing under the PCA.
2 As noted in Staff witness Hessing's pre-filed testimony, fixed power supply costs are normlly included
in base rates for full recovery in a general rate case once these costs have been found to have been
prudently incurred. (Hessing Direct, at p. 11, lines 4-16)
Norwood, Di 13
Avista Corporation
1 Q.Please explain the settlement terms relating to
2 cost of service.
3 A.As part of its next general rate case (GRC), the
4 Company will prepare an analysis of the impacts of
5 allocating 100% of transmission costs to demand, as well as
6 allocating transmission costs to reflect any peak and off-
7 peak seasonal cost differences over seven months, rather
8 than assuming an equal weighting over twelve months.The
9 Company is also in the process of compiling twelve (12)
10 months of continuous load data for use in future analysis of
11 costs-of-service,and will share the results of the
12 consul tant' s analysis of such data with interested parties
13 as soon as it becomes available.
14 Q.Please explain the settlement terms relating to
15 PCA Sharing percentage.
16 A.The Company proposed to change the sharing
17 percentages between Customers and the Company from 90%/10%
18 to 95%/5%, primarily due to the increased volatility of
19
20
power supply costs.The Company agrees to wi thdraw its
request to amend the PCA sharing ratio.The sharing ratio
21 shall remain at its current value of 90%/10%.
22 Q.Please explain the settlement terms relating to
23 prudency of energy efficiency expenditures.
24 A.The Parties agree that Avista's expenditures for
25 electric and natural gas energy efficiency programs from
Norwood, Di 14
Avista Corporation
1 January 1, 2008 through November 30, 2008 will be subject to
2 further review for prudence and recovery in a subsequent
3 docket.
4 Q.Please describe the low-income portion of the
5 Stipulation.
6 A.There are five areas the Company addressed in the
7 Stipulation, as follows:
8 (a.) LIRAP Legislation Avista will support
9 legislation in the State of Idaho during the next
10 legislative session in order to establish a Low Income Bill
11 Payment Assistance Program.
12 (b.) Low-Income Weatherization Funding - The Parties
13 agree to maintain the annual level of funding of $465,000 to
14 Idaho service (CAP) agencies for funding of weatherization
15 (which includes administrative overhead).The continuation
16 and level of such funding will be revisited in the Company's
17 next general rate filing, or other appropriate proceeding.
18 (c.) Funding for Outreach for Low-Income Conservation -
19 The Parties agree that annual funding in the amount of
20 $25,000 will be provided to Idaho CAP agencies for the
21 purpose of underwriting the dedication of agency personnel
22 to assist in low-income outreach and education concerning
23 conservation. This amount will be funded through the Energy
24 Efficiency Tariff Rider (Schedules 91 and 191), and will be
25 in addition to the $465,000 of Low~Income Weatherization
Norwood, Di 15
Avista Corporation
1 Funding. The continuation and level of such funding will be
2 revisited in the Company's next general rate filing or other
3 appropriate proceedings.
4 (d.) Payment Plans - The Company agrees to confer with
5 Staff to assess the effectiveness of its new payment plans
6 and identify ways to decrease defaults on payment
7 arrangements.
8 (e.) Low-Income Deposit Requirements - As proposed by
9 Staff, the Company will undertake a study to evaluate the
10 effectiveness of its deposit policies and practices.
11 Q.Does the Company have other programs in place to
12 mitigate the impacts on customers of the proposed rate
13 increase?
14 A.Yes. Avista Utili ties offers a range of programs
15 to help customers who have difficulty paying their energy
16 bills.Some programs are in cooperation with local Idaho
17 communi ty action agencies, who are specialized in targeting
18 assistance where it is most needed.We are very aware of
19 the impacts energy costs have on our customers.
2021 Programs designed to assist customers include:
22 . DSM Energy Efficiency Programs. In March 2008 Avista23 proposed, and the IPUC approved, modifications to the
24 Company's energy efficiency program offerings. The25 modifications further broadened the technical and26 financial support Avista provides to its customers, and
27 provides customers with increased opportunity to manage28 their energy bills. In 2008 Avista also launched the29 award-winning ~Every Little Bit" energy efficiency
Norwood, Di 16
Avista Corporation
1 promotional campaign which integrates all of the
2 Company's energy efficiency programs into one location.
3
4 . Project Share. Project Share is a voluntary program
5 allowing customers to donate funds that are distributed
6 through community action agencies to customers in need.
7 In addition to the customer and employee contributions
8 of $74,333 in Idaho, Avista shareholders contributed
9 $50,000, Idaho's share, to the program in 2008.
10
11 . Comfort Level Billing. The Company offers the option
12 for all customers to pay the same bill amount each13 month of the year by averaging their annual usage.
14 Under this program, customers can avoid unpredictable15 winter heating bills.
16
17 . Payment Arrangements. The Company's Contact Center
18 Representatives work with customers to set up payment19 arrangements to pay energy bills.
2021 . CARS Program. Customer Assistance Referral and22 Evaluation Services provides assistance to special-23 needs customers through access to specially trained24 (CARES) representatives who provide referrals to area25 agencies and churches for help with housing, utili ties,26 medical assistance, etc.
27
28 . Customer Service Automation. Customers are able to29 access Avista' s Interactive Voice Response system (IVR)
30 for automated transactions to enter their own payment31 arrangements, listen to outage messages and conduct32 other business such as obtaining account balances and33 requesting a duplicate bill.
34
