Idaho Public Utilities Commission

Case Nos. AVU-E-11-01 and AVU-G-11-01, Order No. 32371

September 30, 2011

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

Rate case settlement results in electric decrease to customers

The Idaho Public Utilities Commission is granting Avista Utilities a base rate electric increase of about 1.1 percent and a base rate gas increase of 1.6 percent. However, due to decreases in other rate components, billed rates for electric and some gas customers actually decrease effective Oct. 1.

The overall rate decrease to electric customers is an average 2.4 percent for all customer classes (2.1 percent to residential class) and the average overall decrease to gas customers is 0.1 percent (however, an 0.3 increase to residential class).

While permanent base electric rates increase, the annual Power Cost Adjustment – which varies every year depending on water and market conditions – is a decrease of about 6 percent. Ratepayers also benefit from an increase in a credit given residential and small-farm customers from the Bonneville Power Administration. On the gas side, customers are getting an increase to both base rates and the annual Purchased Gas Cost Adjustment, but they are getting a more substantial decrease due to the reduction in an efficiency rider used to fund to conservation programs.

An electric residential customer using the company’s average of 956 kilowatt-hours a month will see a $1.79 per month decrease for a revised monthly bill of $82.02. The overall electric rate decreases from the current 7.9 cents per kWh for the first 600 kWhs of use to 7.68 cents per kWh. For use above 600 kWh, the billed rate decreases from the current 8.8 cents 8.6 cents per kWh.

A residential natural gas customer using an average of 62 therms would see a 20-cent per month increase for a revised monthly bill of $60.96, while rates for customers in larger classes decline very slightly.

Part of the base electric and gas rate increase include an increase in the monthly customer service charge from $5 to $5.25 per month for electric customers and from $4 to $4.25 per month for natural gas customers.

In the base rate electric case, Avista is granted a $2.8 million increase in annual revenue. When Avista filed the case in July it asked for a $9 million increase in annual revenue. Avista sought a $1.9 million increase in gas revenue and is granted $1.1 million.

The commission approved a negotiated settlement between the utility, commission staff and other parties representing industrial customers, the Idaho Conservation League and the Community Action Partnership Association of Idaho, the latter representing primarily customers on low- and fixed-incomes. A key part of the settlement is that Avista agrees to not collect another base electric or gas rate increase before April 1, 2013. (This does not include yearly tracker adjustments such as the Power Cost Adjustment or Purchased Gas Cost Adjustment and energy efficiency rider adjustments.)

The commission said it appreciated the “diligent work” by all the parties to resolve the issues in the case. “We note that the stipulation and settlement represents a significant reduction in the requested revenue increase,” the commission said. The company was granted only 31 percent of its original electric rate increase request and 58 percent of its original gas increase request. Further, the commission said, the provision in the settlement to not implement new base rates before April 1, 2013 “provides an extended period of rate stability that otherwise might not occur.”

The agreement also provides an additional $10,000 in funding for outreach to low-income customers on conservation measures, bringing the total annual funding for that program to $50,000. This is in addition to the $700,000 already made available for low-income weatherization projects.

The parties to the settlement are also directed to participate in workshops to address updating the cost of service to each customer class, rate design and low-income programs.

Avista serves more than 122,000 electric and more than 74,000 natural gas customers in Idaho.

Here is a summary of all the rate adjustments effective Oct. 1:

ELECTRIC ADJUSTMENTS include two increases and two decreases, for a net overall rate decrease of 2.4 percent.

Base rate increase of $2.8 million, or an average 1.1 percent. (Case No. AVU-E-11-01)

Deferred state income tax increase of $8.7 million. This was previously approved as part of the settlement of the 2010 rate case. Deferred state income tax benefits are no longer available to reduce rates. (Case No. AVU-E-10-01, Order No. 32070)

Power Cost Adjustment (PCA) decrease of $15.5 million or about 6 percent. 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. (Case No. AVU-E-11-03, Order No. 32375)

A decrease in customer bills as the result of a $2.2 million increase in the Bonneville Power Administration (BPA) exchange credit given residential and small-farm customers. 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.

NATURAL GAS ADJUSTMENTS include three increases and one decrease for net overall rate decrease of 1 percent.

Base rate increase of $1.1 million, or 1.6 percent. (Case No. AVU-G-11-01).

Deferred state income tax increase of $470,423. This was previously approved as part of the settlement of the 2010 rate case. Deferred state income tax benefits are no longer available to reduce rates. (Case No. AVU-G-10-01, Order No. 32070)

Purchased Gas Adjustment (PGA) increase of $776,190 or an average 1 percent. The PGA operates much like the electric PCA, matching anticipated gas supply and transportation costs with actual cost. (Case No. AVU-G-11-04, Order No. 32370)

Energy efficiency rider decrease of $2.4 million or an average 3.5 percent. The rider is used to fund conservation programs that reduce the company’s need to buy gas supply at greater cost than the cost of the conservation programs. For residential customers, the decrease in the rider is from about 5.7 cents per therm to 2.7 cents per therm. Avista estimates that during 2010, natural gas efficiency programs resulted in natural gas savings of about 1.9 million therms. (Case No. AVU-G-11-03, Order No. 32366)

A full text of the commission’s order, 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 Case Nos. AVU-E-11-01 or AVU-G-11-01.

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