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HomeMy WebLinkAbout20220729Application.pdf./ittsra Avista Corp. 141I East Mission P.O.Box3727 Spokane. Washington 99220-37 27 Telephone 509-489-0500 Toll Free 800-727-9170 t"t l i"i].":.l_ fi_. f"l' 1", *.,: f-* Li., -T)*; r\) (r&) Re July 29,2022 State of Idaho Idaho Public Utilities Commission 11331W. ChindenBlvd Bldg 8 Suite 201-A Boise,ID 83714 Case No. AW-G-22-g[t Natural Gas Fixed Cost Adjustment Annual Rate Filing of Avista Corporation Dear Commission Secretary: Enclosed for electronic filing with the Commission is Avista's natural gas Fixed Cost Adjustnent (FCA) annual rate adjustment filing. This filing consists of Avista's Application, Exhibit A (the Company's proposed tariffs), Exhibit B (rate calculation), Exhibit C (12 months ended June 30, 2022 deferral), and Exhibit D (customer communications) in support of the Application. The Company requests that the proposed tariff sheets be made effective November 1,2022. Electonic versions ofthe Company's filing were emailed to the Commission, and the Service List, onJuly 29,2022. Please direct any questions on this matter to me at (509) 495-8620 or Joel Anderson at (509) 495- 281 l. Sincerely, /s/ Patrick Ehrber Patrick D. Ehrbar Director of Regulatory Affairs Enclosures I DAVID J. MEYER2 VICE PRESIDENT AND CHIEF COUNSEL FOR3 REGULATORY AND GOVERNMENTAL AFFAIRS4 AVISTA CORPORATION5 I4II E. MISSION AVENUE6 P . O. BOX 37277 SPOKANE, WASHINGTON 992208 PHONE: (509) 49s-4316, FAX: (509) 49s-88s1 t0 ll 9 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION t2 l3 t4 15 t6 t7 IN THE MATTER OF THE FIXED COST ) ADruSTMENT MECHANISM (FCA) ) ANNUAL RATE ADruSTMENT FILING ) oF AVTSTA CORPORATION ) CASE NO. AVU-G-zz- 9+ APPLICATION OF AVISTA CORPORATION 18 I.INTRODUCTION lg ln accordance with ,*noffiission order No. 33437, and Rp 20 052, Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or 2l "Company"), at l4ll East Mission Avenue, Spokane, Washington, respectfully makes 22 application to the Idaho Public Utilities Commission ("Commission") for an order 23 approving the level of natural gas Fixed Cost Adjustment Mechanism (FCA) revenue 24 deferred during 12 months ended June 30, 2022 and authorizing FCA rates for natural gas 25 service from November l, 2022 tbrough October 31,'2023. The FCA rate for the 26 Residential Group (Schedule 101) is proposed to change from a present rebate rate of 27 0.4939 to a proposed rebate rate of 1.0201 per therm. The FCA rate for the Non-Residential 28 Group (Schedules 111 and 112) is proposed to change from a present rebate rate of 0.490$, 29 to a proposed surcharge rate of 0.3811 per therm. The Residential Group rate change AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 1 4 5 6 I represents a $0.3 million, or 0.5o/o decrease, to Schedule 101 customers, and the Non- 2 Residential Group rate change represents a $0.1 million, or l.2Yo, incease. The combined 3 effect of expiring FCA rates and the proposed rates are shown on the table below. Expiring Present FCA Revenue Proposed FCA Revenue Proposed FCA Increase Residential $ (346.68s)$ (717.280)$ (370.59s) Non-Residential s fl32.961)$ 103,384 s 236.34 7 T\e Company has requested a November 1,2022 effective date. 8 The Company requests that this filing be processed under the Commission's 9 Modified Procedure Rules (RP 201-204). Communications referencing this Application l0 should be addressedto: David J. Meyer, Esq. Vice President and Chief Counsel for Regulatory & Governmental Affairs Avista Corporation P.O.Box3727 MSC.IO l4l I E. Mission Ave Spokane, WA 99220-3727 Phone: (509)495-4316 David. Meyer@avistacorp. com Patrick D. Ehrbar Director of Regulatory Affairs Avista utilities P.O.Box3727 MSC-27 1411 E. Mission Ave Spokane, WA 99220-3727 Phone: (509)495-8620 pahick. ehrb ar @av istacorp. com 11 t2 13 l4 l5 t6 t7 l8 t9 20 2t 22 23 24 25 26 27 28 29 30 31 AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 2 1 II. BACKGROT]NI) 2 The purpose of the natural gas FCA is to adjust the Company's Commission- 3 authorized revenues from therm sales, such that the Company's revenues will be 4 recognized based on the number of customers served under the applicable natural gas 5 service schedules. The FCA allows the Company to: I ) defer the difference between actual 6 FCA-related revenue received from customers through volumetric rates, and the FCA- 7 related revenue approved for recovery in the Company's last general rate case on a per- 8 customer basis; and2) file a tariffto surcharge or rebate, by rate group, the total deferred 9 amount accumulated in the defened revenue accounts for the prior January through l0 December time period. 