20191031final_order_no_34472.pdf

Office of the Secretary
Service Dale
October 31, 2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA
CORPORATION'S APPLICATION TO
CHANGE ITS NATURAL GAS RATES ANI)
CHARGES (2019 PURCHASED GAS COST
ADJUSTMENT)
CASE NO. AVU-G-19.06
oRDER N(). 3.r.172
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On August 23, 2019, Avista Corporation dba Avista Utitities filed its annual Purchased
Gas Cost Adjustment (PGA) Application. The PGA is a Commission-approved mechanism that
adjusts ratcs up or down to reflect changes in Avista's costs to buy natural gas lrom suppliers-
including changes in transportation, storage, and other related costs. Avisla defers these costs into
its PGA account, and then passes them on to customers through an increase or decrease in rates.
Avista states its proposal will increase rates lor an average residential or small
commercial customer using 64 therms per month by $2.26 per month. Avista states it issued notice
ol'this change via news release on August 23, 2019. Avista asked that its Application be processed
by Modified Procedure, and that the new rates take effect November I , 201 9.
On Septcmbcr 13,2019, the Commission issued a Notice of Application and Notice of
Modified Procedure setting an October 9, 2019 comment deadline, and an October 16,2019 reply
deadline. Commission Staff filed wT itten comments. Avista did not lile reply comments. The
Commission also received one customer comment.
Now, based on the record, the Commission approves the Application as set forth below.
THE APPLICATION
Avista distributes natural gas in northern Idaho, eastem and central Washington, and
southwestern and northeastern Oregon. In this PGA Application, Avista proposed to: (1)passany
change in the estimated cost of natural gas lor thc next l2 months to customers (Tariff Schedute
150); and (2) revise the amortization rates to refund or collect the balancc ol deferred gas costs
( l'arifT Schedule I 55). Avista proposed to change its PGA rates fbr i1s customer classes as follows:
ORDER NO. 34472
Scrvice
Schcdulc
No.
Commodity
Change per
Therm
(a)
Demand
Change per
Therm
(b)
Total
Sch. 150
Change
(c=a+b)
Amortization
Change per
Therm
(d)
Total Rate
Change per
Therm
(e=c+d)
Overall
Percent
Change
Gelleral l0l xi(0.01697)s(0.00290)s(0.01987)$0.0s520 $0.03533 5.2E
Lg. Ceneral 1 si(0.0r 697)$(0.00290)$(0.0198?)$0.05s20 $0.03s11 L9qc
Lg. General l2 $(0.01697)!i(0.00290)$(0.01987)$$().0 r987)-2.6Vo
lntcrruptible l3l $(0.01697)$$(0.01697)$$(0.0 r 697)-4.60k
Transportation I46 $s $$0.00265 $0.00265 2.17c
Avista's proposed changes to Schedules 150 and 155 and Avista's rates are further explained
below.
Schedule 150
The Tariff Schedule 150 portion ofthe PGA has two parts: the "commodity costs" and
the "demand costs." Avista's "commodity costs" are the variable costs at which Avista buys
natural gas. The weighted average cost of gas (WACOG) is an estimate of those costs. [n its
Application, Avista estimated its commodity costs will decrease by $0.01 697 per therm, from the
currently approved $0.17025 per therm, to $0.15328 per therm. To minimize exposure to potential
rising gas costs, Avista diversifies how it procures natural gas. Avista's procurement strategy
includes hedging and estimating the cost of index purchases using a 30-day historical average of
forward prices for each supply basin.
Avista's "demand costs" are primarily costs to transport gas on interstate pipelines to
Avista's local distribution system and underground storage costs. Avista proposed a $0.00290 per
therm decrease in the overall demand rate for customers on Schedules l0l, I I I, and I12. This
reduction is caused by several factors, including the Canadian exchange rate, an updated demand
forecast, and changes arising from federal tax reform for Gas Transmission Northwest.
Schedule 155
Tariff Schedule 155 reflects the amortization of Avista's deferral account. With this
Application, Avista proposed to increase the amortization rate for general and large general service
customers by $0.05520 per therm. Avista explained this increase is largely due to volatile
wholesale natural gas prices during the winter of 2018-2019, which was mostly caused by the West
Coast Pipeline rupture in October 2018.
ORDER NO. 34472 2
COMMENTS
A. Staff Comments
Staff reviewed Avista's Application and accompanying submissions and supports the
Company's request. To assess the reasonableness of the proposed changes, Staff examined
Avista's gas purchases for the year, its fixed price hedges, pipeline transportation and storage costs,
and estimates of future commodity prices. Staff reviewed Avista's jurisdictional al.locations and
the reasonableness of its Lost and Unaccounted for Gas volumes. Staff also verified that Avista's
filing will not change Avista's earnings, and confirmed the proposed changes to Schedules 150
and 155 accurately capture Avista's demand and commodity costs.
Staff recommended the Commission a) approve Avista's proposed Tariff Schedules
150 and 155, b) direct Avista to continue filing quarterly WACOG reports and monthly deferred
cost reports with the Commission on an ongoing basis, and c) accept late-filed customer comments.
To date, the Commission has received one customer comment, which was timely filed.
B. Customer Comments
The customer comment filed with the Commission recommended that it reject Avista's
Application. The customer argued that there "is no justification" for the price increase because
wholesale natural gas prices have steadily decreased over the past three years. While
acknowledging the spike in wholesale prices caused by the West Coast Pipeline rupture in 2018,
the customer argued the event could not have been so costly as to require a price increase for
customers, particularly in light of steadily declining wholesale natural gas prices.
COMMISSION FINDINGS AND DECISION
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 6l of the Idaho Code, and more specifically, Idaho Code $$ 6l - 1 17,
61-129,6l-307,61-501, and 6l-502. The Commission must establish just, reasonable, and
sufficient rates for utilities subject to its jurisdiction. Idaho Code $ 6l-502.
Based on our review of the record, we find Avista's proposed commodity cost and
demand cost rates in Schedule 150 reasonably capture Avista's costs. We thus find it fair,just, and
reasonable to approve Avista's proposed Schedule 150. We further find the proposed $0.05520
per therm amortization rate increase for general and large general service customers is fair. just.
and reasonable. The Commission acknowledges wholesale natural gas price decreases are reflected
3oRDER NO.34472
in the cost decreases in Schedule 150. The overall cost increase for residential and small
commercial customers is due to amortization of the defenal account under Schedule 155. We
therefore approve Schedule 155.
We also find that quarterly WACOG reports and monthly defered cost reports provide
useful information and assist Staff with determining whether to audit earlier than planned, and
whether an interim filing might be needed.
ORDER
IT IS HEREBY ORDERED that Avista's Application to change its natural gas rates
and charges is approved. Avista's proposed Tariff Schedules 150 and 155 are approved as filed,
effective November l, 2019.
IT IS FURTHER ORDERED that Avista continue filing quarterly WACOG reports
and monthly deferred cost reports on an ongoing basis.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsiderati on. See ldaho Code 5 6l-
626.
4ORDER NO,34472
DONE by Order of the ldaho Public Utilities Commission at Boise, Idaho this
day of October 201 9.
P,,\[]I,PRESIDENT
TINE RAPER, CO IONER
ial"
ERIC ANDER SON. COMMISSIONtsR
A I]'F]ST
Diane M. Flanian
Commission Secretary
3/d
5ORDITR NO. 34472
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