The Idaho PUC on Nov. 29 approved an all-party settlement in Avista's general rate case that provides for a $7.2 million, 2.8 percent decrease in annual billed electric revenues, effective Dec. 1.
Avista originally filed a request in June for a $5.3 million, 2.1 percent annual revenue increase [AVU-E-19-04] (CU No. 1906 ).
Under the approved deal, an average residential customer using 900 kWh per month would see a 1 percent, 86 cent decrease, for a revised monthly bill of $84.45.
The decrease is based on a 9.5 percent return on equity with a common equity ratio of 50 percent and a rate of return on rate base of 7.35 percent, which is a continuation of prior levels.
The main issue settled in the agreement was that the company will continue to recover costs for its wind power purchase agreements with Palouse Wind and Rattlesnake Flat through its power cost adjustment mechanism under its current 90/10 split for customer and company sharing, respectively, rather than moving them to the rate base.
Avista has a 30-year contract with the 105 MW Palouse Wind project signed in 2011, and a 20-year contract with the 144 MW Rattlesnake Flat project expected to enter commercial operations in December 2020.
The IPUC also noted it had not yet determined the prudency of the PPA with Rattlesnake Flat because it is not yet operational, nor of any associated utility costs such as infrastructure built to connect to the project.
The settlement also tweaked rate decreases of each customer class to move them closer to their costs of service.
Rates for general service and large general service customers were "well above" their cost of service, the commission acknowledged, and were granted rate decreases higher than the overall base change. Specifically, the decreases were 8.4 and 4.5 percent for general service and large general service customers, respectively, while the overall base rate decreased 2.8 percent.
Most other customer classes received rate decreases below the overall base change to reflect the degree to which they were underpaying for their costs of service. Residential service customers, for example, got a 1 percent decrease.
The settlement also established a $1.6 million energy efficiency assistance fund to help fund projects not fully funded through existing incentives or that do not otherwise qualify for traditional energy efficiency funding.
In addition, Avista will work with Clearwater Paper and Idaho Forest Group to qualify their demand-side management projects under a current tariff that provides up to 70 percent of needed funding, and will consider the unfunded portion for EEAF support.
The commission's approval "provides new electric rates in Idaho that are reasonable for our customers, the Company and our shareholders," said Dennis Vermillion, Avista president and CEO, in a statement. "This outcome provides us the opportunity to continue to earn a fair return in Idaho and supports Avista's efforts to make key capital investments so we can continue to provide the reliable energy our customers expect."
The settlement was filed in October (CU No. 1925 ). Joining Avista in the settlement were IPUC staff, Clearwater Paper, Idaho Forest Group, Community Action Partnership Association of Idaho, Idaho Conservation League and Walmart.