20170612Ehrbar Direct.pdf

DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
[e-mail]

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-17-01
OF AVISTA CORPORATION FOR THE ) CASE NO. AVU-G-17-01
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC AND )
NATURAL GAS SERVICE TO ELECTRIC ) DIRECT TESTIMONY
AND NATURAL GAS CUSTOMERS IN THE ) OF
STATE OF IDAHO ) PATRICK D. EHRBAR

FOR AVISTA CORPORATION

(ELECTRIC AND NATURAL GAS)

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Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, business address and 2
present position with Avista Corporation? 3
A. My name is Patrick D. Ehrbar and my business address
is 1411 East Mission Avenue, Spokane, Washington. I am
presently assigned to the State and Federal Regulation
Department as Senior Manager of Rates and Tariffs.
Q. Would you briefly describe your educational 8
background and professional experience? 9
A. Yes. I am a 1995 graduate of Gonzaga University with
a Bachelors degree in Business Administration. In 1997 I
graduated from Gonzaga University with a Masters degree in
Business Administration. I started with Avista in April 1997
as a Resource Management Analyst in the Company’s Demand Side 14
Management (DSM) department. Later, I became a Program
Manager, responsible for energy efficiency program offerings
for the Company’s educational and governmental customers. In
2000, I was selected to be one of the Company’s key Account 18
Executives. In this role I was responsible for, among other
things, being the primary point of contact for numerous
commercial and industrial customers, including delivery of
the Company’s site specific energy efficiency programs.
I joined the State and Federal Regulation Department as
a Senior Regulatory Analyst in 2007. Responsibilities in that
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Avista Corporation
role included being the discovery coordinator for the
Company’s rate cases, line extension policy tariffs, as well
as miscellaneous regulatory issues. In November 2009, I was
promoted to Manager of Rates and Tariffs, and later promoted
to be Senior Manager of Rates and Tariffs. My primary areas
of responsibility include electric and natural gas rate
design, decoupling, power cost and natural gas rate
adjustments, customer usage and revenue analysis, and tariff
administration.
Q. What is the scope of your testimony in this 10
proceeding? 11
A. My testimony in this proceeding will cover the
spread of the proposed 2018 and 2019 electric and natural gas
revenue increases among the Company’s electric and natural
gas general service schedules. My testimony will also describe
the changes to the rates within the Company’s electric and 16
natural gas service schedules.
Q. Would you please provide an overview of the 18
Company’s electric and natural gas rate requests? 19
A. Yes. As discussed by Company witness Mr. Morris,
the Company is proposing a Two-Year Rate Plan for calendar
years 2018 and 2019, with proposed increases effective January
1 of each year. The Company is proposing a Two-Year Rate
Plan, to once again, avoid annual rate cases in its Idaho
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Avista Corporation
jurisdiction, providing benefits to all stakeholders. A Two-
Year Rate Plan, with increases in 2018 and 2019, would provide
benefits to its customers by providing a level of rate
predictability to customers over this two-year period. A two-
year window also provides Avista with the opportunity to
manage its business in order to achieve a fair rate of return
within known price changes. Finally, relief is provided to
all stakeholders (customers, the Commission and its Staff,
intervenors, and the Company) from the administrative burdens
and costs of litigation of annual general rate cases.
Accordingly, the Company has filed two sets of tariffs
for each of the electric and natural gas service schedules.
The first tariff for each rate schedule provides for an
effective date of July 9, 2017; however, in the Company’s 14
Application in this case, Avista has requested that the
tariffs related to the 2018 rate request be suspended with a
proposed effective date of January 1, 2018. The second set of
tariffs filed for each of the electric and natural gas service
schedules have an effective date of January 1, 2019,
consistent with the Company’s second-step increase proposal.
Provided below in Table Nos. 1 & 2 is a summary of the
proposed increase, by rate schedule, on a billing basis
(inclusive of all base and billing rate components, including
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Avista Corporation
Rate Schedule Description
2018 Billing
Increase
2019 Billing
Increase
Residential Service Schedule 1 8.1%4.3%
General Service Schedules 11 & 12 7.5%4.0%
Large General Service Schedules 21 & 22 8.2%4.4%
Extra Large General Service Schedule 25 7.7%4.3%
Extra Large General Service 25P Schedule 25P 7.2%4.1%
Pumping Service Schedules 31 & 32 8.8%4.6%
Street & Area Lights Schedules 41 - 49 7.5%3.8%
Total 7.9%4.2%
Table 2: 2018 & 2019 Natural Gas Rate Request by Rate Schedule
Rate Schedule Description
2018 Billing
Increase
2019 Billing
Increase
General Service Schedule 101 6.6%3.8%
Large General Service Schedules 111 & 112 2.2%1.3%
Interruptible Service Schedules 131 & 132 0.0%0.0%
Transportation Service Schedule 146*9.2%5.0%
Total 5.7%3.3%
* excludes commodity and interstate pipeline transportation costs
the effect of the new and expiring electric rebates discussed
later in my testimony):
Table No. 1 – 2018 & 2019 Electric Rate Request by Schedule 3

Table No. 2 – 2018 & 2019 Natural Gas Rate Request by Schedule 11

16
17
18
Q. Are you sponsoring any Exhibits that accompany your 19
testimony?
A. Yes. I am sponsoring Exhibit No. 16, Schedules 1
through 3 related to the proposed electric increase, and
Schedules 4 through 6 related to the proposed natural gas
increase. These exhibits were prepared under my supervision.
A table of contents for my testimony is as follows:
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Avista Corporation
Table of Contents Page 1
I. Introduction 1

