Case No. AVU-E-07-07

August 13, 2007

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


Surcharge would increase most Avista bills by about $1 per month


Customers of Avista Utilities have until Sept. 7 to comment on the company’s request to increase its surcharge to cover extraordinary power supply expenses. Under the company’s proposal, the surcharge would result in about a 1.5 percent increase for residential customers, or about $1.04 per month for the average residential customer who uses 1,000 kWh per month.


The surcharge varies year to year to account for changing fuel prices, hydroelectric conditions and wholesale market prices. Most of the company’s expenses to acquire power supply are included in base rates. However, during years when water conditions are low and the utility’s hydroelectric generation is short or during years when fuel expenses for natural gas plants are higher than anticipated, the company incurs more power supply expense than anticipated. Under those circumstances, the commission recently approved a mechanism, called the Power Cost Adjustment or PCA, that allows Avista to recover prudently incurred expenses through a one-year surcharge that is added to base rates. During years when streamflow conditions are above average and market and fuel prices are stable, customers are allowed a PCA credit that is subtracted from base rates.


Avista claims its annual power supply costs have increased to be about $4.6 million more than the $5 million raised in the existing PCA surcharge. The PCA is currently 2.45 percent, or about 0.163 cents per kWh. Under Avista’s proposal, the surcharge would result in an addition of 0.267 cents per kWh. Residential customers now pay a base rate of 5.84 cents per kWh on their first 600 kWh of use, plus the 0.163-cent power cost surcharge, for a total overall energy rate of 6.005 cents per kWh. If the surcharge were approved, the total energy rate for the first 600 kWh would increase to 6.109 cents per kWh. For use of 600 kWh per month and more the monthly overall rate would increase from 6.775 cents per kWh to 6.879 cents.


If approved, the PCA becomes effective Oct. 1 and expires on Sept. 30, 2008. 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 ensure that 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.


Those wishing to submit comments must do so by no later than Sept. 7. 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-07-07) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.


Avista, headquartered in Spokane, serves about 115,000 customers in its northern Idaho territory.