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HomeMy WebLinkAbout20151113Ehrbar Direct in Support of Stipulation.pdfrf- I l\J ?fil$ l{0Y l3 A}t 9: 39 DAVID J. MEYER vrcE ,RESTDENT AND cHrEF couNSEL FoR ,'r'J,?ffi*#|;,hi8u,o* REGULATORY & GOVERNMENTAL AFEAIRS AVISTA CORPORATION P.O. BOX 3727 1411 EAST MISSION AVENUE SPoKANE, WASHTNGTON 99220-3727 TELEPHoNE: (509) 495-43L6 EACSIMILE: (509) 495-8851 DAVI D . MEYERGAVI STACORP . COM BEBORE EIIE IDNIO PT'BI,IC UITILI.|IIES COMMISSION IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-15-05 OF AVISTA CORPORAT]ON FOR THE ) CASE NO. AVU-G-15-01 AUTHORITY TO INCREASE ITS RATES ) AND CHARGES FOR ELECTR]C AND ) D]RECT TEST]MONY NATURAL GAS SERVICE TO ELECTRIC ) OF PATRICK D. EHRBAR AND NATURAL GAS CUSTOMERS IN THE ) IN SUPPORT OF THE STATE OF IDAHO ) STIPULAT]ON AND ) SETTLEMENT FOR AVISTA CORPORATION (ELECTRIC AND NATURAL GAS) I 2 3 4 5 6 7 8 9 l0 ll t2 l3 l4 l5 l6 t7 18 t9 20 2t 22 23 24 I. INTRODUCTION 9. PJ.ease state your name, em;rloyer and business address. A. My name is Patrick D. Ehrbar and I am employed as the Manager of Rates and Tariffs for Avi-sta Utilitles ("Company" or "Avista"), at 7411- East Mission Avenue, Spokane, Washington. A. Have you previously fiJ.ed direct testimony in this proceedingr? A. Yes. My testimony in this proceeding covered the spread of the proposed electric and natural gas revenue increases among the Company's electri-c and natural gas general service schedules. My testimony also described the changes to the rates within the Company's electric and natural gas service schedules, as weII as the Company's proposed electric and natural gas Fixed Cost Adjustment Mechanj-sms. A. I[hat is the scope of this pre-fi1ed testimony? A. The purpose of my testimony is to descrj-be and support the non-revenue requirement portions of the Stipulation and Settlement ("Stipulation"), filed on October 16, 2015 between the Staff of the Idaho Public Utilities Commj-ssion ("Staff'), Clearwater Paper Corporation ("Clearwater"), Idaho Eorest Group, LLC Ehrbar, Di 1 Avista Corporation I 2 3 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 t6 t7 l8 t9 20 2t 22 ("Idaho Forest"), the Community Acti-on Partnership Association of ldaho ("CAPAI"), the Idaho Conservation League ("Conservation League"), the Snake River AlLiance ("Snake River") and the Company. These entities are collectively referred to as the "Partiesr" and represent several- parties in the above-referenced cases. In my testimony I will explain the following Settlment components: 1. Rate Spread and Rate Design 2. Fixed Cost Adjustment Mechanisms 3. Other Settl-ement f tems I wlll also provide an overview of the Company's customer service programs. A. Are you sponsoring any e:rhibits? A. No, I am not. Company witness Ms. Andrews is sponsoring Exhibit No. L, which is a copy of the Stipulation and Settlement filed on October 16, 2015, with the Commission. II. RATE SPREAD T RATE DESIG,IJI A. Please e:rplain the settlement terms relating to cost of service. A. Eor el-ectric operations, the Company prepared a cost of service analysls uslng a system load factor Ehrbar, Di 2 Avista Corporation 23 24 I 2 3 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 t6 t7 18 l9 20 2l 22 23 24 method of classifying production costs, allocating 1008 of transmissj-on costs to demand, and allocating transmission costs on a twelve-month basis.For settlement purposes, the Parties agreed to use a pro-rata allocation based on the Company's proposed 252 move towards unity for purposes of spreading the revised el-ectric revenue requirement, while not agreeing on any particular cost of service methodology. Eor natural gas operations, the Company proposed that all rate schedules be moved approximately 338 towards unity. For settlement purposes, the Partles agreed to use a pro-rata allocatj-on of the Company's natural- gas rate spread percentages from its original filing for purposes of spreading the revised revenue requi-rement. C. Hor did the StipuJ.ation address rate desigm? A. For settlement