20200720Notice_of_Application_Order_No_34729.pdf

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 1
Office of the Secretary
Service Date
July 20, 2020
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA’S
APPLICATION TO IMPLEMENT FCA
RATES FOR NATURAL GAS SERVICE
FROM NOVEMBER 1, 2020 THROUGH
OCTOBER 31, 2021
)
)
)
)
)
)
)
)
CASE NO. AVU-G-20-05

NOTICE OF APPLICATION

NOTICE OF
MODIFIED PROCEDURE

ORDER NO. 34729

On June 30, 2020, Avista Corporation (“Company” or “Avista”) applied to the
Commission for authorization to implement Fixed Cost Adjustment (“FCA”) rates for natural gas
service effective from November 1, 2020 through October 31, 2021, to approve its corresponding
modifications to Schedule 175, “Fixed Cost Adjustment Mechanism – Natural Gas,” and to update
language in Schedule 175 to incorporate modifications authorized in Order No. 34502. Application
at 1-2. Avista also asks that the Commission approve the level of natural gas FCA revenue deferred
during calendar year 2019. Id. at 1. The Company separately applied to implement FCA rates for
electric service in Case No. AVU-E-20-06. The Company proposes per therm FCA rebate rates
for its residential and non-residential gas customers. The Company’s Application, if approved,
would incrementally decrease overall natural gas revenues by about $1.1 million. Id. at 13. The
monthly bill of an average residential gas customer would decrease by about $1.11, or 2.2%. Id.
at 12. Avista asks that its Application be processed by Modified Procedure and requests an
effective date of November 1, 2020. Id. at 2.
With this Order, the Commission issues a Notice of Application and Notice of Modified
Procedure and establishes a public comment period and Company reply deadline.
BACKGROUND
The FCA is a rate adjustment mechanism designed to break the link between the energy
a utility sells and the revenue it collects to recover fixed costs1 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 to increase revenue and profits and

1 “Fixed costs” are a utility’s costs to provide service that do not vary with energy use, output, or production, and
remain relatively stable between rate cases – for example, infrastructure and customer service.

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 2
encourages energy conservation. Id. at 3-4. The Commission originally approved Avista’s FCA as
a three-year pilot program, 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 review the program’s effectiveness at the end of its second full year, to ensure it is
functioning as intended. Application at 3-4. The settlement stipulation in those cases and Schedule
175 also set forth how the FCA mechanism works, including treatment of existing versus new
customers, quarterly reporting requirements, annual filings, interest, accounting, and a 3% rate
increase cap. Id. at 4.
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
pilot for an additional year. See Order No. 34085. On December 13, 2019, the Commission
authorized the Company to: (1) extend its FCA mechanism for both gas and electric through March
31, 2025; (2) alter the first deferral period of the FCA extension by using a one-time, 18-month
deferral period from January 1, 2020 through June 30, 2021; and (3) alter its quarterly FCA
reporting requirement to 60-days after the end of each quarter. Order No. 34502; Case Nos. AVU-
E-19-06 and AVU-G-19-03.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that in its filing, Avista proposes a rate rebate for its
residential gas customer group and its non-residential gas customer groups based on the amount
of deferred revenue recorded for each group between January 1, 2019 and December 31, 2019. Id.
at 12. The Company mostly attributes the proposed changes to drivers such as cooler weather in
February and March 2019 and “other” drivers. Id. at 7. Other drivers are not easily quantifiable
according to the Company’s Application but include the effects of non-programmatic energy
efficiency and changes in business cycles. Id. at 8.
YOU ARE FURTHER NOTIFIED that Avista recorded $517,162 in the rebate
direction in deferred revenue for its natural gas residential customer group in 2019. Id. (table
includes: 2018 residual balance, interest, and revenue-related expenses). After considering the
2018 residual balance of $22,393, the Company proposes a rebate of $509,799, at a proposed rate
of -0.783 cents per therm, to the Company’s residential natural gas customers served under rate

