20230816ICL_NWEC Post-Hearing Brief.pdf

IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
F. Diego Rivas (MT State Bar No. 68806741, pro hac vice admission1) 1101 8th Ave
Helena, MT 59601
[phone] [e-mail] Attorney for the NW Energy Coalition
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION TO INCREASE ITS RATES AND CHARGES
FOR ELECTRIC AND NATURAL GAS SERVICE FOR ELECTRIC AND NATURAL GAS CUSTOMERS IN THE STATE OF IDAHO
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) ) ) ) )
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CASE NO. AVU-E-23-01; AVU-G-23-01
POST-HEARING BRIEF OF NW ENERGY COALITION AND IDAHO CONSERVATION LEAGUE

Pursuant to Rule 255 of the Idaho Public Utilities Commission ("Commission") Rules of
Procedure and the direction of Chairman Anderson at the August 2, 2023 Technical Hearing
in the above-captioned proceeding, the NW Energy Coalition (“NWEC”) and Idaho
Conservation League (“ICL”, together “NWEC/ICL”) hereby submit their post-hearing brief.

I. Summary of Position
NWEC/ICL recommend the Commission reject the provisions of the proposed settlement
and stipulation increasing the basic charge (variously as “monthly charge” or “customer charge”)
for Avista Corporation’s (“Avista” or “Company) Residential Schedule 1 from $7.00 per month
to $20.00 per month over two years.2 This increase to the basic charge is inconsistent with the

1 Order No. 35718 2 Stipulated Settlement at 18.
RECEIVED
Wednesday, August 16, 2023 4:28:29 PM
IDAHO PUBLIC
UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
principle of cost causation, sends a negative price for energy efficiency and conservation, and
most disproportionately effects low-income and low-usage customers.

II. The Commission has the authority to reject only the residential rate design
provisions within the settlement.
The Commission is tasked with setting rates that are “just, reasonable or sufficient.”3 A
settlement does not automatically equate to just and reasonable rates and the Commission is not
bound by a settlement proposal.4 Rather, the Commission must determine if the settlement is,
along with just and reasonable, in the “public interest.”5 The Commission has several options in
addressing a settlement proposal: accept the settlement outright; reject the settlement outright; or
apply “additional conditions” to the settlement in an effort to meet the just and reasonable
threshold.6
As discussed in further detail below, the proposed settlement in this case, if approved, would
result in rates that are not just, not reasonable, and not in the public interest. As a result, the
Commission may reject the settlement in its entirety or apply additional conditions, such a
striking the rate design provision. Because the rate design component was the only contested
issue, NWEC/ICL recommend the Commission accept the settlement with the added conditions
that the basic charge remain at $7.00 per month.

3 Idaho Code §61-502. 4 IDAPA 31.01.01.276
5 Id. 6 Id.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
III. The settling parties failed to meet their burden of proof showing that an increase
in the customer charge is in the public interest.
While the Commission must determine whether the proposal is in the public interest,7 it
is the settling parties that carry the burden of proving the settlement meets the public interest
standard.8 “Public” in its most basic and appropriate meaning, is defined as “relating to people
in general.”9 “Public interest” means “appeal or relevance to the general populace.”10
In this case, the settling parties have failed to prove that an increase in the customer
charge benefits the public as a whole. Even by narrowing “public” to mean the entirety of
customers within a utility’s service territory, Avista’s proposal to increase the customer charge
benefits only the company itself and large energy users. At the very least, any determination
under the public interest standard should consider effects on the entirety of the effected customer
class, notwithstanding the constant need to consider the energy system as a whole.
Two parties provided evidence in the record supporting an increase to the customer
charge. Avista relies on a theory of intraclass subsidization, alleging that a failure to recover
fixed costs through a fixed charge results in low-energy users being subsidized by high energy
users.11 For its part, Staff posited that the current basic charge does not allow the Company to
recover its fixed costs associated with billing, metering, and distribution.12
A. The settling parties failed to prove that low energy users subsidize high energy users.
Company witness Miller offered testimony in the Company’s initial application stating
high basic charges are warranted because “the effect of a low basic charge is that customers with