purposes, the Parties have agreed that the revenue requirement for each electric and natural gas service schedule would be applied as a uniform percentage increase to each volumetric energy rate, ds shown in Appendix D of the Stipulation provided as Ms. Andrew's Exhibit No. 1. While there would be no change to the residential electric Schedul-e 1- monthly basic charge, the Parties agreed that the natural gas Ehrbar, Di 3 Avj-sta Corporatlon I 2 J 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 l6 l7 l8 t9 20 2t 22 23 Schedule 101 monthly basic charge would $1.00 per month, from $4.25 to $5.25. increase by Appendix D of the Stipulation (Andrews Exhibit No. 1) provides a sunrmary of the current and proposed rates and charqes for electric and natural- gas service. A. Wou1d you please erctrrJ.ain how the StipuJ-ation addresses the present electric rebate customers are receiving in 2015. A. Yes. Through rate Schedule 97 , customers are receiving a rebate of $0.00091 per kwh for 20L5 (approximately $2.8 million) . This rebate rate was first approved in the Company's 20L2 general rate case, Case No. AVU-E-12-08. As a part of the settlement stipulation approved by the Commission in Case No. AVU-E-14-05, the rebate was extended through December 31, 20L5 using the 20L3 electric earnings sharing deferral. For 2014, Avista deferred approxi-mately $5. 6 million under the electric earnings sharing. The Parties have agreed to use the $5.6 million deferral balance from 20L4 and extend the Schedule 97 rebate rate for 2016 and 2071. This information is shown on Appendix E to the Settlement Stipulation (Andrews Exhlbit No. 1). Ehrbar, Di 4 Avista Corporation I 2 J 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 l6 t7 18 t9 20 2t 22 23 24 the in A. Please e:q>J.ain present natural gas hor the StipuJ.ation addresses rebate cugtomers are receivingr 2015 A.Through rate Schedule 197,customers are therm throughreceiving a rebate of $0.0L489 per December 31, 201,5 (approximately $1.2 rebate rate was first approved in the million)This Company's 20L2 general rate case, Case No. AVU-G-L2-0'7. As a part of the settlement stipulation approved by the Commission in Case No. AVU-G-14-0L, the rebate rate was extended for 201,5 using the 20L3 natural gas earnings sharing deferralr Ers well as the Schedule 191 Natural Gas Energy Efficiency funding bafance. For 2074, Avista deferred approximately $0.2 mil-l-ion under the natural gas earnj-ngs sharlng. The Parties have aqreed to use the $0.2 million natural- gas deferral- balance from 20L4 to partially offset the expiration of the $1.2 mil-l-ion rebate that will occur on January 7, 2016. This informatlon is shown on Appendlx E to the Settlement Stipulation (Andrews Exhibit No. 1). A. What is ttre effect on retaiJ. rates, by rate schedule, of the proposed settJ.enent? A. The following table reflects the agreed-upon percentage increase by schedule for electric service: Ehrbar, Di 5 Avista Corporation I 2 3 4 5 6 7 8 9 l0 Rate Schedule Residenthl Schedule I General Service Schedules 1ll12 Large General Service Schedules 21122 Eltra large General Service Sctreduh 25 Cleanvater Paper Scheduh 25P Punping Service Schedules 31132 Steet & Area Lights Schedules 4l-48 Overall lncrcase in Base Increase in Rates Bi[ins Rates 0.9% 0.5% 0.6% 0.6% 0.4% 0.7% 08% 9'1% 0.9% 05% 0.6% 0.6% 0A% 0.7% 0.8% 9'1Ye The following table reflects the agreed-upon percentage increase by schedule for natural gas service: Incrcase in Base Rates Increase in Billing Increase Net of New & I I Rate schedule lZ General Service Schedule l0l [,arge General Service Scheduhs llllll2 13 Intemryt. Sales Service Schedules l3lll32 Transportation Servbe Schedule I 46* 14 ovelall Billine Rates Expirine Rebate 7.7o/o 3.7% 7.5% s.2% 6S% 4.1% 1.5% 2.7% 5.2%w 5.3% 3.1% 4.8% 3.1% 4.8% * excludes commodity and interstate pipeline transportation costsl5 16 A. What aae ttre residential. biJ.J. irqracts if the t7 r8 t9 20 21 22 23 24 Comission approves the SettJ.enent Stipulation? A. An electric residentia1 customer using