35 . Power to Conserve. In partnership wi th KREM36 television, a half-hour television program is annually37 developed that covers low-cost and no-cost ways to save38 energy at home. The goal of the program is to help39 limi ted income seniors and other vulnerable populations
40 with their energy bills by providing home energy41 conservation education. The program provides helpful42 energy conservation tips, information on community
43 resources and ways for customers to manage their energy
44 bills. A DVD of the program has also been produced45 which is included as part of energy conservation kits46 provided in senior conservation workshops.
47
48 . Senior Energy Workshops. Energy efficiency workshops49 that focus on safety as well as the wise use of energy
Norwood, Di 17
Avista Corporation
1 have been specially designed for the senior population.
2 Kits are provided that contain energy-saving items such3 as compact fluorescent light bulbs, draft stoppers,
4 rope caulking, etc. The Power to Conserve program DVD
5 along with energy efficiency tip sheets are also
6 incl uded in the ki t . Workshops are held at senior meal
7 si tes, senior centers and other senior support8 locations.
9
10 . KHQ.com - caregivers Resource. Avista sponsors the
11 Caregivers Resource page on KHQ's Senior Life website
12 in order to reach seniors and caregivers wi th a wide
13 variety of resource information including energy14 efficiency, energy assistance information, Avista15 CARES, bill paying assistance, etc. Several video16 clips offer low-cost, no-cost energy saving ideas.
17
18 . Senior Publications. Avista created a one page19 advertisement that is placed in several senior20 directories and publications as part of an effort to21 reach seniors with information about energy efficiency,22 Comfort Level Billing, Avista CARES, and energy23 assistance information.
24
25 V. RATE SPREAD & RATE DESIGN
26 Q.Are you sponsoring an exhibit that shows the
27 percentage change in electric rates/revenue by rate schedule
28 resulting from the Stipulation?
29
30
A.Yes.Exhibi t No. 1 shows the percentage change
by rate schedule.Column (f) shows the general increase,
31 column (g) shows the effect of the PCA rate decrease, and
32 column (j) shows the net change.
33
34
Q.How did the Stipulation address rate spread?
A.The table on Page 2 of Appendix 1 of the
35 Stipulation shows the impact on the energy rates under each
36 service schedule of the agreed-upon electric increase,
Norwood, Di 18
Avista Corporation
1 including the effect of including the FERC Spokane River
2 License.The proposed electric revenue increase of
3 $12,548,000 represents an overall increase of 5.70% in base
4 rates and is spread on a uniform percentage basis to all
5 schedules (applied only to the energy charges).The table
6 also shows the impact on each service schedule of the
7 change in the PCA rate, which was determined on a uniform
8 cents per kWh basis applicable to all schedules, as
9 required by Order No. 30361, which represents a reduction
10 in revenue of 4.2%.
11 Page 14 of the Stipulation shows the impact on each
12 service schedule of the agreed-upon natural gas increases.
13 The increased natural gas revenue requirement of $1,939,000
14 represents an overall increase of 2.11% in base rates.
15 Coincident with the effective date of the increase in base
16 natural gas rates, the Parties have agreed to reduce the
17 Company's Weighted Average Cost of Gas (WACOG) by reducing
18 the present rate reflected under Schedule 150 - purchased
19 Gas Cost Adjustment, resulting in a net overall revenue
20 change for General Service Schedule 101 of 0%. The Staff's
21 proposed rate spread was used to determine the general
22 revenue requirement increase by schedule. The reduction in
23 the WACOG is 2.662 cents per therm, which is equivalent to
24 the general increase per therm for Schedule 101.Applying
25 this same reduction in the WACOG of 2.662 cents per therm
Norwood, Di 19
Avista Corporation
1 for the remaining schedules, results in the net change to
2 natural gas rates that are shown in the table on Page 14 of
3 the Stipulation.
4 Q.What is the basis of the Stipulation relating to
5 the rate design?
6 A.The Stipulation adopted Staff's position that
7 there will be no increase in the basic charges, monthly
8 minimum charges, or demand charges in Schedules 11, 21 and
9 25.Otherwise, a uniform percentage increase will be
10 applied to each energy rate wi thin each electric service
11 schedule as proposed by Staff.
12 The parties also adopted Staff's position that the
13 current residential electric basic charge of $4.60 per
14 month and the residential natural gas basic charge of $4.00
15 per month will remain unchanged.
16 VI. CONCLUSION
17
18
Q.What is the effect of the Stipulation?
A.The Stipulation represents a negotiated
19 compromise on a variety of issues among the Parties. Thus,
20 the Parties have agreed that no particular party shall be
21 deemed to have approved the facts, principles, methods, or
22 theories employed by any other in arriving at these
23 stipulated provisions, and that the terms incorporated
24 should not be viewed as precedent setting in subsequent
25 proceedings except as expressly provided.
Norwood, Di 20
Avista Corporation
1 Q.In conclusion, why is this Stipulation in the
2 public interest?
3 A.This Stipulation strikes a reasonable balance
4 between the interests of the Company and its customers,
5 including its low-income customers. As such, it represents
6 a reasonable compromise among differing interests and
7 points of view.
8 The Parties have agreed that the Company has
9 demonstrated need for a revenue requirement increase for
10 both its electric and natural gas customers.The
11 Stipulation provides for recovery of these costs. In the
final analysis,however,any settlement reflects a12
13 compromise in the give-and-take of negotiations.The
14 Commission, therefore, has before it a Stipulation that is
15 supported by sound analysis and supporting evidence, the
16 approval of which is in the public interest.
17 Q.Does this conclude your pre-filed direct
18 testimony?
19 A.Yes, it does.
Norwood, Di 21
Avista Corporation
AV
I
S
T
A