II. Proposed Electric Revenue Increase 5
Summary of Rate Schedules and Tariffs 5
Proposed Rate Spread (Increase by Schedule) 7
Proposed Rate Design (Rates within Schedules) 11

III. Proposed Natural Gas Revenue Increase 24
Summary of Rate Schedules and Tariffs 25
Proposed Rate Spread (Increase by Schedule) 27
Proposed Rate Design (Rates within Schedules) 30
13
II. PROPOSED ELECTRIC REVENUE INCREASE 14
Summary of Electric Rate Schedules and Tariffs 15
Q. Would you please explain what is contained in 16
Schedule 1 of Exhibit No. 16? 17
A. Yes. Schedule 1 is a copy of the Company’s present 18
and proposed electric tariffs for 2018 and 2019, showing the
changes (strikeout and underline) proposed in this filing.
Q. Would you please describe what is contained in 21
Schedule 2 of Exhibit No. 16?
A. Yes. Schedule 2 contains the proposed (clean)
electric tariff sheets for 2018 and 2019 incorporating the
proposed changes included in this filing.
Q. What is contained in Schedule 3 of Exhibit No. 16?
A. Schedule 3 contains information regarding the
proposed spread of the electric revenue increase among the
service schedules and the proposed changes to the rates within
the schedules. Page 1 shows the 2018 and 2019 proposed
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Avista Corporation
general revenue and percentage increases by rate schedule
compared to the present revenue under base tariff and billing
rates. Page 2 shows the rates of return and the relative
rates of return for each of the schedules before and after
application of the proposed 2018 general increase. Pages 3
and 4 show the present rates under each of the rate schedules,
the proposed changes to the rates within the schedules, and
the proposed rates after application of the 2018 and 2019 rate
changes. These pages will be referred to later in my
testimony.
Q. Would you please describe the Company's present 11
rate schedules and the types of electric service offered under 12
each? 13
A. Yes. The Company presently provides electric
service under Residential Service Schedule 1, General Service
Schedules 11 and 12, Large General Service Schedules 21 and
22, Extra Large General Service under Schedule 25 and Schedule
25P (Clearwater Paper’s Lewiston Plant), and Pumping Service
Schedules 31 and 32. Additionally, the Company provides
Street Lighting Service under Schedules 41-46, and Area
Lighting Service under Schedules 47-49. Schedules 12, 22,
32, and 48 cover residential and farm service customers who
qualify for the Residential Exchange Program operated by the
Bonneville Power Administration. The rates for these
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Avista Corporation
Rate Schedule No. of Customers
Residential Schedule 1 105,700
General Service Schedules 11/12 21,114
Large General Service Schedules 21/22 1,125
Extra Large General Service Schedule 25 11
Clearwater Paper Schedule 25P 1
Pumping Service Schedules 31/32 1,403
Table No. 3 - Customers by Service Schedule
schedules are identical to the rates for Schedules 11, 21,
31, and 47, respectively, except for the Residential Exchange
rate credit.
The following table shows the type and number of
customers served in Idaho (as of December 2016) under each of
the electric service schedules:

12
Proposed Electric Rate Spread 13
Q. For 2018, what is the proposed electric revenue 14
increase, and how is the Company proposing to spread the 15
increase by rate schedule? 16
A. For 2018, the proposed electric increase is
$18,571,000, or 7.5% over present base tariff rates in effect.
The proposed general increase over present billing rates,
including all other rate adjustments (such as DSM and
Residential Exchange), is 7.9%. The proposed percentage
increase by rate schedule is as follows:
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Avista Corporation
Table No. 4 - Proposed % Electric Increase by Schedule - 2018
Rate Schedule
Increase in Base
Rates
Increase in
Billing Rates
Residential Schedule 1 7.8%8.1%
General Service Schedules 11/12 7.2%7.5%
Large General Service Schedules 21/22 7.8%8.2%
Extra Large General Service Schedule 25 7.0%7.7%
Clearwater Paper Schedule 25P 6.5%7.2%
Pumping Service Schedules 31/32 8.5%8.8%
Street & Area Lights Schedules 41-48 7.5%7.5%
Overall 7.5%7.9%

This information is shown with more detail on page 1 of
Exhibit No. 16, Schedule 3.
Q. What is the Company’s proposal related to the 10
current rebate customers are receiving in 2017? 11
A. Through rate Schedule 97, customers are receiving
a rebate of $0.00091 per kWh for 2017 (approximately $2.7
million). This rebate rate was approved in the Company’s 2015
general rate case, Case No. AVU-E-15-05. The rebate was
related to Avista’s 2014 electric earnings sharing of 16
approximately $5.6 million, of which approximately one-half
was rebated to customers in 2016, and the remaining half
rebated in 2017.
Avista deferred approximately $1.5 million under the
electric earnings sharing for calendar-year 2015. The Company
is proposing in this case to use the $1.5 million deferral
balance from 2015 to replace approximately one-half of the
current rebate in 2018. The Company has filed tariff sheet
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Avista Corporation
Schedule 97 with revised language reflecting the new rebate.1
The net effect for 2018 of the expiring rebate, offset by the
new rebate, is an increase in billed revenues (i.e., less of
a rebate) of approximately $1.2 million.
Q. How did the Company spread the total 2018 general 5
revenue increase request of $18,571,000 among its various rate 6
schedules? 7
A. The Company used the results of the electric cost
of service study (sponsored by Company witness Ms. Knox) as
a guide to spread the general increase. The spread of the
proposed increase generally results in the rates of return
for the various electric service schedules moving
approximately 15 percent closer to the overall rate of return
(unity). While we believe it is reasonable and appropriate to
use the cost of service study results as the basis for rate
spread, we have tempered the amount of movement toward unity
proposed in this case due primarily to the impact such
movement would have between the rate schedules. The Company
may propose additional movement toward unity in future
proceedings.
Table No. 5 below shows the relative rates of return
before and after application of the proposed general increase:

