20220608Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
(208) 334-03t2
IDAHO BAR NO. 9917
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Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, TD 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
AVISTA UTILITIES FOR AN ORDER
APPROVING A CHANGE IN NATURAL GAS
RATES AND CHARGES
CASE NO. AVU.G.22-02
COMMENTS OF THE
COMMISSION STAFF
STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of
record, Dayn Hardie, Deputy Attomey General, submits the following comments.
BACKGROUND
On April 29,2022, Avista Corporation dba Avista Utilities ("Company") filed an "Out of
Cycle" Purchased Gas Cost Adjustment ("PGA") to amend its current weighted average cost of
gas ("WACOG") in its Schedule 150 for the Company's PGA rate. The Company is not
requesting any changes to demand charges or Schedule 155-Gas Rate Adjustment or
amortization rate in this case.l
The 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
I Together Schedule 150 and Schedule 155 make up the PGA rates.
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1STAFF COMMENTS JUNE 8,2022
transportation, storage, and other related costs. The Company defers these costs into its PGA
account and then passes them on to customers through an increase or decrease in rates. The
Company requested that the proposed rates take effect July 1, 2022.
Overview of Proposed Rates
The Company's PGA proposal would increase the Company's annual revenue by
approximately $8.3 million or 10.5o/o. If approved, residential customers using an average of 63
therms per month would see rates increase by $5.44 or about 9.7Yo per month. The Company's
proposed changes to Schedule 150 rates are further explained below.
The Company proposes to change its PGA per therm rates for its customer classes as
shown in Table No. 1 below:
Table No. 1: Summary of Proposed PGA Rate Chanees bv Class
STAFF ANALYSIS
Staff reviewed the Company's "Out of Cycle" PGA Application and accompanying
workpapers and supports 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 will
not change the Company's earnings and that the proposed changes to Schedule 150 accurately
reflects the Company's projected variable (commodity) costs.
2
Seruice 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)
TotaI
Rate
Change
per
Therm
(e=c*d)
General 101 $0.0864r $0.08641 $0.08641
Lg. General 111 $0.08641 $0.08641 $0.08641
Lg. General tt2 $0.08641 $0.08641 $0.08641
Intemrptible 131 $0.08641 $0.08641 $0.08641
STAFF COMMENTS JLINE 8,2022
Schedule 150 - Purchased Gas Cost Adjustment
The Schedule 150 portion of the PGA rate consists of commodity costs and demand
costs. The Company's commodity costs are variable costs the Company incurs to buy natural
gas. The WACOG is an estimate of those costs. In this case, the Company estimates its
commodity costs will increase by $0.08641 per therm-from the currently approved $0.26540
per therm-to $0.35181 per therm. The Company is not seeking to change to demand costs
which will be addressed in the next annual PGA filing.
Wreighted Average Cost of Gas
The WACOG includes charges to move gas at the city gate, some variable transport
costs, and Gas Research Institute ("GRI") funding. It does not include third party gas
management fees. In this case, the Company proposes a WACOG of $0.35181 per therm. This
is an increase of approximately 32Yo fromthe current approved WACOG of $0.265402 per
therm.
Chart No. 1 shows the Company's historical WACOG:
Chart No. 1: Historical WACOG
2 Approved Order No. 35295
aJ
Avista PGA WACOG (S/rherm)
E
o
0.4500
0.4000
0.3500
0.3000
0.2s00
0.2000
0.1s00
0.1000
0.0500
0.0000
.CF
1r|
so.3s .373 0.38s
20].4
.240 .279 L64 o.L70
2018
153 L
2012 20L3 2015 20L6 2017
Year
20L7*2019 2020 202t 27*2022
* AVU-G-17-06 **AVU-G-21-07
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\
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STAFF COMMENTS JUNE 8,2022
Schedule 155 - Deferral Account
Schedule 155 reflects the amortization of the Company's deferral account. The Company
is not proposing any changes to the current surcharge of$0.015053 for rate Schedules l0l or
I I l. Potential changes to Schedule 155 will be addressed within the Company's next annual
PGA filing.
