Avista Comments.pdf

NOV-25-2002 NON 10: 34 AN AVI STA RATES DEPT,-' ,---" ---"" ",--"", --" ,-, --"",-,
FAX NO. 509 495 8058 P. 02 -)2('-/1
Avis!. Carp.
1411EestMissiofl POBax3727
Spokane. Washingtafl 99226-3727
Telephone 5f1!-489-DSOO
Toll Free 811.727.9170
~~~'iI'ST
Corp.
November 25, 2002
Jean D. Jewell, Secretary
State of Idaho
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83702
RE: Avistu Corp. comments on Case No. GNR-02-
Avista Corp. respectfully submits for Commission consideration the following comments on
Case No. GNR-O2-02, Annual Determinalion of the Interest Rates on Deposits Collected from
Customers for the Calendar Year 2003. Interest rates are at historic lows and the currently
proposed change for Customer Deposits to 2% reduces by half the previous year's rare of 4%.
Customer Deposits in the state of Idaho were approxirmltely $960,000 as of the cnd of OctOber.
What is of prime importance to the Company is that the Customer Deposit Rale is cun'enLly
being used as the proxy for determination of the interest rate that is applied to tht Company
electric and gas deferrals under our Idaho Power Cost Adjustment (PCA) and
Purchased Gas
Adjustment (PGA) mechanisms. Those defetTals total approximately $44 million as of October
31, 2002 and a difference of 2 percent would represent approximately $900,000 anm.mlly. The
deferral balances have been at very high levels since the middle of 2000 and Company
projections show amortization of the PCA balance to extend beyond 2004. An extended
amortization period for the PCA defcITals associated with the extraordinary energy situation of
2000 and 2001 was chosen to mitigate the rate impact on our customers.
The Company cannot bOITOW funds at Treasury Bill rates. Even if the Cc.m1pany was tlble
finance these material amounts under its short-term credit arrangement. thetl rate is based on a
standard bank index plus 1.75% plus 25 to 50 basis points for fees. A recent borrowing under
the credit agreement for a 3D-day peliod was at 3.63%, Most experts don t anticipate interest
rates staying at these histonc low levels.
We understand that the Customer Deposit Rate calculation is cstuhlished by administrative rule,
however, t:he Company desired to submit these commentii ro inform the Commis~ion of the
related consequences of their decision today. We would like ro j(eep the issue open regarding the
appropriateness of using the Cust:omer Deposit: Rate for A vista s energy defelTals, and would like
the OPP011unit:y to address this issue in a separate proceeding.
Sin
.srd
Kelly Norwood
Vice-President, Rates and Regulation