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Home My WebLink About20200520Reply Comments.pdf^iiststa Avista Corp. 14l l East Mission P.O.Box3727 Spokane. Washington 99220-0500 Telephone 509-489-0500 Toll Free 800-727-9170 May 20,2020 Diane Hanian, Commission Secretary Idaho Public Utilities Commission P O Box 83720 Boise, ID 83720-0074 RE: GNR-U-20-03 Reply Comments of Avista Corporation for an Accounting Order Authorizing Deferred Accounting of Incremental Costs Associated with the COVID-l9 Public Health Emergency. Dear Ms. Hanian: Attached for electronic filing in the above matter is Avista's Reply Comments relating to an Accounting Order Authorizing Deferred Accounting Treafrnent of lncremental Costs Related to the COVID-I9 Public Health Emergency. Please direct any questions on this matter to Elizabeth Andrews at (509) 495-8601 or myself at (509) 495-8620. Sincerely, Patrick Ehrbar Director of Regulatory Affairs Avista Utilities pat. ehrbar@ avistacorp.com 509495-8620 Enclosures DAVID J. MEYER VICE PRESIDENT AND CHIEF COUNSEL FOR REGULATORY AND GOVERNMENTAL AFFAIRS AVISTA CORPORATION P.O.BO){3727 1411 EAST MISSION AVENT'E S POKANE, WASHINGTON 99220 -37 27 TELEPHONE: (509) 495-4316 david. meyer(lD avistacom.com IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION, DIB/A AVISTA UTILITIES, FOR AN ACCOUNTING ORDER AUTHORZING DEFERRED ACCOUNTING OF INCREMENTAL COSTS ASSOCIATED WITH THE COVID-19 PUBLIC HEALTH EMERGENCY BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION ) ) ) ) ) ) ) CASE NO. GNR-U-20-03 REPLY COMMENTS OF OF AVISTA I. INTRODUCTION Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or "Company''), submits these Reply Comments regarding comments submitted by the Staff of the Idaho Public Utilities Commission ("Staff') and the ldaho Conservation League ("ICL") on the consolidated Applications for a deferred accounting order for incremental costs associated with the COVID-I9 public health emergency. IL BACKGROUND On March 13,2020,Idaho Govemor Brad Little issued a Proclamation declaring a state of emergency and providing directives to combat the spread of SARS-CoV-2 ("COVID-I9"), to provide essential services and limit public exposure (the "Emergency"). Reply Comments of Avista Corporation CaseNo. GNR-U-20-03 Page 1 Thereafter, several Idaho public utilities - including Avista Corporation, Falls Water Company ("Falls Water"), Gem State Water Company ("Gem State"), Idaho Power Company ("Idaho Power"), and PacifiCorp dba Rocky Mountain Power's ("PacifiCorp") - applied to the Commission for orders authorizing them to account for certain unanticipated, emergency-related expenses by booking them as regulatory assets for possible recovery through rates that would be set in future proceedings. The utilities do not seek to increase rates at this time. See Case Nos. AW-E-20-03 and AVU-G-20-03 (Avista electric and gas expenses); FLS-W-20-02 (Falls Water); GSW-W-20-01 (Gem State); IPC-E-20-19 (Idaho Power), and PAC-E-20-04 (PacifiCorp). Given the emergency and the similarities in the utilities' applications for an accounting order to address emergency-related costs (collectively, the "Application"), Commission Staff recommended the Commission consolidate the above-cited cases into a general docket to address whether and to what extent the utilities should be authorized to defer incremental emergency-related expenses in a regulatory asset account for possible future recovery. Staff recommended the docket be processed by Modified Procedure. The Commission then decided to open this generic proceeding and consolidate the above-cited cases for purposes of issuing a single order that would apply to each of the utilities that had filed an application. Staff supports the deferral of emergency-related costs for recovery in a future proceeding by the utilities, given the unprecedented nature of the emergency and because the incremental costs were not anticipated when the Commission set the utilities' revenue requirement and base rates. ICL acknowledges the costs incurred by the utilities may become significant and recommends the Commission begin considering novel methods to Reply Comments of Avista Corporation Case No. GNR-U-20-03 Page2 allow utilities to recoup these costs while mitigating impact to utility customers. Avista appreciates these comments