Idaho Public Utilities Commission

September 27, 2012

Case No. AVU-G-12-05, Order No. 32651

Case No. AVU-G-12-03 and -06, Order No. 32650

Case No. AVU-E-12-07, Order No. 32652

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

Gas, electric decreases effective for Avista customers on Oct. 1

Northern Idaho customers of Avista Utilities are getting reductions to both their electric and natural gas bills effective Oct. 1.

The Idaho Public Utilities Commission approved three Avista applications that reduce rates largely due to declining natural gas prices. Combined, rates for natural gas customers decrease by about 5.6 percent and electric rates about 1.3 percent. A fourth application, a proposed 2.1 percent reduction to Avista’s annual Power Cost Adjustment (PCA) surcharge, is expected to be ruled on soon.

The largest decrease (about 3 percent) comes from Avista’s annual Purchased Gas Cost Adjustment (PGA). Costs associated with providing gas supply for customers vary from year to year as the wholesale price of natural gas and transportation-related expenses change. Natural gas utilities in Idaho file a PGA at least yearly to account for those changing prices. Overall, prices today are lower than they were in 2011. Consequently, the company will reduce by $2.14 million the amount it collects in its PGA account. Another $1.55 million of an un-refunded credit balance will be used to offset a potential rate increase next April. Avista has filed a notice with the commission to file a combined electric and natural gas base rate case on or after Oct. 10 for proposed new rates that, if adopted, would be effective in April.

A second gas rate decrease (2.6 percent) is attributable to the temporary suspension of programs to fund natural gas efficiency programs.

Lower natural gas prices due to changing gas supply now make it cost ineffective for Avista customers to invest in natural gas energy efficiency programs. Consequently, the commission has approved Avista’s application to temporarily suspend its gas efficiency programs while still meeting its contractual obligations for agreements executed before Sept. 1, 2012. Customers who qualify for rebates associated with the programs will have until Nov. 1 to send all required rebate forms to the company.

As a result of the company’s proposal to temporarily suspend gas efficiency programs, the company will zero-out the rider that funds those programs. Residential and small-commercial customers now pay about 2.7 cents per therm for gas efficiency programs. There will still be about $390,000 in the account to fund the efficiency programs and the rider will continue to be collected through Oct. 1. Avista will work with commission staff to determine the most appropriate method to refund customers the remaining $390,000.

Electric rates will decline about 1.3 percent as a result of the commission’s decision to adopt an Avista application to reduce the rider used to fund electricity conservation programs. Revenue from the electric rider now collected from customers at the current level will exceed the amount needed to fund the programs during the next year. Avista is reducing the amount collected in the rider by $3.46 million.

In its Washington and Idaho territories, Avista realized about 59,000 megawatt-hours of savings from energy efficiency programs, 115 percent of the company’s goal. In its Idaho territory alone, the savings were 19,908 MWh during 2011. However, the end of the federal stimulus act that provided tax incentives for energy efficient measures and a sluggish economy that discourages customers from investing in energy efficient appliances has resulted in Avista needing only about 55 percent of projected revenue collected from customers in the rider.

The Snake River Alliance and the Idaho Conservation League opposed reducing the rider, stating the utility did not present enough evidence that it will over-collect the amount needed in rider funds and that the utility’s projections should be made for two years, not just one year. Reducing the rider amount now may result in the company’s failure to aggressively pursue energy efficiency programs in the future, they argued.

The commission said that allowing rider funds to accumulate “could undermine customers’ confidence that their rates are prudently used to fund cost-effective programs. We find it would not be prudent for the company to retain rider funds for which it has no existing or projected use.”

The commission said it still expects Avista to pursue all cost-effective efficiency programs and notify the commission if the new rider proves insufficient to fund the programs. The commission directed Avista to file a report within 60 days advising it about the opportunities the company believes exist for increasing customer awareness about energy efficiency issues and the company’s current programs.

Avista, headquartered in Spokane, serves about 125,000 electric customers and about 75,000 natural gas customers in northern Idaho.

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