1l In Case Nos. AW-E-15-05 and AW-G-15-01, the Commission in Order No. 12 33437 approved for Avista a Fixed Cost Adjustnent Mechanism. On page l0 of Order 13 No. 33437, the Commission stated: t4 t5 t6 t7 l8 L9 20 2l 22 23 24 25 26 The parties have also agreed upon a three-yearl FCA pilot for electric and natural gas operations. The FCA will compare actual FCA revenues to allowed FCA revenues determined on a per-customer basis. Any differences will be deferred for a rebate or surcharge. There are a number of customer safeguards, including that an FCA surcharge cannot exceed a 3o/o annuial rate adjustrnent. Any unrecovered balances will be carried forward to recover in futrue years. Further, there is no limit to the level of the FCA rebate. As part of the Stipulation, Staffand other interested parties, will review the efficacy of the FCA after its second full year to ensure it is functioning as intended. Fixed cost adjustnent mechanisms are intended to encourage conservation and allow customers more control over their bills. Further, the proposed FCA will remove any financial disincentive of the Company to encourage energy conservation. 27 The Section 13 of the Stipulation and Settlement, as amended by Addendum to the On June 15, 2018, the Idaho Public Utilities Commission approved an Addendum to the Stipulation which extended the term of the pilot for an additional year by Order No. 34085. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 3 4 5 6 7 8 9 10 11 t2 13 t4 15 16 I7 18 t9 20 2t 22 23 24 25 26 27 28 29 30 31 32 33 34 35 1 Stipulation approved by the Commission in Order No. 34085 on June 15, 2018, provided 2 further details, reproduced below, regarding the mechanics of the fixed cost adjustment 3 mechanism. A. FCA Mechanisms Term. The Parties agree to an initial FCA term of 4 years, with a review of how the mechanisms have functioned conducted by Avista, Staff, and other interested parties following the end of the third full-year. Avista may seek to extend the term of the mechanism prior to its expiration.2 B. Rate Groups. There will be two rate grcups established for both the electric FCA and natural gas FCA: Electric Customer Rate Groups:l. Residential - Schedule I2. Commercial - Schedules 11, 12,21,22,31,32 Natural Gas Rate Groups:l. Residential - Schedule 1012. Commercial-Schedules 111 and l12 C. Existing Customers and New Customers. The Parties have agreed that revenue related to certain items discussed below would not be included in the FCA for new customers. The result is that the Fixed Cost Adjustnent Revenue-Per-Customer for new customers will be less than the Fixed Cost Adjustment Revenue-Per- Customer for existing customers. For new electic customers added after the test period, recovery of incremental revenue related to fixed production and transmission costs would be excluded from the electric FCA. For new natural gas customers added after the test period, recovery of incremental revenue related to fixed production and underground storage facility costs would be excluded. These modifications are included in Appendices B and C to the Stipulation. D. Quarterly Reporting. Avista will file, within 45 days of the end of each quarter, a report detailing the FCA activity by month.3 The reporting will also include information related to the deferrals by rate group, what the deferrals would have been if tracked by rate schedule, use and revenue-per-customer for existing and new customers, and other summary furancial infonnation. Avista will provide such 2 Review of the mechanisms took place at a workshop March 27 , 2019, and the Company filed a separate application with the Commission which extended the term of the FCA Mechanisms through March 31,2025. See also discussion starting atpage 6 ofthis application.3 As stated in Order No. 34502 Case No. AW-G-19-03, the Company altered its quarterly reporting from 45 days to 60 days from the end ofeach quarter. