20100729notice_of_proposed_settlement_order_no_32043.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
July 29, 2010
IN THE MATTER OF THE APPLICATION
OF AVISTACORPORATIONDBAAVISTA )
UTILITIES FOR AUTHORITY TO
INCREASE ITS RATES AND CHARGES FOR
ELECTRIC AND NATURAL GAS SERVICEmmo
CASE NOS. A VU-IO-
A VU-IO-
NOTICE OF
PROPOSED SETTLEMENT
NOTICE OF AMENDED
SCHEDULE AND TECHNICAL
HEARING
ORDER NO. 32043
In March 2010, Avista Corporation dba Avista Utilities filed an Application seeking
authority to increase the Company s base rates for electric and natural gas service in Idaho by
averages of 14% and 3., respectively. In Order No. 31038, the Commission suspended the
proposed increases and subsequently scheduled this matter for an evidentiary hearing.
Intervention was granted to: Clearwater Paper Corporation; Idaho Forest Group; Idaho
Community Action Network (ICAN); Community Action Partnership Association of Idaho
(CAP AI); Idaho Conservation League (ICL); Snake River Alliance; and North Idaho Energy
Logs. The Commission Staff also participated as a party.
The parties scheduled settlement conferences in this matter for July 6 and 8, 2010.
All parties attended the settlement conferences except ICAN and Idaho Energy Logs. Based
upon settlement discussions, the participating parties agreed to resolve and settle all issues raised
in this proceeding. On July 26, 2010, the settling parties filed a Motion to approve the
Settlement Stipulation and to change the scheduled date for the technical hearing. The settling
parties represent that the settlement is in the public interest and that all its terms and conditions
are fair, just and reasonable.
NOTICE OF PROPOSED SETTLEMENT
The settlement parties agreed that annual revenues for Avista s electric and natural
gas service may increase by $21.25 million (9.25%) and $1.85 million (2.62%), respectively.
However, these proposed revenue increases are to be offset by $17.5 million of deferred state
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
income tax over a two-year period. The tax offset would result in an average net increase in base
rates of 3.95% for electric service and an average increase of 1.9% for natural gas revenues. The
parties propose that new electric and natural gas base rates become effective October 2010.
1. Rate Mitigation.As mentioned above, the proposed revenue increases are offset
by $17.5 million of deferred state income tax over a two-year period. The parties agreed to use
$17 million of the tax refund to mitigate the increase for electric customers ($13.0 million in the
first year and $4.0 million in the second year). The settling parties also propose to use $0.
million to offset the increase for natural gas service in the first year. The table below shows the
proposed increase for electric revenues and the offsetting deferred taxes. Stipulation at 3-
Electric Revenues with Tax Offset
Year Year 2 Year 3
October 1, 2010 October 1, 2011 October 1, 2012
Revenue Increase $21.25 M 25%$21.25 M 25%$21.25 M 9.25%
Less Tax Credit $13.0 M 66%$ 4.1.74%
Less Prior Increase $ 8.25 M 59%$17.25 M 51%
Net Increase $ 8.25 M 59%$ 9.00 M 92%$ 4.0 M 1.74%
2. Lancaster Plant.The settling parties also agreed that the fixed and variable
operating costs of the Lancaster power plant be recovered in the base electric rates of the
Company. Lancaster is a 275 MW gas-fired combined-cycle combustion turbine located in
Rathdrum, Idaho. Stipulation ~ 8. Idaho s share of Lancaster s operating costs is $7.5 million.
3. Efficiency Programs. The parties also agreed that Avista s expenditures for
energy efficiency programs for both electric and natural gas service for calendar years 2008 and
2009 are prudent and recoverable. These costs are $6.222 million for 2008 and $7.805 million
for 2009. These costs are not included in base rates but are funded through the energy efficiency
tariff rider.
4. Cost of Service. The settling parties have also agreed to a proposed cost of
service. They have agreed to allocate 100% of transmission costs to demand and allocate
transmission costs to reflect any peak and off-peak seasonal cost differences over 7 months
rather than over 12 months. Prior to the Company s next general rate case, the parties have also
agreed to exchange information and convene a public workshop to determine whether other
changes should be made to the Company s cost of service. In particular, the parties will discuss
whether the cost of service should use a 12-month coincident-peak (CP) - whether "weighted" or
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
not - versus a 7-month CP or some other method for allocating transmission costs. Stipulation at
~ 11.
The parties have also agreed to move all electric rate schedules toward recovering
their cost of service approximately 25% (except for street and area lighting schedules which will
receive a percentage increase equal to the overall increase in revenue requirement). The parties
also agreed to move natural gas rate schedules toward recovering its class cost of service
approximately 60% (except for Transportation Services Schedule 146). Stipulation at ~~ 11-
12(a).
5. Rate Design. Given the agreed revenue increases and the changes to cost of
service, the settling parties propose the following rate changes for the major classes of electric
and natural gas service:
Proposed Base Rate Proposed Net Increase
ior Customer Class Increase with Tax Refund
ELECTRIC
Residential (Schedule 1)11.
Business (Schedule 11)
Large Business (Schedule 21)3.4%Industrial (Schedule 25)
Clearwater Paper (Schedule 25P)7.2%
Pumping (Schedule 31)13.5.2%
OVERALL 59%
GAS
ResidentiallBusiness (Schedule 101)3.4%
Large Business (Schedule 111)0.2%
Interruptible (Schedule 131)1.0%
Transport (Schedule 146)
OVERALL
Source: Stipulation at 8.
