20221004Comments.pdf

CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 98IO
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Street Address for Express Mail:
I I331 W CHINDEN BLVD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attomey for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FIXED COST
ADJUSTMENT MECHANISM GCA)
ANNUAL RATE ADJUSTMENT FILING OF
AVISTA CORPORATION
CASE NO. AVU-G-22-04
COMMENTS OF THE
COMMISSION STAFF
Staff of the Idaho Public Utilities Commission ("Staff'), by and through its Attorney of
record, Chris Burdin, Deputy Attomey General, submits the following comments.
BACKGROUND
On July 29,2022, Avista Corporation ("Company" or "Avista") applied to the Idaho
Public Utilities Commission ("Commission") for approval of recovery of its Fixed Cost
Adjustment ("FCA") deferrals for July 1,2021, through June 30, 2022, and authorization for an
adjustment to its FCA rates for natural gas service from November I ,2022, through October 30,
2023. The Company proposed to adjust the FCA rate for the Residential group (Schedule 101)
from a present rebate rate of 0.493(, to a proposed rebate rate of 1.020(, per therm. The
Company proposed to adjust the FCA rate for the Non-Residential group (Schedules I l l and
I I 2) from a present rebate rate of 0.490p to a proposed surcharge of 0.3 8 I I per therm.
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STAFF COMMENTS OCTOBER 4,2022
The Company represented that the Residential group rate change represents a $0.3
million, or 0.5oh, decrease to Schedule l0l customers, and the Non-Residential group rate
change represents a $0.1 million, or l.2Yo increase to Schedules I I 1 and I l2 customers. The
Company requested that the adjustment have aNovember 1,2022, effective date and that the
Commission process the request under Modified Procedure.
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 costsl of providing service, thus
decoupling the utility's revenues from its customers' energy usage. This decoupling removes a
utility's incentive to increase sales to increase revenue and profits and encourages energy
conservation. The Commission originally approved a three-year pilot program of the Company's
FCA as part of the approved settlement of the Company's 2075 rate case. Order No. 33437 at 10.
The parties to the Company's 2015 rate case agreed to review the program's effectiveness at the
end of its second full year to ensure the program was functioning as intended. On June I 5, 20 I 8,
the Commission approved an addendum to the settlement that extended the term of the
Company's FCA pilot for an additional year. Order No. 34085. On December l3,20l9,the
Commission authorized the Company to extend its FCA mechanism for both gas and electric
customers through March 31,2025. Order No. 34502.
The Company proposed a rate adjustment for its Residential and Non-Residential natural
gas customer groups based on the amount of deferred revenue for the 12 months ended June 30,
2022. The Company mostly attributes the proposed changes to drivers including the weather,
energy effrciency, and "other" drivers.
The Company represented that it recorded $743,688 in the rebate direction in deferred
revenue for the natural gas Residential customer group for the 12 months ended June 30, 2022.
The Company stated that the proposed rate of 1.020f, per therm is designed to rebate $717,280 to
the Company's Residential natural gas customers served under rate Schedule 101. The Company
represented that the deferral balance for the l2 months ended June 30, 2022, plus interest
through October, would be transferred into a regulatory liability balancing account, and the
balance in the account would be reduced each month by the revenue collected under the tariff,
I "Fixed costs" are a utility's costs to provide service, such as infrastructure and customer service, which do not vary
with energy use, output, or production, and remain relatively stable between rate cases.
2STAFF COMMENTS OCTOBER 4,2022
The Company represented that it recorded $99,328 in surcharge direction in deferred
revenue for the Non-Residential natural gas group for the l2 months ended June 30, 2022. The
Company stated that the proposed surcharge rate of 0.381(, per therm is designed to recover
$103,384 from commercial and industrial customers served under rate Schedules 111 and I12.
The Company represented that the deferral balance, plus interest through October, would be
transferred into a regulatory asset balancing account, and the balance in the account would be
reduced each month by the revenue collected 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.
