20090915Application.pdf

~~~'V'STA.
Corp.
A Vi) _D-09-oS-
i.P.V.C. No. 27 - Natural Gas Servce
Enclosed for filing with the Commssion are the following revised tarff sheets:
Thirteenth Revision Sheet 150 canceling Twelfth Revision Sheet 150
Eleventh Revision Sheet 155 canceling Tenth Revision Sheet 155
The Company requests that the proposed tarff sheets be made effective November 1,2009.
These tarff sheets reflect the Company's anual Purchased Gas Adjustment (pGA). If these tariff
sheets are approved as fied, the Company's anual revenue will decrease by approximately $14.7
millon or about 17.8%. The proposed change(s) have no effect on the Company's net income.
The proposed decrease results from a substantial reduction in the weighted average cost of gas
(WACOG) for the forthcoming year as a result of lower wholesale natual gas prices. A portion
of the WACOG reduction is offset with an increase in the present (deferred gas cost) amortization
rate as described in the attached Application.
If approved, the average residential or small commercial customer using 66 therms per month
will see a decrease of $12.74 per month, or approximately 17.0%. The present bill for 66 therms
is $74.95 while the proposed bil is $62.21.
Also enclosed are an Application and workpapers that provide informtion supporting the
proposed rate change.
If you have any questions regarding this fiing, please contact Brian Hirschkom at (509) 495-
4723 of Craig Bertholf at [phone].
Sincerely,
?t~~~
Kelly Norwood
Vice President, State and Federal Regulation
Enc.
Avu -l7 -oc¡-o.s
CERTIFICATE OF SERVICE
RECEfVr:r¡ .
.-c..." .t-~i
2089 SEP 15 AM 9: 34
UTIL. ID~.r¡OPUt$.riLit,¡ lTlr-S. C"r;",t' "",- V¡'.1rItH$t:ini.iV'~C1t
I HEREBY CERTIFY that I have served Avista Corporation dba Avista Utilties' filing with Tariff
IPUC No. 27 Natural Gas Service via electronic mail where available or by mailing a copy
thereof, postage prepaid to the following:
Chad Stokes
Cable Huston Benedict Haagensen & Lloyd, LLP
1001 SW 5th, Suite 2000
Portland, OR 97204-1136
Paula Pyron
Northwest Industrial Gas Users
4113 Wolfberry Court
Lake Oswego, OR 97035-1827
Curt Hibbard
St. Joseph Regional Medical Center
P.O. Box 816
Lewiston, ID 83501
Jean D Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83720-5983
Dated at Spokane, Washington this 14th day of September 2009.
~~Pattss
Rates Coordinator
IN THE MATTER OF THE APPLICATION OF
AVISTA UTILITIES FOR AN ORDER APPROVING
A CHAGE IN NATU GAS RATES AN CHAGES
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION Ri:CJ: 1;
!pO. .. t: I ¡/t: !)uti! SE'. - ,~,
) . Pis
) urlLI9 Pi ,Al19t3lt
) I.e Cor'f:L/t ;, fbfM.'::
~ (j U .. -01' -Ò'¿'tN
Application is hereby made to the Idaho Public Utilities Commission for an Order
approving a revised schedule of rates and charges for natural gas serice in the state of
Idaho. The Applicant requests that the proposed rates included in ths Purchased Gas
Adjustment (pGA) filing be made effective on November 1, 2009. If approved as fied,
the Company's anual revenue wil decrease by approximately $14.7 milion or about
17.8%. In support of this Application, Applicant states as follows:
i.
The name ofthe Applicant is AVISTA UTILITIES, a unit of AVISTA
CORPORATION, a Washington corporation, whose principal business office is 1411
East Mission Avenue, Spokane, Washington, and is qualified to do business in the state
ofIdaho. Applicant maintains distrct 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
Avista Utilities
P.O. Box 3727
Spokane, WA 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
III.
The Applicant is a public utility engaged in the distrbution of natual gas in
certain portions of Eastern and Central Washington, Northern Idaho and Southwester
and Northeastern Oregon, and fuer engaged in the generation, transmission, and
distrbution of electrcity in Eastern Washington and Northern Idaho.
IV.
Thirteenth Revision Sheet 150, which Applicant requests the Commission
approve, is filed herewith as Exhibit "A". Also included in Exhibit "A" is a copy of
Thirteenth Revision Tarff Sheet 150 with the changes underlined and a copy of Twefth
Revision Tarff Sheet 150 with the proposed changes shown by lining over the current
language or amounts.
Additionally, Eleventh 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 Eleventh Revision Tarff Sheet 155 with the changes underlined and a copy
of Tenth 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 fie with the Commission
and designated as Applicant's Tarff 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 sìmultaneously
with the filing of this Application by posting, at each of the Company's distrct 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 wil be sent to customers as a bil insert prior to November 1,
2009.
VIII.
The circumstances and conditions relied on for approval of Applicant's revised
rates are as follows: Applicant purchases natual 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 fiing 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.
Commodity Demand Total Sch.155 Total Rate
Sch.Change Change Sch.150 Amort.Change Percent
Service No.per therm perthm Change per therm per therm Change
General 101 ($0.26891)($0.00031)($0.26922)$0.07614 ($0.19308)(17.0%)
Lg. General 111 ($0.26891)($0.00031)($0.26922)$0.07614 ($0.19308)(20.1%)
Interruptible 131 ($0.26891)$0.00000 ($0.26891)$0.03911 ($0.22980)(27.8%)
X.
