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Brad M. Purdy
Attorney at Law
Bar No. 3472
2019 N. lTth St.
Boise,ID. 83702
(208) 384-1299 (Land)
(208) 484-9980 (Cell)
bmpurdv@hotmail.com
Attorney for Petitioner
Community Action Partnership
Association of Idaho
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION DBA AVISTA
UTILITIES FOR AUTHORITY TO
INCREASE ITS RATES AND CHARGES FOR
ELECTRIC AND NATURAL GAS SERVICE
IN IDAHO
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. AVU-E.15.05
AVU-G-Is-0r
COMMUNITY ACTION PARTNERSHIP ASSOCIATION OF IDAHO'S
DIRECT TESTIMONY OF CHRISTINA ZAMORA
IN SUPPORT OF SETTLEMENT STIPULATION
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I.INTRODUCTION
Q: Please state your name and business address.
A: My name is Christina Zanora. I am the Executive Director of the Community Action
Partnership Association of Idaho at 3350 W. Americana Terrace, Suite 360, Boise, ID
83706.
Q: On whose behalf are you testifying in this proceeding?
A: The Community Action Partnership Association of Idaho ("CAPAI") Board of Directors
asked me to present the views of an expert on, and advocate for, low income customers o
Avista.
II. BACKGROUND
Q: Please describe CAPAI's organizational structure and the functions it performs, relevant
to its involvement in this case.
A: CAPAI is an association of the following private, nonprofit organizations that fight
poverty in Idaho: l) The Community Action Partnership (CAP-N & CAP-NC);2)El
Ada, Inc. (El Ada); 3) The Western Idaho Community Action Partnership (WICAP); a)
The South Central Community Action Partnership (SCCAP); 5) The Southeastern Idaho
Community Action Agency, Inc. (SCCAP); 6 The Eastern Idaho Community Action
Partnership,Inc. (EICAP); 7) The Community Council of ldaho,Inc. (CC!, and; 8) The
Canyon County Organization on Aging, Weatherization and Human Services, Inc.
(CCOA). The last two agencies, CCI and CCOA, are designated in CAPAI's Bylaws as
"special purpose agencies." These agencies are focused on providing services to migrant
and senior populations, respectively. Collectively, the six CAPs along with CCI and
CCOA are referred to as "member agencies." For the purposes of the Stipulation at issue
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in this proceeding, there is no relevant distinction between a CAP and special purpose
agency.
Each member agency has a designated service area. Combining all agencies,
every county in Idaho is served. The agencies design their various programs to meet the
unique needs of communities located within their respective service areas. Not every
agency provides all of the following services, but all work with people to promote and
support increased self-sufficiency. Programs provided by CAPS include: employment
preparation and retention, education assistance child care, emergency food, senior
independence and support, clothing, home weatherization, energy assistance, affordable
housing, health care access, and much more.
Q: What is the relationship between CAPAI and the member agencies?
A: CAPAI is effectively the umbrella organization that provides a myriad of services to the
members to assist them in carrying out their individual missions throughout Idaho. Such
services include training and technical assistance, coordination ofresources, program
planning and assistance with implementation, programmatic administrative oversight, and
advocacy for the low-income in Idaho, among other things.
Q: Are the individual member agencies represented on CAPAI's Board of Directors and, if
so, how?
A: Yes they are. Each agency has an Executive Director and its own Board of Directors that
establishes policy for that agency. The Executive Director manages the day to day
functions of the agency. In addition, each Executive Director of each member agency sits
on the CAPAI Board of Directors. Thus, there are currently 8 CAPAI Board members.
Q: Which of the eight member agencies provide low-income assistance to Avista's service
territory?
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A: The Community Action Partnership serves North Idaho including all of Avista's Idaho
service territory.
Q: Have you testified before this Commission in other proceedings?
A: Yes, I have testified on behalf of CAPAI in numerous cases involving United Water,
Idaho Power, AVISTA, and Rocky Mountain Power and in generic proceedings.
III. SUMMARY
Q: Please summarize your testimony in this case?
A: The purpose of my testimony is to support the settlement stipulation entered into between
CAPAI, Avista, Clearwater Paper Corporation, Idaho Forest Group, L.L.C., the Idaho
Conservation League, and the Snake fuver Alliance. The Settlement Stipulation was
filed with the Commission on October 19,2015, and accompanied by a Motion for
Approval of Stipulation and Settlement. I also provide the rationale for CAPAI's support
of the settlement. Finally, I will explain why I believe that the settlement is in the genera
interests not only of Avista's low-income customers, but the general body of ratepayers
as well.