U
T
I
L
I
T
I
E
S
ID
A
H
O

E
L
E
C
T
R
I
C
,

C
A
S
E

N
O
.

A
V
U
-
E
-
0
9
-
0
1
PR
O
P
O
S
E
D

I
N
C
R
E
A
S
E

B
Y

S
E
R
V
I
C
E

S
C
H
E
D
U
L
E
12

M
O
N
T
H
S

E
N
D
E
D

S
E
P
T
E
M
B
E
R

3
0
,
2
0
0
8
(O
O
O
s

o
f

D
o
l
l
a
r
s
)
Ba
s
e

T
a
r
i
f
f
Ba
s
e

T
a
r
i
f
f
Ba
s
e
Re
v
e
n
u
e
Re
v
e
n
u
e
Ta
r
i
f
f
Sc
h
.
6
6
Sc
h
.
6
6
To
t
a
l

G
e
n
To
t
a
l

G
e
n
Li
n
e
Ty
p
e

o
f
Sc
h
e
d
u
l
e

U
n
d
e
r

P
r
e
s
e
n
t
Ge
n
e
r
a
l
Un
d
e
r

P
r
o
p
o
s
e
d
Pe
r
c
e
n
t
PC
A
PC
A
&
S
c
h
.

6
6
&
S
c
h
.