6. Monthly Basic Charge. The parties agreed that the current monthly basic charge
for residential electric customers should be increased from $4.60 per month to $5.00 per month.
The basic monthly charge for residential natural gas customers will remain unchanged at $4.
per month. Stipulation at ~ 12.
7. Customer Service Issues. The settlement stipulation also provides that A vista will
increase the annual funding for low-income weatherization from $465 000 to $700 000. The
increased funds for weatherization will be recovered through the energy efficiency tariff rider
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
(Schedules 91 and 191). The parties also agreed that the Company will provide $40 000 to the
Community Action Partnership (CAP) agencies for low-income outreach and education
programs concerning energy conservation. The Company will also conduct five energy
conservation workshops for seniors in different Idaho communities no later than December 31
2011. Stipulation at ~ 16(a), (b).
8. Proposed Effective Date. Given the settlement of all issues, the parties propose
that the effective date for new electric and natural gas rates should be October 1 2010. To meet
this proposed effective date, the parties also agreed that the technical hearing initially scheduled
for September 22-2010 should be vacated and rescheduled for August 26 2010. The existing
deadline of August 5 , 2010, for the prefiling of Staff/Intervenor testimony would remain. Parties
supporting or opposing the settlement should file testimony no later than August 5, 2010.
DISCUSSION AND FINDINGS
Without discussing the merits of the proposed Stipulation and Settlement, we find it is
reasonable to amend the procedural schedule in this matter. The initial deadline for filing direct
testimony by the Staff and Intervenors shall remain the same - August 5 , 2010. Given the fact
that most of the parties to this case have entered into the settlement, we find it also reasonable to
vacate the initial technical hearing of September 22 and instead reschedule the technical hearing
to August 26 2010. Accordingly, we adopt the schedule set out below.
A vista/Staff/Intervenor prefile testimony August 5 , 2010
in support or opposition to the
settlement
Rebuttal testimony due August 19 2010
Technical hearing (Boise)August 26, 2010
YOU ARE FURTHER NOTIFIED that the parties shall serve their testimony on each
other via e-mail. Testimony and exhibits filed in this case must conform to Rules 230 and 231.
Parties shall file an original and nine (9) paper copies of testimony with the Commission
Secretary on the dates such documents are due.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
AMENDED NOTICE OF TECHNICAL HEARING
YOU ARE HEREBY NOTIFIED that consistent with the Commission s decision
above, the technical hearing previously scheduled in this matter will be changed to
THURSDAY. AUGUST 26. 2010. COMMENCING AT 9:30 A.M. (MDT) AT THE
COMMISSION'S HEARING ROOM. 472 WEST WASHINGTON STREET. BOISE.
IDAHO All parties intending to offer testimony in this matter shall present their testimony at
the technical hearing in Boise.
YOU ARE FURTHER NOTIFIED that the Settlement Stipulation together with its
accompanying Motion and attachments can be viewed at the Commission s office in Boise
Idaho. The Settlement Stipulation is also available for viewing on the Commission s web site at
www.puc.idaho.gov by clicking on "File Room" and then "Electric Cases.
YOU ARE FURTHER NOTIFIED that the Commission is not bound by any
settlement reached by the parties. The Commission will independently review any settlement
proposed to determine whether the settlement is just, fair and reasonable, and in the public
interest, or otherwise in accordance with law or regulatory policy. The Commission may accept
the settlement, reject the settlement, or state additional conditions under which the settlement
will be accepted. IDAP A 31.01.01.274-.276.
YOU ARE FURTHER NOTIFIED that written public comments concerning the
proposed settlement be served upon the Commission and A vista at the following addresses:
Commission Secretary
Idaho Public Utilities Commission
PO Box 83720
Boise, ID 83720-0074
Street Address for Express Mail:
Kelly Norwood, Vice President
State & Federal Regulation
A vista Utilities
PO Box 3727
1411 East Mission Avenue
Spokane, WA 99220-3727
E-mail: kelly .norwood~avistacorp.com472 W. Washington Street
Boise, ID 83702-5918 David J. Meyer
Vice President & Chief Counsel
Reg. & Gov t Affairs
A vista Corporation
PO Box 3727
1411 East Mission Avenue
Spokane, W A 99220-3727
E-mail: david.meyer~avistacorp.com
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.idaho.gov. Click the "Comments and Questions
icon and complete the comment form using the case number as it appears on the front of this
document. These comments must also be sent to A vista at the e-mail addresses listed above.
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in
this matter will be held in facilities meeting the accessibility requirements of the Americans with
Disabilities Act (ADA). Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5) working days before the hearing by
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83710
BOISE, IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
Email: secretaryUV,puc.idaho.gov
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission s Rules of Procedure, ID AP A 31.01.01.000 et seq.
ORDER
IT IS HEREBY ORDERED that the settling parties' Motion to revise the procedural
schedule is granted. The schedule and technical hearing in this case are modified as set out
above. The parties shall comply with the modified case schedule.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this J.. 9 f'I..
day of July 2010.
ATTEST:
D. Jewell
C mmission Secretary
O:AVU-IO-Ol AVU-IO-Ol dh Settlement
- -
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF AMENDED SCHEDULE
AND TECHNICAL HARING
ORDER NO. 32043
D. KEMP SIDENT
MARSHA H. SMITH, COMMISSIONER
~ L;'
MACK A. REDFORD , COMMISSIONER