20090102Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMSSIONER REDFORD
COMMSSIONER SMITH
COMMISSIONER KEMPTON
COMMSSION SECRETARY
COMMISSION STAFF
FROM:DONN ENGLISH tfVU- 6-0?-ò~
DATE: JANUARY 5, 2009
SUBJECT: IN THE MATTER OF A VISTA UTITIES' REQUEST FOR
AUTORITY TO DECRASE ITS RETAIL RATES FOR NATURL
GAS.
On September 30, 2008, the Commission approved Avista Utilties' anual Purchased
Gas Cost Adjustment (PGA) Application requesting authority to increase its anuaized revenues
by $11.6 millon. Order No. 30646. Withn its PGA Application, the Company affirmed that
curent commodity futues prices dictated the use of a $0.78646 per therm weighted average cost
of gas (W ACOG) for its Schedule 150 Tariff and an amortzation rate of 1.727 cents per therm
for its Schedule iss Tariff to refud to customers the credit balance in the deferred gas cost
account.
On Janua 2,2009, Avista fied an Application with the Commission for authority to
decrease its rates. More specifically, the Company seeks to increase its Schedule 155
amortzation rate by 5.984 cents per therm, refuding to customers approximately $4.0 milion
between Januay and October 2009. This decrease reflects the refud of the increase in deferred
gas costs due to customers since the Company's original PGA filing on August 18,2008,
updated September 12,2008 for decreases in the WACOG. Avist's earings will not be
decreased as a result of the proposed changes in prices and revenues. The Company requests
that new:rates become effective Jan~ 6,2009.
APPLICATION
With this Application, A vista seeks to refud to its Residential, Large General and
Interrptible customer classes on Schedules 101, ILL and 131 respectively, approximately 72% of
the $5.6 millon deferral balance on November 30, 2008. The proposed changes would be
DECISION MEMORADUM JANARY 5, 2009
applicable to servce rendered under th rate schedules afected by and subject to Avista's anual
PGA.
The Schedule 155 amortzation rate curently in rates is designed to retu to customers
approximately $1.3 millon from October 1,2008 - October 31,2009. Since September 30,
2008 wholesale natual gas prices have contiued to fall below the projected prices included in
the PGA filing. As a result oflower-cost gas purchases, deferred gas costs due to customers
have grown signficantly. Ths filing proposes to adjust the amortization rate to refud
approximately $4.0 milion dollars to customers based on projected customer usage between
Januay 6 and October 31,2009. The Company is not, however, proposing to decrease the
W ACOG at this tie.
The approximately $4 milion refud to customers represents 72% of the deferral balance
of$5.6 million at the end of November. The Company states tht refuding the entire $5.6
million would result in a refud rate of approximately ten cents per therm and would increase the
possibility of a rate increase in the 2009 PGA filing. The Company contends that the present
state of the economy and customers experiencing higher winter heating bils, reducing natural
gas rates is appropriate at ths tie.
STAFF RECOMMNDATION
Staff has reviewed the Company's filing and proposed Schedule 155 amortation rate to
refud to customers approximately $4 millon dollars durg the remainder of the curent PGA
year. Although a larger decrease could be warted, the potential for an increase later in 2009
would be greater. The Company wil continue to defer all cost differences between the W ACOG
included in rates and the actual cost of gas incured, and wil continue to accrue interest on the
balance of the deferrls. Therefore, Staff recommends that the Company's Application
requesting authority to decrease its rates be approved without fuer delay or comment to be
effective Januay 6,2009.
COMMISSION DECISION
Does the Commission wish to approve the Company's Application to decrease rates
without fuer comment?
i:udmemos/Avista PGA 08 decrease
DECISION MEMORAUM 2 JANARY 5, 2009