an average of 929 kilowatt hours per month woul-d see a $0.75, or 0.9?, increase per month for a revised monthly bill of $85.74. A natural gas residential- customer using an average of 6l therms per month would see a $3.19, or 5.42, increase per month for a revised monthly bill of $62.4L. Ehrbar, Di 6Avista Corporation I 2 J 4 5 6 7 8 9 l0 l1 t2 l3 t4 l5 t6 t7 l8 t9 20 21 22 23 III. FIXED COStr ADJUSIAE}iM MECIIA}IISMS A. P1ease e:<plain the sett1enent tercms relating to the Fixed Cost Adjustment ("FClil"'1 Mechanisms. A. The Stipulation i-ncludes el-ectric and natural gas FCA mechanisms. The ECA is a mechanj-sm designed to break the link between a utility's revenues and a consumer's energy usage. The Company's actual- revenue, based on kllowatt-hour and therm sal-es, will vary, up or down, from the level set by the IPUC. This could be due to changes in conservation, weather or the economy. The Parties have agreed upon a Revenue-Per-Customer FCA for electric and natural gas operations. The FCA will compare actual ECA revenues to allowed ECA revenues determined on a per-customer basis, wj-th any differences deferred for later rebate or surcharge. Customers in the FCA will be segmented into Rate Groups (Residential and Non-Residential), and further categorized as either "Existinq Customers" or "New Customers. " 9. Wtrat is the term of the FCA Mechanisms? A. The Parties agreed to an initial FCA term of three years, with a review of how the mechanisms have functioned conducted by Avista, Staff, and other interested parties following the end of the second fuII- Ehrbar, Di 7 Avj-sta Corporation I 2 J 4 5 6 7 8 9 r0ll t2 l3 t4 l5 16 t7 18 19 20 2t 22 23 24 25 26 27 year. Avista may seek to extend the term of the mechanism prior to its expiratj-on. A. You mentioned that customers wiJ.J. be combined into Rate Groups. Please oq>J.ain. A. The Parties have agreed to combine customers into Rate Groups. For the Electric FCA, customers would be inc1uded in one of two Rate Groups: 1. Residential - Schedule 1 2. Commercial Schedules L1, 12, 2\, 22, 31, and 32 For the Natural Gas ECA, customers would be included in one of two Rate Groups: 1. Residential - Schedule 101 2. Commercial - Schedules 111 and 112 A. Why were certain customers excluded fron ttre agreed-upon mechanisms? A. For the electric ECA, Street and Area Lighting customers served on Schedul-es 41"-49 were excluded because the fixed costs to serve them are recovered in their flat monthly rates, and therefore fixed cost recovery is not dependent upon customer usage.Extra Large General Service Schedule 25 and Extra Large Generaf Service to Clearwater Paper Schedule 25P were excluded from the mechanism primarily because these customers tend to be higher load factor customers. With a higher load factor, Ehrbar, Di B Avista Corporation I 2 3 4 5 6 7 8 9 l0 ll t2 l3 t4 15 t6 t7 l8 t9 20 2I the Company bel-ieves that the recovery of fixed costs from these customers is less volatile versus the other schedules, and as such inclusion in the FCA at this time is not necessary. In addition, for these large-use customers, Avista has more direct contact with these customers regarding future plans that may increase or decrease their Ioads. These changes in retail 1oad, whether they be related to energy efficiency measures or for other reasons, are easier to identify and reflect in a qeneral rate case, than for other rate schedules that have a large number of lower-usage customers . For the natural gas ECA, the Parties have agreed to remove Schedules 131 and 132 from the mechanism because only one customer was served on these schedules in the test year.'EinaIly, Schedule 1,46 transportation customers were not included in the design of the FCA because, like Schedule 25 customers, they tend to have l-ess vol-atile usage (higher l-oad factor) , and future changes in their usage are more easily identified and reflected in general rate filings. 