Avista seeks approval to increase rates in Washington, Idaho

Avista (NYSE:AVA) on June 9 said that it is requesting approval from the Idaho Public Utilities Commission (IPUC) to increase annual electric billed revenues by $18.6m, or 7.9%, effective Jan. 1, 2018, and $9.9m, or 4.2%, effective Jan. 1, 2019.

That plan would create a stay-out period where Avista would not file a new general rate case for a new rate plan to be effective prior to Jan. 1, 2020, the company said.

For natural gas, the rate request is designed to increase annual billed revenues by $3.5m, or 5.7%, effective Jan. 1, 2018, and $2.1m, or 3.3%, effective Jan. 1, 2019, Avista said.

The electric and natural gas requests for the January 2018-December 2019 rate periods are based on a proposed rate of return on rate base of 7.81%, with a common equity ratio of 50%, and a 9.9% return on equity, the company said.

Avista noted that it is not proposing to update base power supply costs for year two of the rate plan, but rather have any differences flow through the power cost adjustment (PCA) mechanism.

The company noted that capital investments in infrastructure, system maintenance, as well as technology and increased power supply costs are the main drivers in its request.

Investments include the rehabilitation and maintenance of generating plants and such distribution and transmission infrastructure as wood pole replacements, feeder upgrades, as well as substation and transmission line rebuilds to maintain reliability for customers Avista said.

According to the company’s filing submitted to the IPUC, substation – station rebuilds represent about $17.5m in 2017; about $7.9m in 2018; and about $15.8m in 2019. Examples of substation rebuilds to be completed in the next five years are Kamiah (wood substation), Ford (end of service life), 9th and Central, Priest River, and Colville, Avista said.

Transmission major rebuild – asset condition projects represent about $9.5m in 2017; about $12m in 2018; and about $11m in 2019. Projects include ER 2550 – Burke-Thompson A&B 115-kV Transmission Line rebuild; ER 2604 – Lind-Warden 115-kV Transmission Line rebuild; ER 2577 – Benewah-Moscow 230-kV Transmission Line structure replacement; ER 2597 – Cabinet-Noxon 230-kV Transmission Line rebuild; and ER 2596 – Lolo-Oxbow 230-kV Transmission Line rebuild.

Mandatory and compliance investments include the Spokane Valley Transmission Reinforcement project, which represents $374,000 in 2017, and about $7.8m in 2018. Portions of that project already completed include construction of the Opportunity substation and Irvin-Millwood 115-kV Transmission Line, Avista added, noting that currently planned projects include rebuilding the Beacon-Boulder #2 115-kV Transmission Line and construction of the Irvin 115-kV switching station.

Avista noted in its statement that its rates are cost-based, where the costs related to projects that are included in customer rates reflect the cost of the equipment when it was installed, decades ago. Avista said that as it replaces the turbines, generators, poles, and other equipment, the costs are many times more expensive today.

Discussing new and expiring rebates, the company noted that as a result of the 2015 general rate case, customers are currently receiving a rebate of about $2.7m for 2017 that expires on Dec. 31. In the current filing, Avista has proposed to replace about one half of the current rebate in 2018 with $1.5m related to the 2015 earnings sharing. The company added that the net effect of the new and expiring rebate for 2018 is a billed increase of about $1.2m.

Effective Jan. 1, 2018, residential customers using an average of 910 kWh per month would see their monthly bills increase from $86.39 to $93.42, an increase of $7.03, or 8.1% per month, Avista said. As a part of the request, Avista said that it is proposing that the basic monthly charge for residential service currently set at $5.75 per month increase to $6 per month.

Effective Jan. 1, 2019, residential customers using an average of 910 kWh per month would see their monthly bills increase from $93.42 to $97.44, an increase of $4.02, or 4.3% per month, Avista said.

Of natural gas, the company noted that effective Jan. 1, 2018, residential customers using an average of 61 therms per month would see their monthly bills increase from $51.10 to $54.47, an increase of $3.37 per month, or 6.6%. As part of the request, Avista is proposing that the basic monthly charge for residential service currently set at $5.25 increase to $6 per month.

The company also said that effective Jan. 1, 2019, residential customers using an average of 61 therms per month would see their monthly bills increase from $54.47 to $56.54, an increase of $2.07 per month, or 3.8%.

Electric, natural gas rate changes sought in Washington

Avista in late May said that it has filed two requests with the Washington Utilities and Transportation Commission (UTC) to recover costs related to power supply, as well as infrastructure, system maintenance, and technology.

The company noted that it filed a power cost rate adjustment that would update and reset power supply costs included in billed rates, and that if approved, the request is designed to increase revenue by $15m, or 2.9%, effective Sept. 1. The key drivers behind the request include the expiration on Dec. 31, 2016, of a long-term contract with Portland General Electric that was providing about $8m in net benefits that Avista is no longer receiving, but which Avista is still passing on to customers through the current level of retail rates.

According to Avista’s filing, the contract between Avista and Portland General Electric involved a capacity sale where Portland General Electric could take 150 MW for 10 hours each day and return the energy on the hours of its choosing. Avista said that it was not able to replace that contract as current market conditions do not support a capacity sale at rates similar to the expiring contract.

The company said in its May 26 statement that it also filed requests to increase electric and natural gas rates, primarily driven by ongoing capital investments. If approved, the electric general rate request is designed to increase annual revenues by $61.4m, effective May 1, 2018. With the $15m power cost rate adjustment expiring on May 1, 2018, the net increase in billed revenue is $46.4m, or 8.8% on May 1, 2018, Avista added.

For natural gas, if approved, the general rate request is designed to increase annual billed revenues by $8.3m, or 5.4%, beginning on May 1, 2018, the company said.

Noting that the proposal is a three-year rate plan, with new rates taking effect on May 1, 2018, and annual increases in May 2019, and May 2020, Avista said that the plan would create a stay-out period where the company would not file a new general rate case for a new rate plan to be effective before May 1, 2021.

Avista said that its capital investment plans address the need to replace infrastructure that has reached the end of its useful life, as well as respond to the need for reliability and technology investments required to build an integrated energy services grid. Among the capital investments in the filing are transmission and distribution system and asset maintenance, such as wood pole replacements, feeder upgrades, as well as substation and transmission line rebuilds to maintain reliability for customers, the company said.

Discussing the power cost rate adjustment, Avista said that residential electric customers in Washington using an average of 938 kWh per month could expect to see an increase of $2.58 per month, or about 3.1%, for a monthly bill change from $84.51 to $87.09, beginning Sept. 1.

If both of the filings are approved, on May 1, 2018, as a result of the general rate request and the expiration of the power cost rate adjustment, a residential electric customer using an average of 938 kWh per month could expect to see a bill increase of $8.05, or 9.2%, for a monthly bill change from $87.09 to $95.14, beginning May 1, 2018, Avista said.

For natural gas, if the request is approved, a residential natural gas customer using an average of 65 therms per month could expect to see a bill increase of $3.25, or 5.6%, for a revised monthly bill from $58.14 to $61.39, beginning May 1, 2018, the company said.

About Corina Rivera-Linares 3058 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.