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 4 I 2 3 4 5 6 7 8 9 l0 11 t2 13 t4 15 16 t7 18 t9 20 2t 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 4T other infonnation as may be reasonably requested from time to time, in the future quarterly reports. E. Annual Filings. On or before July l, the Company will frle a proposed rate adjustnent surcharge or rebate based on the amount ofdeferred revenue recorded for the prior January through December time period.4 The rate adjustment would be calculated separately for each Rate Group, with the applicable surcharge or rebate recovered from each group on a uniform cents per kWh or per therm basis. The proposed tariff (Schedule 75 for electric, Schedule 175 for natural gas) included with that filing would include a rate adjustment that recovers/rebates the appropriate deferred revenue amount over a twelve-month period effective on October I for electric (to match with Power Cost Adjustnent and Residential Exchange annual rate adjustnents time period) and November lst for natural gas (to match with the annual Purchased Gas Cost Adjustment rate adjusfrnent time period). The deferred revenue amount approved for recovery or rebate would be transferred to a balancing account and the revenue surcharged or rebated during the period would reduce the deferred revenue in the balancing account. After detennining the amount of deferred revenue that can be recovered through a surcharge (or refunded through a rebate) by Rate Group, the proposed rates under Schedules 75 and 175 would be determined by dividing the deferred revenue to be recovered by Rate Group by the estimated kWh sales (Electric FCA) or therm sales (Natural Gas FCA) for each Rate Group during the twelve-month recovery period. Any deferred revenue remaining in the balancing account at the end of the amortization period would be added to the new revenue deferrals to determine the amount of the proposed surcharge/rebate for the following year. F. lnterest. lnterest will be accrued on the unamortized balance in the FCA balancing accounts at the Customer Deposit Rate. G. Accounting. Avista will record the deferral in account 186 - Miscellaneous Deferred Debits. The amount approved for recovery or rebate would then be transferred into a Regulatory Asset or Regulatory Liability account for amortization. On the income statement, the Company would record both the deferred revenue and the amortization of the deferred revenue through Account 456 (Other Electric Revenue), or Account 495 (Other Gas Revenue), in separate sub- accounts. The Company would file quarterly reports with the Commission showing pertinent inforrnation regarding the status ofthe current deferral. This report would include a spreadsheet showing the monthly revenue deferral calculation for each month of the deferral period (January - December), as well as the current and historical monthly balance in the deferral account. 4 As stated in OrderNo. 34502 Case No. AVU-G-19-03, The company altered the deferral period of its FCA extension to July through June by using a one-time l8-month deferral period of January 1,2020 through June 30, 2021. See also discussion starting at page 6 ofthis application. