20151023final_order_no_33402.pdf

Office of the Secretary
Service Date
October 23,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION DBA AVISTA UTILITIES’)CASE NO.AVU-G-15-02
APPLICATION TO CHANGE ITS NATURAL )
GAS RATES AND CHARGES (2015 )
PURCHASED GAS COST ADJUSTMENT))ORDER NO.33402
________________________________________________________________________________________
)
On August 27,2015,Avista Corporation dba Avista Utilities filed its annual
Purchased Gas Cost Adjustment (PGA)Application.The PGA is a Commission-approved
mechanism that adjusts rates up or down to reflect changes in Avista’s costs to buy natural gas
from suppliers—including changes in transportation,storage,and other related costs.Avista
defers these costs into its PGA account,and then passes them to customers through an increase
or decrease in rates.With this Application,Avista proposes to decrease its PGA rates by about
$10.3 million (14.5%),effective November 1,2015.
On September 1,2015,the Commission issued a Notice of Application and Notice of
Modified Procedure setting an October 9,2015 deadline for interested persons to comment on
the Application,and an October 15,2015 deadline for Avista to file reply comments.
Commission Staff filed the only comments in the case,and supported Avista’s Application.
Having reviewed the record,we issue this Order approving Avista’s Application and
proposed tariffs as filed,effective November 1,2015.
THE APPLICATION
A.Overview ofProposed Rates
With this Application,Avista proposes to:(1)pass changes in the estimated cost of
natural gas for the next 12 months to customers (Tariff Schedule 150);and (2)revise the
amortization rates to refund or collect the balance of deferred gas costs (Tariff Schedule 155).
Avista’s proposal would decrease PGA rates for customers as follows:
Commodity Demand Total Amortization Total Rate Overall
Schedule Change per Change per Sch.150 Change per Change per Percent
Service No.Therm Therm Change Therm Therm Change
General 101 $(0.013312)$000133 $(0.13179)$0.00170 $(0.13009)(13.4)%
Lg.General 111 $(0.013312)$000133 $(0.l3179)$0.00170 $(0.13009)(18.O)%
Interruptible 131 $(0.013312)0.00000 $(0.13312)$(0.02097)$(0.15409)(24.6)%
ORDER NO.33402 1
These changes would decrease Avista’s PGA rates by about $10.3 million (14.5%),but would
not affect Avista’s earnings.The average residential or small commercial customer’s rate would
decrease by about $7.94 per month.The new rates would take effect on November 1,2015.
Avista’s proposed changes to Schedules 150 and 155 are further discussed below.
B.Schedule 150
Avista explains that the Schedule 150 portion of the PGA has two parts:the
“commodity costs”and the “demand costs.”Avista’s “commodity costs”are the variable costs
at which Avista must buy natural gas.The weighted average cost of gas (WACOG)
approximates Avista’s commodity costs.The WACOG includes fuel charges to move gas at the
city gate,plus some variable transport costs,and Gas Research Institute (GRI)funding.It does
not include third-party gas management fees.In this case,Avista estimates that its commodity
costs will decrease by $0.0l33 (13.30)per therm,from the currently approved WACOG of
$0.385 (38.50)per therm to $0.252 (25.20)per therm.In an effort to minimize the Company’s
and its customers exposure to volatile and potentially rising natural gas commodity costs,Avista
has used a diversified approach to procure natural gas,including “hedging”strategies,the use of
underground storage capacity,and estimating the cost of index purchases using a 30-day
historical average of forward prices and supply basins
Avista’s “demand costs”are its fixed-capacity costs for interstate transportation and
underground storage,as well as capacity releases that are credited back to customers.The
demand costs primarily are costs to transport gas on interstate pipelines to Avista’s local
distribution system.Avista proposes a $0.0013 per therm increase in the overall demand rate for
customer Schedules 101 and ill.Avista’s proposed demand rate includes the new cost of
transporting gas over TransCanada-Gas Transmission Northwest,which is to take effect on
January 1,2016.