1 The one Schedule 1,32 servi-ce to firm service customer recently moved from interruptible under Schedule 112. Ehrbar, Di 9 Avista Corporation I 2 3 4 5 6 7 8 9 l0 ll A. Have you prepared a siryJ.ified cal.cuJ.ation stroring hor the FCA mechanisa works? A. Yes. While the components of the electric and natural gas FCA mechanisms are il-lustrated in Appendices B and C of the Settl-ement Stipulation (Andrews Exhibit No. 1), Tab1e No. 1 below is an ill-ustrative example of how the electrj-c mechanism works. The example is for only January 20L6, and provides the base authorized values as well as the calculation of the monthly deferral usj-ng an illustrative number of customers, energy usage, and actual monthly revenue. Ehrbar, Di 10 Avj-sta Corporation I 2 J 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 t6 t7 t8 t9 20 2t 22 a b c d e trab1e No. January 2016 Authorized Values January FCA Revenue per Customer Basic Charge Load Change Adjusfrnent Rate January # of Customers January # of kWh Sales January 2016 Actual Resufts Actual January # of Customers Less New Customers* Actual January # of Existing Customers FCA Revenue Per Customer (Authorized) FCA Revenue (Authorized) Actual January Existing Customer Revenue Actual January kWh Usage Basic Charge Revenue Variable Production/Transmission Revenue FCA Revenue (Actual) p January Surcharge/@ebate) Revised November 23, 2015 Electric Fked Cost Adjustment Mechanism - Sample Calculatio n fo r Residential Customers f oE h Source Appendix B, P.3, L.15 Appendix D, P. 2 Appendix B, P.l, L.5 Appendix B, P.2 Appendix B, P.3, L.3 Source Illustrative Illustrative : f-s :h*i Illustrative Illustrative --b*h --l*c :k-m-n :j-o January 2016 Authorized $81.83 s5.25 s0.02281 102,923 131,9&,665 January 2016 Example 103,300 175 103,125 $81.83 $8,438,719 s12,000,000 132,000,000 $541,406 s3,010,920 $8,M7,674 ($8,955) i j k I m n o * New custonrcrs will be tacked using a differerf FCA Revenue Per Customer as agreed to in ttre Stipulation The illustrative example provided above would be simil-ar for natural gas customers. The components for the natural gas FCA are provided in Appendix C to the Stipulation (Andrews Exhibit No. 1). Ehrbar, Di 11 Avista Corporation 1 2 J 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 l6 l7 l8 t9 20 2t 22 23 24 A. IIould you please describe how Existing Custoners and Ner Customers rould be treated in the FCA meehanisms? A. Yes. The Parties have agreed that revenue related to certain items discussed bel-ow would not be included in the FCA for new customers. The result is that the Fixed Cost Adjustment Revenue-Per-Customer for new customers will be less than the Eixed Cost Adjustment Revenue-Per-Customer for existing customers. For new electric customers added after the test period, recovery of incremental revenue related to fixed production and transmissi-on costs would be excl-uded f rom the electric FCA. For new natural- gas customers added after the test period, recovery of incremental- revenue related to fixed production and underground storage facillty costs would be excluded. These modifications are inc]uded in Appendices B and C to the Stipulation (Andrews Exhibit No. 1) . A. PJ.ease describe how Avista wiJ.J. report on ttre mechanisms. A. Avista will file, wJ-thin 45 days of the end of each quarter, a report detaiJ-ing the FCA actlvity by month. The reporting wilI afso inc1ude information related to the deferrals by rate group, what the Ehrbar, Di L2 Avista Corporation I 2 3 4 5 6 7 8 9 l0 ll t2 l3 t4 l5 t6 t7 t8 t9 20 2t 22 23 deferrals would have been if tracked by rate schedule, use and revenue-per-customer for existing and new customers, and other summary financial information. Avista will provlde such other information as may be reasonably requested, from time to tj-me, in the future quarterly reports. A. Please provide information related to when the Company would fiJ.e for a rate adjustnent under the proposed FGA. A. On or before JuIy 1-, the Company wil-1 fil-e a proposed rate adjustment surcharge or rebate based on the amount of deferred revenue recorded for the prior January through December time period. The rate adjustment would be