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 3
Schedule 101. Id. at 8-9; 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 rebate2 received by customers under the tariff. Id. at 9.
YOU ARE FURTHER NOTIFIED that for its natural gas non-residential customer
groups, Avista recorded $175,310 in the rebate direction in deferred revenue in 2019. Id. (table
includes: 2018 residual balance, interest, and revenue-related expenses). After considering the
2018 residual balance of $2,617, the Company proposes to rebate $178,131, at a proposed rate of
-0.687 cents per therm, to the Company’s commercial and industrial natural gas customers served
under rate Schedules 111 and 112. Id. at 9-10; 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 the Company also proposed to update language
in its Schedule 175 to include the modifications authorized in Order No. 34502. These
modifications include the authority to: (1) extend the FCA mechanism for both gas and electric
through March 31, 2025; (2) alter the first deferral period of the FCA extension by using an 18-
month deferral period from January 1, 2020 through June 30, 2021; and (3) alter its quarterly FCA
reporting requirement to 60-days after the end of each quarter. Id. at 2 and 6. The Company will
also file its FCA Applications by July 31 of each year during the extended FCA period. Id. at 6.
YOU ARE FURTHER NOTIFIED that with its Application, the Company submitted
its residential and non-residential rate calculations, support for its deferrals, and its proposed FCA
Schedule 175, including the updated language to incorporate modifications authorized by Order
No. 34502.
YOU ARE FURTHER NOTIFIED that the Company’s Application and Exhibits,
including the proposed tariff sheets, are available for public inspection during regular business
hours at the Commission’s office. The Application is also available on the Commission’s web site
at www.puc.idaho.gov. Click on the “NATURAL GAS” tab in the left-hand column of the home
page, then select “Open Cases” and then locate and click on the case number as shown on the front
of this document.

2 The Decision Memo in AVU-G-20-05 incorrectly stated the Company would receive a surcharge from customers.

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 4
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
under the Commission’s Rules of Procedure, IDAPA 31.01.01.000, et seq.
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 it will review the case through written
submissions under the Commission’s Rules of Modified Procedure Rules 201 through 204 of the
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 persons desiring to state a position on this
Application may file a written comment explaining why the person supports or opposes the
Application. Persons who would like a hearing must specifically request a hearing in their written
comments. Persons shall have until October 7, 2020, to file written comments. Comments
must be filed by e-mail unless e-mail is unavailable. To comment by e-mail, please access the
Commission’s home page at www.puc.idaho.gov. Click the “Consumers” tab and then “Case
Comment Form” and complete the form using the case number as it appears on the front of this
document. Comments filed by e-mail must also be e-mailed to the Company at the e-mail addresses
listed below. If e-mail is unavailable, then comments may be mailed to the Commission and
Company at these addresses:
For the Idaho Public Utilities
Commission:

Commission Secretary
Idaho Public Utilities Commission
P.O. Box 83720
Boise, ID 83720-0074

For Avista Corporation:

David J. Meyer, Esq. (MSC-10)
Patrick Ehrbar (MSC-27)
P.O. Box 3727
1411 E. Mission Ave
Spokane, WA 99220-3727
[e-mail]
[e-mail]

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 5
YOU ARE FURTHER NOTIFIED that Avista must file any reply comments by
October 14, 2020.
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.
O R D E R
IT IS HEREBY ORDERED that this case be processed by Modified Procedure, Rule
201-204 (IDAPA 31.01.01.201 - .204). Persons shall have until October 7, 2020, to file written
comments, and the Company shall have until October 14, 2020, to file a reply, if any.
IT IS FURTHER ORDERED that parties continue to comply with Order No. 34602,
issued March 17, 2020. All pleadings should be filed with the Commission electronically and shall
be deemed timely filed when received by the Commission Secretary. See Rule 14.02. Service
between parties should also be accomplished electronically. Voluminous discovery-related
documents may be filed and served on CD-ROM or a USB flash drive.
///

NOTICE OF APPLICATION
NOTICE OF MODIFIED PROCEDURE
ORDER NO. 34729 6

DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 20th
day of July 2020.

__________________________________________
PAUL KJELLANDER, PRESIDENT

__________________________________________
KRISTINE RAPER, COMMISSIONER

__________________________________________
ERIC ANDERSON, COMMISSIONER

ATTEST:

_________________________________
Diane M. Hanian
Commission Secretary

I:\Legal\GAS\AVU-G-20-05\orders\AVUG2005_Ntc App Mod_dh.docx