20090619Comments.pdf

SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 1895
RECEIVED
m9 JUN 19 AM 8= 0 I
IDAHO PUBLIC "'.!
UTILlT!ES COMMISSh..!~-l
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
A VISTA CORPORATION DBA A VISTA ) CASE NO. A VU-G-09-3
UTILITIES FOR AUTHORITY TO DECREASE )
ITS NATURA GAS RATES. ) COMMENTS OF THE
) COMMISSION STAFF
)
COMES NOW the Staff of the Idaho Public Utilties Commission (Commission), by
and through its attorney of record, Scott Woodbur, Deputy Attorney General, and in response to
the Notice of Application, Notice of Modified Procedure and Notice ofCommentlrotest
Deadline issued in Interlocutory Order No. 30826 on May 29, 2009 in Case No. A VE-G-09-3,
submits the following comments.
BACKGROUND
On September 30, 2008, the Commission in Avista's 2008 annual Purchased Gas Cost
Adjustment (PGA) filing authorized the use of a $0.78646 per therm weighted average cost of gas
(WACOG) for the Company's Schedule 150 tariff and approved an amortization rate of
1.727 t/therm for the Schedule 155 taiff used to refud the credit amount in the deferred gas cost
balancing account to customers. Case No. A VU-G-08-3, Order No. 30646.
STAFF COMMENTS 1 JUE 19,2009
Since September 30, 2008, wholesale natual gas prices have fallen below the projected
prices used to calculate the approved W ACOG. As a result of lower gas cost purchases, deferred
gas costs (i.e., the refud balance) due customers have grown significantly.
On January 6, 2009, the Commission approved the Company's request to increase the
Schedule 155 amortization rate from L.727t per therm to 7.711t per therm to refud an increase
in the credit balance for customers of approximately $4 milion through October 31, 2009. Case
No. AVU-G-09-2, Order No. 30714.
On May 19,2009, Avista Corporation dba Avista Utilties (Avista; Company) fied an
Application with the Commission requesting authority to adjust its natural gas tariff Schedule 155
amortization rates to refund additional deferred amounts in its Purchased Gas Cost Adjustment
(PGA) balancing account. The Company requested that the proposed tariff changes be made
effective on June 1,2009.
The Commission issued Interlocutory Order No. 30826 on May 29,2009, finding the
June 1, 2009 effective date requested by the Company for a decrease in its natural gas rates did
not allow sufficient time for notice, investigation and comment. The Commission in its Order
approved the Company's request for an increase in its Schedule 155 amortization rate and related
reduction in natural gas rates for the proposed effective date and allowed additional time for
investigation and comments.
STAFF REVIEW
Staff has reviewed the Company's Application and supporting workpapers and believes
the proposed decrease in retail natual gas rates is appropriate. The combination of favorable
prices in the natural gas market and the additional customer usage over what was projected due to
the abnormally cold winter has resulted in a $6,461,830 deferral balance due to customers. This
balance is in addition to the $4 milion refud curently being credited to customers through
October 2009 from the Januar 6, 2009 decrease of approximately 4.7% authorized by the
Commission in Order No. 30714. The curent proposal will amortize this incremental balance
over 12 months through a credit to customers. More specifically, the Company's proposal will
increase its monthly Schedule 155 amortization rate by 8.1 t per therm from 7.711 t to 15.805 t for
Schedules 101 (General Service) and 111 (Large General Service) customers. Schedule 101
residential and small commercial customers using an average of 65 therms per month will see a
STAFF COMMENTS 2 JUE 19, 2009
monthly bil reduction of $5.26 (or 6.7%), from a present bil of $78.23 to a bil of $72.97 per
month. Large interrptible customers (Schedule 131) wil see a decrease in gas rates as their
Schedule 155 amortization rate increases from 6.574t to 12.033t per thermo The following char
ilustrates the impact of the Company's request on the individual customer classes;
Proposed Proposed Average
Current Rate Change to Rate per Percentage
Schedule Description per Therm Amortization Therm Biling
Rate Change
101 General $1.14206 $0.08094 $1.06112 -6.72%
111 Large General $1.12569*$0.08094 $1.04475 -7.79%
131 Large Interrptible $0.88688 $0.05459 $0.83229 -6.15%
*denotes retail rate for the first block of usage.
The Company has currently locked in approximately 40% of its estimated winter load for
the 2009-2010 heating season. The Jackson Prairie storage facilty is at approximately 45% full
with a weighted average cost of gas (WACOG) in storage under $0.30 per therm, compared to the
curent WACOG embedded in rates of $0.78646 per thermo Baring any unforeseen natural
disaster or pipeline catastrophe, customers should be able to expect a significant decrease in rates
when A vista fies its 2009 anual PGA in September this year, at which time the prudency of the
natual gas purchases and gas procurement policy will be thoroughly reviewed.
Customer Relations
A copy of the press release issued on May 19,2009 by Avista was included with the
Company's Application. The Company is providing notice of the proposed rate decrease to
customers in bils issued from June 4 to July 2, 2009. In Order No. 30826, customers were given
until June 19,2009 to fie comments. As of June 15, only one customer had submitted a
comment. The customer was critical of A vista and its timing, reducing natural gas rates in the
summer when natural gas usage is at its lowest. Staff notes that this is the second decrease in
natual gas rates this year, with a third decrease likely. Had Avista not requested a decrease, the
deferral balance due to customers would have continued to accrue interest, and the monies would
have eventually been refunded to customers regardless of the season.
STAFF COMMENTS 3 JUE 19, 2009
STAFF RECOMMENDATION
After reviewing the Company's Application and workpapers and the external
circumstances, which lead to the large deferral balance, Staff recommends that the Commission
affirm its Interlocutory Order No. 30826, approve the Company's proposed natual gas rate
decrease and accept the fied tariffs that accompanied the Company's Application. Staff
recommends that the Commission reserve judgment on the Company's natural gas purchases and
gas procurement policies until the anual PGA filing when these costs and policies are normally
thoroughly reviewed.
Respectfully submitted this L q11 day of June 2009.
~.(~
Scott Woodbury
Deputy Attorney General
Technical Staff: Donn English
Beverly Barker
i:umisc:commentsaveg09.3swmedemp
STAFF COMMENTS 4 JUE 19,2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 19TH DAY OF JUE 2009, SERVED
THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. A VU-E-09-03, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
PATRICK EHRBAR
SRREGULATORY ANALYST
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220
E-MAIL: pat.ehrbariiavistacorp.com
KELL Y NORWOOD
VICE PRESIDENT - STATE & FED. REG.
A VISTA UTILITIES
PO BOX 3727
SPOKANE W A 99220
E-MAIL: kelly.norwoodiiavistacorp.com
\9J~.k~
SECRETARY
CERTIFICATE OF SERVICE