calculated separately for each Rate Group, with the applicable surcharge or rebate recovered from each group on a uniform cents per kwh or per therm basis. The proposed tarlff (Schedule 75 for el-ectric and Schedule 1,15 for natural- gas ) included with that filing would i-nclude a rate adjustment that recovers/rebates the appropriate deferred revenue amount over a twel-ve-month period effective on October 1 for el-ectric (to match with Power Cost Adjustment and Residential Exchange annual rate adjustments time period), and November l-st for Ehrbar, Di 13 Avista Corporation 1 2 J 4 5 6 7 8 9 l0 11 t2 l3 t4 l5 t6 l7 l8 l9 20 2t 22 23 24 natural gas (to match with the annual Purchased Gas Cost Adjustment rate adjustment time period). The deferred revenue amount approved for recovery or rebate would be transferred to a balancing account and the revenue surcharged or rebated during the period would reduce the deferred revenue in the bal-ancing account. After determining the amount of deferred revenue that can be recovered through a surcharge (or refunded through a rebate) by Rate Group, the proposed rates under Schedules '75 and L15 would be determined by dividing the deferred revenue to be recovered by Rate Group by the estimated kWh sales (Electric FCA) or therm sales (Natural Gas FCA) for each Rate Group during the twefve-month recovery period. Any deferred revenue remainj.ng in the balancing account at the end of the amortization period would be added to the new revenue deferrals to determine the amount of the proposed surcharge/rebate for the following year. A. Wou1d you describe the accounting for the proposed eJ.ectric and natural. gras FCA? A. Yes. Avista will record the deferral- in account 186 - Miscellaneous Deferred Debits. The amount approved for recovery or rebate would then be transferred into a Ehrbar, Di t4Avista Corporation I 2 J 4 5 6 7 8 9 10 1l 12 13 t4 15 l6 t7 l8 t9 20 2t 22 Regulatory Asset or Regulatory Liability account for amortization. On the income statement, the Company would record both the deferred revenue and the amortization of the deferred revenue through Account 456 (Other Electric Revenue), or Account 495 (Other Gas Revenue), j-n separate sub-accounts. The Company would fil-e quarterly reports with the Commission showing pertinent information regarding the status of the current deferral. This report wouLd include a spreadsheet showing the monthly revenue deferral- calculation for each month of the deferral period (January - December), as well as the current and historical monthly balance in the deferral account. A. Yes, interest will be accrued on the unamortized balance in the FCA balancing accounts at the Customer Deposit Rate.2 A. Is there an agreed-upon limitation as to the a.mount of an FCA surcharge? A. Yes. An FCA surcharge, by rate group, cannot exceed a 3? annual rate adjustment, and any unrecovered a. wi].]. ba].ance? 2 Based on Order No. rate for 2015 is 1.0%. interest accrue on the unanortized 33187 in Case No. GNR-U-14-12, the deposit The rate is updated annua11y. Ehrbar, Di 15Avista Corporation 1 2 aJ 4 5 6 7 8 9 l0 1l t2 13 t4 15 l6 t7 l8 t9 20 2l 22 23 balances recovery. rebate. wil-l- be carried forward to future years There is no limit to the l-evel of the for ECA IV. OTHER EI,EDIEIITS OF TIIE SIIIPT'I,ATION A. P1ease e:q>J.ain the settlement ter:ms relating to the PCA authorized leve1 of e:<penses. A. The new level- of power supply revenues, expenses, retail l-oad and Load Change Adjustment Rate resulting from the January 1-, 2016 settfement revenue requirement for purposes of monthly PCA mechanism calcul-ations are detailed in Appendix A of the Stipulation (Andrews Exhibit No. 1). O. P1ease e:qrJ.ain the customer service-related issues agrreed upon in ttre Settleuent Stipulation. A. The Parties have agreed upon two customer service-rel-ated issues. First, the Company and interested parties will meet and confer prior to the Company's next general rate case in an effort to identify low income customers served by the Company, quantify the number