STAF'F REVIEW
Staff reviewed the Company's Application, supporting workpapers, and the proposed
FCA Schedule 175. Staff audited the Company's FCA deferral accounts and internal controls
related to the FCA. This review provided Staff with reasonable assurance that the Company's
FCA natural gas deferral balances and rates were correctly calculated. Therefore, Staff
recommends the Commission approve the Company's Application and proposed FCA Schedule
175 as filed.
The Company proposed changing the FCA Gas rate for the Residential group (Schedule
101) from the current rebate rate of 0.49 4(, to the proposed rebate rate of 1.020i, per therm. The
current FCA rebate rate for the Non-Residential groups (Schedules 111 and 112) is 0.490p and
the Company proposed a surcharge rate of 0.3811 per therm. The Residential group rate change
is a decrease of $370,595, or 0.5%. The Non- Residential group rate change is an increase of
$236,344, or l.2Yo. The combined effect of expiring FCA rates and the proposed rates are shown
on Table No. 1 below.
Tahle No l: Comhined Impact of Present and Pronosed FCA Rates
Expiring Present FCA
Revenue
Proposed FCA
Revenue
Proposed FCA
Change
Residential (346,685)(717,280)(370,595)
Non-Residential (132,961\103,384 236,344
Total (479,646)(613,896)(134,251)
3STAFF COMMENTS OCTOBER 4,2022
Drivers of Natural Gas FCA Rebate
For the 12 months ended June 30, 2022, the FCA deferral for Residential customers was
the result of higher monthly use-per-customer ("UPC") than the UPC embedded in the 2019
FCA base year. Residential average monthly UPC was 2 therms higher than the 2019 FCA base
year. The deferral for Non-Residential customers was the result of slightly lower UPC than what
was embedded in the FCA base year. Non-residential average monthly UPC was 8 therms
lower.
The Company identified the primary drivers for the change in UPC as weather, energy
efficiency, and other. The weather was warner than normal during the deferral period. The
increased temperatures brought about a weather normalization adjustment which required 0.3
million therms of residential usage (0.3 therms per customer) and 0.1 million therms (4 therms
per customer) for non-residential usage. The estimated FCA revenue short fall related to weather
was approximately $131,000 for the Residential group and $15,000 for Non-residential group.
Idaho customers participated in the Company's Demand-Side Management programs and
achieved energy efficiency savings. Estimated cumulative savings for residential for the 12
months ended June 30, 2022, was approximately 125,000 therms and non-residential savings was
approximately 1 9,000 therms.
The "other" drivers are items that are not easily quantifiable. Other can be matters such
as the effects ofnon-program related energy efficiency or changes in business cycles, etc. Table
No. 2 below summarizes the impact of these drivers on the FCA Revenues received from
customers in the deferral period. The total FCA revenue shortfall is $0.8 million for residential
and $0.1 million for non-residential.
Tahle No 2: The impact of these drivers on the FCA Revenues
Residential Group Non-Residential Group
Driver
Use-Per-
Customer
(Therms)
FCA
Revenue
Use-Per-
Customer
(Therms)
FCA
Revenue
Weather (0.3)($0.1)(3.e)($0.0)
Enerqy Efficiency (0.1)($0.1)(0.1)($0.0)
Other 2.1 $1.0 (2.e\($0.1)
Total 1.7 $0.8 (7.8)($0.1)
4STAFF COMMENTS OCTOBER 4,2022
Residential Group Rate Determination
The Company recorded $743,688 in deferred revenue to be credited back to the natural
gas Residential customer group for the l2 months ended June 30, 2022. The proposed rebate
rate of 1.0200 per therm will rebate $717,280 to the Company's Schedule l0l, Residential
natural gas customers.
If the proposed rebate is approved by the Commission, the deferralbalance for 12 months
ended June 30, 2022, plus interest through October will be transferred into the regulatory liability
balancing account. The balance in the liability account will be reduced each month by the rebate
received by customers under the tariff.
