990514_sw.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
STEPHANIE MILLER
DON HOWELL
TONYA CLARK
MADONNA FAUNCE
GEORGE FINK
BEVERLY BARKER
RON LAW
DAVID SCOTT
WORKING FILE

FROM: SCOTT WOODBURY

DATE: MAY 14, 1999

RE: CASE NO. AVU-G-99-1 (AVISTA)
PROPOSED STANDARDS FOR COMPETITIVE PRACTICES

On April 6, 1999, Avista Corporation dba Avista Utilities—Washington Water Power Division (Avista; Company) filed with the Idaho Public Utilities Commission (Commission) proposed Standards for Competitive Practices (Standards) which, if approved, would become part of the Company’s Tariff Schedule 163.
The proposed Standards are being filed by the Company in compliance with the Commission’s Order No. 27908 in Case No. WWP-G-98-4. In that Order the Commission approved the Company’s proposed Tariff Schedule 163 experimental Natural Gas Benchmark Mechanism (Gas Benchmark), together with the proposed consolidation of the Company’s gas procurement operations under its affiliate, Avista Energy. In its Order the Commission stated that “customers may benefit from rules of conduct that promote full and fair competition”, and required the Company to file standards for competitive practices similar to those adopted for Intermountain Gas Company. Reference Case No. INT-G-98-3, Order No. 27799 (November 17, 1998).
The proposed Standards will govern the relationship, transactions and dealings between Avista Utilities and Avista Energy regarding the gas procurement and management services provided by Avista Energy under the Gas Benchmark Mechanism in Tariff Schedule 163.
The Company requests that the Commission approve the revisions to Tariff Schedule 163 to include the proposed Standards for an effective date of May18, 1999. Implementation of the Gas Benchmark Mechanism, including all provisions of Schedule 163, will occur on the first calendar day of the month following receipt of all necessary regulatory approvals and execution of the agency agreement between Avista Utilities and Avista Energy (estimated implementation date—June 1 or July 1, 1999).
Commission Notices of Application and Modified Procedure in Case No. AVU-G-99-1 issued on April 23, 1999. The deadline for filing written comments was May 13, 1999. Commission Staff was the only party to file comments (attached).
Staff notes that the Company’s proposed Standards, while differing in some respects, are similar to the standards approved by the Commission for Intermountain Gas Company. Reference Order No. 27799. Staff contends, however, that the proposed Standards do not adequately or clearly prohibit the furnishing of market-sensitive non-public information by Avista Utilities personnel to its marketing affiliate, Avista Energy. The Company represents to Staff that it is concerned that communications among senior management personnel necessary to evaluate the financial performance of both companies not be prohibited. Staff is concerned that customer specific non-public information not be shared.
Staff recommends that paragraph 4.1 of the proposed Standards be modified to read as follows:
4.1. Without the prior written consent of the customer, Avista may not disclose to its gas marketing affiliate or any other market participant any non-public, customer-specific information that it has from any of the following:

• a customer or gas supplier
• a potential customer or gas supplier
• an agent of a customer or gas supplier or potential customer or gas supplier
• a marketer or other supply entities seeking to supply gas to a customer or potential customer that is located in the utilities service territory

Staff believes that the proposed modification will be a reasonable compromise in that it would allow exchange of aggregate non-public information while it would protect customer-specific, market-sensitive information.
Staff believes the balance of the proposed Standards are acceptable. Staff reserves the right to seek modification in the future pending results of Commission Staff audits.
COMMISSION DECISION:
Avista Utilities requests that the Commission approve proposed revisions to its Tariff Schedule 163 to include its proposed Standards for Competitive Practices for effective date May 18, 1999. The Commission is apprised that all the condition precedents to implementation of Schedule 163 have yet to occur. Should the Company’s Application be approved as filed, or with proposed Staff modification?

Scott Woodbury

bls/M-avug991_sw2.doc
DECISION MEMORANDUM 3