Idaho Public Utilities Commission

Case Nos. AVU-E-11-01 and AVU-G-11-01, Order No. 32348

September 1, 2011

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

Rate hearings scheduled Sept. 13 in Coeur d’Alene

The Idaho Public Utilities Commission will conduct hearings in Coeur d’Alene on Sept. 13 regarding a proposed settlement of the Avista Utilities rate case that, if approved, will result in a net decrease in customer bills.

Avista applied on July 25 for an average 3.7 percent increase in electric rates and an average 2.7 percent increase in natural gas rates. The proposed settlement would grant a 1.1 percent increase in permanent base electric rates and 1.6 percent increase in natural gas rates, but because of several other rate adjustments on the proposed Oct. 1 effective date, customers will actually see a net decrease in their bills. The average decrease for residential electric customers would be about 2.4 percent and the average reduction for residential natural gas customers would be about 1 percent. As part of the proposed settlement, Avista agrees not to seek another increase in base rates that would become effective before April 1, 2013.

The three commissioners who decide the case will conduct both a public hearing and a technical hearing about the proposed settlement on Tuesday, Sept. 13 in the Driftwood Bay room of the North Idaho College student union building at 1000 W. Garden Ave. The public hearing, during which customers can offer sworn testimony, will begin at 7 p.m. The technical hearing, during which the company and commission staff will present their testimony regarding the proposed settlement, will begin about 15 minutes after the public hearing concludes.

At its initial filing, Avista asked for an increase in its annual revenue on the electric side of $9 million and an additional $1.9 million on the gas side. The proposed settlement grants the utility a $2.8 million increase in electric revenue and $1.1 million in natural gas revenue. Part of the $2.8 million electric increase is an increase in the monthly customer service charge from $5 to $5.25 per month and from $4 to $4.25 per month on the gas side.

Two electric rate adjustments result in increases to customers: the $2.8 million base rate increase and $8.7 million that was previously approved as part of the settlement of the 2010 rate case where deferred state income tax benefits are no longer available to reduce rates. Two adjustments result in decreases for customers: the Power Cost Adjustment, or PCA, ($15.5 million reduction) and an increased BPA credit to residential and small-farm customers of $2.2 million.

The PCA is a yearly adjustment to rates based on the always changing costs of power supply. When water is plentiful and market prices for power lower than anticipated, customers typically get a credit. During low-water years or during years of high market and fuel costs, customers typically get a surcharge. Avista’s PCA, which is adjusted every Oct. 1, this year is a $15.5 million decrease.

The BPA is a not-for-profit federal agency that markets power from 31 federal hydroelectric dams and a nuclear plant in the Northwest. The 1980 Northwest Power Act required that residential and small-farm customers in the Northwest share in the benefits of the federal hydroelectric projects located in the region. Avista applies the benefits it receives, which usually fluctuate annually, to customers as a credit on their monthly electric bill. This year, residential and small-farm customers will receive an additional $2.2 million in benefits from the BPA.

On the gas side, the annual Purchased Gas Adjustment (PGA) operates much like the electric PCA, matching anticipated gas supply and transportation costs with actual cost. This year, the PGA is a $776,000 increase for customers and the end of the deferred state income tax benefit is a $470,400 increase. Those increases, along with the $1.1 million base gas rate increase, are offset by a $2.8 million reduction in the gas efficiency rider paid by customers.

The proposed settlement also increases the annual funding Avista will make available for conservation education to low-income customers from $40,000 to $50,000. This will be in addition to the $700,000 made available for low-income weatherization projects.

Customers who choose not to testify at the public hearing may submit written comment regarding the proposed settlement by no later than Sept. 13. Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (AVU-E-11-01 and AVU-G-11-01) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

A full text of the settlement stipulation, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” or “Gas Cases,” and scroll down to the above case number.