20191114Application.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane, Washington 99220-0500
Telephone [phone]
Toll Free 800-127-9170
=
C]'< r:-t()
!r=-m Cf
l\)
VIA OVERNIGHT MAIL
November 13, 2019
Diane Hanian
Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd
Building 8, Suite 201-A
Boise, ID 83 714
RE: CASE NO. AVU-G-I9{E
IN THE MATTER OF AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER
OF PENALTY TERMS SET FORTH IN ITS NATURAL GAS TARIFF
Dear Ms. Hanian:
Enclosed for fiting with the Commission is Avista's Petition lor Limited Waiver of Penalty Terms
Set Forth in its Natural Gas Tariff. The liling consists of an original and seven copies of Avista's
Petition.
Please direct any questions regarding this liling to Michael Andrea at [phone] or
michael.andrea(@avistacom.com and Pat Ehrbar at (509) 49s-8620 or
patrick.ehrbar(Oavistacorp.com.
Sincerely.
/s/ Paul Kimball
Paul Kimball
Manager of Compliance & Discovery
L,nclosures
Aivtsra
Michael G. Andrea (lSB No. 8308)
Senior Counsel
Avista Corporation
141 1 East Mission, MSC- I 7
Spokane, WA 99202
Phone: [phone]
Facsimile: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA
CORPORATION'S PETITION FOR LIMITED
WAIVER OF PENALTY TERMS SET FORTH
IN ITS NATURAL GAS TARIFF
CASE NO. AVU-G.l9-CT
Pursuant to Idaho Public Utilities Commission Rule of Procedure 53, Avista Corporation
("Avista" or "Company") petitions the Idaho Public Utilities Commission ("Commission") for
authority to enter into settlement discussions with Clearwater Paper ("Clearwater") to resolve a
disputed penalty that arose under Avista's Idaho Natural Gas Tariff (*Tariff). In order to engage
in such settlement discussions, Avista requests an order granting a limited waiver ofcertain penalty
provisions contained within Schedule 146 of its Tariff.r Specifically, Avista requests limited
waiver ofthe prescribed entitlement penalties in Schedule 146 authorizing the Company to modify
the Penalty (as defined below) to the extent necessary to ensure that such Penalty serves its
intended purpose, but is not unduly burdensome or otherwise unjust and unreasonable. Any
settlement between Avista and Clearwater would be subject to further Commission review and
approval. Clearwater has authorized Avista to represent that Clearwater supports this Petition.
I Schedule 146 has been replaced and superseded by Schedule l8l. Llowever, since Schedule 146 was in effect when
the penalties at issue were incurred, this Petition seeks waiver ofScheduJe 146 and, to the extent necessary, Schedule
I 81. Thc version of Schedule 146 that is applicable to this Petition is attached hereto as Exhibit A for convenience.
Page - I AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTH IN ITS NATURAL GAS TARIFF
)
)
)
)
)
Communications in reference to this Application should be addressed to:
Michael G. Andrea
Senior Counsel
Avista Corporation
1141 E. Mission Ave., MSC 17
P.O.Box3727
Spokane, WA99220-3727
(s09) 49s-2564
michael. [e-mail]
Patrick D. Ehrbar
Director of Regulatory A ffairs
Avista Corporation
l4l I E. Mission Ave, MSC 27
P.O. Box 3727
Spokane, WA 99220-3727
Phone: [phone]
[e-mail]
I. Clearwater Paper's Special Contract with Avista
Based on Clearwater's unique ability to bypass Avista's distribution facilities and take
service directly from Northwest Pipeline, Avista and Clearwater entered into a special contract
("Contract").2 The initial term of the Contract was l0 years ending November 30, 20t6, and
continuing in effect from year-to-year thereafter unless canceled twelve-months prior by written
notice by either party. The Contract remains in effect today. Pursuant to section 7 ofthe Contract,
Clearwater shall be responsible for imbalance charges or penalties as set forth in Avista's tariff.
As noted in subsection 1l of the Contract, "lncorporated Terms", except as provided in the
Contract, all terms and conditions set forth in Avista's Tariff are incorporated in the Agreement.
Accordingly, the terms set forth in the Tariff are applicable to Clearwater.
