Idaho Public Utilities Commission

Case Nos. AVU-E-08-01, AVU-G-08-01

April 18, 2008

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

Commission begins investigation of Avista rate requests

The Idaho Public Utilities Commission has set a May 9 deadline for those wanting to file as “intervenors” in the Avista Utilities electric and gas rate increase case. The commission also suspended the effective date for a proposed rate increase for up to six months from the company’s requested effective date of May 5.

Persons who petition the commission to intervene become parties to the case for the purpose of presenting evidence, cross-examining witnesses and participating in settlement or negotiation conferences. Intervenors typically represent organizations acting on behalf of customers. In the last Avista rate case in 2004, intervenors included Potlatch, the Community Action Partnership of Idaho and Coeur Silver Valley. There will also be opportunities for individual ratepayers to submit written comments and participate in workshops and public hearings, which have yet to be scheduled.

Avista serves about 120,000 electric customers and 71,700 natural gas customers from Grangeville north to Sandpoint. It is seeking an average 15.8 percent electric rate increase and a 5.8 percent natural gas increase.

The commission’s staff of auditors, engineers and attorneys now begins a thorough investigation of the company’s application that could take up to six months. As the case progresses, dates and places for public workshops and hearings within Avista’s territory will be announced as well as a deadline for public comment.

A prehearing conference to establish how the case will progress has been set for Wednesday, May 14, in the commission hearing room at 472 W. Washington St. in Boise. The purpose of the conference is to identify intervening parties, identify issues not readily apparent in the company’s application and to establish future dates for hearings and deadlines for filing testimony.

The company claims the increase is needed to pay for increasing power supply costs, capital investment in upgrading aging infrastructure, costs incurred in the relicensing process for the Spokane River Hydropower Project and the company’s investment in advanced meter reading.

Part of the commission’s job will be to determine if the added investment and infrastructure upgrade was needed and if the company was prudent in its financial decision-making. The commission has the authority to accept, deny or modify the company’s proposal. The commission must consider all rate increase requests. State statute requires that regulated electric utilities be allowed to recover all prudently incurred expenses in addition to a rate of return that must be reasonable for customers, but enough to attract capital investment in new transmission, distribution and generation. When the commission denies cost recovery to a utility, it must be able to legally demonstrate why the utility’s costs were not prudently incurred or in the best interest of customers. All commission decisions can be appealed to the state Supreme Court.

Avista customers can read all the documents filed in the Avista case thus far, including testimony from Avista executives, by going to www.puc.idaho.gov. Click on the electric icon, then on “Open Electric Cases,” and scroll down to Case No. AVU-E-08-01.