Market Fundamentals & Price Analysis
The Company's proposed WACOG of $0.35181 per therm was determined by adjusting
two items. First, the Company used a 30-day historical average of AECO forward prices (as of
April 12, 2022) to develop an estimated cost associated with index purchases for the one-year
period beginning after the effective date. The estimated monthly volumes to be purchased
during this period are multiplied by the 30-day average forward price for the corresponding
month. The annual weighted average price for these volumes is $4.21 per dekatherm ($0.421 per
therm). Id at 4. The annual weighted average price presently included in rates for these volumes
is $3.06 per dekatherm ($0.306 per therm). Second, the Company entered into additional natural
gas hedges after it filed its last PGA Commodity WACOG update. The weighted average price
for hedged natural gas presently included in rates is $2.66 per dekatherm ($0.266 per therm).
The annual weighted average price for all hedges during the period, including those entered into
after the annual PGA filing, is now $2.90 per dekatherm (0.290 per therm). Id at 4
There is currently volatility in the natural gas futures. In the EIA April 12,2022, Short-
Term Energy Outlook, the EIA states;
In March, the Henry Hub natural gas spot price averaged $4.90 per million
British thermal units (MMBtu), which was Llp from the February average of
S4.69lMMBtu, as inventory withdrawals slightly outpaced the five-year
(2017-2021) average. We expect liquefied natural gas (LNG) exports will
increase from March levels, contributing to a Henry Hub price of
S5.95/MMBtu for April. We expect the Henry Hub price will average
$5.68/MMBtu in 2Q22 and $5.23lMMBtu for all of 2022.4
Based on review of the market fundamentals, trends and current EIA data, Staff believes
that the Company's cost of its current hedges and estimated cost of forward-looking index
purchases are reasonable.
3 Approved in Case No. AVU-G-21-04;Order No. 35151.4 EIA April 12, 2022 https://www.e ia. govioutl ooks/steo/index.php.
4STAFF COMMENTS JUNE 8,2022
CUSTOMER COMMENTS, NOTICE, AND PRESS RELEASE
The Company's press release and customer notice were included with its Application.
Staff reviewed the documents and determined that both meet the requirements of Rule 125 of the
Commission's Rules of Procedure. IDAPA 31.01.01.125. The notice 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. Some customers will have not received their notices or had
adequate time to submit comments before the comment deadline. Customers must have the
opportunity to file comments and have those comments considered by the Commission. Staff
recommends that the Commission accept late filed comments by customers. As of June 7,2022,
no customer comments had been filed.
STAFF RECOMMENDATIONS
After examining the Company's Application and natural gas price estimates, Staff
recommends the Commission:
1. Approve the Company's proposed Schedule 150, including the proposed
WACOG of $0.35181 per therm, as filed;
2. Direct the Company to continue filing quarterly WACOG reports and monthly
deferred cost reports with the Commission on an ongoing basis; and
3. Accept late-filed comments from customers.
Respectfully submitted this b+b day of June 2022.
Dayn
Deputy Attorney General
Technical Staff: Kevin Keyt
Curtis Thaden
i : umisc/comments/avug22.2dhkskct comments
5STAFF COMMENTS JUNE 8,2022
CERTIFICATE OF SERVICE
I HEREBy cERTIFy rHAT I HAVE THIS 8m Da.v oF JUNE 2022,
SERVED THE FOREGOING COMMENTS Or TIm COMMISSION STAFF, IN
CASE NO. AVU-G-22-02, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
PATRICK EHRBAR
DIR OF REGULATORY AFFAIRS
AVISTA CORPORATION
PO BOX3727
SPoKANE WA99220-3727
E-MAIL : [e-mail]
dockets@avi stacorp. com
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
PO BOX3727
SPoKANE WA99220-3727
E-MAIL: [e-mail]
CERTIFICATE OF SERVICE