Idaho regulators approve settlement involving Avista rate request

As TransmissionHub reported, the agreement is designed to decrease annual billed electric revenues by $7.18m, or 2.84%, effective Dec. 1

The Idaho Public Utilities Commission, in a Nov. 29 final order, said that Avista Corporation d/b/a Avista Utilities may implement revised tariff schedules designed to recover the decreased annual electric revenue from Idaho customers consistent with a settlement agreement entered into by various parties in October, including commission staff and the company, with revised rates effective Dec. 1.

As noted in the order, Avista in June filed an application seeking authority to increase its rates for electric service in Idaho, with the company proposing an increase in electric base revenues of about $5.3m, or 2.1%, to be effective on Jan. 1, 2020.

As TransmissionHub reported, Avista on Oct. 11 said that all parties to its electric general rate case have reached a settlement agreement that has been submitted to Idaho regulators for their consideration, noting that if approved, the agreement is designed to decrease annual billed electric revenues by $7.18m, or 2.84%, effective Dec. 1.

The company noted that its original request included an increase of annual electric billed revenues by $5.3m, or 2.1%, effective Jan. 1, 2020. The electric request was based on a proposed rate of return (ROR) on rate base of 7.55%, with a common equity ratio of 50% and a 9.9% return on equity (ROE), Avista said.

The settlement revenue decreases are based on a 9.5% ROE, with a common equity ratio of 50% and an ROR on rate base of 7.35%, which is a continuation of current levels, the company said.

Avista noted that the primary element of the difference in the agreed upon base revenues in the settlement agreement from the company’s original request is the continued recovery of costs for Avista’s wind generation power purchase agreements (PPAs), which will include Palouse Wind and Rattlesnake Flat, through the Power Cost Adjustment (PCA) mechanism instead of through base rates.

According to the stipulation and settlement, dated Oct. 11, the stipulation is entered into by and among Avista d/b/a Avista Utilities, commission staff, Clearwater Paper Corporation, Idaho Forest Group, LLC, the Community Action Partnership Association of Idaho, Inc., the Idaho Conservation League, and Walmart, Inc.

Among other things, the stipulation noted that the parties agree that for the purposes of the case, the recovery of costs related to the Palouse Wind PPA will continue to be included in the PCA, subject to the current sharing (90% customer, 10% company); Idaho will continue to be assigned its proportional share of all environmental attributes. The parties also agree that the recovery of costs related to the Rattlesnake Wind PPA will be included in the PCA, subject to the current sharing (90% customer, 10% company); Idaho will be assigned its proportional share of all environmental attributes.

The stipulation added that the parties also agree that Avista will establish an Energy Efficiency Assistance Fund, with the purpose of that fund being to provide additional funding for projects that are not otherwise fully funded through existing energy efficiency incentives, or do not otherwise qualify for traditional energy efficiency funding.

In its Nov. 29 final order, the commission said that due to the rate decrease specified in the settlement, it finds that it is an opportune time to implement rate changes in varying amounts for each of Avista’s customer classes that will allow the company to move most customer classes closer to their cost of service.

The commission said that it finds that the Rattlesnake Flats Wind Project will not be operational and delivering power under the associated PPA until December 2020. Accordingly, the commission does not determine the prudency of costs related to that PPA, associated costs the company will incur to build infrastructure to connect to the Rattlesnake Flats Wind Project. The commission added that it also does not decide the prudency of the company’s entering into the PPA at this time. However, the commission said, in the future, it will determine the prudence of recovering the actual power supply costs from the Rattlesnake Flats PPA through PCA filings at the current sharing level of 90% customers, 10% company. The commission said that it finds that proposed methodology reasonable.

Among other things, the commission said that the consensus culminating in the settlement will benefit customers through decreased rates for service, a funding increase for low-income weatherization, as well as the establishment and funding of the Energy Efficiency Assistance Fund (EEAF), which will help fund energy efficiency projects that qualify.

The company may implement revised tariff schedules designed to recover the decreased annual electric revenue from Idaho customers consistent with the settlement, with revised rates effective Dec. 1, 2019, as set forth in the settlement, the commission said.

In a Dec. 2 statement, Avista said that a residential electric customer using an average of 900 kWh per month could expect to see a billed decrease of 86 cents per month, or 1.0%, for a revised monthly bill of $84.45, effective Dec. 1, 2019.

Washington rate matter

In other rate news, Avista on Nov. 21 said that it and certain parties to its electric and natural gas general rate cases in Washington have reached a partial settlement agreement that has been submitted to the Washington Utilities and Transportation Commission for the commission’s consideration.

The partial settlement agreement includes agreement among all parties on the electric revenue increase and cost of capital, as well as electric and natural gas rate spread and rate design, Avista said, adding that all parties, with the exception of the Public Counsel Unit of the Washington Office of Attorney General, agree on the natural gas revenue increase.

If approved, the partial settlement agreement is designed to increase annual billed electric revenues by $28.5m, or 5.4%, and annual natural gas billed revenues by $8m, or 5.2%, effective April 1, 2020, Avista said, noting that the partial settlement revenue increases are based on a 9.4% ROE with a common equity ratio of 48.5% and an ROR on rate base of 7.21%.

The other remaining issues to be resolved in the cases include the Energy Recovery Mechanism (ERM) deferral and the extension of the electric and natural gas decoupling mechanisms, the company said, adding that the parties have agreed that the final ERM rebate determined by the commission, after it resolves the remaining ERM contested issues, should be returned to customers over a two-year period, with the ERM rebate being about $34m.

If the partial settlement is approved, a residential electric customer using an average of 918 kWh per month would see a billed increase of $5.41 per month, or 6.6%, for a revised monthly bill of $87.63, effective April 1, 2020, Avista said, adding that a residential natural gas customer using an average of 66 therms per month would see a billed increase of $2.91 per month, or 5.3%, for a revised monthly bill of $57.85, effective April 1, 2020.