20090106final_order_no_30714.pdf

Office of the Secretary
Service Date
January 6, 2009
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA UTILITIES FOR AUTHORITY
TO DECREASE ITS NATURAL GAS RATES
ORDER NO. 30714
CASE NO. A VU-09-
On September 30, 2008 , the Commission approved Avista Utilities' annual Purchased
Gas Cost Adjustment (PGA) application requesting authority to increase its annualized revenues
by $3.3 million. Order No. 30646. In its PGA application, the Company stated that current
commodity futures prices supported the use of a $0.78646 per therm weighted average cost of
gas (W ACOG) for its Schedule 150 tariff. The Commission also approved an amortization rate
of 1.727 cents-per-therm for the Schedule 155 tariff used to refund the credit balance in the
deferred gas cost account to customers.
On January 2, 2009, Avista filed an Application for authority to immediately adjust
its amortization rate to refund additional deferred amounts to customers. More specifically, the
Company seeks to increase its Schedule 155 amortization rate by 5.984 cents-per-therm (from
1.727 cents-per-therm to 7.711 cents-per-therm). This change results in an increase in the credit
balance for customers of approximately $4 million through October 31 , 2009. A vista s earnings
will not be decreased as a result of the proposed changes in prices and revenues. The Company
requested that its new rates become effective January 6, 2009.
THE APPLICATION
With this Application, A vista seeks to increase the credit balance to be refunded to its
residential, large general and interruptible customer classes in Schedules 1 01 , 111 and 131
respectively, to $4 million between January and October 2009. The Schedule 155 amortization
rate approved by the Commission in September 2008 is designed to return to customers
approximately $1.3 million from October 1 , 2008 through October 31 , 2009. Since September
, 2008, wholesale natural gas prices have fallen below the projected prices used to calculate
the original (amended) PGA filing. As a result of lower-cost gas purchases, deferred gas costs
(i., the refund balance) due customers have grown significantly. The proposed amortization
rate refunds approximately $4 million to customers based on projected customer usage between
ORDER NO. 30714
January 6 and October 31 , 2009. The Company is not proposing to decrease the $0.78646 per
therm W ACOG approved by the Commission in September 2008. Order No. 30646.
The $4 million refund to customers represents 72% of the deferral balance of $5.
million at the end of November 2008. The Company asserted that refunding the entire $5.
million would result in a refund rate of approximately 10 cents-per-therm and would increase the
possibility of a rate increase on the 2009 PGA filing. To avoid a rate increase, Avista proposed
the $4 million refund.
A vista asserted that customers were being notified of its request to decrease rates
through a media release coincident with the filing of its Application. The Company calculated
that residential customers using an average of 65 therms per month will see a reduction in their
monthly gas bill of $3., from $82.12 to $78.23 per month.If approved, the Company
maintained it will include a message in customers' bills notifying them of the decrease.
COMMENTS
Staff reviewed the Company s filing and the proposed increase in the amortization
rate resulting in a refund to customers of approximately $4 million during the remainder of the
current PGA year. Although a larger rate decrease might be warranted, Staff agreed that the
potential for a rate increase later in 2009 would then be greater. The Company will continue to
defer all cost differences between the W ACOG included in rates and the actual cost of gas
incurred, and will continue to accrue interest on the balance of the deferrals. Staff recommends
that the Company s Application requesting authority to decrease its natural gas rates be approved
without further delay or comment to be effective January 6 , 2009.
DISCUSSION
We have reviewed the record for this case, including the Application and Staff s
comments. The Commission has jurisdiction over Avista Utilities, a public utility, its
Application for authority to change rates and prices, and the issues involved in this case pursuant
to Title 61 of the Idaho Code, and more specifically, Idaho Code 99 61-117, 61-129, 61-307, 61-
501 , and 61-502.
The Commission is required to establish just, reasonable, and sufficient rates for
utilities subject to our jurisdiction. Idaho Code 9 61-502. The PGA mechanism is used to adjust
rates to reflect annual changes in the costs for the purchase of gas from suppliers, including
transportation, storage and other related costs of acquiring and delivering natural gas. The
ORDER NO. 30714
Company s earnings are not affected by changes in prices and revenues resulting from the annual
PGA. The PGA mechanism is designed to pass-through prudently incurred commodity costs in a
timely fashion.
We find that wholesale natural gas prices have continued to fall, even below the
projected prices included in Avista s September 2008 revised application. As a result of lower-
cost gas purchases over the past few months, the refund balance due to customers has grown
significantly since the Company s original PGA filing. In order to allow customers to receive
the greatest benefit from a decrease in rates during the winter heating season, the Commission
finds it in the public interest to immediately implement Avista s rate decrease without further
procedural delay. Therefore, Avista Utilities ' new amortization rate of 7.711 cents-per-therm
shall be effective as of January 6 2009. We further find this rate to be just and reasonable.
ORDER
IT IS HEREBY ORDERED that Avista Utilities' Application is approved. The
Company s Schedule 155 amortization rate shall be increased from 1.727 cents-per-therm to
711 cents-per-therm.The Company s conforming Schedule 155 shall become effective
January 6, 2009.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code 99 61-
626 and 62-619.
ORDER NO. 30714
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 6 +it
day of January 2009.
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J~JL,
MARSHA H. SMITH, COMMISSIONER
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JI . KEMPTO , ISSIONER
ATTEST:
O:A VU-09-02 ks
ORDER NO. 30714