2 See Case No. AVU-G-07-01.
Page - 2 AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTFI IN ITS NATURAL CAS TARIFF
II, Wholesale Natural Gas Prices and Entitlements
On October 9, 2018, the Enbridge-owned West Coast Pipeline experienced a rupture which
greatly reduced natural gas flows to the Sumas natural gas trading hub for the entire 2018-2019
winter time period. That rupture, coupled with Jackson Prairie3 system maintenance and outages,
resulted in unusually high prices and volatility at Sumas. In the February and March 2019
timeframe, Northwest Pipeline, the main interstate pipeline that transports natural gas from Sumas
south along the I-5 corridor and east to the Rocky Mountains, issued certain entitlement notices
requiring shippers on their pipeline to stay within a certain percentage of their nominated natural
gas supplies. Avista, for its part, issued the same entitlement notice to those customers on Avisla's
distribution system who purchase their own natural gas, and procure their own natural gas
transportation. Clearwater is one of those "transportation" customers. In spite of these
notillcations from Avista, and without passing judgement as to why, Clearwater exceeded its
nominated natural gas volumes eight times between February 7, 2019 and March 4, 2019. Those
eight exceedances, pursuant to the Company's tariflf, led to the issuance of entitlement penalties.
The average price lor natural gas at various non-Sumas trading hubs during those
exceedances was $6.46 per dekatherm. The average price at Sumas, however, was $35.98 per
dekatherm, including a high price of $159.27 per dekatherm (or $ 15.93 per therm). As set forth in
Idaho Schedule 146, the entitlement penalty was the greater of $10 per dekatherm or 150% ofthe
highest price basin. Given that the price of natural gas at Sumas exceeded $ 10 per dekatherm, the
"150% ofthe highest price basin" became the penalty. Ultimately, using that penalty methodology
3 Jackson Prairie (JP) is an underground aquifer natural gas storage facility located in Chehalis, Washington. Through
ajoint ownership agreement, Avista, Puget Sound Energy, and Willians Northwest Pipeline each hold one-third equal,
undivided interest ofJP. Puget Sound Energy is the operator ofthe facility. At the present time, Avista q]{I! a total
of 8,528,013 dekatherms (Dth) of working gas capaciry. This capacity comes with a withdrawal capability
(deliverability) of398,667 Dth per day.
Page - 3 AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTH IN ITS NATURAL GAS TARIFF
and the volumes that exceeded the nominations, the resulting penalty for Clearwater is $926,202.
In Avista's (and Clearwater's) view, that level of penalty may be unduly burdensome. Despite the
regional supply constraints, and entitlements put on Avista by Northwest Pipeline, Avista at no
time was forced to buy more natural gas to make up for the natural gas Clearwater used in excess
ofthe various entitlements. As such lhere wasno financialharm to any of Avista's core customers,
nor was Avista penalized by Northwest Pipeline.
IIL Request for Limited Waiver of Schedule 146 of Avista's Tariff
Avista is a utility engaged in, among other things, the business of distributing natural gas
to customers in the State of ldaho. Avista is required to file with the Commission all rates, tolls,
rentals, charges and classifications collected or enforced, or to be collected or enforced.a As a
general matter, Avista is prohibited from charging, demanding, collecting or receiving a greater or
lesser or diff'erent compensation than what is specified in its Tariffs
Schedule 146 of Avista's Tariff prescribed the penalty that applied to Clearwater's
violations of entitlement orders:
In addition to the transport rate set forth under this Schedule, the unauthorized ovemrn
charge shall be the greater of $1.00 per therm or 150%of the highest midpoint price at
Northwest Wyoming Pool; Northwest south of Green River; Stanfield Oregon, Kem River
Opal. El Paso Bondad or Northwest Canadian border (Sumas) supply pricing points (as
reflected in the Daily Price Survey published in "Gas Daily").
During the period February 7,2019 to March 4, 2019, the penalties ior Clearwater's unauthorized
volumes during ovemrn entitlements totaled $926,202 ("Penalty").
Avista has reviewed the circumstances that gave rise to Clearwater's Penalty. Avista has
determined that other customers were not harmed by Clearwater's entitlement violations.