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 5 I 2 3 4 5 6 7 8 9 10 11 t2 13 t4 l5 t6 t7 18 t9 20 2T 22 23 H. 3% Rate Increase Cap. An FCA surcharge, by rate Broup, cannot exceed a3o/o annual rate adjusfrnent, and any unrecovered balances will be carried forward to future years for recovery. There is no limit to the level of the FCA rebate. III. DRIVERS OF NATURAL GAS FCA REBATES The FCA deferral for Residential customers for 12 months ended Jvrc 30,2022 was the result of higher monthly use-per-customer and the deferral for Non-Reside,ntial customers was the result of slightly lower use-per-customer than the use-per-customer that was embedded in the 2019 test year (i.e., the FCA base). Residential average monthly use-per-customer was higher by 2 therms, and non-residential averuge monthly use-per customer was lower by 8 therms. The Company has identified the primary drivers for the change in use-per-customer. First, weather was wanner than normal for 12 months ended June 30, 2022, givng rise to a weather normalization adjustnent5 that required the addition of 0.3 million therms to residential usage (0.3 therms per customer) and 0.1 million therms (4 therms per customer) to non-residential usage. The estimated FCA revenue short fall associated with weather was approximately $131 thousand residential and $15 thousand non-residential. Since the 2019 test yearused to set 2021 rates,Idaho customers have achieved energy efficiency savings from participation in the Company's Demand Side Management programs. Estimated cumulative savings since the test year (derived from the Idaho 2017, 2018,2019,2020 and202l DSM Annual Reports) reduced residential usage for 12 months ended June 30, 2022 approximately 125 thousand therms and non-residential usage approximately 19 thousand thenns. The estimated FCA revenue shortfall associated with 5 T\e2020 weather normalization adjustment was included in the Company's WA Commission Basis Filing and the same process was applied to year-to-date June 2021. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 6 1 2 J 4 5 6 7 8 9 energy efficiency programmatic savings is $0.8 million residential and $0.1 million non- residential. The "other" drivers are related to items not easily quantifiable, such as the effects of non-programmatic energy efficiency, changes in business cycles, etc. The following table summarizes the impact of these drivers on the FCA Revenues received from customers in the deferral period. Driver Residential Group Use-per- FCA Customer Revenue rlon-Residential Groul Use-per- Customer FCA Revenue Weather Energy Efficiency Other Total (0,3) (0.1) 2.7 1.7 (So.11 (So.r1 $1.9 So.e (3,s) (1.0) (2.s) (7.81 (So.o1 (So.o1 (So.r1 (so.1l 1l T2 IV. RESIDENTIAL GROUP RATE DETERMINATION l3 The Company recorded $743,688 in the rebate direction in deferred revenue for the 14 natural gas residential customer group for 12 months ended June 30, 2022. The proposed l5 rate of 1.020 cents per therm is designed to rebate $717,280 to the Company's residential 16 natural gas customers served under rate Schedule 101. The following table summarizes 17 the components of the Company's request to rebate: l0 Summary 07.2021 - 06.2022 Defe rred Reve n ue Add PriorYear Residual Balance Add lnterest through L0l3y2O23 Add Revenue Related Expense Adj. Total Requested Recovery 'Customer Rebate Revenue Carryove r Deferred Reve nue (s743,688) 53p',7.22 (s+,ass; (s3,419) l57L7,28f.l (s7L7,2801 So18 19 Exhibit B, page 1 shows the derivation of the proposed rate to rebate revenue of AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 7 | $717,280 based on projected sales volumes for Schedule 101 customers during the 2 amortizationperiod (November 2022throngh October 2023). As identified on tariffSheet 3 l75B under Step 6 of "Calculation of Monthly FCA Deferral", interest on the deferred 4 balance accrues at the Customer Deposit Interest Rate.6 tf the proposed rebate is approved 5 by the Commission, the 12 months ended June 30, 2022 defenal balance, plus interest 6 through October, will be transferred into the regulatory liability balancing account. The 7 balance in the liability account will be reduced each month by the rebate received from 8 customers under the tariff. 9 V. NON.RESIDENTIAL GROUP RATE DETERMINATION l0 The Company recorded $99,328 in the surcharge direction in deferred revenue for l1 the natural gas Non-Residential Group for 12 months ended June 30, 2022. The proposed 12 surcharge rate of 0.381 cents per thenn is designed to recover $103,384 from the l3 Company's commercial and industrial customers served under rate Schedules I I I andll2. 