1 Consistent with the provisions of Schedule 97, any over- or under-
amortization of the $1.5 million rebate would be trued up in a future PCA
filed by the Company.
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Avista Corporation
Present Proposed
Relative Relative
Rate Schedule ROR ROR
Residential Schedule 1 0.81 0.84
General Service Schedules 11/12 1.47 1.40
Large General Service Schedules 21/22 1.14 1.12
Extra Large General Service Schedule 25 0.96 0.97
Clearwater Paper Schedule 25P 1.06 1.05
Pumping Service Schedules 31/32 0.92 0.93
Street & Area Lights Schedules 1.07 1.00
Overall 1.00 1.00
Table No. 5 - Present & Proposed Relative Rates of Return
2
3
4
5
6
7

This information is shown in detail on Page 2, Schedule
3 of Exhibit No. 16.
Q. For 2019, what is the proposed electric revenue 11
increase, and how is the Company proposing to spread the 12
increase by rate schedule? 13
A. For 2019, the proposed electric increase is
$9,936,000, or 3.7% over base tariff rates. The proposed
general increase over billing rates, including all other rate
adjustments (such as DSM and Residential Exchange), is 4.2%.
The overall billed increase also reflects the expiration of
the 2015 earnings test rebate (proposed to be rebated in 2018)
discussed earlier in my testimony.
The Company used a pro-rata allocation of the Company’s 21
2018 electric rate spread percentages for purposes of
spreading the proposed 2019 electric revenue increase to its
electric service schedules. The proposed percentage increase
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Avista Corporation
Table No. 6 - Proposed % Electric Increase by Schedule - 2019
Rate Schedule
Increase in Base
Rates
Increase in
Billing Rates
Residential Schedule 1 3.9%4.3%
General Service Schedules 11/12 3.6%4.0%
Large General Service Schedules 21/22 3.9%4.4%
Extra Large General Service Schedule 25 3.5%4.3%
Clearwater Paper Schedule 25P 3.3%4.1%
Pumping Service Schedules 31/32 4.2%4.6%
Street & Area Lights Schedules 41-48 3.7%3.8%
Overall 3.7%4.2%
by rate schedule is as follows:

This information is shown with more detail on page 1 of
Exhibit No. 16, Schedule 3.