1 IDAHo CoDE g 6l-305.
5 tDAHo CoDE $ 6t -313.
Page - 4 AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTH IN ITS NATURAL GAS TARIFF
Clearwater has requested that Avista engage in settlement discussions in an effort to determine
whether the Penalty should be reduced. Avista desires to engage in such settlement discussions to
ensure that the amount ofthe Penalty is appropriate to satisfu the intent ofthe entitlement penalties
in Schedule 146 (i.e., to deter violations of entitlement orders), but is not unduly burdensome or
otherwise unjust and uffeasonable.6
As discussed above, Avista is generally prohibited from deviating from the rates and
charges in its tariff. Avista therefore respectfully requests that the Commission grant Avista a
limited waiver of Schedule 146. Such limited waiver is necessary to allow Avista to engage in
good faith settlement discussions with Clearwater to determine whether, under the circumstances,
the Penalty is unduly burdensome or otherwise unjust and unreasonable. If Avista determines that
the circumstances warrant modifying the Penalty, and Clearwater and Avista agree to a modified
Penalty, Avista and Clearwater will jointly file a settlement agreement. Such filing will set forth
the rational for modifying the Penalty and will explain why the modified Penalty is just and
reasonable. Further, Avista and Clearwater will request that the Commission review and approve
any settlement agreement, assuming that the Commission determines that the modified Penalty is
just and reasonable.
6 See IDAItoCoDE $ 6l-301 (requiring all charges to bejust and reasonable).
Page - 5 AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTH IN ITS NATURAL GAS TARIFF
CONCLUSION
WHEREFORE, based on the foregoing, Avista hereby requests that the Commission
grant Avista's petition and issue an order granting Avista limited waiver of certain provisions of
Schedule 146 of its Tarilf as discussed herein. The Company requests that the matter be processed
under the Commission's Modified Procedure rules through the use of written comments.
Dated at Spokane, Washington this l3th day ofNovember 2019.
AVISTA CORPORATION
By lslMichael G. Andrea
Michael G. Andrea
Senior Counsel
Page - 6 AVISTA CORPORATION'S PETITION FOR LIMITED WAIVER OF PENALTY
TERMS SET FORTH IN I'I'S NATURAL GAS TARIFF
EXHIBIT A
Tariff Pages
l.P.U.C. No.27
Replacement Thirteenth Revision Sheet 146
Canceling
Twelfth Revision Sheet 146
ssued by
By
AVISTA CORPORATION
d/b/a Avista utilities
SCHEDULE 146
TRANSPORTATION SERVICE FOR CUSTOMER.OWNED GAS - IDAHO
AVAILABLE:
To Commercial and lndustrial Customers in the State of ldaho whose
requirements exceed 250,000 therms of gas per year provided that the Company's
existing distribution system has capacity adequate for the service requested by
Customer.
APPLICABLE:
To transportation service for a Customer-owned supply of natural gas from the
Company's point of interconnection with its Pipeline Transporter to the Company's
point of interconnection with the Customer. Service shall be supplied at one poinl of
delivery and metering for use by a single customer.
MONTHLY RATE:
$250.00 Customer Charge, plus
Charge Per Therm:
Base Rate 13.441i,
ANNUAL MINIMUM:
$36,603 unless a higher minimum is required under contract to cover special
conditions.
The above Monthly Rates are subject to increases or decreases as set forth in Tax
Adjustment Schedule 158, Gas Rate Adjustment Schedule 155, Permanent Federal
lncome Tax Credit Schedule 172 and Energy Efficiency Rider Adjustment Schedule
191 .
Effective January 1, 2019lssued November 9, 2018
Avista Utilities
Patrick Ehrbar , Director of Regulatory Affairs
Fifth Revision Sheet 1464
Canceling
Fourth Revision Sheet 1464
1464
LP.U.C. No.27
lssued by
By
AVISTA CORPORATION
d/b/a Avista lJtilities
SCHEDULE 146 - continued
TRANSPORTATION SERVICE FOR CUSTOMER-OWNED GAS. IDAHO
SPECIAL TERMS AND CONDITIONS:
1. Service hereunder shall be provided subject to execution of a contract
between the Customer and the Company for a term of not less than one year. The
contract shall also specify the maximum daily volume of gas to be transported.
