20110922Comments.pdf

WELDON B. STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-03 1 8
IDAHO BAR NO. 3283
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Street Address for Express Mail:
472 W WASHINGTON
BOISE ID 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION REQUESTING
APPROVAL TO DECREASE ITS ENERGY
EFFICIENCY PUBLIC PURPOSE RIDER
SCHEDULE 191.
)
) CASE NO. A VU-G-1l-3
)
) COMMENTS OF THE
) COMMISSION STAFF
)
The Staff of the Idaho Public Utilties Commission, by and through its Attorney of
record, Weldon B. Stutzman, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 32278 on June 28, 2011,
submits the following comments.
BACKGROUND
On June 13,2011, Avista Corporation filed an Application requesting approval ofa
decrease in its Energy Effciency Rider for both electric and gas service, Schedules 91 and 191.
On August 30,2011, the Company fied a Motion to Withdraw Schedule 91 and Place Schedule
191 into effect on October 1, 201 1. The Motion proposes to reduce biled natural gas rates by
4.2 percent though proposed revisions in Schedule 191.
The funds collected by the Energy Efficiency Rider are used to maintain and operate
demand-side management (DSM) programs for the Company's natural gas customers. The
STAFF COMMENTS 1 SEPTEMBER 22, 201 1
Company estimates that in 2010 the energy efficiency programs resulted in natural gas savings of
1.9 milion therms. Application, p. 2.
Avista's natural gas programs for residential customers include incentives for high
effciency gas furnaces, gas water heaters, windows, insulation for walls, floors, ceilngs, and
attics, fireplace dampers, and Energy Star homes. The Company also funds educational
assistance through community events. Commercial and industrial natural gas customers may
qualify for incentives by paricipating in programs which incent high effciency commercial
clothes washers, gas steam cookers, variable frequency drives (VFDs) in HVAC applications,
steamtrap replacement and repair, shell measures, and natural gas space and water heating (as
opposed to the electric default) in new constructions multi-family development projects. In
addition to prescriptive programs, commercial and industrial customers may apply for incentives
for installng any site-specific, or customized, measures with a simple financial payback between
one and thirteen years (eight years for lighting measures).
The Application states that at its current level, the revenue produced by the Energy
Efficiency Rider exceeds the requirements necessar to fund the DSM programs during the next
12 months. At the beginning of 20 1 0 the gas tariff rider was underfunded by $ 1.6 milion. In the
past year, increases to the tariff rider have provided for adequate revenue to both fud curent
energy effcient operations and to eliminate the unfunded balance. At the end of April 201 1,
Avista's Idaho natural gas DSM taiff rider balance was $897,808 (Company owes ratepayer).
Application, p. 2. Accordingly, Avista proposes that the rider tariff, Schedule 191, be decreased
4.2 percent of biled rates, resulting in a decrease of$2.9 milion in collected rider fuds. Avista
proposes that the new rates be effective October 1, 201 1.
The following table shows the curent and rates proposed by A vista by class for Schedule
191.
Schedule 191: Curent Rates and A vista's Proposed Rates
Curent Proposed by A vista
Schedule 101 $0.05762 per therm $0.01939 per therm
(General Service)
Schedules 111 & 112 $0.05038 per therm $0.00950 per therm
(Large General Service)
Schedules 13 1 & 132 $0.04020 per therm $0.00860 per therm
(Interrptible Service)
STAFF COMMENTS 2 SEPTEMBER 22, 201 1
STAFF REVIEW
Staff is concerned that the decrease requested by the Company does not leave sufficient
funding for annual DSM expenses beyond the first year. The current natural gas DSM rider
surcharge generates approximately $4.1 milion anually, and the Company expects to spend
approximately $2.2 milion on natural gas DSM programs during the twelve months ending
June 30, 2012. As of June 30, 2011 the Company had a surlus in the natural gas DSM tariff
rider account (Company owes ratepayers) of$969,585. The proposed tariff rider reduction
would generate approximately $ 1.25 milion in anual revenue, which, when added to surplus,
suffciently fuds the next year of planned natural gas DSM expenditures. Once the surlus
balance has been spent however, the proposed Schedule 191 tariff rates wil not be suffcient to
fund the existing level of natural gas DSM programs. If program expenses remain flat, the
Company wil have to increase the natural gas DSM tariff rider after twelve months or scale
down its existing programs to avoid a deferral balance in the DSM rider account.