Proposed Rate Design 12
Q. Where in your Exhibit do you show a comparison of 13
the present and proposed rates within each of the Company’s 14
electric service schedules? 15
A. Pages 3 (for 2018) and 4 (for 2019) of Schedule 3
in Exhibit No. 16 shows a comparison of the present and
proposed rates within each of the schedules, which I will
describe below. Column (a) shows the rate/billing components
under each of the schedules, column (b) shows the present base
tariff rates within each of the schedules, column (c) shows
the present rate adjustments applicable under each schedule,
and column (d) shows the present billing rates. Column (e)
shows the proposed general rate increase to the rate
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Avista Corporation
components within each of the schedules, column (f) shows the
proposed revenue changes under Schedule 97, column (g) shows
the proposed billing rates and column (h) shows the proposed
base tariff rates.
Q. Is the Company proposing any changes to the existing 5
rate structures within its rate schedules? 6
A. No. The Company is not proposing any changes to
the present rate structures within its electric schedules.
Q. Turning to Residential Service Schedule 1, could 9
you please describe the present rate structure under this 10
schedule? 11
A. Yes. Residential Schedule 1 has a present customer
or basic charge of $5.75 per month and two energy rate blocks:
0-600 kWhs and over 600 kWhs. The present base tariff rate
for the first 600 kWhs per month is 8.449 cents per kWh and
9.434 cents for all kWhs over 600.
Q. How does the Company propose to spread Schedule 1’s 17
proposed 2018 general revenue increase of $8,473,000 to the 18
rates within that schedule? 19
A. The Company proposes to increase the monthly
customer charge from $5.75 per month to $6.00 per month. The
remaining revenue increase for the schedule is proposed to be
recovered through a uniform percentage increase of
approximately 8.0% applied to the two energy block rates. The
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Avista Corporation
proposed increase for the first 600 kWhs used per month under
the schedule is 0.677 cents per kWh, and an increase of 0.757
cents per kWh for usage over 600 kWhs per month.
Q. How does the Company propose to spread Schedule 1’s 4
proposed 2019 general revenue increase of $4,536,000 to the 5
rates within that schedule? 6
A. The Company proposes to keep the monthly customer
charge at $6.00 per month. The revenue increase for the
schedule is proposed to be recovered through a uniform
percentage increase of approximately 4.1% applied to the two
energy block rates. The proposed increase for the first 600
kWhs used per month under the Schedule is 0.377 cents per kWh,
and an increase of 0.420 cents per kWh for usage over 600 kWhs
per month.
Q. For 2018, what is the proposed increase for a 15
residential electric customer with average consumption? 16
A. The proposed increase for a residential customer
using an average of 910 kWhs per month is $7.03 per month, or
an 8.1% increase in their electric bill. The present bill
for 910 kWhs is $86.39 compared to the proposed level of
$93.42, including all rate adjustments.
Q. For 2019, what is the proposed increase for a 22
residential electric customer with average consumption? 23
A. The proposed increase for a residential customer
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Avista Corporation
using an average of 910 kWhs per month is $4.02 per month, or
a 4.3% increase in their electric bill, resulting in an
overall bill of $97.44, including all rate adjustments.
Q. Turning to General Service Schedules 11/12, could 4
you please describe the present rate structure and rates under 5
those schedules? 6
A. Yes. General Service Schedules 11/12 are the
service schedules typically applicable to customers with an
average demand of less than 20 kW per month, such as small
retail establishments (Schedule 11), or shops for residential
customers which require a separate service (Schedule 12). The
present rate structure under the schedules includes a monthly
customer charge of $12.00, an energy rate of 9.704 cents per
kWh for all usage up to 3,650 kWhs per month, and an energy
rate of 7.216 cents per kWh for usage over 3,650 kWhs per
month. There is also a demand charge of $5.75 per kW for all
demand in excess of 20 kW per month. There is no charge for
the first 20 kW of demand.
Q. How is the Company proposing to apply Schedule 19
11/12’s proposed 2018 general revenue increase of $2,681,000 20
to the rates within those schedules? 21
A. The Company is proposing that the customer charge
increase by $1.00 per month, from $12.00 to $13.00. The
Company is also proposing that the variable demand rate
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Avista Corporation
increase from $5.75/kW to $6.00/kW. The remaining revenue
increase for those schedules is proposed to be recovered
through a 0.785 cent per kWh, or 8.1%, increase to the first
energy block (the first 3,650 kWhs used per month), and a
0.293 cent per kWh, or 4.1%, increase to the second energy
block. The Company is proposing to increase the second energy
block by approximately one-half the percentage increase to
the first block in order to provide a more meaningful
separation between the blocks, and to ensure that the higher
load factor customers served on those schedules do not pay a
melded rate per kWh that is higher than customers with poor
load factors.
Q. How is the Company proposing to apply Schedule 13
11/12’s proposed 2019 general revenue increase of $1,433,000 14
to the rates within those schedules? 15
A. The revenue increase for the schedules is proposed
to be recovered through a 0.477 cent per kWh, or 4.6%,
increase to the first energy block (the first 3,650 kWhs used
per month), and a 0.171 cent per kWh, or 2.3%, increase to
the second energy block. Similar to 2018, the Company is
proposing to increase the second block by one-half of the
proposed percentage increase to the first block in order to
provide a more meaningful separation between the blocks, and
to ensure that the higher load factor customers served on the
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Avista Corporation
schedules do not pay a melded rate per kWh that is higher than
customers with poor load factors.
Q. Turning to Large General Service Schedules 21/22, 3
would you please describe the present rate structure under 4
those schedules and how the Company is proposing to apply 5
Schedule 21/22’s 2018 increase of $4,048,000 to the rates 6
within the schedules?
A. Yes. Large General Service Schedules 21/22 are the
service schedules applicable to customers with monthly
demands over 50 kW, but less than 3,000 kW. Typical customers
served are grocery stores, schools, and office buildings
(Schedule 21) and retirement homes and other qualified
residential load (Schedule 22).
These schedules consist of a minimum monthly charge of
$400.00 for the first 50 kW or less, a demand charge of $5.25
per kW for monthly demand in excess of 50 kW, and two energy
block rates: 6.322 cents per kWh for the first 250,000 kWhs
per month, and 5.396 cents per kWh for all usage in excess of
250,000 kWhs.
The Company is proposing to increase the present minimum
demand charge (for the first 50 kW or less) by $25 per month,
from $400.00 to $425.00, and increase the demand charge from
$5.25/kW to $5.50/kW. The remaining revenue increase for the
schedules is proposed to be recovered through a uniform
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Avista Corporation
percentage increase of approximately 8.4% applied to the two
energy block rates. The proposed increase for the first
250,000 kWhs used per month under the schedules is 0.533 cents
per kWh, and an increase of 0.455 cents per kWh for usage over
250,000 kWhs per month.
Q. Would you please describe how the Company is 6
proposing to apply Schedule 21/22’s 2019 increase of 7
$2,165,000 to the rates within the schedule?
A. Yes. The revenue increase for the schedules is
proposed to be recovered through a uniform percentage increase
of approximately 4.9% applied to the two energy block rates.
The proposed increase for the first 250,000 kWhs used per
month under the schedules is 0.338 cents per kWh, and an
increase of 0.289 cents per kWh for usage over 250,000 kWhs
per month.
Q. Turning to Extra Large General Service Schedule 25, 16
would you please describe the present rate structure under 17
that schedule, and how the Company is proposing to apply 18
Schedule 25’s 2018 increase of $1,391,000 to the rates within 19
the schedule?
A. Yes. Schedule 25 is applicable for customers with
demands in excess of 3,000 kVa per month, such as large
industrial customers and universities. Extra Large General
Service Schedule 25 consists of a minimum monthly charge of
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Avista Corporation
$13,500 for the first 3,000 kVa or less, a demand charge of
$4.75 per kVa for monthly demand in excess of 3,000 kVa, and
two energy block rates: 5.299 cents per kWh for the first
500,000 kWhs per month and 4.487 cents per kWh for all usage
in excess of 500,000 kWhs.
The Company is proposing that the present minimum demand
charge of $13,500 be increased by $500 to $14,000 per month.
Further, the Company is proposing to increase the volumetric
demand charge from $4.75/kVA to $5.00/kVA. The remaining
revenue increase for the schedule is proposed to be recovered
through a uniform percentage increase of approximately 7.4%
applied to the two energy block rates. The proposed energy
rate increase for the first 500,000 kWhs used per month is
0.395 cents per kWh and the increase for usage over 500,000
per month is 0.334 cents per kWh.
Q. Would you please describe how the Company is 16
proposing to apply Schedule 25’s 2019 increase of $743,000 to 17
the rates within the schedule?
A. Yes. The revenue increase for the schedule is
proposed to be recovered through a uniform percentage increase
of approximately 4.2% applied to the two energy block rates.
The proposed energy rate increase for the first 500,000 kWhs
used per month is 0.238 cents per kWh and the increase for
usage over 500,000 per month is 0.201 cents per kWh.
Ehrbar, Di 19
Avista Corporation
Q. Please describe the service the Company provides to 1
Clearwater Paper’s Lewiston Plant under Schedule 25P.
A. In Commission Order No. 32841, dated June 28, 2013,
the Commission approved a five-year Electric Service
Agreement (Agreement) between Avista and Clearwater,
applicable to its Lewiston Plant. The Agreement became
effective July 1, 2013 and expires June 30, 2021.2 The
Agreement provides for Clearwater to use its on-site
generation to serve its own load, and for Clearwater to
purchase from Avista all of the electric power requirements
that exceed the electric power generated by Clearwater.
Avista serves Clearwater’s load requirements under Schedule
25P.
Q. Please describe the application of the proposed 14
Schedule 25P 2018 increase of $1,238,000 to the rates within 15
the schedule.
A. Like Schedule 25, the Company is proposing that the
present minimum demand charge of $13,500 be increased by $500
to $14,000 per month. Further, the Company is proposing to
increase the volumetric demand charge from $4.75/kVA to
$5.00/kVA for all kVA between 3,000 and 55,000, and from