and generally agrees with most of the comments. Avista submits these reply comments to Staff s and ICL's comments. IIL AYISTA'S REPLY COMMENTS A. Staff supports PacifiCorprs proposal to use 2019 bad debt expense as a baseline and any excess write-offs would be deferred. Although the use of 2019 is a reasonable solution for some utilities, Avista believes the authorized level of bad debt expense that was set in its most recent general rate case would be a more appropriate level for Avista. Electric customers' rates were set in AW-E-19-04, effective December 1,2019; and natural gas customers' rates were set in AVU-G-17-01, effective January l, 2018. The bad debt expense used in these cases have been audited by Staffand other parties, and perhaps more importantly represents the amounts currently being recovered from customers in base rates today.l B. Staff supports the deferral of prudently incurred additional O&M costs incurred to protect health and safety of utility employees, including personal protective equipment sanitizer, cleaning supplies and additional hardware/software and other equipment not capitalized to allow employees to work from home. I This is a similar approach to that used in 2018 related to Case No. GNR-U-I8-01 (Impact of Federal Tax Code Revisions on Utility Costs and Ratemaking - Tax Code and Jobs Act ("TCJA")). Although the Commission had sought the level of TCJA refund using 2017 historical balances, Avista proposed to base any refunds to customers on the Company's most recent general rate case information for the rate effective period January l, 2018 through December 31, 2018. This approach was agreed to by the Padies in that proceeding, and approved by the Commission. Reply Comments of Avista Corporation CaseNo. GNR-U-20-03 Page 3 Avista will incur additional incremental costs other than those costs described by Staff in its comments that were not anticipated when the Commission set the utilities' revenue requirement and base rates in its last general rate cases. Some of these costs, for example, are additional financing costs for debt that has been incurred to finance the higher level of accounts receivable the utility will likely carry due to delayed customerpayments, additional O&M labor costs due to ernployees that could not work on capital projects having those costs recorded as O&M costs, and other costs that cannot be reasonably determined at this point. Avista believes the Commission should not limit the type of costs incurred that can be deferred at this time, given that this proceeding is relatedjust to the deferral ofcosts (and benefits), and not the recovery nor prudence of such costs. Rather, the Commission can perform a review after the fact, based on each utility's support of its costs, before approving recovery. As such, Avista respectfully requests that it be allowed to include all costs that we believe are related to COVID-I9, and then later the Commission can determine whether some or all ofthose deferred costs can be recovered. C. Staff supports utilities using the 2019 level of late fees as a baseline to estimate approved level of late fees. For Avista in particular, the Company believes that the level of late fees revenues should be based on the level currently authorized in customers' rates, similar to the proposal for bad debt expense described above. Reply Comments of Avista Corporation CaseNo. GNR-U-20-03 Page 4 D. Staffopposes any mechanism that would allow utilities to collect lost revenue from customers whose operation have been shut down. In our original Application, Avista (ike Idaho Power) requested to defer lost revenue from customers not ffacked in our Fixed Cost Adjustment mechanisms. While we understand Staff s views on this issue in particular, the Company respectfully requests that these lost revenues, if any, be tacked (ust like costs and other benefits), knowing that the ultimate prudence of such lost revenue (if any) would be reviewed for recovery in a subsequent proceeding. E. ICL encourages utilities to streamline access to customer assistance and conservation programs. Avista appreciates ICL's comments related to helping keep our customers connected during this pandemic. We recognize that the impacts of COVID-19 will be felt far and wide and are still unfolding. While no one can predict the extent