20110825notice_of_application_order_no_32335.pdf

Office of the Secretary
Service Date
August 25,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
AVISTA CORPORATION FOR AUTHORITY )CASE NO.AVU-G-11-04
TO CHANGE ITS RATES AND CHARGES )
(2011 PURCHASED GAS COST )NOTICE OF APPLICATION
ADJUSTMENT).)
)NOTICE OF
)MODIFIED PROCEDURE
)
__________________________________
)ORDER NO.32335
On August 15,2011,Avista Corporation dba Avista Utilities filed its annual
Purchased Gas Cost Adjustment (PGA)Application requesting authority to increase its
annualized revenues by $1.1 million,or about 1.53%.Application at 1.’The Company says the
changes will not affect its earnings.Avista states that if the Application is approved,the average
residential or small commercial customer using 62 therms of gas per month will experience a
monthly increase of $0.99 per month (1.63%).Id.at 4.The Company asks that its Application
be processed by Modified Procedure,and requests that the new rates take effect October 1,2011.
Id.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Avista buys natural gas for customer usage and
then transports the gas through pipelines for delivery to customers.Id.at 2.The Company says
it defers the effect of timing differences due to implementation of rate changes and differences
between the Company’s actual weighted average cost of gas (WACOG)purchased and the
WACOG embedded in rates.Id.The Company also defers various pipeline refunds or charges
and miscellaneous revenue received from natural gas-related transactions,including pipeline
capacity releases.Id.
YOU ARE FURTHER NOTIFIED that Avista proposes decreasing the commodity
cost (i.e.,the WACOG)from the currently approved $0.46 1 per therm to $0.423 per therm,for a
$0.03 8 per therm decrease.Id.at 3.
The PGA mechanism is used to adjust rates to reflect annual changes in the Company’s costs for the purchase of
natural gas from suppliers —including transportation,storage,and other related costs.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32335 1
YOU ARE FURTHER iOTIFIED that Avista says it has periodically hedged gas
throughout 2011 for the coming PGA year (13 months).Id.The Company says it will hedge
approximately 70%of its estimated annual load requirements for the PGA year (October 2011 —
October 2012)at a fixed price comprised of:(1)32%of volumes hedged for a term of one-year
or less:(2)18%of prior multi-year hedges;and (3)20%from underground storage.Id.
Through July,the planned hedge volumes for the PGA year have been executed at a weighted
average price of $0479 per therm.Id.
YOU ARE FURTHER NOTIFIED that Avista says that average daily wholesale
prices of natural gas have stayed at levels similar to 2010;however,the prices of natural gas
during the storage injection season (April -September)have been slightly higher than in 2010.
See Application at 3.These higher prices have raised the storage WACOG above what is
currently in embedded rates.Id,The Company notes,though,that while gas prices are currently
higher than levels experienced a year ago,the forward prices for the upcoming PGA year have
continued to drop.Id.The Company contends this decline has provided the opportunity to
hedge natural gas at a cost below what is embedded in rates,and that this decreased hedge cost
more than offsets the storage WACOG increase.Id.
YOU ARE FURTHER NOTIFIED that Avista maintains that the demand costs in its
Application primarily represent the costs of pipeline transportation to the Companys system.Id.
The Company proposes a slight increase in demand charges due,in part,to a proposed rate case
settlement between Gas Transmission Northwest and gas shippers (including Avista).Id.The
Company states the proposed settlement is to be filed with FERC in the near future,and that the
Company expects it to be approved.Id.at 4.
YOU ARE FURTHER NOTIFIED that Avista also proposes to increase the
amortization rate to about $0.047 per therm.Id.This increase results from the large,one-year
2010 refund amortization rate being replaced by a smaller rate.Id.The Company states the
larger refund balance from the prior PGA was almost totally amortized in the current PGA year,
resulting in a reduction in the refund amortization rate in this PGA.The Company states this
reduction,coupled with current refund balances of $1.6 million,results in a $0.047 per therm
increase in Schedule 155.Id.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDERNO.32335 2
YOU ARE FURTHER NOTIFIED that Avista asserts it has notified customers of its
proposed increase in gas rates by posting a notice at each of the Company’s district offices in
Idaho,by means of a press release distributed to various informational agencies,and by
individual notice to each of its Idaho gas customers via a bill insert.Id.at 2.Finally,the
Company asks that this matter be handled under Modified Procedure pursuant to Rules 201-204
of the Commission’s Rules of Procedure,and that its rates take effect on October 1,2011.Id.at
4.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the
public interest may not require a formal evidentiary hearing in this matter and will proceed under
Modified Procedure pursuant to the Commission’s Rules of Procedure 201 through 204,IDAPA
3 1.01.01.201 through .204.The Commission notes that Modified Procedure (with written
comments)has proven to be an effective means for obtaining public input and participation in
cases of this nature.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or opposition with the Commission no later
than September 21,2011.The comment must contain a statement of reasons supporting the
comment.Persons desiring a hearing must specifically request a hearing in their written
comments.Written comments concerning this Application shall be mailed to the Commission
and the parties at the addresses reflected below:
Commission Secretary Kelly 0.Norwood
Idaho Public Utilities Commission Vice President State and Federal
P0 Box 83720 Avista Utilities
Boise,ID 83 720-0074 P.O.Box 3727
Spokane,WA 99220-3727
Street Address for Express Mail:
472 W.Washington Street David J.Meyer
Boise,ID 83702-59 18 Vice President and Chief Counsel of
Regulatory and Governmental Affairs
Avista Utilities
P.O.Box 3727
Spokane,WA 99220-3 727
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32335 3
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 form,using the case number as it appears on the front of this document.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are
received within the time limit set,the Commission will consider this matter on its merits and
enter its Order without a formal hearing.If written comments are received within the time limit
set,the Commission will consider them and,in its discretion,may set the same for formal
hearing.
YOU ARE FURTHER NOTIFIED that the Application,supporting work papers and
exhibits have been filed with the Commission and are available for public inspection during
regular business hours at the Commission offices.The Application and other work papers are
also available 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 all proceedings in this matter will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §61-118,61-119,61-502,and 61-503.The Commission may enter any final Order
consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 3 1.01.01.000,ci seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure.
Interested persons may file comments no later than September 21,2011.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32335 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of August2011.
ATTEST:
MAC K A.REDFORD COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
/1//iL4_/
enD.JewfI
dmmission Secretary
O:AVUGI lO4kk
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.32335 5