Case No. AVU-E-07-01, Order No. 30361

July 6, 2007

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


Commission OKs permanent PCA mechanism for Avista


The Idaho Public Utilities Commission has approved a yearly adjustment to rates for Avista Corporation that will allow the utility to recover extraordinary power supply expenses not already included in base rates. The yearly Power Cost Adjustment (PCA) mechanism is similar to one that has been in place for Idaho Power Co. customers since 1993. Avista, headquartered in Spokane, serves about 115,000 customers in its northern Idaho territory.


The yearly adjustment will increase or decrease rates depending on conditions outside the company’s control that can dramatically alter power supply expense. Those conditions include variations in hydroelectric generation cause by lack of streamflows or unanticipated changes in fuel costs or wholesale market prices for energy.


During those years when power supply expenses are less than what is already covered in base rates, customers will get a credit. During those years when power supply expenses are greater than included in base rates, customers get a surcharge. Both the surcharge and credit last for 12 months and then a new adjustment will be calculated to adapt to changing conditions and updated projections. The updated PCA will be effective Oct. 1 of each year. The PCA surcharge or credit does NOT affect company earnings. It is basically a “pass-through,” collected from ratepayers by the company, kept in a deferred account, and then passed directly to wholesale power and fuel suppliers. Each year when Avista files its PCA, the commission will review the application to make sure the power supply and fuel expenses incurred by Avista were necessary to serve customers and were the most reasonably priced available to the company at the time.


The commission’s order also extends to Sept. 30, a 2.45 percent surcharge originally intended to recover extraordinary power supply costs that resulted from the 2000-01 Western energy crisis. Extending the surcharge will allow the company to pay down its current debt before a newly calculated PCA goes into effect Oct. 1. The 2.45 percent surcharge is 0.163 cents per kWh for a residential customer, or about $1.63 a month for a residential customer who uses 1,000 kWh per month.


A full text of the commission’s order, along with other documents related to this case, are available on the commission’s Web site at Click on “File Room” and then on “Electric Cases” and scroll down to Case No. AVU-E-07-01. Interested parties may petition the commission for reconsideration by no later than July 20. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.


Petitions can be delivered to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720, Boise, ID, 83720-0074, or faxed to 208-334-3762.