Q: Is CAPAI's support for the Settlement Stipulation unconditional?
A: Yes it is
Q: Are there any exhibits to your testimony?
A: No.
IV. ESSENTIAL ELEMENTS OF SETTLEMENT
A. Revenue Requirement:
Q: Please identify the primary aspects or elements of the settlement that CAPAI believes
renders it fair, just and reasonable and in the best interests of the general body of
ratepayers.
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A:The Company's original application sought a two-phase rate increase with the first
increase to take place on January 1,2016 and the second on January 1,2017. The first
year revenue increase would have yielded an additional5.2o/o in revenues for Avista's
electric customers and 4.5Yo effective for gas which would have resulted in additional
revenues to the Company of $13.2 million for electric and $3.2 million for gas.
The second phase of the requested increase, effective January 1,2017, would
have increased electric revenues 5.1%ofor electric ($13.7 million) and2.2Yo for gas ($1.7
million).
Would you please describe CAPAI's involvement in this case?
CAPAI participated fully throughout the entirety of this case and participated in all
settlement negotiations.
What is the rate increase ultimately agreed to by all parties and set forth in the Settlement
Stipulation?
A: First, the parties agreed to a single year rate increase as opposed to the two-year phase-in
approach originally requested. The amount of the increase, effective January l, 2016, is
$2.7 million for electric customers and $1.5 million for gas (0.69% and3.49Yo,
respectively). The parties further agreed to a rate of retum on equity for Avista of 9.5Yo
and a 50o/o cornmon equity ratio.
Q: How did the parties calculate this reduced revenue requirement increase?
A: There were numerous adjustments made to Avista's expenses, rate base adjustments, and
capital structure/rate of return, the latter alone reducing revenue requirement by $2.438
million for electric revenues and $415,000 for gas. The many adjustments to the various
components of Avista's operations and the resulting reduced rate increase are too
numerous to mention here and explicitly spelled out in the Settlement Stipulation.
Q:
A:
Q:
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Q:
A:
In light of your testimony, do you believe the proposed revenue requirement increase to
be fair, just and reasonable?
Yes. In combination with other provisions set forth in the proposed Settlement
Stipulation,I believe the agreed upon and significantly reduced revenue requirement
increase to be fair,just and reasonable.
B. Fixed Cost Adiustment Mechanism:
Were there any changes to Avista's overall method of rate recovery that are noteworthy?
Yes. The parties agreed to the implementation of a Fixed Cost Adjustment ("FCA)
mechanism for Avista to go into place at the time of the rate increase, January 1,2016.
This mechanism is initially for a 3 year period with a review after the second full year of
operation. Avista has the right to seek an extension of the FCA. The FCA will be
segregated between electric and gas customers as well as the Residential Class (Schedule
l) and the commercial customer classes. There are numerous other provisions contained
in the Settlement Stipulation pertaining to the implementation and structure of the FCA
including, among others, quarterly reporting by Avista and the annual filings by the
Company necessary to make the adjustments to reflect variations in fixed costs. Finally,
there is a provision in the Stipulation that an FCA surcharge by rate group cannot exceed
a3oh annual rate adjustment. Any unrecovered balances will be carried forward to future
years for recovery which should help to avoid "rate shock" in any given year. On the
other hand, the parties agreed that to the extent that Avista's FCA results in reduced rates,
there shall be no limit on the amount of the adjustment.
C. Rate Spread:
How does the Settlement Stipulation propose to allocate the increased revenue
requirement among rate schedules, or classes?
Q:
A:
Q:
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A: For electric customer classes, the allocation is to be spread on a pro-rata basis based on
the Company's proposed25% move toward unity without adopting any particular cost of
service methodology. For gas customers, there will also be a pro-rata increase but with a
33olo movement toward unity among classes.
Q: Do you believe that a disproportionate rate increase for both residential electric and gas
customer classes is fair?
A: Yes. Under the circumstances, including the fact that Avista's cost of service studies
provided over this and recent other rate cases have all shown the Residential class to be
paying less than its share of overall revenue requirement, I believe that a 25o/o and33Yo
movement for electric and gas Residential customers, respectively, is a fair compromise.
