20220624Final_Order_No_35450.pdf

ORDER NO. 35450 1

Office of the Secretary
Service Date
June 24, 2022
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA UTILITIES
APPLICATION FOR AN ORDER
APPROVING A CHANGE IN NATURAL GAS
RATES AND CHARGES
)
)
)
)
)
CASE NO. AVU-G-22-02

ORDER NO. 35450

On April 29, 2022, Avista Corporation dba Avista Utilities (“Company”) applied for an
order approving a revised schedule of rates and charges for natural gas service. The Company
requested its proposed rates be updated in the Schedule 150 Purchased Gas Cost Adjustment
(“PGA”), effective July 1, 2022. The requested change would increase the Company’s revenue by
$8.3 million, or about 10.5 percent. The Company believed that filing now would limit the
surcharge deferral for the remainder of the PGA cycle. The Company proposed to increase the
Commodity Weighted Average Cost of Gas (“WACOG”) by $0.08641 per therm. If approved, the
average residential or small commercial customer using 63 therms per month would see an
approximate increase of $5.44 per month, or about 9.7 percent.
BACKGROUND
The Company’s PGA is a Commission approved mechanism that adjusts rates up or down
to reflect changes in the Company’s costs to buy natural gas from suppliers including changes in
transportation, storage, and other related costs. The Company defers those costs into its PGA
account and then passes them on to customers through an increase or decrease in rates.
In Case No. AVU-G-21-04, the Commission approved the Company’s annual PGA,
effective September 1, 2021. Order No. 35151. In Order No. 35151, the Commission authorized
the Company to increase its Commodity WACOG by $0.04022 per therm, increasing from
$0.16283 per therm to $0.20305 per therm. Subsequently, in Case No. AVU-G-21-07, the
Commission approved the Company’s proposed “out-of-cycle” PGA adjustment to the WACOG
by $0.06235 per therm, increasing from $0.20305 per therm to $0.26540 per therm and effective
February 1, 2022. Order No. 35295.
APPLICATION
The Company’s Application reflected its proposed “out-of-cycle” PGA to amend its
Commodity WACOG in Schedule 150 and to collect the change in the updated cost of natural gas,
ORDER NO. 35450 2

starting July 1, 2022. The following table summarizes the proposed changes the Company wishes
the Commission to approve:1
Table No. 1: Summary of Proposed PGA Rate Changes by Class
Service Sche
dule
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)
General 101 $0.08641 - $0.08641 - $0.08641
Lg. General 111 $0.08641 - $0.08641 - $0.08641
Lg. General 112 $0.08641 - $0.08641 - $0.08641
Interruptible 131 $0.08641 - $0.08641 - $0.08641

The Company cited macroeconomic and geopolitical events leading to the continued
increase in the price of wholesale natural gas, which has pushed prices to levels not seen in over
13 years. The Company stated that the market factors attributing to the rise in prices were an overall
increase in demand, lower supply, and the impact that the global natural gas market was having on
the US natural gas market due to the war in Ukraine. Further the Company represented that the
elevated liquified natural gas exports and use for electric generation have increased demand for
natural gas. The Company stated that supply has been limited because production has been slow
to return to pre-pandemic levels and, to date, has underperformed expectations in 2022. The
Company noted that some of those market conditions were present when the Company filed Case
Nos. AVU-G-21-04 and AVU-G-21-07, but when coupled with the additional market factors
increasing demand for natural gas, there has been upward pressure on wholesale natural gas prices,
creating a material change from the WACOG approved in the Company’s prior PGA.
As such, the Company proposed to increase the Commodity WACOG from the $0.26540
per therm currently embedded in rates, to $0.35181 per therm for Schedule Nos. 101, 111, 112,
131, and 146, which is an increase of $0.08641 per therm.
The Company calculated the proposed Commodity WACOG of $0.35181 per therm by
adjusting two items. First, the Company used a 30-day historical average of forward prices (as of
April 12, 2022) to develop an estimated cost associated with index purchases for the one-year

1 The Company is not requesting any changes related to demand charges or its Schedule 155 Amortization rate in this
case.