of customers so identified, and determlne those customers' usage patterns. An initial- meeting shall occur no later than June 30, 20L6, with follow-up meetings to occur as the attendees may deem approprJ-ate. Ehrbar, Di L6 Avista Corporation I 2 J 4 5 6 7 8 9 l0 1l t2 l3 t4 15 l6 l7 l8 t9 20 2t 22 23 24 25 26 27 Second, the Company and interested parties will meet and confer prior to the Company's next general rate filing in order to assess the Low Income Weatherization and Low Income Energy Conservation Education Programs and dlscuss appropriate levels of cost-effective, low-income weatherization funding in the future. An initial meetingr shaII occur no l-ater than June 30, 2016, with follow-up meetings to occur as the attendees may deem appropriate. V. CUSTOMER SERVICE PROGRN4S A. Does the Coryany have prograns in place to mitigate ttre impacts on customers of the proposed rate increases? A. Yes. We have a history of making it a priority within our Company to maintain meaningfuJ- programs to assist our customers that are l-east able to pay their energy bi1ls. Vie also have programs to assist our entire customer base, L.e., not just our low-income customers. Some of the key programs that we offer or support are as follows: o DStrvI Energy Efficieney Prograns and Ftrnding. The Company offers a broad array of energy efficiency program measures that provide customers with increased opportunity to manage their energy bil-ls. fn 201,5, Avista has hosted two Energy Fairs, one in Lewi-ston, and the other in Post Falfs. Over 500 customers were in attendance and received energy Ehrbar, Di L1 Avista Corporation 1 2 J 4 5 6 7 8 9 10 11 t2 t3 t4 l5 t6 t7 l8 19 20 2t 22 23 24 25 26 27 28 29 30 3l 32 33 34 35 36 37 38 39 40 4t 42 43 44 45 46 efficiency tips and kits that included l-ow cost/no cost ways to reduce energy consumption. Project Share. Project Share is a voluntary program allowing customers to donate funds that are distributed through community action agencies to customers in need. In the 201,4/201,5 heating season, Avista Utilities' customers, employees and Avista Corp donated $1,23,528 which was directed to Idaho Community Action Agencies. o Comfort Level Bi].].ing.The Company offers the option for all customers to pay the same bill amount each month of the year by averaging their annual usaqe.Under this program, customers can avoid unpredictable winter heating bill-s. Payrment Arrangements. The Company's Contact Center Representatives work with customers to set up payment arrangements to pay energy biIIs. C.ARES Progra'n. Customer Assistance Referral and Eval-uation Servj-ces provide assistance to speclal- needs customers through access to specially trained (CARES) representatives who provlde referrals to area agencJ-es and churches for help with housing, util-ities, medical assistance, etc. Senior Energy Outreach: Avj-sta has developed specific outreach efforts to reach our more vulnerable customers (seniors and dlsabled customers) with bilI paying assistance and energy efficiency information that emphasizes comfort and safety. Some examples of this effort are as follows: . Senior Publications: Avista has created a one-page advertisement that has been placed in senj-or resource dj-rectories and targeted senior publications to reach seniors withj-nformation about energy efficiency, Comfort Level- Billing, Avista CARES and energy assistance.A brochure with the sameinformation has also been created fordistribution through senior meal delivery programs and other senior home-care programs. Ehrbar, Di 18 Avista Corporation 1 2 3 4 5 6 7 8 9 l0 l1 Senior Energy Workshops: With the help of the Avista Conservation Energy EducationTeam, 5 Energy Workshops have been faciLitated in 20L5, with more to come later thls year. Approxj-mate1y, 150 seni-ors and l-ow-income individual-s were reached and given Home Energy Saving kits along with learning about 1ow-cost/no-cost ways to reduce energy use. tftis concJ.uds your pre-fiJ.ed direct A. Yes,it does. Ehrbar, Di 1,9 Avista Corporation a. testimony?t2 13