20221101Final_Order_No_35581.pdf

ORDER NO. 35581 1
Office of the Secretary
Service Date
November 1, 2022
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA UTILITIES
APPLICATION FOR AN ORDER
APPROVING A CHANGE IN RATES FOR
PURCHASED GAS COSTS AND
AMORTIZATION OF GAS-RELATED
DEFERRAL BALANCES
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CASE NO. AVU-G-22-06

ORDER NO. 35581

On September 2, 2022, Avista Corporation dba Avista Utilities (“Company”) filed its
annual Purchased Gas Cost Adjustment (“PGA”) Application (“Application”).
On September 27, 2022, the Commission issued a Notice of Application and Notice of
Modified Procedure setting comment deadlines for interested persons and a reply comment
deadline for the Company. Order No. 35541. The Commission Staff (“Staff”) filed comments and
was the only party to do so. The Company did not file reply comments.
Having reviewed the record, we now issue this Order approving the Company’s
Application.
APPLICATION
A. Overview of Proposed Rates
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
transportation, storage, and other related costs. During the deferral period, 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 stated its proposal will increase annual revenues by about $11.2 million or
12.7%. The Company stated that the average residential or small commercial customer using 63
therms per month will see an increase of $7.27 per month or 11.9%. The Company represented
that the proposed change would have no effect on the Company’s earnings. The Company provided
a copy of the press release it will send to affected customers. The Company asked that its
Application be processed by Modified Procedure and that the new rates take effect November 1,
2022.
In its Application, the Company proposed to: (1) pass any change in the estimated cost of
natural gas for the next 12 months to customers (Schedule 150); and (2) revise the amortization
ORDER NO. 35581 2
rates “to refund or collect the balance of deferred gas costs (Schedule 155).” Application at 2. The
Company proposed to change its PGA rates in this case for its customer classes as follows:

Service

Sch
No.
Commodity
Change per
therm
Demand
Change per
therm
Total
Sch. 150
Change
Amortization
Change per
therm
Total PGA
Rate Change
per therm
General 101 $ (0.00111) $ (0.00005) $ (0.00116) $ 0.11658 $ 0.11542
Lg. General 111 $ (0.00111) $ (0.00005) $ (0.00116) $ 0.11658 $ 0.11542
Lg. General 112 $ (0.00111) $ (0.00005) $ (0.00116) $ - $ (0.00116)
Interruptible 131 $ (0.00111) $ - $ (0.00111) $ - $ (0.00111)
Transportation 146 $ - $ - $ - $ - $ -

Id. at 3. The Company’s proposed changes to Schedules 150 and 155 and the Company’s rates are
further explained below.
B. Schedule 150
The Schedule 150 portion of the PGA has two parts: the “commodity costs” and the
“demand costs.” The Company’s “commodity costs” are the variable costs at which the Company
must buy natural gas. The weighted average cost of gas (“WACOG”) is an estimate of those costs.
Here, the Company estimated its commodity costs will decrease by $0.00111 per therm to
$0.35070 per therm, from the currently approved $0.35181 per therm. Id. To minimize exposure
to potential rising gas costs, the Company diversifies how it procures natural gas. The Company
stated that its procurement strategy included hedging and estimating the cost of index purchases.
The Company’s “demand costs” are its fixed-capacity costs for interstate transportation
and underground storage. Id. at 4. The Company’s demand costs primarily are costs to transport
gas on interstate pipelines to the Company’s local distribution system and fixed costs associated
with storage. Id. The Company proposed a $0.00005 per therm decrease in the overall demand
rate for customers on Schedules 101, 111, and 112. Id. This decrease is caused by “factors
including the Canadian exchange rate, an updated demand forecast, and new rates for the
Company’s Canadian pipelines, effective June 1, 2022.” Id.
C. Schedule 155
The Company’s Schedule 155 reflects the amortization of the Company’s deferral account.
The Company’s proposed amortization rate change for Schedule 101 and Schedule 111 is an
increase in revenue of $0.11658 per therm.1 The current rate applicable to Schedules 101 and 111