7 Id. 8 IDAPA 31.01.01.275
9 Meriam-Webster Dictionary. https://www.merriam-webster.com/dictionary/public 10 https://www.dictionary.com/browse/public-interest
11 Ehrbar, Di(Stip), 4-5, lines 22-2. 12 English, Di(Stip),13, lines 9-13.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
low monthly usage are being subsidized by customers with higher monthly usage.”13 This line –
and indeed the entirety of the brief buildup to this conclusion - was repeated in the Company
Witness Ehrbar’s testimony in support of the settlement.14 The only evidence offered in support
were three figures taken from Witness Garbarino’s Class Cost of Service (CCOS) study: $19.24;
$23.84; and $43.08.15 These figures were described in two sets of testimonies as being
“essentially fixed costs” that are not currently being fully recovered in the current basic charge
(emphasis added).16
NWEC/ICL contend that “essentially fixed costs” are not enough to prove that such costs
are indeed fixed. Yet when asked at the Technical Hearing held on August 2 to detail the costs
included in such calculations, Witness Ehrbar was unable to do so:
Q: And are you familiar with the inputs that create those figures, those dollar amounts?
A: I am not.17
Without proving the fixed nature of the included costs in the cited dollar figures, which serve as
the basis for the establishment of the higher basic charge, Avista is unable to make the leap to
intraclass subsidization of fixed costs.
Furthermore, NWEC/ICL witness McCloy establishes that intraclass subsidization does
not exist under the current rate design because the basic charge is not meant to recover costs
outside of metering, billing and customer service.18 All Schedule 1 residential customers
currently pay $7 per month, which aligns closely with the $6.61 indicated by Avista’s own

13 Miller, Di-28, lines 13-14.
14 Compare Ehrbar, Di(Stip)-4 with Miller, Di-28; Witness Ehrbar sponsored Mr. Miller’s testimony for the purposes of the Technical Hearing.
15 Miller, Di-28, lines 5-7; Ehrbar Di(Stip)-4, lines 16-19. 16 Miller, Di-28, lines 7-8; Ehrbar Di(Stip)-4, line 19.
17 Hearing Transcript, pp. 241-242, lines 24-1 18 See McCloy, Di(Stip)-3-4.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
CCOS as the amount needed to pay for Meter, Services, Meter Reading & Billing Costs.19
Avista’s only response to this argument is there is no rule or law that strictly limits what is
included in the basic charge.20 Conversely, the rule for increasing the basic charge as part of the
proposed settlement is the very public interest standard which Avista has failed to meet or
sufficiently articulate in written testimonies or at the Technical Hearing.
B. Avista is allowed to recover additional fixed costs through volumetric charges and no
evidence exists that Avista is unable to recover its fixed costs.
Staff’s reasoning for support of the increase to the fixed charge in the settlement is
that the “current Basic Charge does not allow the Company to recover the fixed costs associated
with customer charges (billing and meter reading) or distribution.21 Avista, however, provided
no evidence that the current basic charge and accompanying volumetric charge is insufficient to
recover its fixed costs. Instead, “the primary factor driving the Company’s electric and natural
gas revenue requirements in Rate Year 1 and Rate Year 2 is an increase in net plant investment
(including return on investment, depreciation, taxes, and offset by the tax benefit of interest)
from that currently authorized.”22
In fact, the Fixed Cost Adjustment (FCA) mechanism ensures that Avista is not only
allowed, but is guaranteed to recover its authorized revenue requirement (including fixed costs),
no more and no less.23 Indeed, the FCA exists precisely to discourage the use of basic charges
above those needed to recover direct customer costs, while at the same time ensuring the utility