6
6
No
.
Se
r
v
i
c
e
Nu
m
b
e
r
Ra
t
e
s
(
1
)
In
c
r
e
a
s
e
Ra
t
e
s
(
1

)
In
c
r
e
a
s
e
Ch
a
n
g
e
%
C
h
a
n
g
e
Ch
a
n
g
e
%
Ch
a
n
g
e

(a
)
(b
)
(c
)
(d
)
(e
)
(f
)
(g
)
(h
)
(i
)
ü)
1
Re
s
i
d
e
n
t
i
a
l
1
$8
6
,
3
5
8
$4
,
9
1
8
$9
1
,
2
7
6
5.
7
%
($
3
,
0
9
0
)
-3
.
6
%
$1
,
8
2
9
2.
1
%

(
2
)
2
Ge
n
e
r
a
l

S
e
r
v
i
c
e
11
,
1
2
$2
7
,
8
4
1
$1
,
5
8
7
$2
9
,
4
2
8
5.
7
%
($
8
6
0
)
-3
.
1
%
$7
2
7
2.
6
%
3
La
r
g
e

G
e
n
e
r
a
l

S
e
r
v
i
c
e
21
,
2
2
$4
6
,
6
3
4
$2
,
6
6
0
$4
9
,
2
9
4
5.
7
%
($
1
,
8
8
3
)
-4
.
0
%
$7
7
7
1.
7
%
4
Ex
t
r
a

L
a
r
g
e

G
e
n
e
r
a
l

S
e
r
v
i
c
e
25
$1
4
,
4
9
7
$8
2
5
$1
5
,
3
2
2
5.
7
%
($
8
3
6
)
-5
.
8
%
($
1
1
)
-0
.
1
%
5
Po
t
l
a
t
c
h
25
P
$3
7
,
9
4
1
$2
,
1
6
1
$4
0
,
1
0
2
5.
7
%
($
2
,
4
1
5
)
-6
.
4
%
($
2
5
4
)
-0
.
7
%
6
Pu
m
p
i
n
g

S
e
r
v
i
c
e
31
,
3
2
$4
,
1
3
9
$2
3
5
$4
,
3
7
4
5.
7
%
($
1
5
6
)
-3
.
8
%
$7
9
1.
9
%
7
St
r
e
e
t

&

A
r
e
a

L
i
g
h
t
s
41
-
4
9
$2
.
8
4
2
$1
6
2
$3
.
0
0
4
5.
7
%
.c
-1
.
3
%
$1
2
5
4.
4
%
8
To
t
a
l
$2
2
0
,
2
5
2
$1
2
,
5
4
8
$2
3
2
,
8
0
1
5.
7
%
($
9
,
2
7
7
)
-4
.
2
%
$3
,
2
7
2
1.
5
%
(1
)

E
x
c
l
u
d
e
s

a
l
l

p
r
e
s
e
n
t

r
a
t
e

a
d
j
u
s
t
m
e
n
t
s
:

S
c
h
e
d
u
l
e

6
6
-
T
e
m
p
o
r
a
r
y

P
C
A

A
d
j
.
,

S
c
h
e
d
u
l
e

9
1
-
E
n
e
r
g
y

E
f
f
c
i
e
n
c
y

R
i
d
e
r

A
d
j
.
,
an
d

S
c
h
e
d
u
l
e

5
9
-
R
e
s
i
d
e
n
t
i
a
l

&

F
a
r
m

E
n
e
r
g
y

R
a
t
e

A
d
j
.
(2
)

T
h
e

p
e
r
c
e
n
t
a
g
e

c
h
a
n
g
e

i
n

b
i
l
l
e
d

r
e
v
e
n
u
e

f
o
r

r
e
s
i
d
e
n
t
i
a
l

s
e
r
v
i
c
e

(
i
n
c
l
u
d
i
n
g

r
a
t
e

a
d
j
u
s
t
m
e
n
t
s

d
e
s
c
r
i
b
e
d

a
b
o
v
e
)

i
s

1
.
9
%
.
Ex
h
i
b
i
t

N
o
.

1
Ca
s
e

N
o
.

A
V
U
-
E
-
Q
9
-
0
1
a
n
d

A
V
U
-
G
-
0
9
-
0
1
No
r
w
o
o
d
,

A
v
i
s
t
a
Pa
g
e

1

o
f

1