ORDER NO. 35450 3

period beginning after July 1, 2022. The Company then estimated the monthly volumes it would
purchase during that period and multiplied that by the 30-day average forward price for the
corresponding month. According to the Company’s estimations, the annual weighted average price
for these volumes is $0.421 per therm. The annual weighted average price currently included in
rates for these volumes is $0.306 per therm. Second, the Company has entered into additional
natural gas hedges since Case No. AVU-G-21-07. The weighted average price for hedged natural
gas presently included in rates is $0.266 per therm. The annual weighted average price for all
hedges during the period, including those entered into after Case No. AVU-G-21-04, is now $0.290
per therm.
STAFF COMMENTS
Staff reviewed the Company’s “out-of-cycle” PGA Application and accompanying
workpapers, and Staff supported the Company’s proposal to increase natural gas revenues in Idaho.
Staff examined the Company’s fixed price hedges and estimated future commodity prices to assess
the reasonableness of the proposed changes. Staff verified that the Company’s filing would not
change the Company’s earnings, and that the proposed changes to Schedule 150 accurately
reflected the Company’s projected variable (commodity) costs.
However, Staff noted that the Company’s notice to customers was included with bills
mailed to customers beginning May 7, 2022, and ending June 6, 2022. The Commission set a
comment deadline of June 8, 2022. Staff believed that some customers would not have received
their notices or had adequate time to submit comments before the comment deadline. Staff
represented that customers must have the opportunity to file comments and have those comments
considered by the Commission. Staff recommended that the Commission accept late filed
comments by customers.
Based upon its examining of the Company’s Application and natural gas price estimates,
Staff recommended the Commission:
a. Approve the Company’s proposed Schedule 150, including the proposed WACOG of
$0.35181 per therm, as filed;
b. Direct the Company to continue filing quarterly WACOG reports and monthly deferred
cost reports with the Commission on an ongoing basis; and
c. Accept late-filed comments from customers.

ORDER NO. 35450 4

COMMISSION FINDINGS AND DECISION
The Commission has reviewed the record, including the Application and comments. The
Commission notes that, to date, no customer comments have been filed in this case. The Company
is a gas corporation and public utility, and the Commission has jurisdiction over it and the issues
in this case under Title 61 of the Idaho Code; specifically, Idaho Code §§ 61-117, 61-129, 61-307,
61-501, and 61-502. The Commission must establish just, reasonable, and sufficient rates for
utilities subject to its jurisdiction. Idaho Code § 61-502. The PGA mechanism is used to adjust
rates to reflect annual changes in the Company’s costs for the purchase of natural gas from
suppliers including transportation, storage, and other related costs. The Company’s earnings are
not to be increased from changes in prices and revenues resulting from the PGA. The PGA
mechanism passes through prudently incurred commodity costs in a timely fashion. Based upon
our review of the Application and all submitted material, we find it fair, just, and reasonable to
approve the Company’s proposed Schedule 150, including the proposed WACOG of $0.35181 per
therm. As always, we expect the Company to promptly apply to amend its WACOG if gas prices
materially deviate from the WACOG approved in this Order.
Due to the rate increases arising from the Company’s approved PGA Application, the
Commission finds merit in the Company’s efforts to mitigate the impacts arising therefrom. The
Company’s decision to file the “out-of-cycle” PGA Application will help mitigate the impact on
Customer bills and limit surcharge deferrals. We also find that quarterly WACOG and monthly
deferred 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 the Commission approves the Company’s proposed
Schedule 150, including the proposed WACOG of $0.35181 per therm, as filed.
IT IS FURTHER ORDERED that the Company shall promptly apply to amend its
WACOG if gas prices materially deviate from the WACOG approved in this Order.
IT IS FURTHER ORDERED that the Company 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 upon this Order regarding any
matter decided in this Order. Within seven (7) days after any person has petitioned for
ORDER NO. 35450 5

reconsideration, any other person may cross-petition for reconsideration. See Idaho Code §§ 61-
626 and 62-619.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 24th day of
June 2022.

ERIC ANDERSON, PRESIDENT

JOHN CHATBURN, COMMISSIONER

JOHN R. HAMMOND JR., COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\GAS\AVU-G-22-02 rates\orders\AVUG2202_final_cb.docx