2 On July 30, 2015 the Commission approved (Order No. 33350) a Joint
Petition between Avista and Clearwater which, among other things, gave
approval of a contract amendment which would extend the length of the
original contract from June 30, 2018 to June 30, 2021 (Case No. AVU-E-15-
06).
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Avista Corporation
$2.25/kVA to $2.50/kVA for all kVA over 55,000. The remaining
revenue increase for the schedule is proposed to be recovered
through an increase of 0.278 cents per kWh to the energy
charge.
Q. Please describe the application of the proposed 5
Schedule 25P 2019 increase of $663,000 to the rates within 6
the schedule.
A. The revenue increase for the schedule is proposed
to be recovered through an increase of 0.183 cents per kWh to
the energy charge. 10
Q. Turning to Pumping Schedules 31/32, would you 11
please describe how the Company is proposing to apply Schedule 12
31/32’s 2018 increase of $468,000 to the rates within the 13
schedules?
A. The Company is proposing that the customer charge
of $10.00 per month be increased by $1.00, to $11.00 per
month, and that the remaining revenue increase be spread on
a uniform percentage basis of approximately 8.5% to the two
energy rate blocks under the schedules. The proposed increase
in the first block rate is 0.813 cents per kWh and the increase
in the second block rate is 0.693 cents per kwh.
Q. Please describe how the Company is proposing to 22
apply Schedule 31/32’s 2019 increase of $251,000 to the rates 23
within the schedules.
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Avista Corporation
A. The Company is proposing that the revenue increase
be spread on a uniform percentage basis of approximately 4.4%
to the two energy rate blocks under the schedules. The
proposed increase in the first block rate is 0.454 cents per
kWh, and the increase in the second block rate is 0.387 cents
per kwh.
Q. How is the Company proposing to spread the proposed 7
2018 revenue increase of $272,000 applicable to Street and 8
Area Light (Schedules 41-49)? 9
A. The Company proposes to increase present street and
area light (base) rates on a uniform percentage basis. The
proposed increase for all lighting rates is 7.5%. The (base
tariff) rates are shown in the tariffs for those schedules,
in Exhibit No. 16, Schedule 2.
Q. How is the Company proposing to spread the proposed 15
2019 revenue increase of $145,000 applicable to Street and 16
Area Light (Schedules 41-49)? 17
A. The Company proposes to increase present street and
area light (base) rates on a uniform percentage basis. The
proposed increase for all lighting rates is 3.7%. The (base
tariff) rates are shown in the tariffs for those schedules,
in Exhibit No. 16, Schedule 2.
Q. Is the Company proposing any other changes to its 23
Street and Area Light schedules?
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Avista Corporation
A. Yes. For Schedule 42 (Company-owned street lights)
and Schedule 49 (Area Lighting), the Company is proposing that
High Pressure Sodium Vapor (“HPS”) lights should no longer be 3
made available for new installations. As discussed by Company
witness Ms. Rosentrater, the Company is currently converting
its Company-owned street and area lights from HPS to LED
technology over a five-year period. With a change in the
Company’s standards to only support LED street and area light 8
technology, Avista is proposing to remove HPS as an option
for new customer installations.3
In addition, in the Company’s 2015 general rate case
(Case No. AVU-E-15-05), the Commission approved the Company’s 12
“Custom Street Light Calculation” contained in Schedule 42, 13
“Company Owned Street Light Service – Idaho”. Schedule 42 is 14
applicable to local, state, or federal governments for
purposes of lighting public streets and thoroughfares. The
Company also provides similar lighting under Schedule 49,
“Area Light – Idaho”. Lighting options under this schedule 18
are similar to the lighting options under Schedule 42, with
the only exception being that area lights are not used to
light streets or thoroughfares, but rather yards, alleys, and
parks, for example. As mentioned, Schedule 42 contains a

