20180726notice_of_application_order_no_34114.pdf

Office of the Secretary
Service Date
July 26,2018
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )CASE NO.AVU-G-18-03
CORPORATION'S APPLICATION TO )IMPLEMENT FIXED COST ADJUSTMENT )NOTICE OF APPLICATION
RATES FOR NATURAL GAS SERVICE )FROM NOVEMBER 1,2018,THROUGH )NOTICE OF
OCTOBER 31,2019 )MODIFIED PROCEDURE
)ORDER NO.34114
On July 2,2018,Avista Corporation (Avista)applied to the Commission for
authorization to implement Fixed Cost Adjustment (FCA)rates for natural gas service from
November 1,2018,through October 31,2019,and to approve its corresponding modifications to
Schedule 175,"Fixed Cost Adjustment Mechanism -Natural Gas."Application at 1.Avista also
asks that the Commission approve the level of natural gas FCA revenue deferred during calendar
year 2017.The Company separately applied to implement FCA rates for electric service,in Case
No.AVU-E-18-06.The Company proposes per therm FCA rebate rates for both residential and
non-residential groups in this case.Avista asks that its Application be processed by Modified
Procedure,and requests an effective date of November 1,2018.Id.at 2.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that the FCA is a rate adjustment mechanism
designed to break the link between the amount of energy a utility sells and the revenue it collects
to recover fixed costs'of providing service,thus decoupling the utility's revenues from its
customers'energy usage.Order No.33437 at 3.This decoupling removes a utility's incentive to
increase sales as a means of increasing revenue and profits,and encourages energy conservation.
Id.at 3-4;Application at 4.
YOU ARE FURTHER NOTIFIED that the Commission approved Avista's FCA as a
three-yearpilotprogram,and part of the approved settlement of Avista's 2015 rate case.See Case
Nos.AVU-E-15-05;AVU-G-15-01;Application at 3;and Order No.33437 at 10.In the Order
approving the FCA program,the Commission noted that the parties to Avista's rate case agreed to
'"Fixed costs"are a utility's costs to provideservice that do not vary with energy use,output,or production,and
remain relativelystable between rate cases -for example,infrastructure and customer service.
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NOTICE OF MODIFIED PROCEDURE
ORDER NO.34114 1
review the program's effectiveness at the end of its second full year,to ensure it is functioningas
intended.Application at 3-4.The Stipulation in those cases and Tariff Sheet 175 also set forth
how the FCA mechanism works,includingtreatment of existing versus new customers,quarterly
reporting,annual filings,interest,accounting,and 3%rate increase cap.Id at 4.
YOU ARE FURTHER NOTIFIED that on June 15,2018,the Commission approved
an addendum to the settlement stipulation approved in AVU-E-15-05 and AVU-G-15-01,which
extended the term of the Company's FCA pilotfor an additional year.See Order No.34085.As
a result,the Company also proposes changes to its Tariff Sheet 175 to reflect,among other
changes:(1)an FCA mechanism term of four years;and (2)interested parties will conduct an
effectiveness review at the end of the third year.Application at 4.
YOU ARE FURTHER NOTIFIED that in its natural gas FCA filing Avista proposes
to decrease rates for each rate group based on the amount of deferred revenue recorded for January
through December 2017.The Company mostly attributes these proposed changes to drivers such
as abnormally cold weather in 2017,and FCA revenue shortfall associated with energy efficiency
programmatic savings.Id.at 7-8.Other drivers are not easily quantifiable but include,among
other things,the effects of non-programmatic energy efficiency and changes in business cycles.
Id.at 8 .
YOU ARE FURTHER NOTIFIED that Avista recorded $1,636,265 in the rebate
direction in deferred revenue for its natural gas residential customer group in 2017.Id at 9 (table
includes carry over balance,interest and revenue-relatedexpenses).After taking into account the
2016 carry over balance of approximately $1.2 million,the Company proposes to rebate $465,043,
at a proposed rate of -0.766 cents per therm,to the Company's residential natural gas customers
served under rate Schedule 101.Id.;Application Exhibit B.If approved by the Commission,the
Company would record this amount in a regulatory liability balancing account and reduce the
account balance each month by the rebate received by customers under the tariff.Id at 10.
YOU ARE FURTHER NOTIFIED that for its non-residential group,Avista recorded
$377,623 in the rebate direction in deferred revenue in 2017.Id.(table includes carry over balance,
interest and revenue-relatedexpenses).After taking into account the 2016 carry over balance of
approximately $108,778,the Company proposes to rebate $274,617,at a proposed rate of -1.067
cents per therm,to the Company's commercial and industrial natural gas customers served under
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34114 2
rate Schedules 111 and I12.Id.;Application Exhibit B.If approved by the Commission,the
Company would record this amount in a regulatory liability balancing account and reduce the
account balance each month by the rebate received by customers under the tariff.Id at 11.
YOU ARE FURTHER NOTIFIED that the Application,Exhibit A (the Company's
proposed tariffs),Exhibit B (rate calculation),Exhibit C (2017 deferral),and Exhibit D (customer
communications)have been filed with the Commission and are available for public inspection
during regular business hours at the Commission offices.The Application and attachments are
also available on the Commission's web site at www.puc.idaho.gov.Click on the "File Room"
tab at the top of the page,scroll down to "Open Gas Cases,"and then click on the case number as
shown on the front of this document.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has determined that the public
interest may not require a formal hearing in this matter and will proceed under Modified Procedure
pursuant to Rules 201 through 204 ofthe Idaho Public Utilities Commission's Rules of Procedure,
IDAPA 31.01.01.201-204.The Commission notes that Modified Procedure and written comments
have proven to be an effective means for obtaining public input and participation.
YOU ARE FURTHER NOTIFIED that any person desiring to state a position on this
Application may file a written comment in support or in opposition with the Commission by no
later than September 20,2018.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 may be mailed to the Commission and
Avista Corporation at the addresses reflected below:
Commission Secretary David J.Meyer,Esq.
Idaho Public Utilities Commission Avista Corporation
PO Box 83720 P.O.Box 3727
Boise,ID 83720-0074 1411 E.Mission Ave,MSC-27
Spokane,WA 99220-3727
Street Address for Express Mail:email:[e-mail]
472 W.Washington Street
Boise,ID 83702-5918
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
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ORDER NO.34114 3
Commission's home page located at www.puc.idaho.gov.Click the "Case Comment or Question
Form"under the "Consumers"tab,and complete the form using the case number as it appears on
the front of this document.These comments must also be sent to the Company at the e-mail
addresses listed above.
YOU ARE FURTHER NOTIFIED that Avista may file reply comments,if necessary,
no later than September 27,2018.
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 all proceedings in this case will be held
pursuant to the Commission's jurisdiction under Title 61 of the Idaho Code,and specifically Idaho
Code §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 31.01.01.000,et seq.
ORDER
IT IS HEREBY ORDERED that this case be processed under Modified Procedure,
Rule 201-204 (IDAPA 31.01.01.201 -.204).Parties and persons shall have until September 20,
2018,to file written comments,and the Company shall have until September 27,2018,to file a
reply,if any.
NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO.34114 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of July2018.
PAUL KJELLANDlg,PRESIDENT
KRI l E RAPER,C MISSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane M.Hanian
Commission Secretary
1:\Legal\GAS\AVU-G-18-03\ordersAVUGl803_Ntc of AppNod se.doex
NOTICE OF APPLICATION
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