19 Garabino, Di Exhibit 16, page 16, Column D, Row 24; See also Hearing Transcript, Page 241, lines 9-16
20 Ehrbar, Reb(Stip)-4, lines 3-15. 21 Ehrbar, Di(Stip)-4-5, lines 22-2.
22 Vermillion, Di-19, lines 4-7. 23 See Ehrbar, Reb(Stip)-6.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
recovers its fixed costs despite a potential decrease in volumetric sales due to investments in
energy conservation.24
C. Even if the settling parties did prove that intraclass subsidization exists, there is no
evidence in the record indicating that such subsidization is not in the public interest.
It is the burden of the settling parties to prove the proposed settlement is in the public
interest.25 With regard to intraclass subsidization, the settling parties have not met this burden.
Rather, the Company notes it “believes that it is appropriate to recover more of these fixed costs
through the basic charge” because the “effect of a low basic charge is that customers with low
monthly usage are being subsidized by customers with higher monthly usage.”26 The analysis
stops there, failing to establish why intraclass subsidization (if it exists) is not beneficial to the
entirety of its customer base. The only purported gain is that “[i]ncreases in fixed monthly basic
charges will benefit high users of energy.”27 Avista provides no reasoning why benefiting high
users of energy is of interest to the entirety of its customers or the public as a whole. Rather, the
Company simply exacts tradeoffs, benefiting high energy users at the expense of lower usage
customers.
On the other hand, NWEC/ICL witness McCloy provided extensive testimony on why
appropriate basic charges should be limited to the incremental metering and billing costs of each
additional customer.28 Above this amount, shifting costs in to basic charges negatively impacts
energy efficiency and conservation, and disproportionately impacts low-income customers.29

24 See McCloy, Di(Stip)-6-8. 25 IDAPA 31.01.01.275.
26 Miller, Di-28, lines 10-14. 27 Ehrbar, Reb(Stip)-7, lines 2-3.
28 See McCloy, Di(Stip) 29 Id.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
IV. Increasing the basic charge is not in the public interest because it exacerbates
resource adequacy issues by sending a negative price signal for energy efficiency.
Witness McCloy detailed in testimony how increasing the basic charges to include costs
outside of metering, billing, and customer service provides for a decreased incentive for
investment in energy efficiency and conservation.30 The testimony noted that both “utility
customers and the utility itself will have a decreased incentive to pursue energy conservation.”31
At the Technical Hearing, Witness Ehrbar confirmed that energy efficiency benefits all
customers, whether they participate in utility programs or not.32 Witness Ehrbar also confirmed
that Avista previously incented customers to invest in energy efficiency and conservation,
spending customer dollars to facilitate decreased energy use.33 NWEC/ICL applaud this effort. It
is incongruous, however, for a utility to incent customers to use less energy, while at the same
time increase their bills more than other customers precisely for using less energy relative to
customers not pursuing efficiency gains. The rational outcome of increasing basic charges and
decreasing variable rates is that customers will be less motivated to participate in utility
efficiency programs.34
Furthermore, Witness McCloy noted in testimony that investments in energy efficiency and
conservation are in the public interest because they alleviate issues pertaining to price volatility,
resource adequacy and reliability.35 Energy efficiency alleviates the need to invest in more
generation, and reduces the need for maintenance on the transmission and distribution systems.36

30 Id. 31 McCloy, Di(Stip)-9, lines 8-9. 32 Hearing Transcript, p. 225, lines 3-8. 33 Hearing Transcript p. 231, lines 20-25.
34 McCloy, Di(Stip)-9-10, lines 10-2.
35 McCloy, Di(Stip)-10, lines 14-20. 36 Hearing Transcript, pp. 227-228, lines 18-14.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
Without these benefits, utility costs, and thus customer rates, will be higher, contrary to the
public interest.

V. Increasing the basic charge is not in the public interest because it most
negatively impacts low-income customers.
Avista concedes that, as a result of the proposed settlement, low-energy users will see
a disproportionately higher bill increase than high-energy users.37 Witness McCloy provided
testimony indicating that nationally low-income customers generally use less energy than higher-
income customers.38 NWEC/ICL agrees that the cited national economic data on energy usage is
not state specific, but in lieu of specific evidence to the contrary, it is consistent that Idaho usage
patterns by income conform to the general result. As a result, it can be deduced that increases to
the basic charge as part of the proposed settlement will also disproportionally harm low-income
customers.
Avista responded only that Witness Ehrbar had sponsored testimony in 2015
indicating that low-income customers use more energy than other residential customers.39 At the
hearing, Witness Ehrbar agreed that his previous testimony had not resulted in an increase to the
basic charge in that docket, but rather a settlement requiring the Company to further investigate
the matter.40 Witness Ehrbar also agreed that no update to the low-income analysis had been
provided and that subsequent rate cases resulted in only minimal increases to the basic charge.41