3 There may be circumstances where an existing customer (an existing
street/area light) requires a HPS light and cannot support an LED light.
In those circumstances the customer would continue to receive HPS service
under Schedule 42 or 49.
Ehrbar, Di 23
Avista Corporation
“Custom Street Light Calculation”, as customers over time have 1
requested lighting options that in some cases are not in the
Company’s tariff. This custom calculation allows Avista to 3
calculate a rate for such a light in between rate cases. In
this case, the Company has included the same custom
calculation in Schedule 49 for the same reasons the Company
added it to Schedule 42 several years ago – i.e., customers
have requested lighting options that are not already existing
in Schedule 49.4
Q. Turning now to the Company’s Electric Fixed Cost 10
Adjustment Mechanism, how will new baseline information be 11
incorporated into the mechanism?
A. As in the prior general rate case, the Company
would, as a part of its Compliance Filing, submit the final
baseline values for its Fixed Cost Adjustment Mechanism (for
both 2018 and 2019) prior to new rates going into effect as
a result of this general rate case.5

4 To determine the rate for a new light option, the capital cost,
maintenance expense, and energy costs need to be determined. As shown in
the proposed revisions to Schedule 47, the capital cost calculation is
the same as what is provided for in Schedule 42. The maintenance cost
would be based on an engineering estimate of the maintenance cost of a
new fixture. Finally, the energy rate calculation is the same as what is
provided for in Schedule 46 (the energy-only street light tariff).
5 The Company’s Electric and Natural Gas Fixed Cost Adjustment mechanisms
were approved with an initial three year term, which expires December 31,
2018. Per the terms of the mechanisms, the Company may seek to extend
the mechanisms prior to their expiration. While the Company would provide
the baseline values for the mechanisms for 2019 in any compliance filing
in this general rate case, Avista understands that it must receive
Commission approval to continue the mechanisms in 2019 and beyond.
Ehrbar, Di 24
Avista Corporation
III. PROPOSED NATURAL GAS REVENUE INCREASE 1
Q. Would you please explain what is contained in 2
Schedule 4 of Exhibit No. 16? 3
A. Yes. Schedule 4 of Exhibit No. 16 is a copy of the
Company’s present and proposed natural gas tariffs for 2018
and 2019, showing the changes (strikeout and underline)
proposed in this filing.
Q. Would you please describe what is contained in 8
Schedule 5 of Exhibit No. 16?
A. Schedule 5 of Exhibit No. 16 contains the proposed
(clean) natural gas tariff sheets for 2018 and 2019
incorporating the proposed changes included in this filing.
Q. Would you please explain what is contained in 13
Schedule 6 of Exhibit No. 16?
A. Schedule 6 of Exhibit No. 16 contains information
regarding the proposed spread of the natural gas revenue
increase among the service schedules and the proposed changes
to the rates within the schedules. Page 1 shows the proposed
general revenue and percentage increase by rate schedule. Page
2 shows the rates of return and the relative rates of return
for each of the schedules before and after the proposed 2018
increase. Pages 3 and 4 show the present rates under each of
the rate schedules, the proposed changes to the rates within
the schedules, and the proposed rates after application of
Ehrbar, Di 25
Avista Corporation
the 2018 and 2019 rate changes. These pages will be referred
to later in my testimony.
3
Summary of Natural Gas Rate Schedules and Tariffs 4
Q. Would you please review the Company's present rate 5
schedules and the types of natural gas service offered under 6
each? 7
A. Yes. The Company's present Schedules 101 and 111
offer firm sales service. Schedule 101 generally applies to
residential and small commercial customers who use less than
200 therms/month. Schedule 111 is generally for customers
who consistently use over 200 therms/month and Schedule 131
provides interruptible sales service to customers whose
annual requirements exceed 250,000 therms. Schedule 146
provides transportation/distribution service for customer-
owned natural gas for customers whose annual requirements
exceed 250,000 therms.
Q. The Company also has rate Schedules 112 and 132 on 18
file with the Commission. Would you please explain which 19
customers are eligible for service under these schedules?
A. Yes. Schedules 112 and 132 are in place to provide
service to customers who at one time were provided service
under Transportation Service Schedule 146. The rates under
these schedules are the same as those under Schedules 111 and
Ehrbar, Di 26
Avista Corporation
Rate Schedule No. of Customers
General Service Schedule 101 79,729
Large General Service Schedules 111/112 1,408
Interruptible Sales Service Schedules 131/132 0
Transportation Service Schedule 146 6
Table No. 7 - Customers by Service Schedule
131 respectively, except for the application of Temporary Gas
Rate Adjustment Schedule 155. Schedule 155 is a temporary
rate adjustment used to amortize the deferred natural gas
costs approved by the Commission in the prior Purchased Gas
Cost Adjustment (“PGA”) filing. Because of their size,
transportation service customers are analyzed individually to
determine their appropriate share of deferred natural gas
costs. If those customers switch back to sales service, the
Company continues to analyze those customers individually;
otherwise, those customers would receive natural gas cost
deferrals which are not due them; thus the need for Schedules
112 and 132. There is only one customer served under these
schedules as of December 31, 2016.
Q. How many customers does the Company serve under each 14
of its natural gas rate schedules in Idaho? 15
A. As of December 31, 2016, the Company provided
service to the following number of customers under each of
its schedules in Idaho:

