Case No. AVU-E-11-03, Order No. 32328

August 19, 2011

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

Avista seeks decrease in annual PCA

The Idaho Public Utilities Commission is taking comments through Sept. 21 on an application by Avista Utilities to decrease the variable portion of customer electric rates, the annual Power Cost Adjustment (PCA), by an average 6 percent effective Oct. 1. If approved, the reduction to an average residential monthly bill would be about $4.40.

The PCA reduction is just one of three rate adjustment applications the north Idaho electric and gas utility has before the commission.

A second request is to increase the fixed-cost portion (base rate) of electric and gas rates by an average 3.7 percent and 2.7 percent respectively. The third request is to decrease the efficiency rider portion of gas rates by an average 4.2 percent and electric rates by 0.3 percent.

The PCA is a yearly adjustment made every Oct. 1 that varies depending on water conditions, natural gas and market prices and changes in power contract revenues and expenses. If water to generate Avista’s hydroelectric systems is plentiful and natural gas and market prices are not higher than anticipated, customers typically receive a one-year credit. Under opposite conditions, customers get a one-year surcharge. Unlike a base rate adjustment, none of the revenue collected through the PCA can go to increase company earnings or be used for anything other than paying unanticipated power supply expense.

In this case, Avista claims higher hydro generation reduced power supply expenses during the PCA year of July 1, 2010, through June 30, 2011. The decrease would be even larger if not for higher expenses associated with the Lancaster natural gas plant, Colstrip coal plant and Kettle Falls biogas plant.

Under Avista’s application, the PCA surcharge would be reduced from the current 0.532 cents per kWh to 0.072 cents per kWh.

The commission plans to handle this request in a modified procedure that uses written comments rather than conducting a hearing, unless customer comments can demonstrate a need for a public hearing. Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (AVU-E-11-03) 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, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.