20200520Avista Reply Comments.pdf

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Avista Corp.
14l l East Mission P.O.Box3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
May 20,2020
Diane Hanian, Commission Secretary
Idaho Public Utilities Commission
P O Box 83720
Boise, ID 83720-0074
RE: GNR-U-20-03 Reply Comments of Avista Corporation for an Accounting Order
Authorizing Deferred Accounting of Incremental Costs Associated with the COVID-l9 Public
Health Emergency.
Dear Ms. Hanian:
Attached for electronic filing in the above matter is Avista's Reply Comments relating to an
Accounting Order Authorizing Deferred Accounting Treafrnent of lncremental Costs Related to the
COVID-I9 Public Health Emergency.
Please direct any questions on this matter to Elizabeth Andrews at [phone] or myself at
[phone].
Sincerely,
Patrick Ehrbar
Director of Regulatory Affairs
Avista Utilities
pat. ehrbar@ avistacorp.com
509495-8620
Enclosures
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O.BO){3727
1411 EAST MISSION AVENT'E
S POKANE, WASHINGTON 99220 -37 27
TELEPHONE: [phone]
david. meyer(lD avistacom.com
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION, DIB/A AVISTA
UTILITIES, FOR AN ACCOUNTING ORDER
AUTHORZING DEFERRED ACCOUNTING
OF INCREMENTAL COSTS ASSOCIATED
WITH THE COVID-19 PUBLIC HEALTH
EMERGENCY
BEFORE TIIE IDAHO PUBLIC UTILITIES COMMISSION
)
)
)
)
)
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CASE NO. GNR-U-20-03
REPLY COMMENTS OF
OF AVISTA
I. INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter "Avista" or
"Company''), submits these Reply Comments regarding comments submitted by the Staff
of the Idaho Public Utilities Commission ("Staff') and the ldaho Conservation League
("ICL") on the consolidated Applications for a deferred accounting order for incremental
costs associated with the COVID-I9 public health emergency.
IL BACKGROUND
On March 13,2020,Idaho Govemor Brad Little issued a Proclamation declaring a
state of emergency and providing directives to combat the spread of SARS-CoV-2
("COVID-I9"), to provide essential services and limit public exposure (the "Emergency").
Reply Comments of Avista Corporation
CaseNo. GNR-U-20-03
Page 1
Thereafter, several Idaho public utilities - including Avista Corporation, Falls Water
Company ("Falls Water"), Gem State Water Company ("Gem State"), Idaho Power
Company ("Idaho Power"), and PacifiCorp dba Rocky Mountain Power's ("PacifiCorp")
- applied to the Commission for orders authorizing them to account for certain
unanticipated, emergency-related expenses by booking them as regulatory assets for
possible recovery through rates that would be set in future proceedings. The utilities do
not seek to increase rates at this time. See Case Nos. AW-E-20-03 and AVU-G-20-03
(Avista electric and gas expenses); FLS-W-20-02 (Falls Water); GSW-W-20-01 (Gem
State); IPC-E-20-19 (Idaho Power), and PAC-E-20-04 (PacifiCorp). Given the emergency
and the similarities in the utilities' applications for an accounting order to address
emergency-related costs (collectively, the "Application"), Commission Staff
recommended the Commission consolidate the above-cited cases into a general docket to
address whether and to what extent the utilities should be authorized to defer incremental
emergency-related expenses in a regulatory asset account for possible future recovery.
Staff recommended the docket be processed by Modified Procedure. The Commission
then decided to open this generic proceeding and consolidate the above-cited cases for
purposes of issuing a single order that would apply to each of the utilities that had filed an
application.
Staff supports the deferral of emergency-related costs for recovery in a future
proceeding by the utilities, given the unprecedented nature of the emergency and because
the incremental costs were not anticipated when the Commission set the utilities' revenue
requirement and base rates. ICL acknowledges the costs incurred by the utilities may
become significant and recommends the Commission begin considering novel methods to
Reply Comments of Avista Corporation
Case No. GNR-U-20-03
Page2
allow utilities to recoup these costs while mitigating impact to utility customers. Avista
appreciates these comments and generally agrees with most of the comments. Avista
submits these reply comments to Staff s and ICL's comments.
