Case No. AVU-E-07-07, Order No. 30429

September 14, 2007

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


Avista allowed recovery of extraordinary expenses


The portion of Avista Utilities’ customer bills that goes to pay for extraordinary power supply costs will increase by about 1.5 percent for residential customers – and 2.2 percent overall – beginning Oct. 1. For an average residential customer who uses 1,000 kWh per month, the increase is about $1.04 per month.


The power cost surcharge varies year to year to account for changing fuel prices, hydroelectric conditions and wholesale market prices. Higher natural gas fuel costs and reduced generation from Avista’s hydroelectric projects resulted in the utility incurring $10.6 million more in supply costs than is covered in base rates. 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, customers receive a surcharge in addition to the base rates. During years when streamflow conditions are above average and market and fuel prices are stable, customers can receive a credit that is subtracted from base rates.


The surcharge is currently 2.45 percent, or about 0.163 cents per kWh, and will increase to about 0.267 cents per kWh on Oct. 1. The surcharge has been as high as 19.4 percent when the Western energy crisis of 2000-01 caused unprecedented increases in wholesale power prices. It has been dropping steadily until this year.


The surcharge does NOT affect company earnings and does not go to pay salaries or finance any company operations. The surcharge is essentially a “pass-through,” collected from ratepayers, kept in a deferred account, and then passed directly to wholesale power and fuel suppliers. The commission’s job is to review the surcharge request 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. State statutes require that regulated utilities recover all prudently incurred expenses and earn a reasonable rate of return.


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


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-07-07.


Interested parties may petition the commission for reconsideration by no later than Oct. 5. 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.