23
24
Ehrbar, Di 27
Avista Corporation
Table No. 8 - Proposed % Natural Gas Increase by Schedule - 2018
Increase in Increase in
Rate Schedule Margin Rates Billing Rates
General Service Schedule 101 9.8%6.6%
Large General Service Schedules 111/112 4.1%2.2%
Interrupt. Sales Service Schedules 131/132 0.0%0.0%
Transportation Service Schedule 146* 8.8%9.2%
Overall 8.8%5.7%
* excludes commodity and interstate pipeline transportation costs
Q. Is the Company proposing any changes to the present 1
rate structures within its natural gas service schedules? 2
A. No. The Company is not proposing any changes to
the present rate structures within its natural gas schedules.
5
Proposed Rate Spread 6
Q. For 2018, what is the proposed natural gas revenue 7
increase, and how is the Company proposing to spread the 8
increase by rate schedule?
A. For 2018, the proposed base revenue increase is
$3,480,000, or 8.8% in base margin6 revenue (on a billed
revenue basis, the increase is 5.7%). The proposed percentage
increase by rate schedule is as follows:

20

6 Base margin revenue refers to the base revenue associated with the
Company’s ownership and operation of its natural gas distribution
operations. It is the revenue related to delivering natural gas to
customers, and does not include the cost of natural gas, upstream third-
party owned transportation, or the effect of other tariffs.
Ehrbar, Di 28
Avista Corporation
Q. Is the proposed billing percentage increase for 1
Transportation Schedule 146 comparable to the increase for the 2
other service schedules? 3
A. No. The proposed billing percentage increase for
Transportation Schedule 146 is not comparable to the proposed
increases for the other (sales) service schedules, as Schedule
146 revenue does not include an amount for the cost of natural
gas or upstream pipeline transportation. Transportation
customers acquire their own natural gas and pipeline
transportation. Including an estimate of 35.0 cents per therm
for the cost of natural gas and pipeline transportation, the
proposed increase to Schedule 146 rates represents an average
increase of 2.4% (2018) and 1.4% (2019) in those customers’ 13
total natural gas bill.
Q. What information did the Company use to develop the 15
proposed spread of the overall 2018 increase to the various 16
rate schedules?
A. The Company used the results of the cost of service
study (sponsored by Company witness Mr. Miller) as a guide to
spread the natural gas general increase. The spread of the
proposed increase generally results in the rates of return
for the various service schedules moving approximately one-
third closer to the overall rate of return (unity). The
relative rates of return before and after application of the
Ehrbar, Di 29
Avista Corporation
Present Proposed
Relative Relative
Rate Schedule ROR ROR
General Service Schedule 101 0.86 0.91
Large General Service Schedules 111/112 1.71 1.45
Interruptible Sales Service Schedules 131/132 1.00 1.00
Transportation Service Schedule 146 1.17 1.10
Overall 1.00 1.00
Table No. 9 - Present & Proposed Relative Rates of Return
proposed 2018 increase by schedule are as follows:

Page 2 of Exhibit No. 16, Schedule 6 shows this
information in more detail.
Q. For 2019, what is the proposed natural gas revenue 10
increase, and how is the Company proposing to spread the 11
increase by rate schedule? 12
A. For 2019, the proposed base revenue increase is
$2,137,000, or 5.0% in base margin revenue (on a billed
revenue basis, the increase is 3.3%).
The Company used a pro-rata allocation of the Company’s 16
2018 natural gas rate spread percentages for purposes of
spreading the proposed 2019 natural gas revenue increase to
its natural gas service schedules. Below is a table showing
the effect of the Company’s 2019 proposed natural gas increase
by rate schedule:
Ehrbar, Di 30
Avista Corporation
Table No. 10 - Proposed % Natural Gas Increase by Schedule - 2019
Increase in Increase in
Rate Schedule Margin Rates Billing Rates
General Service Schedule 101 5.5%3.8%
Large General Service Schedules 111/112 2.4%1.3%
Interrupt. Sales Service Schedules 131/132 0.0%0.0%
Transportation Service Schedule 146* 4.8%5.0%
Overall 5.0%3.3%
* excludes commodity and interstate pipeline transportation costs

