Avista’s annual PCA is 2.17 percent reduction

Idaho Public Utilities Commission

October 2, 2012

Case No. AVU-E-12-06

Contact: Gene Fadness (208) 334-0339, 890-2712

Avista Utilities’ northern Idaho customers received an approximate 2.17 percent decrease in electric rates effective Oct. 1. 

The Idaho Public Utilities Commission approved the utility’s proposal to rebate customers about $3.1 million of over-collection in Avista’s Power Cost Adjustment (PCA) account. 

Customer rates are divided into two major components: variable rates (the PCA) and base rates.  The variable rates are adjusted annually to account for expenses to utilities that change from year to year: wholesale electric, natural gas and transportation expense and water supply.  When variable expenses come in higher than what is included in the fixed portion of customer rates (the base rate), customers are assessed a one-year surcharge. When variable costs are lower than what is included in base rates, customers are given a one-year credit. For Avista customers, the credit or surcharge expires every Sept. 30 and a new adjustment implemented on Oct. 1 depending on the previous year’s actual conditions and a forecast of the next year’s conditions. 

For this PCA year, the adjustment is a credit of 0.09 cents per kWh, or an average decrease of 2.17 percent.  Commission staff proposed delaying the $3.1 million credit to soften the impact of a potential base rate increase next spring.  Avista notified the commission last August of its intent to file a general rate case in early October for new rates that would become effective next April or May.  Waiting until after the base rate case, promotes rate stability, staff argued, by avoiding two rate adjustments in a short period.  Idaho Forest Products filed comments objecting to the commission staff recommendation, asserting that customers should benefit now from the PCA credit. 

The commission ruled that the credit should be applied immediately.  The commission’s staff promotion of rate stability is a “worthy goal,” the commission said, but increases or decreases to rates every year “is an inherent attribute of the annual PCA mechanism. The year-to-year fluctuation of net power costs is the norm rather than the exception.” 

“Moreover, the commission finds that the PCA contains an implicit compact between the company and its customers to pass through the amount of excess power costs accrued during the deferral period,” the commission said. “Based upon this record, we find no compelling reason to deviate from this arrangement.” 

Last week the commission approved an approximate 1.3 percent electric rate decrease due to a reduction in the rider customers pay to fund electric conservation programs. 

Avista, headquartered in Spokane, serves about 125,000 electric customers and about 75,000 natural gas customers in northern Idaho.