2. Billing anangements with gas suppliers, transportation providers and
agents are to be the responsibility of the Customer.
3. The Customer shall be responsible for any transportation service fees,
agency fees, penalties and end-use taxes levied on Customer-owned gas transported
by the Company.
4. Customers served under this schedule are required to pay for the
installation of telemetering equipment and any other new facilities or equipment
required to transport Customer-owned gas or accurately meter such gas under this
schedule.
5. A Customer may designate an Agent, or act as an agent on their own
behalf, to manage the Customer's gas supply and provide daily nominations to the
Company on behalf of the Customer. The Customer may become a member of a
Supply Pool under their Agent, provided the Agent has executed an Agency Pooling
agreement with the Company. A Customer participating in an agent's Supply Pool
must execute an Agency Assignment Agreement with the Company. A Supply Pool
shall consist of only customers receiving gas transportation service from the
Company through a single agent, and whose gas for all customers in the Supply Pool
is received into the Company's distribution system. The Company will designate
Supply Pools based on regional and geographical locations in accordance with the
Company's ability to physically receive and deliver gas to the customer. The
Customer's Agent will nominate and balance gas supplies on behalf of all customers
in a Supply Pool in accordance with Avista's nomination procedures and shall be
responsible for any imbalance charges or other fees, charges, taxes or penalties.
6. The Company may entitle, curtail or interrupt the transportation of
Customer-Owned Gas on its system whenever the Company, in its sole judgement,
determines that it does not have adequate pipeline or distribution system capacity to
meet all firm service requirements. Such entitlement, curtailment or interruption shall
be made in accordance with the Company's "Contingency Plan for Firm Service Gas
lssued January 15, 2016 Effective March 1, 2016
Avista Utilities
Kelly O. Norwood ,Vice President, State & Federal Regulation
AVISTA CORPORATION
d/b/a Avista Utilities
SCHEDULE 146 - continued
TRANSPORTATION SERVICE FOR CUSTOMER.OWNED GAS. IDAHO
Curtailment", as contained in its general service tariff. Any volumes of Customer-owned
gas unable to be delivered due to operational constraints on the Company shall be held
as an imbalance and delivered to the Customer as soon as operationally practicable.
The Company will not be liable for damages occasioned by the entitlement, curtailment
or interruption of service supplied under this schedule.
7. The Company, at its discrelion, may issue an entitlement order which will
serve to prescribe a minimum or maximum amount of gas to be used by a Customer
during a day. The entitlement order will specify the conditions necessary for compliance
including the prescribed tolerance, as defined in Northwest Pipeline LLC's FERC Gas
Tariff (Fifth Revised Volume No. 1, Effective Dale 1012712014) Section 15.5 Daily
Entitlement Overrun and Underrun. Under an overrun entitlement order, gas used in
excess of the confirmed daily nomination plus the prescribed tolerance shall be
considered as daily unauthorized overrun usage. ln addition to the transport rate set
forth under this Schedule, the unauthorized overrun charge shall be the greater of $1 .00
per therm or 150% of the highest midpoint price at Northwest Wyoming Pool, Northwest
south of Green River, Stanfield Oregon, Kern River Opal. El Paso Bondad or Northwest
Canadian border (Sumas) supply pricing points (as reflected in the Daily Price Survey
published in "Gas Daily"). Payment of an overrun penalty shall not under any
circumstances be considered as granting Customer the right to take unauthorized
overrun gas or exclude any other remedies which may be available to Company,
8. Gas not taken by Customer under this tariff by reason of failure to comply
with an underrun entitlement order shall be considered as unauthorized underrun. The
charge for unauthorized underrun shall be $1.00 per therm for that part of the
unauthorized underrun below the confirmed daily nomination and the prescribed
tolerance specified in the underrun entitlement order and as defined in Northwest
Pipeline LLC's FERC Gas Tariff (Fifth Revised Volume No. '1, Effective Date
1012712014) Section '15.5 Daily Entitlement Overrun and Underrun. ln addition, the
Company may require that the volume of underrun gas be taken off the system within
the following seventy{wo (72) hour period. lf applicable, for that part of the
unauthorized underrun not taken off the system within the seventy-two hour period, an
additional penalty of $1.00 per therm per each gas flow day will be assessed following
the seventy-two (72) hour period.