14 The following table summarizes the components of the Company's request for rebate: Summary 07.2021 - 06.2022 Defe rred Reve n ue Add PriorYear Residual Balance Add lnterest through 7Ol3L/2023 Add Revenue Related Expense Adj. Total Requested Recovery Customer Surcharge Revenue Carryover Deferred Revenue S99,328 s2,930 574L Sges 5103,384 s103,384 SO15 16 t7 Exhibit B, page 3 shows the derivation of the proposed rate to surcharge revenue of $103,384 based on projected sales volumes for Schedules 111 and 112 during the 6 The Customer Deposit Interest Rate was 1.00% beginning January 2021. T\e current rate of 1.00% has been used as an estimate for purposes of this rate determination. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 8 1 amortization.period (November 2022 throryh October 2023). As identified on the tariff 2 Sheet l75B under Step 6 of "Calculation of Monthly FCA Deferral", interest on the 3 deferred balance accrues at the Customer Deposit lnterest Rate. If the proposed rebate is 4 approved by the Commission, the deferral balance, plus interest through October will be 5 transferred into the regulatory liability balancing account. The balance in the liability 6 account will be reduced each month by the rebate received by customers under the tariff. 7 Support showing the monthly calculation of the 12 months ended Jlumie 30, 2022 8 defenal balances for both the Residential and Non-Residential Groups is provided as 9 Exhibit C. These calculations were also provided to the Commission in quarterly reports 10 (except April through June 2022 which will be provided in the Q2 report by the end of 11 August). 12 VI.3% AI\NUAL RATE INCREASE TEST 13 FCA rate adjustment surcharges are subject to a3o/o annual rate increase limitation. 14 There is no limit to rebate rate adjustnents. As described in tariff Schedule 175, the 3o/o 15 annual rate increase limitation will be determined by dividing the incremental annual 16 revenue to be collected (proposed surchargerevenue less present surcharge revenue) under 17 this Schedule by the total "normalized" revenue forthe two Rate Groups forthe most recent l8 January through Decernber time period. Normalized revenue is determined by multiplying 19 the weather-corrected usage for the period by the present rates in effect. If the incremental 20 amount of the proposed surcharge exceeds 3o/o, only a 3olo incremental rate increase will be 2l proposed, and any remaining deferred balance will be carried over to the following year. 22 Exhibit B, page 6 shows the 3o/o test for the two rate groups. The incremental 23 change from the existing rebate to the proposed rebate for the residential group is a decrease AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 9 1 of $0.4 million or approximately 0.5o/o. For the Non-Residential group, the incremental 2 change from the existing rebate to the proposed surcharge is an increase of $0.2 million or 3 approximately 1.2%o. As both the Residential deferral and the Non-Residential deferral are 4 less than 3o/o, they are not subject to the 3Yo incremental surcharge test. There is no 5 proposed carry over for either rate class. 6 VII. EXISTING CUSTOMERS AND NEW CUSTOMERS 7 The Settlement Stipulation approved by the Commission requires that natural gas 8 customers that have been added since the test year are subject to an FCA Revenue-Per- 9 Customer that excludes incremental revenue related to fixed production and underground l0 storage facility costs. Separate calculations for new versus existing customers are clearly I I identified in the FCA base that was approved in Case No. AW-G-17-01 OrderNo. 33953 12 as adjusted by tax reform Case No. GNR-U-18-01 Order No. 34070 for natural gas rates 13 effective since January 1,2019 and Case No. AW-G-01 OrderNo. 35156 for natural gas 14 rates effective since September 1,2021(included in this filing as Attachment C, pages 6 15 through 10). 