Agenda Date:  February 10, 1999
Item Number: 

Docket:  UG-981376
Company Name: Avista Utilities (formerly The Washington Water Power Company)

Staff:   Mike Parvinen, Revenue Requirements Specialist
   
Recommendation:

Issue an order dismissing complaint and order suspending tariff revisions in 
Docket
UG-981376 and allow the temporary rates to become 
permanent.                                                 
Discussion: 

On October 29, 1998, Avista Utilities (Company) filed docket UG-981376 with the 
purpose of refunding a net $428,000 in prior period gas cost savings.  The 
filing was suspended on November 25, 1998, with rates placed into effect on a 
temporary basis.  Staff raised two concerns at that time: 1) Transactions with 
its affiliate Avista Energy, 2) Jurisdictional allocation of gas supply costs.

Avista Energy:

Docket UG-981376
February 10, 1999
Page 1
The Company has entered into many transactions with its subsidiary, Avista 
Energy.  These transactions include pipeline capacity releases, off-system 
supply purchases and sales, and system supply purchases.  Staff has reviewed 
the transactions for the twelve month period ended June 30, 1998, and found 
that the transactions appear to be at market rates and are a representation of 
Avista Energy’s costs.  Staff was concerned that Avista Energy could be 
encroaching on activity that Avista Utilities could and should be doing in the 
interest of its ratepayers.  There is a certain amount of overlap in the 
functions performed by the Company and Avista Energy.  However, Avista Energy’s 
primary gas function is much more speculative in nature than what a regulated 
company would be venturing into.  The Company has also increased the amount of 
capacity release revenues and net off-system sales activities since the 
formation of Avista Energy, indicating that Avista Energy is not taking 
opportunities from the Company.  Staff will need to continue to monitor 
transactions between the Company and Avista Energy, Avista Energy’s results of 
operation, and the Company’s level of capacity release/off-system sales.

Jurisdictional Gas Cost Allocations:

Staff was concerned with the methods employed to assign gas costs to the 
different jurisdictions.  Even though Staff does not agree with the methods 
used, the Company has demonstrated to Staff’s satisfaction that the end results 
of the methods used to assign gas supply costs to the various jurisdictions are 
reasonable.  Staff and the Company are continuing to find an allocation method 
that is agreeable to all jurisdictions involved.  Until an agreed upon 
methodology is found Staff will continue to review all allocations to ensure 
that the results are reasonable.


IV. Summary

The outcome of Staff’s review of the above mentioned issues is that there 
should be no adjustments made to the deferred gas cost accounts and, therefore, 
the rates placed into effect on November 25, 1998, on a temporary basis are 
correct and should become permanent.

V.  Conclusion.

Staff recommends that the Commission issue an order dismissing the complaint 
and order suspending the filing in Docket UG-981376 and allow the temporary 
rates to go into effect on a permanent basis.