Case No. AVU-E-05-06, Order No. 29861

September 1, 2005

Contact: Gene Fadness (208) 334-0339 office; (208) 841-1107 cell




Avista Utilities seeks extension of surcharge


The Idaho Public Utilities Commission is seeking comment on Avista Utilities’ application for a 12-month extension of a 2.45 percent surcharge that allows the utility to recover above normal costs of supplying power to its customers. Extension of the surcharge does not increase rates. It leaves the surcharge – about 0.163 cents per kWh for residential customers – in place for another year.


Normal costs for supplying power to customers are already included in base rates. However, when a utility incurs abnormal costs due to low water or higher than anticipated market prices, it can request a temporary surcharge to recover those costs. Revenues from the surcharge do not increase Avista’s earnings. The surcharge will raise about  $4,268,000, which goes directly to pay debts Avista owes it power suppliers.


Avista’s deferral account has been decreasing since a 19.4 percent surcharge was implemented in October 2001 to allow the company to start paying down a $78 million debt it incurred following the 2000-01 Western states’ energy crisis. Last fall, with the debt at $26.1 million, the surcharge was reduced to 4.38 percent. In April of this year, the surcharge was reduced to 2.45 percent to offset an increase customers got in their base rate to recover costs associated with Avista’s decision to purchase the second half the Coyote Springs 2 natural gas generating plant.


Avista’s current deferred account is $5.9 million. The current 2.45 percent surcharge will recover $4.27 million of that deferral. Any balance remaining will be placed in a deferred account for the commission to review a year from now.


Avista claims that Idaho’s share (most of the utility’s customers are in Washington) of power supply expenses exceeded the level authorized in base rates by about $3 million. Most of that was due to a shortfall in hydro generation and some was due to increasing gas fuel expenses for Avista’s thermal generating plants.


To incent the utility to find the most reasonably priced power when its generation falls short, the commission requires that shareholders pick up 10 percent of the $3 million in unanticipated expenses.


The commission will proceed under a modified procedure that allows this case to be handled through written public comments rather than by public hearing. However, comments may request a public hearing. Those wishing to submit comments must do so by no later than Sept. 22. Comments are accepted via e-mail by accessing the commission’s homepage at and clicking on "Comments & Questions." Fill in the case number (AVU-E-05-06) 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 commission’s order, along with other documents related to this case, are available on the commission’s Web site. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.