RE: Avista's Surcharge

[Tom Trail <ttrail@moscow.com>]

>Visionaires:

Ther have been a number of inquiries and discussion on vision2020 recently
about the Avista
surcharge.  I requested some additional information from the Idaho Public
Utility Commission
concerning this issue.   Included in my inquiry was the e mail message from
John Cronin.  Listed
below in the IPUC response.

Rep. Tom Trail/Dist. 5
>
>9/13
>Dear Representative Trail:
>   The short answer is that by Idaho law utilities are allowed to recover
>legitimate costs.  Avista has had high power purchase costs that were
>deferred and  have not yet been recovered.  For the complete history of
>this issue you and Mr. Cronin should visit the PUC web page and refer to
>Avista's application which can be found at
>www.puc.state.id.us.fileroom/electric/avu.e.-02-06.  Additional history
>will be found in last year's case, AVU-E-01-11 also available in the "file
>room."  There is a workshop scheduled  in Sandpoint next Wednesday, 9/18,
>at  6:30 p.m.  at the Edgewater.  PUC staff members as well as utility
>employees will be in attendance to answer questions the public may have.
>The following is a PUC press release regarding the surcharge workshop.
>
>Marge Maxwell
>Utilities Compliance Investigator
>
>
>IDAHO PUBLIC UTILITIES COMMISSION
>FOR IMMEDIATE RELEASE September 6, 2002
>Case No. AVU-E-02-06
>Contact: Gene Fadness (208) 334-0339
>
>Commission to conduct Avista surcharge workshop Sept. 18
>
>BOISE - Staff of the Idaho Public Utilities Commission and representatives
>of Avista Utilities will hold a public workshop in Sandpoint on Sept. 18
>to answer questions regarding Avista's request to continue its 19.4
>percent surcharge to recover costs the company incurred during 2000 and
>2001 buying electricity on the wholesale market.
>
>Rates won't increase from current levels if the commission approves
>extension of the surcharge for another year. The surcharge was implemented
>last year to recover $23.6 million of a power supply expense that totaled
>about $78 million during a two-year period when water supplies were low
>and prices on the wholesale electricity market reached record levels.
>Avista's request would continue the surcharge until Oct. 11, 2003,
>allowing the company to recover another $23.6 million of the same debt.
>
>The workshop will begin at 6:30 p.m. at the Best Western Edgewater Resort,
>56 Bridge Street, in Sandpoint.
>
>The commission has also extended the deadline to receive written comments
>on the case from Sept. 18 to Sept. 20.
>
>Very low stream flow conditions through the end of 2001 produced a
>shortfall in generation for the Spokane-based utility. That forced the
>utility into the expensive wholesale market to buy electricity to meet
>customer demand.
>
> At this time last year, the company asked for a 27-month surcharge
>through 2003 to recover the debt incurred in 2000 and 2001. Instead, the
>commission approved a 12-month surcharge of 19.4 percent and directed the
>company to report back in one year on the status of the account. In that
>order last year, the commission said, "If the status report and our review
>of the actual PCA deferral balance (at the end of 12 months) support
>continuation of the surcharge, we anticipate continuation of the surcharge
>for an additional period." Even though water and market conditions have
>since improved, Avista still has debt remaining from the 2000 and 2001
>electricity crisis that impacted much of the western United States.
>
>Avista's credit ratings are below investment grade and the company
>contends it is important to regain investment grade ratings so it can
>refinance long-term debt on more reasonable terms. Continuation of the
>current surcharge is necessary for the company to improve its financial
>condition, the company contends.
>
>Also at issue is the carrying charge the company wants to receive on the
>deferred balance. Currently, the commission allows a carrying charge based
>on the interest rate on customer deposits, which this year is 4 percent.
>The company is requesting 6 percent, noting that its current embedded cost
>of both short- and long-term debt is at 8.88 percent.
>
>Those wishing to comment via e-mail may do so by accessing the
>commission's homepage at www.puc.state.id.us under the heading, "Contact
>Us." Then select, "E-mail question or comment regarding a formal utility
>case," fill in the case number (AVU-E-02-06) and enter your comments.
>Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or
>faxed to (208) 334-3762. You can also view the company's application on
>the commission Web site. Click on "File Room" and then on "Recent Orders"
>and search for the case number.
>
>
> A portion of last year's recovery of high power costs was deferred (see
>AVU-E-01-11 case).
>
>
>
>
>
>-----Original Message-----
>From: Tom Trail [mailto:ttrail@moscow.com]
>Sent: Thursday, September 12, 2002 10:13 PM
>To: Marge Maxwell
>Subject: Avista's Surcharge
>
>
>>X-From_: vision2020-request@moscow.com  Thu Sep 12 18:00:47 2002
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>>From: "John Cronin" <jaycron@turbonet.com>
>>To: "\"Vision 2020 (E-mail)\" <Vision 2020" <vision2020@moscow.com>
>>Subject: Avista's Surcharge
>>Date: Thu, 12 Sep 2002 17:53:54 -0700
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>>
>>We all received a notice in our most recent Avista bill informing us that
>>Avista has filed "a request to continue the existing Power Cost Adjustment
>>surcharge of 19.4% for an additional 12 months. The current surcharge at
>>the same rate will expire on October 11th.
>>
>>The notice tells us the purpose is to "recover  excess power costs"
>>Avista admits that they are due to collect $23.6 million annually. The
>>notice goes on to say, "Avista makes no profit from surcharge revenues and
>>actually is required to absorb 10% of excess power costs"  Mmmm.
>>
>>Why is Avista in such financial trouble?  Will this surcharge become
>>permanent?  Are there reasons that justify a customer bailout of Avista?
>>
>>
>>John
>>
>Margie--what is the scoop on this issue?
>
>Tom
>
>Dr. Tom Trail
>International Trails
>1375 Mt. View Rd.
>Moscow, Id. 83843
>Tel:  (208) 882-6077
>Fax:  (208) 882-0896
>e mail ttrail@moscow.com
>

Dr. Tom Trail
International Trails
1375 Mt. View Rd.
Moscow, Id. 83843
Tel:  (208) 882-6077
Fax:  (208) 882-0896
e mail ttrail@moscow.com