19991028Order No 28189.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION DBA AVISTA UTILITIES — WASHINGTON WATER POWER DIVISION FOR AN ORDER APPROVING A CHANGE IN NATURAL GAS RATES AND CHARGES.
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) CASE NO. AVU-G-99-2

ORDER NO. 28189

On September 15, 1999, Avista Corporation dba Avista Utilities — Washington Water Power Division (Avista; Company) applied to the Idaho Public Utilities Commission (Commission) for authority to implement new rates and charges for natural gas service in the state of Idaho. Avista serves approximately 48,600 customers in Idaho. Over 48,000 of those customers are residential. As computed by the company, the total requested net annual revenue increase in Idaho is $2,708,000 (8.58%), which includes separate billing adjustments for contract customers as detailed below. The increase in price per therm to residential customers is approximately 8.41%. Residential customers using an average of 80 therms per month under the Company’s proposal can expect an increase in their average monthly bill of $3.21. The change in rates and charges to other customers will vary according to customer class and usage. The Company has requested an effective date of November 1, 1999. The Company maintains that the public interest does not require a hearing on its Application and requests that the matter be processed under the Commission’s Rules of Modified Procedure, i.e., by written submission rather than by hearing, IDAPA 31.01.01.201-204.
As part of this Purchase Gas Adjustment (PGA) filing, the Company is also requesting to collect $.0004 per therm from sales customers for remittance to the Gas Research Institute (GRI) for research and development (R&D) projects. GRI is requesting that local distribution companies (LDCs) contribute, on a voluntary basis, an annual amount equal to lost pipeline funding. It is estimated that the proposed customer charge of $.0004 per therm will provide approximately $31,000 on an annual basis.
The overall effect of the proposed changes, if authorized, would be to increase customer rates per therm in the follow amounts:

Class Description
& Schedule

$ Per Therm
General/Large General & Commercial
(Schedules 101,111 &121)

Large General & Commercial Receiving Lump Sum Bill
Credits or Charges
(Schedules 112 & 122)

Interruptible Service & Interruptible Service Receiving Lump Sum Bill Credits or Charges
(Schedules 131 & 132)

Transportation
(Schedule 146)

$0.04012

$0.02185

$0.01784

$Ø
Schedule 155Gas Rate Adjustment
Schedule 155Gas Rate Adjustment (Idaho) is used by the Company to pass through any under- or over-collection of gas costs since its last tracker filing. The company estimates a net deferral amount of $1,245,411 owing from its customers as of June 30, 1999. The result is an increase in the Tariff Schedule 155 rates for Schedules 101, 111 and 121 customers of $0.01827/therm.
As per the Company’s Application and to clear out residual balances in customer accounts the following large transportation and interruptible customers will receive individual billing charges and/or credits/refunds that include interest that has accumulated from the end of the test period to the date of Commission approval. Balances at the end of the test period were:

Kootenai Medical Center
Idaho Asphalt
Imsamet
Hughes Greenhouse
Lignetics
Louisiana Pacific (Sandpoint)
Louisiana Pacific (Chilco)
Interstate Asphalt
University of Idaho
St. Joseph Hospital
Coeur dAlene Asphalt
Crown Pacific
($ 224)
($ 189)
$ 0
($ 33)
$ 182
$2,345
($ 32)
$ 8,508
$10,561
$11,766
($ 1,088)
$12,658
Potlatch will receive an individual (Sch 155) refund/credit of $3,462.

Schedule 150Permanent Gas Cost Changes
Schedule 150Permanent Gas Cost Changes (Idaho) is used by the Company to reflect continuing changes in the cost of purchasing and transporting gas for customers. Since rates were last approved, the net change in commodity, demand and storage gas costs results in an increase of $0.02185/therm for firm gas Schedules 101 through 122; an increase of $0.01784/therm for interruptible Schedules 131 and 132; and no change for transportation Schedule 146. As per the Company’s Application, the resultant annual net increase in annual revenue requirement (Idaho) related to Schedule 150 changes is $1,462,698. The Company calculates its current weighted average cost of gas (WACOG) to be $0.19308, an increase of $0.02567 from the previous $0.16741.

