20231004Comments of the Commission Staff.pdf

MICHAEL DUY AL
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BARNO. 11714
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
~:;23 OCT -4 PM 3: 12
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE FIXED COST
ADJUSTMENT MECHANISM (FCA)
ANNUAL RA TE ADJUSTMENT FILING OF
A VISTA CORPORATION
)
) CASE NO. A VU-G-23-05
)
)
) COMMENTS OF THE
) COMMISSION STAFF
___________________ )
COMMISSION STAFF ("STAFF") OF the Idaho Public Utilities Commission, by and
through its Attorney of record, Michael Duval, Deputy Attorney General, submits the following
comments.
BACKGROUND
On July 31 , 2023, 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, 2022, through June 30, 2023, and authorization for an
adjustment to its FCA rates for natural gas service from November 1, 2023, through October 31 ,
2024. The Company proposed to adjust the FCA rate for the Residential group (Schedule 101)
from a present rebate rate of 1.020¢, to a proposed rebate rate of 1.219¢ per therm. The
Company proposed to adjust the FCA rate for the Non-Residential group (Schedules 111 and
112) from a present surcharge rate of0.381 ¢ to a proposed rebate of0.632¢ per therm.
STAFF COMMENTS 1 OCTOBER 04, 2023
The Company represented that the Residential group rate change represents a $0.1
million, or 0.2%, decrease to Schedule 101 customers, and the Non-Residential group rate
change represents a $0.3 million, or 1.2% decrease to Schedules 111 and 112 customers. The
Company requested that the adjustment have a November 1, 2023, 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 costs 1 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 2015 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 15, 2018,
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 13, 2019, the
Commission authorized the Company to extend its FCA mechanism for both gas and electric
customers through March 31 , 2025. Order No. 34502.
STAFF REVIEW
The Company submitted its Residential and Non-Residential rate calculations, support
for its deferrals, and its proposed FCA Schedule 175 with its Application. 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 represented that it recorded $820,233 in the rebate direction in deferred
revenue for the natural gas Residential customer group for the 12 months ended June 30, 2023.
The Company stated that the proposed rate of 1.219¢ per therm is designed to rebate $859,547 to
1 "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.
STAFF COMMENTS 2 OCTOBER 04, 2023
the Company's Residential natural gas customers served under rate Schedule 101. The Company
represented that the deferral balance for the 12 months ended June 30, 2023, 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.
The Company represented that it recorded $181,388 in the rebate direction in deferred
revenue for the Non-Residential natural gas group for the 12 months ended June 30, 2023. The
Company stated that the proposed rebate rate of 0.632¢ per therm is designed to rebate $174,563
from commercial and industrial customers served under rate Schedules 111 and 112. 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 rebate received by customers under the tariff.
The Company proposed changing the FCA Gas rate for the Residential group (Schedule
101) from the current rebate rate of 1.020¢ to the proposed rebate rate of 1.219¢ per therm. The
current FCA surcharge rate for the Non-Residential groups (Schedules 111 and 112) is 0.381¢
and the Company proposed a rebate rate of 0.632¢ per therm. The Residential group rate change
is a decrease of $140,320, or 0.2%. The Non-Residential group rate change is a decrease of
$279,798, or 1.2%. The combined effect of expiring FCA rates and the proposed rates are shown
in Table No. 1 below.
Table No 1: Combined Effect of Present and Proposed FCA Rates
Rate Group Expiring Present FCA Proposed FCA Proposed FCA
Revenue Revenue Change
Residential ($719,227) ($859,547) ($140,320)
Non-Residential $105,235 ($174,563) ($279,798)
Total ($613,992) ($1,034,110) ($419,571)
Drivers of Natural Gas FCA Rebate
For the 12 months ended June 30, 2023, 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. 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, 2023. The Company attributes the proposed changes to drivers including
higher use per customer, colder weather, and energy efficiency savings.
STAFF COMMENTS 3 OCTOBER 04, 2023
Residential Group Rate Determination
For the Residential customer group, the Company recorded $820,233 in deferred revenue
for the 12 months ended June 30, 2023. The proposed rebate rate of 1.219¢ per therm will rebate
$859,547 to the Company's Schedule 101, Residential natural gas customers.
If the proposed rebate is approved by the Commission, the deferral balance for 12 months
ended June 30, 2023, 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. 2 summarizes the components of the Company's request to rebate the deferred
revenue to Residential natural gas customers:
Table No. 2: Residential Natural Gas Customer Rebate Components
July 1, 2022 -June 30, 2023, Deferred Revenue ($820,233)
Add: Prior Year Residual Balance ($24,538)
Add: Interest through 10/31/2024 ($11,224)
Add: Revenue Related Expense Adj. ($3,552)
Total Requested Rebate ($859,547)
Non-Residential Group Rate Determination
For the Non-Residential group, the Company recorded $181,388 of deferred revenue for
the 12 months ended June 30, 2023. The proposed rebate rate of 0.632¢ per therm will rebate
$174,563 to commercial and industrial ("C&I") customers receiving service under Schedules 111
and 112. The Company's proposed rate to rebate $174,563 from C&I customers is based on
projected sales volumes for Schedules 111 and 112 for the November 1, 2023, through October
31, 2024, 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 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
non-residential natural gas customers:
STAFF COMMENTS 4 OCTOBER 04, 2023
Table No. 3: Non-Residential Natural Gas Customers Rebate Components
January 1, 2022-June 30, 2023, Deferred Revenue ($181 ,388)
Add: Prior Year Residual Balance $9,991
Add: Interest through 10/31/2024 ($2,589)
Add: Revenue Related Expense Adjustment ($577)
Total Requested Rebate ($174,563)
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, 2023, 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 31.01.01.125. The notice was included with bills mailed to
customers between August 7, 2023, and September 7, 2023, providing customers with a
reasonable opportunity to file timely comments with the Commission by the October 4, 2023,
deadline. As of October 3, 2023, 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:
1. The proposed FCA residential rebate rate of 1.219¢ per therm, which is designed
to refund $859,547 to the Company's Residential natural gas customer group;
2. The proposed FCA non-residential rebate rate of 0.632¢ per therm, which is
designed to rebate $174,563 from the Company's Non-Residential natural gas
customer group; and
3. The proposed Schedule 175 -Fixed Cost Adjustment Mechanism -Natural Gas
as filed.
STAFF COMMENTS 5 OCTOBER 04, 2023
Respectfully submitted this 4th day of October 2023.
Technical Staff: Kevin Keyt
Curtis Thaden
Laura Conilogue
Leena Gilman
i:umisc/co1mnents/avug23.5mdkkct comments
STAFF COMMENTS
Michael Duval
Deputy Attorney General
6 OCTOBER 04, 2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HA VE THIS 4th DAY OF OCTOBER 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
A VISTA CORPORATION, IN CASE NO. A VU-G-23-05, BY E-MAILING A COPY
THEREOF, TO THE FOLLOWING:
PA TRICK EHRBAR
DIR OF REGULATORY AFFAIRS
AVISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
E-MAIL: pa trick. [e-mail]
[e-mail]
DA YID J MEYER
VP & CHIEF COUNSEL
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3 727
E-MAIL: [e-mail]
~~
SECRETARY
CERTIFICATE OF SERVICE