D. Rate Desisn:
Q: Does the Settlement Stipulation change the Company's existing monthly customer
charge?
A: For electric customers, the answer is no. There will be no change to the monthly
customer charge or fixed and variable demand charges. The residential customers'
existing $5.25 per month will remain unchanged. For gas customers, there will be a
$1.00 increase from $4.25 to $5.25, bringing it to the same level as electric customers.
The remaining revenue requirement increase for gas customers will be allocated on a
uniform percentage basis to the volumetric rates currently in existence.
Q: What is CAPAI's position regarding the proposed rate design for the Residential electric
and gas classes?
A: I believe that, for the time being and unless and until there is data demonstrating the
existing electric customer charge to not be fair, just and reasonable, leaving it at its
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current level is best. I also believe that a $1.00 per month increase to the gas monthly
customer charge to align it with the electric monthly charge is fair, just and reasonable.
E. Customer Service-Related Issues:
1. Low Income Data:
Does the Settlement Stipulation address any issues of interest or concern specific to
Avista's low income customers?
Yes. Paragraph}} of the Stipulation addresses two important low income issues. First,
as the Commission is most likely aware, CAPAI has been working diligently to obtain a
better understanding of low income customer consumption habits, especially for electric
customers. In that pursuit, CAPAI has encountered numerous obstacles, among them, the
fact that electric utilities have not historically categorized their customers between low
income and non-low income. Programs requiring identification of low income
customers, such as LIHEAP, are a source of some low income consumption data, but
falls far short of capturing the true number and identities of the Company's actual low
income customer base that would qualify pursuant to federal poverty guidelines.
Why is the identification of low income customers and their consumption data of value
and interest to CAPAI?
As I stated, no person or entity truly knows the exact number of Avista's customers who
qualify as low-income pursuant to federal guidelines. Although some low income
customers apply for assistance programs such as LIWA or LIHEAP and their
consumption data could be anonymously collected by Avista, CAPAI has reason to
believe that there are a considerable customers who qualify as low income, but either fail
to apply for assistance, for whom assistance is not available or meaningful, or who
somehow fall between the cracks. It is entirely possible that the true number of low
Q:
A:
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income customers is many times greater than the handful of assistance recipients on
record.
Q: Why is the consumption data of low income customers of interest to CAPAI?
A: Since CAPAI began initiating its pursuit of low income data, there have been several
realizations that historical assumptions are not always accurate. For example, it was
assumed for many years that low income customers cannot afford to consume
unnecessary electricity, so they consume relatively lower levels than non-low income.
Because of information collected in recent years, we now know that there possibly exists
a surprisingly greater number of low income customers who consume relatively high
levels of electricity. The possible reasons for this are numerous and include the fact that
the poor often live in rented housing, or own homes, that rely on electric heat. Avista's
far northern service territory naturally brings with it long, cold winters. We also know
with certainty that low income customers typically cannot afford to switch to alternative
fuel sources such as natural gas. Furthernore, low income housing is typically very
poorly insulated resulting in considerable heat loss. This is why Avista's Low Income
Weatherization (LIWA) program is of great importance to the poor. Thus, low income
customers whose usage matches these profiles have much less discretion in their electric
consumption.
Q: Please explain how the acquisition of more thorough low income data would assist
CAPAI?
A: Without having a better picture of low income consumption, it makes taking a position on
rate design for the residential class very difficult.
Q: Why is this?
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A: Because another historical presumption was that low, fixed monthly customer charges are
preferable to low income customers. Thus, CAPAI has historically argued for collecting
revenue requirement increases primarily through the consumption rates. If a greater
percentage of low income customers are in fact relatively high users, then a higher basic
charge would be preferable. There are always winners and losers when making rate
design decisions, but without better data, CAPAI is shooting in the dark. Thus, additional
low income data is essential to taking a more well-informed position.
Q: How does the Settlement Stipulation address this need for more thorough low income
data?
A: In paragraph 20(a) of the Stipulation it is stated: "The Company and interested parties
will meet and confer prior to the Company's next general rate case in an effort to identify
low income customers served by the Company, quantify the number of customers so
identified, and determine those customers'usage patterns. An initial meeting shall occur
no later than June 30,2016, with follow-up meetings to occur as the attendees may deem
appropriate."
