Avista
surcharge continued, but further study required
A
surcharge to allow Avista Utilities to recover extraordinary power supply
expenses that are not included in base rates may continue for another year, but
must be reviewed before it can be renewed again state regulators ruled on
Tuesday.
The
Idaho Public Utilities Commission approved Avista’ application for a 12-month
extension of the 2.45 percent Power Cost Adjustment (PCA) surcharge, but
expressed concern the surcharge is being continued to allow for projected
future power supply expenses rather than recovering only those costs directly
attributable to the Western energy crisis of 2000-01, the reason the surcharge
was created.
Extension
of the surcharge does not increase rates. It leaves the surcharge – about 0.163
cents per kWh for residential customers – in place for another year. Revenues
from the surcharge do not increase Avista’s earnings. The surcharge is expected
to raise about $4,268,000, which goes
directly to pay debts Avista owes its power suppliers.
The
surcharge, originally at 19.4 percent, was implemented in October 2001 to allow
the company to start paying down a $78 million debt it incurred following the
2000-01 Western states’ energy crisis. In 2005, with the debt down to $26.1
million, the surcharge was reduced to 4.38 percent. In April of this year, the
surcharge was reduced to its current level of 2.45 percent.
By
June 30 of this year, the deferred balance was down to $1.5 million. But
increased expenses that Avista claims are due to a shortfall in hydro
generation and to increasing gas fuel expenses for the utility’s thermal
generating plants, resulted in the deferral balance increasing to $3.2 million
by July 31. The company anticipated that by this fall the balance will grow
beyond the $4.3 million in annual revenue the surcharge collects.
The
commission said further study of the original intent of the surcharge and
future methods for treating extraordinary power supply expense are warranted
before the surcharge can be renewed again. “We find that the events that
justified implementation of changes in PCA methodology, however, cannot be used
to support an unending continuation of the charges,” the commission said. “A
thorough review and examination is required.”
In
the company’s current PCA filing, it uses a projected increase, rather than an
actual increase, in power supply expense to justify its request to continue the
existing surcharge level. “This recommended use of projections is a significant
departure from the approved PCA methodology,” the commission said.
The
commission ordered the company and commission staff to conduct workshops to
examine future treatment of extraordinary power supply expense. Avista must
file a report filed with the commission by on or before August 15, 2007.
A full text of the
commission’s order, along with other documents related to this case, are
available on the commission’s Web site at www.puc.idaho.gov.
Click on “File Room” and then on “Electric Cases” and scroll down to Case No.
AVU-E-06-05.