IIL AYISTA'S REPLY COMMENTS
A. Staff supports PacifiCorprs proposal to use 2019 bad debt expense as a baseline
and any excess write-offs would be deferred.
Although the use of 2019 is a reasonable solution for some utilities, Avista believes the
authorized level of bad debt expense that was set in its most recent general rate case
would be a more appropriate level for Avista. Electric customers' rates were set in
AW-E-19-04, effective December 1,2019; and natural gas customers' rates were set
in AVU-G-17-01, effective January l, 2018. The bad debt expense used in these cases
have been audited by Staffand other parties, and perhaps more importantly represents
the amounts currently being recovered from customers in base rates today.l
B. Staff supports the deferral of prudently incurred additional O&M costs incurred
to protect health and safety of utility employees, including personal protective
equipment sanitizer, cleaning supplies and additional hardware/software and
other equipment not capitalized to allow employees to work from home.
I This is a similar approach to that used in 2018 related to Case No. GNR-U-I8-01 (Impact of Federal Tax
Code Revisions on Utility Costs and Ratemaking - Tax Code and Jobs Act ("TCJA")). Although the
Commission had sought the level of TCJA refund using 2017 historical balances, Avista proposed to base
any refunds to customers on the Company's most recent general rate case information for the rate effective
period January l, 2018 through December 31, 2018. This approach was agreed to by the Padies in that
proceeding, and approved by the Commission.
Reply Comments of Avista Corporation
CaseNo. GNR-U-20-03
Page 3
Avista will incur additional incremental costs other than those costs described by Staff
in its comments that were not anticipated when the Commission set the utilities'
revenue requirement and base rates in its last general rate cases. Some of these costs,
for example, are additional financing costs for debt that has been incurred to finance
the higher level of accounts receivable the utility will likely carry due to delayed
customerpayments, additional O&M labor costs due to ernployees that could not work
on capital projects having those costs recorded as O&M costs, and other costs that
cannot be reasonably determined at this point. Avista believes the Commission should
not limit the type of costs incurred that can be deferred at this time, given that this
proceeding is relatedjust to the deferral ofcosts (and benefits), and not the recovery
nor prudence of such costs. Rather, the Commission can perform a review after the
fact, based on each utility's support of its costs, before approving recovery. As such,
Avista respectfully requests that it be allowed to include all costs that we believe are
related to COVID-I9, and then later the Commission can determine whether some or
all ofthose deferred costs can be recovered.
C. Staff supports utilities using the 2019 level of late fees as a baseline to estimate
approved level of late fees.
For Avista in particular, the Company believes that the level of late fees revenues
should be based on the level currently authorized in customers' rates, similar to the
proposal for bad debt expense described above.
Reply Comments of Avista Corporation
CaseNo. GNR-U-20-03
Page 4
D. Staffopposes any mechanism that would allow utilities to collect lost revenue from
customers whose operation have been shut down.
In our original Application, Avista (ike Idaho Power) requested to defer lost revenue
from customers not ffacked in our Fixed Cost Adjustment mechanisms. While we
understand Staff s views on this issue in particular, the Company respectfully requests
that these lost revenues, if any, be tacked (ust like costs and other benefits), knowing
that the ultimate prudence of such lost revenue (if any) would be reviewed for recovery
in a subsequent proceeding.
E. ICL encourages utilities to streamline access to customer assistance and
conservation programs.
Avista appreciates ICL's comments related to helping keep our customers connected
during this pandemic. We recognize that the impacts of COVID-19 will be felt far and
wide and are still unfolding. While no one can predict the extent of the COVID-l9
situation and its impact, we're continuing to adapt and are committed to serving our
customers well during this uncertain time. We know a growing number of our
customers are hurting and struggling to make ends meet. We are here for them and want
to support them. We listen to each unique situation and work to identify ways to ease
the burden.
We are also aware that as we all spend more time at home, we may have higher energy
usage, which can lead to higher bills. As we've worked to identify immediate and near-
term opportunities to support our customers and communities, we know this work is
not done. Along with other utilities and businesses across the region and country, we
Reply Comments of Avista Corporation
CaseNo. GNR-U-20-03
Page 5
continue to plan for the future, what it might look like and how we can best serve our
customers. ln the meantime, our website - https://myavista.com/safety/covid-19-
response - provides all of the latest information related to energy effrciency, payment
arrangements, payment assistance, and Avista's ongoing operational efforts during this
difficult time.