Staff does not support scaling back cost-effective energy effciency programs. The
Commission has ordered investor-owned utilities in Idaho to pursue all cost-effective demand-
side management. Therefore, Staff recommends that the Commission approve a rate reduction
of 3.5 percent rather than the requested 4.2 percent. This reduction wil stil provide $1.7 milion
in anual revenue and approximately $4.4 milion over two years for gas DSM programs when
combined with the $969,585 surlus in the rider account. On an anual basis, this generates $2.2
milion, which is the Company's curent funding level for its gas DSM programs.
In addition to the current rates and the rates proposed by A vista, the table below shows
the rates proposed by Staff which would maintain curent gas DSM funding levels for two years.
Schedule 191: Curent Rates, A vista Proposed Rates, and Staff Proposed Rates
.
Current Proposed by A vista Proposed by Staff
Schedule 101 $0.05762 per therm $0.01939 per therm $0.02697 per therm
(General Service)
Schedules 111 & 112 $0.05038 per therm $0.00950 per therm $0.01321 per therm
(Large General Service)
Schedules 13 1 & 132 $0.04020 per therm $0.00860 per therm $0.01197 per therm
(Interrptible Service)
STAFF COMMENTS 3 SEPTEMBER 22, 201 1
The Company states that the purose of this fiing is to establish a taiff rider that is
sufficient to fud the following twelve months of DSM as well as amortize any tariff rider
imbalance, thus minimizing the amount of future under or over-collections. The Company
fuher states that it intends to fie periodically to revise Schedules 91 and 191. While Staff
understands the Company's desire to maintain a DSM rider balance close to zero, Staffis
concerned with the potential for rate adjustments that may decrease one year, only to increase the
following year. Anual DSM taiff rider changes are burdensome and disorienting to customers,
especially when compounded by anual PGA changes. Staffs recommendation to reduce the
tariff rider by 3.5 percent rather than 4.2 percent wil prevent this situation by providing two
years of gas DSM program funding. After two years, the Company can either apply to the
Commission to increase the rider amount or show why reduced natural gas DSM fuding is
warranted.
If the Commission approves the Stipulation recommended by Staff and the Company in
Avista's general rate case (AVU-G-1 1-01) and Staffs recommendation in this case, rates for
each customer class wil change as follows:
Natural Gas Increase Percentage by Schedule
Net Increase in
Rate Schedule Increase in Base Rates
Biling Rates*
General Service Schedule 101 1.6%0.3%
Large General Service Schedule 111/112 1.6%-1.3%
Interrptible Sales Service Schedule 131/132 1.6%-10.2%
Transportation Service Schedule 146 1.6%3.0%
Overall 1.6%-.1%
*Net Increase includes the effects of the proposed changes in Schedule 150/155
(PGA), Schedule19, (Energy Efficiency Rider), Schedule 199 (Deferred State Income
Tax) and the General Rate Increase, all effective on October 1,2011 if approved.
STAFF COMMENTS 4 SEPTEMBER 22, 201 1
STAFF RECOMMENDATIONS
Staff recommends that the Commission approve a 3.5 percent decrease to the Company's
annual revenue from Schedule 191 Energy Effciency Public Purose Rider and order the
Company to fie new tarffs reflecting a 3.5 percent rider reduction effective October 1,2011.
Respectfully submitted this ~ wJ day of September 201 1.
~~
Weldon B. Stutzman
Deputy Attorney General
Technical Staff: Stacey Donohue
Donn English
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STAFF COMMENTS 5 SEPTEMBER 22,2011
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF SEPTEMBER 2011,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. AVU-G-11-03, BY E-MAILING AND MAILING A COPY THEREOF,
POSTAGE PREPAID, TO THE FOLLOWING:
DAVID J MEYER
VP & CHIEF COUNSEL
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-MAIL: david.meyertfavistacorp.com
KELL YO NORWOOD
VP STATE & FED REG
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-MAIL: kelly.norwoodtfavistacorp.com
CERTIFICATE OF SERVICE