Commodity Costs
As shown in the table above, the estimated commodity cost (W ACOG) change is a
decrease of 26.9 cents per thermo The proposed W ACOG is 49.1 cents per therm
compared to the present W ACOG of 76.0 cents per therm included in rates. Wholesale
gas prices have fallen dramatically since July 2008 and A vista has been hedging gas on a
periodic basis throughout 2009 for the fortcoming PGA year. Approximately 64% of
estimated anual load requirements for the PGA year (Nov '09-0ct ' 10) wil be hedged at
a fixed price, comprised of: 1) 42% of volumes hedged for a ter of one year or less, 2)
10% of prior multi-year hedges, and 3) 12% from underground storage. Through August,
most of the planed hedge volumes for the PGA year have been executed at a weighted
average price of $5.82 per dekatherm ($0.582 per therm).
The Company used a 30-day historical average of forward prices (ending Aug. 31) by
supply basin to develop an estimated cost associated with index/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. These index/spot volumes
represent approximately 36% of estimated annual load requirements for the coming year
and the anual weighted average price for these volumes is $4.78 per dekatherm.
Available underground storage capacity at Jackson Prairie represents approximately 12%
of anual load requirements (20% ofload requirements durng the Jan.-Mar. withdrawal
period). The estimated weighted average cost for all storage volumes is $2.80 per
dekatherm. The company also utilizes (optimizes) its underground storage capacity to
provide additional benefits to customers beyond the winter/summer price differential and
supply reliability.
The Company's gas procurement plan uses a diversified approach to procure gas for the
coming year. While the plan generally incorporates a structured approach for the hedging
portion of the portfolio, the company exercises flexibility and discretion in all areas of the
plan based on changes in the wholesale market. The Company typically meets with the
Commission Staff quarerly 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 and/or opportities
arse in the market.
XI.
Demand Costs
The Demand Cost shown in the table primarly represents the cost of pipeline
transportation to the Company's system. As shown in the table above, there is essentially
no change in the demand cost included in rates.
XII.
Schedule ISS/Amortization Rate Change
As shown in the table above, the proposed change in the amortization rate is an increase
of7.6 cents per therm for firm sales customers, reflecting a two-year amortization of the
estimated deferral balance at November 1. The Company projects that there wil be a
$12.3 milion (refud) deferred gas cost balance at November 1. Two additional rate
decreases were implemented by the Company in 2009 to accelerate amortization of the
growing deferral balance since the November 2008 PGA. These additional decreases
have resulted in a present amortization rate (refund) of 15.8 cents per therm for firm sales
customers. However, gas prices have continued to fall thoughout the year, and the
deferral balance has continued to grow despite the increased amortization rate(s).
A one-year amortization rate to refund the estimated balance of$12.3 milion would be a
refund rate of 16.2 cents per thermo Eliminating a refund rate of this magnitude in the
2010 PGA filing would, all other things being equal, result in an increase of 17%. In
other words, even if the Company had no change in it's WACOG from the 2009 to the
2010 PGA fiings, it would have a 17% increase to eliminate a 16.2 cent refud rate. In
order to mitigate the potential 2010 PGA increase, the Company proposes to refund the
deferral balance over a two-year period, rather than one. Using the same scenaro
described above (no change in W ACOG from 2009 to 2010), there would be no PGA rate
change in 2010 and approximately an 8% increase in 2011 to eliminate the smaller refund
rate. The Company believes thatthe substantial reduction in the W ACOG in this filing
presents a unique opportnity to mitigate future PGA increase(s) via a two-year refund of
the deferral balance.
XIII.
The average residential or small commercial customer using 66 therms per month wil
see a decrease of$12.74 per month, or approximately 17.0%. The present bil for 66
therms is $74.95 while the proposed bil is $62.21.
XIV.
Exhibit "C" attached hereto contains support for the rates proposed by Applicant
contained in Exhibit "A".
XV.
Applicant is requesting that Applicant's rates be approved to become effective on
November 1,2009. 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.
XVI.
WHREFORE, Applicant requests the Commission issue its Order finding
Applicant's proposed rates to be just, reasonable, and nondiscriminatory and to become
effective for all natual gas service on and after November 1,2009.
Dated at Spokane, Washington, this 14th day of September 2009.
A VISTA UTILITIES
BY
?t ;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.
J3~~
Brian Hirschkorn
Manager, Retail Pricing
SUBSCRIED and sworn to before me this 14th day of September 2009.
~\\\\"uill"""ii~\\\.. 'l OLSAi.!1111:.," ~'\ ....._.;~l(\.."~~ q,'l.-:~..\\. ~'.'~l ~§ ....'! ..\ ~:: :~ lA' . ~: ig..O r \:Ë i .. : æ-. A~"-~ '. rU8':~ :..;:~. ~ .~~~ .P.... ~ ~t;lJll:) ~10 ~ '..a: 22 .~..... ~~ T. -... t.- ~ §o'/ ".1, ..........~. ~~.,.,.,.,'" OF W~tl \\\~"
"''''11111111\\,\
~~
NO~ ~li~ in and for the
State of Washington, residing in
Spokane.