F. ICL recommends Commission and utilities consider using the Energy Costs
Recovery Bond process (Idaho Code 61-1501) and recommends long amortization
period to recover the prudently incurred expenses.
As it relates to the use of Energy Cost Bonds referenced by ICL, while Avista
appreciates the creative thinking, we do not believe that this situation warrants the use
of such instruments. First, Avista has the necessary financial standing to be able to
fund its operations. Second, these bonds appearto be very specific to "energy costs" -
fuel or power cost adjustnents, purchased gas adjustment tacker rates, commodity
tracker rate adjushnents or purchased power tracker rates. In the end, the increased
costs associated with COVID-19 are more specific to bad debt costs, labor and
technology costs, and other non-energy related items. We don't believe such an
instrument is necessary at this time, and further has proposed that any deferral be
carried without interest. Finally, Avista would be open to a longer amortization period,
if the final approved net deferral is of a significant nature.
Reply Comments of Avista Corporation
CaseNo. GNR-U-20-03
Page 6
DATED at Spokane, Washington, this 20th day of May 2020.
AVISTA CORPORATION
a
By
Patrick Ehrbar
Director of Regulatory Atrairs
Avista Corp
Reply Commeirts of Avista Corporation
CaseNo. GNR-U-20-03
PageT
CERTIF'ICATE OF' SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 2Od'DAY OF MAY 2020, SERVED THE
FOREGOING COMMENTS OF AyISTA CORPORATION,IN CASE NO. GNR-U-
20-03, BY E-MAILING A COPY THEREOF, TO THE FOLLOWING:
Diane Hanian, Secretary
Idaho Public Utilities Commission
I1331 W. Chinden Blvd
Building 8, Suite 201-A
Boise, lD 83714
diane.hanian(a)puc. idaho. gov
GEM STATE WATER CO
PRESTON N CARTER
GTVENS PURSLEY
601 W BANNOCK ST
BOISE ID 83702
E-MAIL: prestoncarter(iz), givenspurslev.com
kendrah(4 eivenspursley. com
LISA NORDSRTON
MATT LARKIN
IDAHO POWER COMPANY
PO BOX 70
BOISE rD 83707-0070
E-MAIL: lnordstrom(a)idahopower.corn
m I arkin(D, id ahopow er. com
dockets (D i dahopow er. com
BENJAMIN J OTTO
ID CONSERVATION LEAGUE 710 N
61I{ STREET
BOISE ID 83702
E-MAIL: botto(rridahoconservation.ore
DR DON READING
6070 HILL ROAD
BOISE ID 83702
E-MAIL: dreadinq(a)mindsprinq.com
FALLS WATER CO
PRESTON N CARTER
GTVENS PURSLEY
601 W BANNOCK ST
BOISE ID 83702
E-MAIL: prestoncarter(rD givenspursley. com
k endrah (d. eivenspursl ey. com
ERIC W NELSON
NW NATURAL
220 NW 2ND AVE
PORTLAND OR 97209
E-MAIL: eric.nelson(rDnwtatural.com
TED WESTON
ROCKY MOUNTAIN POWER
I4O7 WNORTH TEMPLE STE 330
SALT LAKE CITY UT 84116
E-MAIL: Ted.weston(n)pacifi corr:. com
law.com
J acob. mcdermott(r0paci ficorp. com
Emily. wegener(lDpacifi com.com
PETER RICAHRDSON
RICHARDSON ADAMS PLLC
5I5 N 27TH STREET
BOISE TD 83702
E-MAIL: peter(a/richardsonadams.com
CERTIFICATE OF SERVICE
RAI{DALL C BI.'DGE
THOIvIAS J BITDGE
RACINE OLSON PLLP
PO BOX t39t
POCATELLO ID 83204
E-MAIL: randy@.acineolson.com
[e-mail]
BRIAN COLLINS
MAURICE BRUBAKER
BRI.'BAKER & ASSOCATBS
16690 SWINGLEY RIDGE RD #I4O
CHESTERFIELD MO 63017
E-}vIAIL: [e-mail]
mbrubaker@ consultbai. com
/Y Paul Kimball
Paul Kimball
Manager of Compliance & Discovery
CERTIFICATE OF SERVICE