37 Miller, Di-30, lines 17-19.
38 McCloy, Di(Stip)-11, lines 3-4. 39 Ehrbar, Reb(Stip)-7-8, lines 19-4.
40 Hearing Transcript, pp. 233-234, lines 20-5. 41 See Hearing Transcript, pp. 233-235.
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 ICL & NWEC – Post-Hearing Brief
The Commission has before it a classic case of two competing expert opinions, neither of
which can be verified in time for a decision in the case. One expert’s opinion, however, that of
witness McCloy, is based on rate design techniques relied on for decades in Idaho and other
jurisdictions as a proper method to ensure cost recovery for utilities while not negatively
impacting more vulnerable populations. The other opinion, that of Company witness Ehrbar,
even if validated, provides only a snapshot in time - eight years prior to the filing of this case.
That is not to say that either of the witnesses is undeniably correct regarding usage
patterns of Avista’s low-income customers; these are complicated matters worth deliberate and
ongoing study. What the testimonies do indicate, however, is that low-income customers must be
given due consideration by the Commission in determining whether a substantial increase in the
basic charge is in the public interest. NWEC/ICL contend that witness McCloy’s reliance on the
advocacy of low-income organizations is sufficient to demonstrate that, absent compelling
evidence to the contrary, the proposed increase to the basic charge is not in the public interest.
VI. Conclusion
For the foregoing reasons, and those provided in written and oral testimony, the
Commission should reject the residential basic charge provisions of the proposed settlement.
Respectfully submitted this 16th day of August, 2023.

__________________________
F. Diego Rivas, appearing Pro Hac Vice
Regulatory Counsel NW Energy Coalition 1101 8th Ave Helena, MT 59601
[e-mail]

IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 Page 1 ICL & NWEC, Certificate of Service

CERTIFICATE OF SERVICE
I hereby certify that on this 16th day of August, 2023, I delivered true and correct copies
of the foregoing POST HEARING BRIEF in Case No. AVU-E-23-01; AVU-G-23-01 to the following persons via the method of service noted: /s/ F. Diego Rivas

F. Diego Rivas (MT State Bar No. 68806741) Appearing pro hac vice 1101 8th Ave Helena, MT 59601
[e-mail]
Electronic Mail Only (See Order No. 35058):
Idaho Public Utilities Commission
Jan Noriyuki Commission Secretary [e-mail] [e-mail]

Commission Staff Chris Burdin Deputy Attorney General Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No. 8
Suite 201-A 93714 [e-mail] Avista Corporation
Patrick D. Ehrbar
Director of Regulatory Affairs Avista Corporation PO Box 3727 Spokane, WA 99220-3727
[e-mail]
[e-mail] David Meyer Vice President and Chief Counsel
of Regulatory and Government Affairs
Avista Corporation [e-mail]
IDAHO PUBLIC UTILITIES COMMISSION, Case No. AVU-E-23-01; AVU-G-23-01 Page 2 ICL & NWEC, Certificate of Service

Clearwater Paper Peter J. Richardson
Richardson Adams, PLLC
515 N. 27th St. Boise, ID 83702 [e-mail]
Dr. Don Reading
280 Silverwood Way Eagle, ID 83716 [e-mail]
Carol Haugen
Nathan Smith Jamie McDonald [e-mail] [e-mail]
[e-mail]
Idaho Forrest Group Andrew P. Moratzka Stoel Rives LLP
33 South Sixth Street
Suite 4200 Minneapolis, MN 55402 [e-mail]
Larry Crowley
The Energy Strategies Institute 3738 S. Harris Ranch Ave. Boise, ID 83716 [e-mail]

Walmart, Inc. Justina A. Caviglia Parsons Behle & Latimer 50 West Liberty Street, Suite 750
Reno, NV 89502
[e-mail] Steve W. Chriss Director, Energy Services
Walmart Inc.
2609 Southeast “J” Street Bentonville, AR 72716 [e-mail]