Effective lvlarch 1, 2016lssued February 5,2016
2nd Substitute Sixth Revision Sheet 1468
Canceling
Fifth Revision Sheet 1468
1468
l.P.U.C. No.27
ssued by
Bv
Avista Utilities
Kelly O. NoMood ,Vice President, State & Federal Regulation
Second Revision Sheet 146C
Canceling
First Revision Sheet 146C
146C
l.P.U.C. No.27
lssued by
By
AVISTA CORPORATION
d/b/a Avista Utilities
SCHEDULE 146 - continued
TRANSPORTATION SERVICE FOR CUSTOMER.OWNEO GAS - IDAHO
demonstrate creditworthiness. Customers executing a sales contract will be subject to
the provisions specified in Section 18 of this Schedule.
10. The Customer, with assistance from the Company when necessary, will
schedule its supply such that at the end of the Customer's billing cycle, the Customer's
usage approximately equals the amount of gas supplied to the Company by the
Customer's supplier during the billing cycle.
11. lf a Customer's cumulative imbalance in any billing month during the period
August through February is more than three percent (3%) above or below total
confirmed nominations for that billing month, or if Customer's cumulalive imbalance in
any billing month during the period March through July is more than five percent (5%)
above or below total confirmed nominations for that billing month, the Company will
provide notification by the fifteenth day of the following month that the imbalance
exceeds the allowed tolerance and that a potential penalty situation exists. From the
notification date, 45 days will be given to eliminate the imbalance. lf at the end of the 45
day period the imbalance has not been corrected to a level wilhin the allowed tolerance,
a balancing penalty of $1.00 per therm will be assessed. The imbalance penalty will
continue to be charged at the end of each billing period until the imbalance is within the
allowed tolerance.
12. Gas delivered under this schedule shall not be resold by the
Customer contracting for transportation service.
13. The quality of Customer-owned natural gas shall meet the requirements as
set forth in the Company's Pipeline Transporters' FERC tariff.
14. Customers served under this schedule who desire to switch from this
Schedule to a sales service schedule, or from a sales service schedule to this Schedule,
must provide 90 days' prior written notice to the Company. The Company reserves the
right to refuse or postpone a Customer request to switch between transportation service
and sales service based on firm pipeline capacity or gas supply constraints.
15. Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
Effective March 1,2016lssued February 5, 2016
Avista Utilities
Kelly O. NoMood ,Vice President, State & Federal Regulation
9. ln the event that transportation gas is unable to be delivered for a period of
time, the customer may be required to execute a sales contract and
AVISTA CORPORATION
d/b/a Avista Utilities
SCHEDULE '146 - continued
TRANSPORTATION SERVICE FOR CUSTOMER.OWNED GAS. IDAHO
16. The above Rate is subject to the provisions of Purchase Gas Cost
Adjustment Schedule 150, Gas Rate Adjustment Schedule 155, Tax Adjustment
Schedule 158, and DSM Rider Adjustment Schedule 191.
17. Deferred gas costs will be determined for individual customers served
under this Schedule, as well as for sales Customers who request to switch from a
sales service Schedule to this Schedule. The defened gas cost balance for each
Customer will be based on the difference between the purchased gas costs
collected through rates and the Company's actual purchased gas cost multiplied by
the Customer's therm usage each month. The deferred gas cost balance for
Customers who have switched from a sales service schedule to this Scheduled will
be transferred with the Customer's account. The Customer shall have the option
of 1) a lump-sum refund or surcharge to eliminate the defened gas cost balance,
or 2) an amortization rate per therm to reduce the deferred gas cost balance.
18. Customers who elect to switch from service under this Schedule to a
sales service schedule will be served under Schedule 1 12 or Schedule 132 as
applicable.
Effective June 6, 2011lssued May 6, 2011
First Revision Sheet 146D
Canceling
Original Sheet 146D
146D
l.P.U.C. No.27
lssued by
By
Avista Utilities
Kelly O. NoMood ,Vice President, State & Federal Regulation