On October 4, 1999, the Commission issued Notices of Application and Modified Procedure in Case No. AVU-G-99-2. The deadline for filing written comments or protests was October 22, 1999. Comments were filed by Commission Staff and a number of the Company’s customers. Staff recommends that the Company’s Application be approved. Staff reviewed the Company’s filing and audited the information provided. In its comments, Staff notes that natural gas prices in the northwest appear to be trending up. A major factor cited for the increase is the addition of new pipeline capacity connecting the Canadian Provinces of British Columbia and Alberta to the mid-west and eastern U.S. markets. Whereas previously the Canadian gas was locked into the northwest and California markets, the Canadians, Staff states, are now able to sell their gas in more lucrative markets. Additional factors cited as contributing to the higher gas prices are an increase in oil prices and the tightening of gas supplies vis-à-vis demand.
The Commission has also received a number of letters, faxes and e-mails from Avista customers opposing the size of the proposed increase, questioning the necessity of an increase, expressing concern regarding the impact of the increase on fixed and low-income customers, questioning the nature of the review process and the Commission’s role, and questioning whether the Company, which can recover its costs, has incentive to negotiate the lowest price for its customers.

COMMISSION FINDINGS
The Commission has reviewed and considered the Company’s Application in Case No. AVU-G-99-2 together with the attached exhibits and workpapers. The Commission has also considered the comments and recommendations of Staff related to the Company’s Application. We further acknowledge the receipt of a number of letters, faxes and e-mails from Avista customers protesting the proposed increase. Despite the concerns raised by the Company’s customers, we find that the public interest regarding the requested change in rates does not require a public hearing to consider the issues presented. Reference IDAPA 31.01.01.204.
The Commission appreciates the concerns raised by customers who oppose the rate increase. We note that the Company’s Application is a limited gas tracker and not a general rate case. Items such as the CEO’s salary package, the Company’s affiliate enterprises and how the Company spends its profits are not at issue. As this Commission in prior Orders has previously observed, the nature of costs included in the Company’s gas tracker Applications are generally external costs over which the Company has little or no control. Of exception in this case, the Company is asking to recover what is now a voluntary contribution to the Gas Resource Institute. We approve same because it has historically been recovered in the PGA as a pipeline cost and we believe the Company’s customers will benefit from the Company’s continued investment in research and development projects. Although we recognize the Company maintains an element of control in its contracting practices, the Commission has confidence that should the Company’s actions appear out of ordinary or imprudent that the review process would reveal same. We continue to find the annual tracker mechanism to be a useful regulatory vehicle for tracking and adjusting for gas-related costs. In some years PGA trackers result in rate increases, in other years rate decreases. The most recent history is as follows:

1998
1997
1996
1995
1994 $1,117,000 or 4.04% increase
$3,972,000 or 15.6 % increase
$2,338,601 or 8.5 % decrease
$4,850,000 or 15.68% decrease
$1,026,000 or 3.98% decrease Order No. 27816
Order No. 27261
Order No. 26662
Order No. 26283
Order No. 25708
There is equity in approving increases as well as decreases.
The Company in this case has requested a net annual revenue increase in Idaho of $2,708,000 (8.58%), which includes separate billing adjustments for contract customers as detailed above. Based on the Commission’s review and consideration of the Application and record in Case No. AVU-G-99-2, we accept the Company’s proposed rates, charges and adjustments as fair, just and reasonable. We further find to be reasonable an implementation date for new tariffs of November 1, 1999.

CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over this matter and Avista Corporation dba Avista Utilities—Washington Water Power Division, a gas utility, pursuant to the authority and power granted under Title 61, Idaho Code and the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED that Avista Corporation dba Avista Utilities—Washington Water Power Division be authorized to increase (change) its rates and charges in the manner requested in its Application and as reflected in the tariff schedules submitted in Case No. AVU-G-99-2 for effective date for implementation of November 1, 1999.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this _______ day of October 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/zO:AVU-G-99-2_sw

ORDER NO. 28189 1

Office of the Secretary
Service Date
October 29, 1999