Table No. 3 summarizes the components of the Company's request to rebate the deferred
revenue to Residential natural gas customers:
Table No.3: Residential Natural Gas Customers Rebate
July 1, 2021 - June 30.2022. Deferred Revenue ($743,688)
Add: 2021 Residual Balance $34,722
Add: Interest through 1013112023 ($4,895)
Add: Revenue Related Expense Adj.($3,419)
Total Requested Recovery ($717,280)
Non-Residential Group Rate Determination
The Company recorded $99,328 of deferred revenue from the Non-Residential group for
the l2 months ended June 30, 2022. The proposed surcharge rate of 0.381p per therm will
recover $103,384 from the Company's commercial and industrial ("C&I") customers receiving
service under Schedules 1l I and 112. The Company's proposed rate to collect $103,384 from
C&l customers is based on projected sales volumes for Schedules 111 and 112 for the November
1,2022, through October 31,2023, amortization period. If the proposed rate is approved by the
Commission, the deferral balance, plus interest, through October will be transferred into the
regulatory balancing account. Interest on the deferred balance accrues at the Customer Deposit
Interest Rate. The balance in the liability account will be reduced each month by surcharge
revenues received by customers under the tariff. Table No. 4 summarizes the components of the
Company's request for the surcharge:
5STAFF COMMENTS OCTOBER 4,2022
Table No.4: Non-Residential Natural Gas Customers Rebate
January 1,2021-June 30. 2022, Deferred Revenue $99,328
Add: 2019 Residual Balance $2,930
Add: Interest through 10/31/2023 $741
Add: Revenue Related Expense Adi.$385
Total Requested Recovery $103,384
CUSTOMER NOTICE AND PRESS RELEASE
The Company's press release and customer notice were included with its Application. In
addition to the four electric rate changes approved for October 1,2022, these documents also
addressed the Company's proposed natural gas adjustments in this case. Staff reviewed the
documents and determined they both meet the requirements of Rule 125 of the Commission's
Rules of Procedure. See IDAPA 3 1 .0 1 .0 1 . I 25. The notice was included with bills mailed to
customers between August 11,2022, and September 9,2022, providing customers with a
reasonable opportunity to file timely comments with the Commission by the October 4,2022,
deadline. As of October 3, 2022, no customer comments had been filed.
STAFF RECOMMENDATION
Staff recommends that the Commission approve the Company's FCA filing.
Specifically, Staff recommends that the Commission approve:
l. The proposed FCA residential rebate rate of 1.020i, per therm, which is designed
to refund $717,280 to the Company's Residential natural gas customer group;
2. The proposed FCA non-residential rate of 0.38ld per therm, which is designed to
collect $103,384 from the Company's Non-Residential natural gas customer
group; and
3. The proposed Schedule 175 - Fixed Cost Adjustment Mechanism -Natural Gas
as filed.
6STAFF COMMENTS OCTOBER 4,2022
Respectfrrlty submittedthis LIL\ day ofOctober2[Z|
Wlilt,
Chris Burdin
Deputy Attomey General
Technical Staff: Robin Maupin
CurtisThaden
Kevin Keyt
i:umisc/oonrnrnt*/ayug22.4offi d[* commpils
7STAIIF COMMENTS OCTOBER 4,2CI22
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4M DAY OF OCTOBEP. 2022,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFtr" IN
CASE NO. AW.G-22.04, BY E-MAILING A COPY THEREOF, TO THE
FOLLOWING:
PATRICK EHRBAR
DIR OF REGULATORY AFFAIRS
AVISTA CORPORATION
POBOX3727
SPOKANE WA99220-3727
E-MAIL : [e-mail]
[e-mail]
DAVID J MEYER
VP & CHIEF COUNSEL
AVISTA CORPORATION
POBO)(3727
SPOKANE WA99220-3727
E-MAIL: [e-mail]
Y
CERTIFICATE OF SERVICE