20160125Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: KARL KLEIN
DEPUTY ATTORNEY GENERAL

DATE: JANUARY 21, 2016

SUBJECT: AVISTA’S APPLICATION FOR AN ACCOUNTING ORDER, CASE
NOS. AVU-E-16-01 AND AVU-G-16-01

On January 13, 2016, Avista applied for an Order authorizing it to record, as a
regulatory asset, the costs it incurs to offer a fee free payment program to its residential
customers. The Company does not seek to recover the costs now. Rather, it requests an
Accounting Order that will let it defer and record the costs so it will have the opportunity to
recover those costs through future rates. The Company asks the Commission to process the
Application by Modified Procedure.
APPLICATION SUMMARY
In its Application, Avista notes that it currently uses a third-party vendor to process
one-time payments that customers make through Avista’s web site or by telephone. The vendor
collects a $3.50 “convenience fee” if the customer pays by checking or savings account but lacks
an Avista “My Account” profile, or by credit or debit card. On the other hand, customers with a
“My Account” profile may pay by phone or Avista’s web site without being charged a
convenience fee. Customers also are not charged the fee if they pay by check, cash, or pay
station.
Avista would like to eliminate the “convenience fee” so its residential customers may
pay their bills by any method without incurring an extra charge. However, Avista does not want
to create a fee free payment program if it will incur costs that will cause it and its shareholders to
lose money. The Company thus seeks to defer, for later recovery from customers through rates,
the costs it incurs to set up and offer the fee free payment program. The Company expects that
DECISION MEMORANDUM 2
the deferred costs will be about $195,000 per year on an Idaho electric allocated basis, and about
$120,000 per year on an Idaho natural gas allocated basis.
With this Application, the Company asks the Commission to approve an accounting
treatment that would let the Company defer the program costs for up to 36 months from the
month in which the program begins. Every six months, the Company would update the
Commission on program participation rates and fees incurred. Then, after the Company has 12
to 18 months of history with the program, the Company would seek to recover the program’s
costs as part of a general rate case. In the rate case, the Company would ask to amortize and
recover the costs from all customers over a two-year period, with no return on the unamortized
balance. The Company also asks the Commission to approve this proposed ratemaking
treatment.
STAFF RECOMMENDATION
Staff recommends that the case be processed by Modified Procedure, with comments
due within 45 days of the Commission’s notice, and reply comments (if any) due 7 days later.
COMMISSION DECISION
Does the Commission wish to process this case under Modified Procedure and set a
45-day comment deadline and 7-day reply deadline?

/s/ Karl T. Klein
Karl T. Klein
Deputy Attorney General

M:AVU-E-16-01/AVU-G-16-01_kk