1 The Application mistakenly stated that the change in the amortization rate was $0.11542; Staff’s comments mirrored
that mistake. The actual change in the tariff is $0.11658 as seen on the table outlining the Company’s proposed
changes.
ORDER NO. 35581 3
is $0.01505 per therm in the surcharge direction; the proposed rate is $0.13163 per therm in the
surcharge direction taking into account the proposed amortization rate change.
If the Company’s Application is approved as filed, “the Company’s annual revenue will
increase by approximately $11.2 million” (12.7%). Id. at 5. The Company states that the average
residential or small commercial customer “using an average of 63 therms per month will see an
increase of $7.27 per month” or 11.9%. Id.
The Company asserts it has or will notify customers of its proposed tariffs by sending
notice to each customer as a bill insert in September.
STAFF COMMENTS
Staff reviewed the Company’s Application and accompanying submissions and supported
the Company’s request. To assess the reasonableness of the proposed changes, Staff examined the
Company’s gas purchases for the year, its fixed-price hedges, pipeline transportation and storage
costs, and estimates of future commodity prices. Staff reviewed the Company’s jurisdictional
allocations and the reasonableness of its Lost and Unaccounted for Gas volumes. Staff also verified
that the Company’s filing will not change the Company’s earnings and confirmed the proposed
changes to Schedules 150 and 155 accurately capture the Company’s demand and commodity
costs. Staff calculated the impact of three natural gas filings. In slight contrast to the Company’s
Application, Staff included the Company’s Fixed Cost Adjustment (“FCA”) into their
calculations2 of the Company’s net change to their natural gas revenue as seen in Table No. 4
contained in Staff’s Comments and set forth below:
Table No. 4: Impact of the Three Natural Gas Filings

CASE $ REVENUE CHANGE % REVENUE CHANGE
PGA $ 11.2 Million 12.7%
EE Tariff Rider $ 2.6 Million 3.0%
FCA $ (0.1 Million) (0.2%)
TOTAL $ 13.7 Million 15.5%

Staff Comments at 8. Staff also encouraged the Company to update its WACOG if gas prices
materially change.

2 The Company’s Application did not incorporate a FCA in their analogous calculation. Accordingly, the Company
calculated that the net change to their natural gas revenue “would be an increase of approximately $13.8 million or
15.7%.” Application at 3.
ORDER NO. 35581 4
Staff recommended the Commission a) approve the Company’s proposed Schedules 150
and 1553 as filed, and b) direct the Company to continue filing quarterly WACOG reports and
monthly deferred cost reports with the Commission on an ongoing basis.
Staff also reviewed the Application, including Exhibit C: Copy of Press Release and
Customer Notice. Staff determined that the documents in Exhibit C meet the requirements of Rule
125 of the Commission’s Rules of Procedure. IDAPA 31.01.01.125. Because comment dates in
this case were set to end before the Company had finished sending out customer notification, Staff
recommended the Commission accept late filed comments.
COMMISSION FINDINGS AND DECISION
The Commission has reviewed the record, including the Application and comments. 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, and more 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 on our review of the record, we find the Company’s proposed commodity and
demand cost rates in Schedule 150 reasonably adjusts for the Company’s costs without changing
its net income. We find the proposed WACOG decrease by $0.00111 per therm, from the currently
approved $0.35181 per therm to $0.35070 per therm to be a rate that is fair just and reasonable.
We further find the proposed $0.13163 per therm amortization rate for general and large general
service customers is fair, just, and reasonable. Likewise, we find the demand cost decrease of
$0.00005 per therm for general and large general customers to be fair just and reasonable
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. We also find that quarterly WACOG
and monthly deferred cost reports provide useful information and assist Staff with determining

3 The Company’s 2021 PGA included an approved 38-month amortization period. In this filing, the Company stated
that it modeled its calculations using the customary 12-month amortization period. Staff also recommended returning
to a 12-month amortization period.
ORDER NO. 35581 5
whether to audit earlier than planned, and whether an interim filing might be needed. We find it
fair, just, and reasonable to approve the Company’s proposed Schedule 155. The Company’s
proposed rate of $0.13163 per therm in the surcharge direction is reasonable. The Commission
also finds the Company’s proposal to amortize the surcharge balance of approximately $11.2
million to be recovered from customers over the customary 12-month amortization period to be
fair, just, and reasonable. Therefore, we approve the Company’s proposed Schedule 155, as filed.
For those customers in need of financial assistance, the Low Income Home Energy
Assistance Program and Project Share each provide energy assistance grants to eligible
participants to help pay their natural gas bills. Customers can apply for these programs through
Community Action Partnership agencies located in Avista’s service territory.
O R D E R
IT IS HEREBY ORDERED that the Company’s Application to change its natural gas rates
and charges is approved, as filed. The Company’s proposed Schedule 150, including the WACOG
of $0.35070 per therm and demand charge of $0.09238 per therm, for a total of $0.44308 per therm
is approved, effective November 1, 2022.
IT IS FURTHER ORDERED the Company’s proposed Schedule 155, with the
amortization rate of $0.13163 per therm is approved as filed, effective November 1, 2022.
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.

ORDER NO. 35581 6
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 1st day of
November 2022.

ERIC ANDERSON, PRESIDENT

JOHN CHATBURN, COMMISSIONER

JOHN R. HAMMOND JR., COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

I:\Legal\GAS\AVU-G-22-06 PGA\orders\AVUG2206_final_md.docx