16 Due to this segregation, Avista tracks the usage of new customers since January 1, 17 2017 as compared with existing customers.T In general, the average usage of new natural 18 gas customers is comparable to the average usage of existing customers. Avista will 19 continue to track the usage of new customers over the Fixed Cost Adjustrnent term. 7 "Existing customers" were part of the test year used to set the January 1 , 2020 rates (20 1 6 calendar year). "New customers" consist of all new hookups after the test year. AVISTA'S NATURAL GAS FCA ANNUAL RATE ADJUSTMENT FILING PAGE IO 1 YIU. PROPOSED RATES TO BE EFFECTIYE NOVEMBER 1.2022 2 The Company is proposing a per therm FCA rebate rate of L.020$ for the 3 Residential Group, and a per therm FCA surcharge rate of 0.3811 for the Non-Residential 4 Group, bothto become effectiveNovember 1,2022. Exhibit B to this Applicationprovides 5 the Residential and Non-Residential Rate Calculatioru and Exhibit C provides the support 6 for the deferrals for the July 1, 2021 through June 30, 2022 defenal period. Exhibit A is a 7 copy of the proposed tariff, Schedule 175, which contains the proposed FCA rates. Exhibit 8 A also includes the proposed changes to Schedule 175 in strike/underline fonnat. 9 Residential customers using an average of 63 therms per month would see their l0 monthly bills decrease from $62.06 to $61.73, a decrease of $0.33 per month, or 0.5%. l1 12 IX. COMMT]MCATIONS AI\D SERVICE OF APPLICATION 13 In conformance with RP 125, this Application will be brought to the attention of 14 the Company's customers. First, the Company has served a copy of this Application upon 15 the service list in Case Nos. AVU-E-15-05 and AVU-G-I5-01, the cases that gave rise to 16 the FCA mechanisms. Second, a copy of Company's news release and customer notice is 17 provided as Attachment D. The news release will be issued in July and the customer notice 18 will be inserted in customer bills starting in August and run for a full billing cycle. t9 20 X. REOTTEST FOR RELIEF 2l The Company requests that the Commission issue an order approving recovery of 22 FCA deferrals for the period July 1, 2021 through June 30, 2022 and approve a per therm 23 FCA rebate rate of 1.020i for the Residential Group, and a per therm FCA surcharee rate AVISTA'S NATURAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE II I of 0.381f for the Non-Residential Group, both to become effective November 1,2022. 2 The Residential Group rebate represents a $0.4 million, or 0.5Yo incremental decrease to 3 schedule 101 customers, and the Non-Residential Group surcharge represents a $0.1 4 million, or l.2o/o incremental increase to Schedule l l l and 112 customers. The Company 5 requests that the matter be processed under the Commission's Modified Procedure rules 6 through use of written comments. 7 Dated at Spokane, Washington this 2fth day of July 2022. 8 AVISTA CORPORATION 9 l0lt t2 BY /s/ Patrick Ehrbar Patrick D. Ehrbar Director of Regulatory Affairs AVISTA'S NATI.'RAL GAS FCA ANNUAL RATE ADruSTMENT FILING PAGE 12 CERTIFICATE OF SERYICE I HEREBY CERTIFY that I have this 29ft day of J:uly 2022, served the Application of Avista Corporation - Fixed Cost Rate Adjustment, upon the following parties, by mailing a copy thereof, properly addressed with postage prepaid to: Jan Noriyuki, Secretary Idaho Public Utilities Commission I1331 W. Chinden Blvd Bldg 8 Suite 201-A Boise,ID 83714 i an.norivuki@puc.idaho. gov Peter J. Richardson Greg M. Adams Richardson Adams 515 N.27ft Steet PO Box 7218 Boise,ID 83702 peter(Erichardsonadam s. com gree@richardsonsdams. com Karl Klein Brandon Karpen Deputy Attorneys General Idaho Public Utilities Commission 472W. Washington Boise,ID 83702-0659 karl.klein@puc.idaho.sov Brandon.karpen@puc.idaho. qov Marv Lewallen 28530 SW Canyon Creek Rd. - South Wilsonville, OR 97070 marv@malewallen.com Larry A. Crowley The Energy Strategies Institute, Inc. 5549 S. Cliffsedge Ave Boise, ID 83716 crowleyla(daol.com Wendy Wilsons Clean Energy Program Director Snake River Alliance 223 N 6th Street, Suite 317 Boise, lD 83702 wwi I s on (a) snakeri veral I i ance. ore Dean J. Miller, Lawyer 36208. Warm Springs Boise,ID 83716 deanj miller@ cableone.net Benjamin J. Otto Idaho Conservation League 710 N.6th St. Boise, ID83702 botto@ idahoconservation.ore Dr. Don Reading 6070 Hill Road Boise,ID 83703 dreadine(Dmindsprin e. com /s/ Patrick Ehrbar Patrick Ehrbar Director of Regulatory Affairs