20211028Final_Order_No_35210.pdf

ORDER NO. 35210 1
Office of the Secretary
Service Date
October 28, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA’S
APPLICATION TO IMPLEMENT FCA
RATES FOR NATURAL GAS SERVICE
FROM NOVEMBER 1, 2021 THROUGH
OCTOBER 31, 2022
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CASE NO. AVU-G-21-06

ORDER NO. 35210

On July 30, 2021, Avista Corporation dba Avista Utilities (“Company”) applied to the
Commission for authorization to implement Fixed Cost Adjustment (“FCA”) rates for natural gas
service effective from November 1, 2021 through October 31, 2022, and approve its corresponding
modifications to Schedule 175 “Fixed Cost Adjustment Mechanism – Natural Gas.” The Company
also asks that the Commission approve, as prudently incurred, the level of natural gas FCA revenue
deferred during the 18-month deferral period ended June 30, 2021.1 The Company separately
applied to implement FCA rates for electric service in Case No. AVU-E-21-08.2 The Company
proposes per therm FCA rebate rates for its residential and non-residential gas customers. The
Company’s Application, if approved, would increase overall natural gas revenues by about
$250,000. The monthly bill of an average residential gas customer would increase by about $0.18,
or 0.4% based on the proposed FCA rates. The Company asks that its Application be processed by
Modified Procedure and requests an effective date of November 1, 2021.
On August 24, 2021, the Commission issued a Notice of Application and set comment
deadlines for public comments and the Company’s reply. Order No. 35145. Staff filed the only
comments. The Company did not reply.
Having reviewed the record in this case the Commission issues this Order authorizing
the Company’s Application.
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 costs3 of providing service, thus
decoupling the utility’s revenues from its customers’ energy usage. Order No. 33437 at 3. This

1 In Order No. 34502, the Commission authorized the Company to modify its electric and natural gas deferral periods
one-time to run from January 1, 2020, through June 30, 2021.
2 On September 29, 2021, the Commission issued Order No. 35183 approving the Company’s Electric FCA rates for
2021/22.
3 “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.

ORDER NO. 35210 2
decoupling removes a utility’s incentive to increase sales to increase revenue and profits and
encourages energy conservation. Id. at 3-4. The Commission originally approved the Company’s
FCA as a three-year pilot program, and part of the approved settlement of its 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 the Company’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. 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.
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.
THE APPLICATION
The Company proposes a rate rebate for its residential and non-residential gas customer
groups based on the deferred revenue recorded for each group between January 1, 2020, and June
30, 2021. The Company attributes the proposed changes to drivers including warmer than normal
weather during 18 months ended June 30, 2021, energy efficiency, and “other” drivers.
The Company recorded $324,456 of deferred revenue in the rebate direction for its
residential natural gas customer group for the 18-month deferral period ended June 30, 2021. After
considering the prior year residual balance of $6,663 and other adjustments, the Company proposes
to return $334,866 to its residential natural gas customers served under rate Schedule 101, at a
proposed rate of 0.493 cents per therm. See Exhibit B. If approved, 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.
For its non-residential natural gas customer groups, the Company recorded $130,431
of deferred revenue in the rebate direction for the 18-month deferral period ended June 30, 2021.

ORDER NO. 35210 3
After considering the prior year residual balance of $918 and other adjustments, the Company
proposes to return $132,916 to the Company’s commercial and industrial natural gas customers
served under rate Schedules 111 and 112, at a proposed rate of 0.490 cents per therm. See Exhibit
B. If approved, 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.
The Company submitted its residential and non-residential rate calculations, support
for its deferrals, and its proposed FCA Schedule 175 with its Application.
STAFF’S COMMENTS
Staff reviewed the Company’s Application, supporting work papers, and production
responses and believed the Company properly calculated its proposed FCA deferral balances.
Staff recommended the Commission allow the Company, in the 2021-22 FCA year, to return
$334,866 to residential customers with a rebate rate of 0.493 cents per therm and return $132,916
to non-residential customers with a rebate rate of 0.490 cents per therm. Staff stated that the
proposed rate change for the residential customer group would represent a $196,979 (0.4%)
decrease in revenue and for the non-residential customer groups a $53,438 (0.4%) decrease in
revenue.
The proposed FCA rebate rates for both the residential and non-residential customer
groups for the 18 months ended June 30, 2021, are the result of increased use-per-customer
(“UPC”) from levels in the 2016 test year—the levels used to establish the FCA base period.
Residential average monthly UPC was higher by two therms, and non-residential average monthly
UPC was higher by approximately 23 therms during the deferral period.
The Company noted three primary drivers of FCA revenue deferrals: (1) Weather, (2)
Energy Efficiency, and (3) “Other.” The Company identified the “Other” drivers as items that are
difficult to quantify, including the effects of non-programmatic energy efficiency, changes in
business cycles, non-quantifiable effects related to the COVID 19 pandemic, etc. The “Other”
drivers have a more significant impact on non-residential customers than on residential customers.
Weather is an especially significant driver for residential customers because residential energy
usage is relatively sensitive to weather fluctuations.
Staff noted that the Company included notices with customer bills between August 12,
2021 and September 9, 2021. Staff believed customers were sufficiently notified of their
opportunity to comment.

ORDER NO. 35210 4
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over the Company and this matter under Title 61 of
the Idaho Code, and specifically Idaho Code §§ 61-501 and -502. The Commission has reviewed
the record, including Staff’s comments, and finds the Company’s proposed natural gas FCA
residential rebate rate of 0.493 cents per therm for Schedule 101 customers, and FCA non-
residential rebate rate of 0.490 cents per therm for Schedule 111 and 112 customers to be fair, just,
and reasonable. The Commission finds that the Company correctly calculated its deferral balances.
The 3% annual rate adjustment cap is not operative in this case because the Company proposed
rebate rates for both residential and non-residential groups. The Commission finds the Company’s
proposed Schedule 175 meets the Commission’s requirements. The Commission thus approves the
Company’s Application and proposed Schedule 175, as filed, effective November 1, 2021.
O R D E R
IT IS HEREBY ORDERED that the Company’s Application is approved as described
above. The Company’s Application for residential and non-residential FCA Natural Gas Service
rates from November 1, 2021 through October 31, 2022, is granted, as requested, effective
November 1, 2021.
IT IS FURTHER ORDERED that the Commission approves the Company’s Schedule
175 as filed.
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. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
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ORDER NO. 35210 5
DONE by order of the Idaho Public Utilities Commission at Boise, Idaho this 28th day
of October 2021.

__________________________________________
PAUL KJELLANDER, PRESIDENT

__________________________________________
KRISTINE RAPER, COMMISSIONER

__________________________________________
ERIC ANDERSON, COMMISSIONER

ATTEST:

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Jan Noriyuki
Commission Secretary

I:\Legal\GAS\AVU-G-21-06 FCA\AVUG2106_final_dh.docx