Case No. AVU-E-06-05

August 30, 2006

Contact: Gene Fadness (208) 334-0339 office




Avista Utilities seeks surcharge extension


The Idaho Public Utilities Commission is taking comments through Sept. 29 on Avista Utilities’ application to extend for another 12 months its 2.45 percent surcharge for above-normal costs of supplying power to its customers. Extension of the surcharge would not increase rates. It leaves the surcharge – about 0.163 cents per kWh for residential customers – in place for another year.


The normal costs for supplying power to customers are recovered in the utility’s base rates. However, a utility may incur higher than normal costs from unusual circumstances, such as low water conditions or higher than anticipated market conditions. In those circumstances, the commission has approved a temporary “power cost adjustment” (PCA) process enabling Idaho utilities to recover higher than normal costs. Revenues from a PCA surcharge are used only to pay the increased power costs and do not increase company earnings.


The commission approved a yearly PCA mechanism for Avista after the unprecedented increase in power supply costs following the 2000-01 Western energy crisis. That crisis resulted in a deferral account of $78 million for Avista. By the end of the PCA reporting period on June 30 of this year, that debt had been reduced to $1.5 million. However, by July 31 the deferral balance had increased to $3.2 million and Avista anticipates that the deferral balance will be $8.7 million by the end of the PCA year next June 30. The surcharge collects about $4.3 million per year.


Avista attributes the anticipated growth in the PCA deferral balance to reduced generation from its hydroelectric facilities and increased natural gas prices. Hydro conditions were favorable during the first half of 2006, but a dry summer will contribute to a projected shortfall of 38 average-megawatts in hydro generation, the company claims. Should conditions turn out to be more favorable than anticipated, Avista will make a filing to either zero-out the surcharge or to modify it.


Since the surcharge was initiated in 2001 it has gone down from 19.4 percent to 2.45 percent.


Those wishing to submit comments must do so by no later than Sept. 29. 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-06-05) 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.