This information is also shown on page 1 of Exhibit No.
16, Schedule 6.
10
Proposed Rate Design 11
Q. Would you please explain the present rate design 12
within each of the Company’s present natural gas service 13
schedules?
A. Yes. General Service Schedule 101 generally applies
to residential and small commercial customers who use less
than 200 therms/month. The schedule contains a single rate
per therm for all natural gas usage and a monthly
customer/basic charge.
Large General Service Schedule 111 has a four-tier
declining-block rate structure and is generally for customers
who consistently use over 200 therms/month, such as schools,
restaurants, and office buildings. The schedule consists of
a monthly minimum charge plus a usage charge for the first
Ehrbar, Di 31
Avista Corporation
200 therms or less, and block rates for 201-1,000
therms/month, 1001-10,000 therms/month and usage over 10,000
therms/month.
Interruptible Sales Service Schedule 131 contains a
single rate per therm for all natural gas usage. The schedule
also has an annual minimum (deficiency) charge based on a
usage requirement of 250,000 therms per year. As required by
tariff, customers served on this schedule are required to have
standby facilities with an alternate fuel.
Transportation Service Schedule 146 contains a $225 per
month customer charge and contains a single rate per therm
for all natural gas usage. The schedule also has an annual
minimum (deficiency) charge based on a usage requirement of
250,000 therms per year.
Q. Where in your Exhibit No. 16 do you show the present 15
and proposed rates for the Company’s natural gas service 16
schedules?
A. Pages 3 and 4 of Schedule 6 shows the present and
proposed rates under each of the rate schedules, including
all present rate adjustments (adders) for the 2018 and 2019
rate changes. Column (e) on those pages show the proposed
changes to the rates contained in each of the schedules.
Q. How does the Company propose to spread Schedule 23
101’s proposed 2018 general revenue increase of $3,166,000 to 24
Ehrbar, Di 32
Avista Corporation
the rates within that schedule? 1
A. The Company proposes to increase the monthly
customer charge from $5.25 per month to $6.00 per month. The
remaining revenue is proposed to be recovered through an
increase of 4.293 cents per therm. This is shown in column
(e), page 3, Schedule 6 of Exhibit No. 16.
Q. How does the Company propose to spread Schedule 7
101’s proposed 2019 general revenue increase of $1,945,000 to 8
the rates within that schedule? 9
A. The Company proposes to keep the monthly customer
charge at $6.00 per month. The revenue increase for the
schedule would be recovered through a 6.5% increase in the
volumetric energy rate. This is shown in column (e), page 4,
Schedule 6 of Exhibit No. 16.
Q. For 2018, what is the proposed monthly increase for 15
a residential natural gas customer with average usage? 16
A. The increase for a residential customer using an
average of 61 therms of natural gas per month would be $3.37
per month, or 6.6%. A bill for 61 therms per month would
increase from the present level of $51.10 to a proposed level
of $54.47.
Q. For 2019, what is the proposed monthly increase for 22
a residential natural gas customer with average usage? 23
A. The increase for a residential customer using an
Ehrbar, Di 33
Avista Corporation
average of 61 therms of natural gas per month would be $2.07
per month, or 3.8%, resulting in an overall bill of $56.54,
including all rate adjustments. 3
Q. Would you please explain the proposed changes in the 4
rates for Large General Service Schedules 111? 5
A. Yes. The present rates for Schedules 101 and 111
provide guidance for customer placement: customers who
generally use less than 200 therms/month should be placed on
Schedule 101, customers who consistently use over 200 therms
per month should be placed on Schedule 111. Not only do the
rates provide guidance for customer schedule placement, they
provide a reasonable classification of customers for
analyzing the costs of providing service.
The proposed 2018 increase to the minimum charge for
Schedule 111 (for 200 therms or less) of $9.34 per month is
a function of the basic charge increase under Schedule 101 as
well as the change in the Schedule 101 variable rate. This
methodology maintains the present relationship between the
schedules, and will minimize customer shifting. The remaining
revenue requirement for the schedule is proposed to be
recovered through a uniform percentage increase of
approximately 2.4% to blocks 2, 3 and 4.
The proposed 2019 increase to the Schedule 111 minimum
charge for Schedule 111 (for 200 therms or less) is $6.79 per
Ehrbar, Di 34
Avista Corporation
month. The remaining revenue requirement for the schedule is
proposed to be recovered through a uniform percentage increase
of approximately 1.1% to blocks 2, 3 and 4.
Q. Did the Company propose a revenue increase for 4
Schedules 131/132? 5
A. No customers are presently served on these
schedules. However, given that customers could decide to take
service on these schedules in the future, the Company does
propose to increase the volumetric rates for this schedule by
the same overall percentage increases proposed for 2018 and
2019. Proposing to increase the base rates for these schedules
will better reflect cost of service should customers decide to
choose these rate schedules in the future.
Q. How is the Company proposing to spread the proposed 14
2018 increase of $35,000 to the rates under Transportation 15
Schedule 146? 16
A. The Company is proposing to increase monthly Basic
Charge from $225 per month to $250 per month. The remaining
revenue requirement would be recovered through an increase of
1.111 cents to the per-therm rate.
Q. How is the Company proposing to spread the proposed 21
2019 increase of $21,000 to the rates under Transportation 22
Schedule 146? 23
A. The Company is proposing to increase the per therm
Ehrbar, Di 35
Avista Corporation
charge under the schedule by 0.691 cents per therm.
Q. Is the Company proposing any other changes to its 2
natural gas service schedules? 3
A. No, it is not. 4
Q. Turning now to the Company’s Natural Gas Fixed Cost 5
Adjustment Mechanism, how will new baseline information be 6
incorporated into the mechanism?
A. As in the prior general rate case, the Company
would, as a part of its Compliance Filing, submit the final
baseline values for its Fixed Cost Adjustment Mechanism (for
both 2018 and 2019) prior to new rates going into effect as
a result of this general rate case.7
Q. Does this conclude your pre-filed, direct 13
testimony? 14
A. Yes, it does.

7 The Company’s Electric and Natural Gas Fixed Cost Adjustment mechanisms
were approved with an initial three year term, which expires December 31,
2018. Per the terms of the mechanisms, the Company may seek to extend
the mechanisms prior to their expiration. While the Company would provide
the baseline values for the mechanisms for 2019 in any compliance filing
in this general rate case, Avista understands that it must receive
Commission approval to continue the mechanisms in 2019 and beyond.