Q: Does this provision satisff CAPAI's desires for more thorough data as you have
identified?
A: Yes. CAPAI notes that Avista has been forthcoming in responding to past requests
regarding this topic. It is, however, an on-going learning process as we attempt to forge
better ways to identify low income customers and then obtain their usage data. CAPAI is
satisfied that this provision will provide the forum to acquiring further knowledge of the
data sought.
2. Low Income Weatherization Assistance and Conservation Education:
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Q: What is the second low income issue you referred to earlier and that is addressed in the
Settlement Stipulation?
A: Paragraph 20(b) states that: "The Company and interested parties shall meet and confer
prior to the Company's next general rate filing in order to assess the Company's Low
Income Weatherization and Low Income Conservation Education Programs and discuss
appropriate levels of cost-effective, low income weatherization in the future. An initial
meeting shall occur no later than June 30,2016, with follow-up meetings to occur as
attendees may deem appropriate.
Q: Would you please explain why this provision is of value to CAPAI?
A: LIWA funding levels for all three of Idaho's electric [OUs have been frozen since roughl
late-2011. Given the amount of time that has transpired, and the increasing backlog of
otherwise eligible low income customers who cannot receive LIWA assistance due to
insufficient funding, CAPAI believes that a discussion with the Company, Staff, and
other interested parties would be of value. CAPAI also believes that there are new
methodologies for determining a LIWA program's cost-effectiveness that have been
adopted in other states. In addition, any given utility's programs are subject to their own
idiosyncrasies, changes, and opportunities for improvement. CAPAI would like to
discuss Avista's LIWA program on a holistic, broad spectrum basis to determine possible
means of achieving a greater cost-effectiveness rating.
IV. CONCLUSION
Q: Would you please summarize CAPAI's position with respect to the Settlement
Stipulation?
A: It is CAPAI's position that the Settlement Stipulation reflects a well-negotiated
conclusion and one that is in the best interests ofthe general body ofratepayers. For the
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Q:
A:
reasons outlined in my testimony, CAPAI recommends that the Commission approve the
proposed settlement agreed to by all parties to this case.
Does that conclude your testimony?
Yes, it does.
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CERTIFICATE OF SERVICE
I, the undersigned, hereby certify that on the 13th day of November, 2015,I served a
copy of the foregoing document on the following by electronic mail and U.S. postage or hand
delivery.
COMMISSION STAFF:
Karl Klein
Brandon Karpen
Deputies Attomey General
Idaho Public Utilities Commission
472W. Washington St.
Boise,lD 83702
karl.klein@puc.idaho. gov
brandon.karpen@puc. idaho. gov
AVISTA CORPORATION:
Kelly Norwood
Vice President State & Federal Regulation
Avista Corporation
POBox3727
Spokane, WA99220-3727
kelly.norwood@,avi stacorp. com
David Meyer
Vice President and Chief Counsel
of Regulatory & Governmental Affairs
Avista Corporation
P0Box3727
Spokane, WA99220-3727
david. meyer@avi stacorp. com
CLEARWATER PAPER CORPORATION :
Peter J. Richardson
Richardson Adams, PLLC
515 N. 27thst.
Boise,Idaho 83702
peter@richardsonadams. com
DIRECT TESTIMONY OF CHRISTINA ZAMORA 13
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Dr. Don Reading
6070 Hill Rd.
Boise,ID 83703
dreading@mindsprin g. com
IDAHO FOREST GROUP, LLC:
Dean J. Miller
McDevitt & Miller
420 W. Bannock Street
P.O. Box 2564-837Al
Boise, lD 83702
j oe@mcdevitt-miller. com
Larry A. Crowley
The Energy Strategies Institute, Inc.
5549 S. Cliffsedge Ave.
Boise,lD 83716
crowleyla@aol.com
IDAHO CONSERVATION LEAGUE:
Benjamin J. Otto
Idaho Conservation League
710 N. 6th st.
Boise,ID 83702
botto@idahoconservation. org
SNAKE RIVER ALLIANCE:
Ken Miller
,Snake River Alliance
P.O. Box 1731
'Boise,ID 8370i
knunez@snakeriveral I iance.org
km i I ler@snakeri veral I iance.org
DIRECT TESTIMONY OF CHRISTINA ZAMORA
Purdy