Idaho Public Utilities Commission

Case No. AVU-E009-06 and AVU-G-09-04, Interlocutory Order No. 30870

August 3, 2009

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

Commission reviewing Avista conservation programs

The Idaho Public Utilities Commission is taking comments through Aug. 28 on an application by Avista Utilities to increase the rider that electric and natural gas customers pay to fund conservation programs and to create a mechanism for a yearly adjustment each spring.

If the commission approves the application, there is no increase to the overall rates approved by the commission in its July 17 order and made effective on Aug. 1. That increase – an average 1.5 percent for electric customers and 1.2 percent for gas customers already includes the proposed rider adjustments. The net increase approved July 17 was the result of the following adjustments:

n an increase to base rates for electric and natural gas customers

n a decrease for electric customers in the annual Power Cost Adjustment and a decrease for gas customers in the annual Purchases Gas Cost Adjustment

n a decrease for residential and small-farm electric customers as a result of the resumption of the Bonneville Power Administration’s residential exchange credit

n an increase (subject to commission review in this application) to the energy efficiency rider for electric and natural gas customers.

The commission directed that the energy efficiency rider portions of the adjustment be made effective Aug. 1 on a temporary basis to avoid having several rate adjustments within a short period of time. If the commission finds that the company has not demonstrated a need for an increase in the energy efficiency rider, the rider account will be adjusted in the near future to accommodate the commission’s findings.

The rider funds more than 30 programs in two categories called demand side management (DSM) and energy efficiency. DSM programs reduce customer demand on the company’s generation sources. Efficiency programs help customers use their electricity more efficiently. The commission approves riders for electric and gas utilities if they are found to be cost-effective for both customers and the utility. DSM and efficiency programs can save customers money in both the short term by direct customer participation and in the long term because they prevent or delay the utility from having to buy or build more expensive generation.

Avista proposes to increase its electric rider from 2.24 percent to 3.27 percent of customer bills and the gas rider from 1.55 percent to 2.6 percent. As stated, this proposed increase is already in the overall rates approved last July 17, subject to commission review. Final approval of the rider would increase annual revenue by $5.4 million. However, increases in the rider cannot increase or decrease company earnings. Revenue collected from the rider can be used only to pay off a $2.36 million shortfall in the electric rider fund, a $1 million shortfall in the gas rider fund and to fund ongoing programs.

Avista’s DSM and efficiency efforts are based on providing financial incentives or rebates for customer participation in more than 30 programs. Some of the programs include efficiency measures for appliances, compressed air systems, HVAC systems, industrial and commercial equipment, lighting and motors. The programs also include renewable technologies and sustainable building measures. Further, Avista has long encouraged the direct use of natural gas by its electric customers with rebates for the conversion of electric-to-natural gas space and water heater loads.

According to the company’s application, Avista continues to exceed targets in electric and gas savings as the result of these programs for its Washington and Idaho customers. More than 110 average megawatts of demand-side management programs are now in place on the company’s total retail average load (during 2008) of 1,100 average megawatts. (A megawatt is one million watts, enough electricity to power about 650 average homes.) On the gas side, 1.9 million therms were saved during 2008, which was 136 percent of the company’s target.

Of all the surcharge revenues collected from Washington and Idaho electric and gas customers, 72 percent were paid back to customers in direct incentives to participate in energy efficiency and demand-side management programs. This does not include the additional benefits such as technical analysis and education provided to customers by the company’s DSM staff.

In this application, Avista also proposes to reduce large negative or positive adjustments to the rider by filing on or about Feb. 15 of each year for either an increase or a decrease to the rider.

According to the company’s application, installing energy efficiency measures “is a direct action customers can take to respond to a period of increasing energy prices facing the Pacific Northwest and the country as a whole.” The application states that Avista’s energy efficiency programs are being used by customers at unprecedented levels.

The commission plans to handle this request in a modified procedure that uses written comments rather than conducting a hearing, unless customer comments can demonstrate a need for a public hearing. Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions." Fill in the case number (AVU-E-09-06 or AVU-G-09-04) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.