C.Schedule 155
Avista explains that tariff Schedule 155 reflects the amortization of Avista’s deferral
account.With this Application,Avista proposes to increase the amortization rate for customer
Schedules 101 and 111 by $0.00 170 per therm,which will decrease the rebate that customers
currently enjoy from $0.03056 per therm rebate to $0.02886 per therm.Avista explains that
lower than expected wholesale natural gas prices contributed to the proposed amortization rate
by causing Avista to collect revenues that exceeded its costs.Avista notes,however,that part of
ORDER NO.33402 2
the benefit from reduced wholesale gas prices was offset by an under collection of fixed-demand
costs that resulted from a warmer-than-normal winter.
THE COMMENTS
Commission Staff supported Avista’s Application.Staff assessed the reasonableness
of Avista’s proposal by examining Avista’s gas purchases for the year,and Avista’s fixed-price
hedges,pipeline transportation and storage costs,and estimates of future commodity prices.
Staff also reviewed Avista’s jurisdictional allocations and the reasonableness of Avista’s Lost
and Unaccounted for Gas (LAUF)volumes.’Staff confirmed that the proposed changes to
Schedules 150 and 155 accurately capture Avista’s fixed and variable costs given the coming
year’s forecasted gas purchases,and properly amortize the deferral balance from the prior year.
Staff also verified that Avista’s proposed PGA will not change Avista’s earnings.
Based on this review,Staff recommended the Commission approve Avista’s PGA
Application and proposed tariffs as filed.Specifically,Staff recommended the Commission
approve,with an effective date of November 1,2015,Avista’s proposed:(1)Tariff Schedule
150,including the proposed WACOG of $0.252 per therm;and (2)Tariff Schedule 155,
including the proposed $0.00 170 per therm increase in the amortization rate for customer
Schedules 101 and 111,and including the $0.02886 per therm credit to customers.Staff noted
this change will result in an overall customer refund of about $2.3 million.Staff also
recommended that Avista apply to amend its proposed WACOG if gas prices materially deviate
from the proposed WACOG during the upcoming year.
DISCUSSION AND FINDINGS
The Commission has reviewed the record,including the Application and comments.
Avista is a gas corporation and public utility,and the Commission has jurisdiction over it and the
issues in this case under Title 61 of the Idaho Code,and more specifically,Idaho Code §61
117,61-129,61-307,61-501,and 61-502.The Commission must establish just,reasonable,and
sufficient rates for utilities subject to its jurisdiction.Idaho Code §6 1-502.
Based on our review of the record,we find that Avista’s proposed Schedules 150 and
155 accurately capture Avista’s fixed and variable costs in light of forecasted gas purchases,and
properly amortize Avista’s deferral balance from the prior year.We thus find it fair,just,and
LAUF Gas is the difference between the volumes of natural gas delivered to the distribution system at the city gate
and volumes of natural gas billed to customers at the meter.
ORDER NO.33402 3
reasonable to approve Avista’s proposed Schedule 150,including the proposed WACOG of
S0.252 per therm,and proposed Schedule 155 with an amortization rate of $0.02886 per therm.
As always,we expect Avista to promptly apply to amend its WACOG if gas prices materially
deviate from the WACOG approved in this Order.
ORDER
IT IS HEREBY ORDERED that Avista’s PGA Application is approved.Avista shall
establish a WACOG of S0.252 per therm,and a Schedule 155 amortization rate of $0.02886 per
therm.Avista’s proposed tariffs are approved as filed for service rendered on and after
November 1,2015.
IT IS FURTHER ORDERED that Avista shall promptly apply to amend its WACOG
if gas prices materially deviate from the WACOG approved in this Order.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)may petition for reconsideration within twenty-one (21)days of the
service date of this Order.Within seven (7)days after any person has petitioned for
reconsideration,any other person may cross-petition for reconsideration.See Idaho Code §61-
626.
ORDER NO.33402 4
DONE by Order of the Idaho Public Utilities Commission at Boise.Idaho this 23
day of October 2015.
PAUL
MARSHA H.SMITH,COMMISSIONER
KRT1NE RAPER,COMMISSIONER
ATTEST:
4t
J/tn D.Jewell
6mrnission Secretary
O:AVU-G-I 5-02kk2
ORDER NO.33402 5