of the COVID-l9 situation and its impact, we're continuing to adapt and are committed to serving our customers well during this uncertain time. We know a growing number of our customers are hurting and struggling to make ends meet. We are here for them and want to support them. We listen to each unique situation and work to identify ways to ease the burden. We are also aware that as we all spend more time at home, we may have higher energy usage, which can lead to higher bills. As we've worked to identify immediate and near- term opportunities to support our customers and communities, we know this work is not done. Along with other utilities and businesses across the region and country, we Reply Comments of Avista Corporation CaseNo. GNR-U-20-03 Page 5 continue to plan for the future, what it might look like and how we can best serve our customers. ln the meantime, our website - https://myavista.com/safety/covid-19- response - provides all of the latest information related to energy effrciency, payment arrangements, payment assistance, and Avista's ongoing operational efforts during this difficult time. F. ICL recommends Commission and utilities consider using the Energy Costs Recovery Bond process (Idaho Code 61-1501) and recommends long amortization period to recover the prudently incurred expenses. As it relates to the use of Energy Cost Bonds referenced by ICL, while Avista appreciates the creative thinking, we do not believe that this situation warrants the use of such instruments. First, Avista has the necessary financial standing to be able to fund its operations. Second, these bonds appearto be very specific to "energy costs" - fuel or power cost adjustnents, purchased gas adjustment tacker rates, commodity tracker rate adjushnents or purchased power tracker rates. In the end, the increased costs associated with COVID-19 are more specific to bad debt costs, labor and technology costs, and other non-energy related items. We don't believe such an instrument is necessary at this time, and further has proposed that any deferral be carried without interest. Finally, Avista would be open to a longer amortization period, if the final approved net deferral is of a significant nature. Reply Comments of Avista Corporation CaseNo. GNR-U-20-03 Page 6 DATED at Spokane, Washington, this 20th day of May 2020. AVISTA CORPORATION a By Patrick Ehrbar Director of Regulatory Atrairs Avista Corp Reply Commeirts of Avista Corporation CaseNo. GNR-U-20-03 PageT CERTIF'ICATE OF' SERVICE I HEREBY CERTIFY THAT I HAVE THIS 2Od'DAY OF MAY 2020, SERVED THE FOREGOING COMMENTS OF AyISTA CORPORATION,IN CASE NO. GNR-U- 20-03, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING: Diane Hanian, Secretary Idaho Public Utilities Commission I1331 W. Chinden Blvd Building 8, Suite 201-A Boise, lD 83714 diane.hanian(a)puc. idaho. gov GEM STATE WATER CO PRESTON N CARTER GTVENS PURSLEY 601 W BANNOCK ST BOISE ID 83702 E-MAIL: prestoncarter(iz), givenspurslev.com kendrah(4 eivenspursley. com LISA NORDSRTON MATT LARKIN IDAHO POWER COMPANY PO BOX 70 BOISE rD 83707-0070 E-MAIL: lnordstrom(a)idahopower.corn m I arkin(D, id ahopow er. com dockets (D i dahopow er. com BENJAMIN J OTTO ID CONSERVATION LEAGUE 710 N 61I{ STREET BOISE ID 83702 E-MAIL: botto(rridahoconservation.ore DR DON READING 6070 HILL ROAD BOISE ID 83702 E-MAIL: dreadinq(a)mindsprinq.com FALLS WATER CO PRESTON N CARTER GTVENS PURSLEY 601 W BANNOCK ST BOISE ID 83702 E-MAIL: prestoncarter(rD givenspursley. com k endrah (d. eivenspursl ey. com ERIC W NELSON NW NATURAL 220 NW 2ND AVE PORTLAND OR 97209 E-MAIL: eric.nelson(rDnwtatural.com TED WESTON ROCKY MOUNTAIN POWER I4O7 WNORTH TEMPLE STE 330 SALT LAKE CITY UT 84116 E-MAIL: Ted.weston(n)pacifi corr:. com law.com J acob. mcdermott(r0paci ficorp. com Emily. wegener(lDpacifi com.com PETER RICAHRDSON RICHARDSON ADAMS PLLC 5I5 N 27TH STREET BOISE TD 83702 E-MAIL: peter(a/richardsonadams.com CERTIFICATE OF SERVICE RAI{DALL C BI.'DGE THOIvIAS J BITDGE RACINE OLSON PLLP PO BOX t39t POCATELLO ID 83204 E-MAIL: randy@.acineolson.com tj@racineolson.com BRIAN COLLINS MAURICE BRUBAKER BRI.'BAKER & ASSOCATBS 16690 SWINGLEY RIDGE RD #I4O CHESTERFIELD MO 63017 E-}vIAIL: bcollins@consultbai.com mbrubaker@ consultbai. com /Y Paul Kimball Paul Kimball Manager of Compliance & Discovery CERTIFICATE OF SERVICE