Agenda Date:   March 28, 2001    
Item No.:   2G

Docket:   UE-010295
Company Name:  Avista Corporation, dba Avista Utilities

Staff:   Joelle Steward, Policy Research Specialist
   Thomas Schooley, Policy Research Specialist
  
Recommendation:

Allow the tariff revisions in UE-010295 to become effective April 1, 2001, as 
filed.  Also, issue an Order requiring 1) reports to be filed with the 
Commission on program implementation, due by the end of July and the end of 
October and 2) requiring the Company to continue to post current offer prices 
on a publicly available website.

Background

In the special open meeting session on December 9, 2000, the Commission 
permitted Avista's Voluntary Buy-Back of Customer Power, Schedule 70R, to 
become effective with less than statutory notice (Docket No. UE-001923).  The 
program was approved on an expedited basis due to the volatile market 
conditions and severe weather forecasts at the time.  The program tariff 
included a termination date for March 30, 2001.  A broad overview of the 
program's features and implementation experience is provided in the attached 
table.  

The buy back program provides a billing credit to large customers for voluntary 
load curtailment at times specified by the company.  The purpose of this 
program is to provide the Company an opportunity to reduce its power supply 
expense during periods of high market prices for electricity.  Market prices 
are expected to remain high through the summer because of  the present drought 
conditions and the supply imbalance across the region.   

The current filing makes four changes to the existing tariff:
 1. extends the termination date to October 31, 2001;
 2. removes the minimum payment language;
 3. and specifies that customers taking similar service will be provided with 
the highest credit received by   a customer on any day; and
 4. includes language requiring acknowledgement by participants that the 
decision to curtail usage was   influenced by this program.

In order to take advantage of opportunities to reduce power supply expenses, 
and limit accruals in the deferral account established in Docket UE-000972, 
Avista proposes to extend this program through the summer and part of autumn 
with a new termination date of October 31, 2001.    The Company is also 
removing the minimum payment language in order to give themselves greater 
flexibility for when they could seek curtailment and to remove any issue of 
discrimination over program offer prices to industrial customers under this 
tariff sheet (70R) and irrigation customers 

under sheet 70S.  Lastly, the Company is trying to guard against free ridership 
by including an acknowledgement by participants that their decision to curtail 
was influenced by the program.

Discussion

Avista has sought curtailment once with the industrial buy back program, which 
resulted in curtailment in December of 613 MWh and power supply expense savings 
of approximately $82,000.  The Company did not solicit power during the months 
of January and February because of a combination of sufficient system 
resources, pre-purchased power and lower indexed market prices.  

Staff supports the Company's proposed changes for this filing at this time.  
The market and hydro conditions in the current situation necessitate that the 
utilities have the opportunity and flexibility to use these voluntary buy back 
mechanisms to reduce their power supply expenses for all ratepayers.  Since 
there is little experience to date with these programs, Staff believes that the 
extension of the termination date (as opposed to the elimination of a 
termination date altogether) is appropriate so that we may have more time and 
opportunities to verify that ratepayers do benefit from these programs. 

Staff also recommends that Avista submit two reports, of similar format and 
detail as current monthly program reports, over the course of the extended 
period.  The first report would be due by the end of July and would cover 
implementation during April, May and June; the second would be due by the end 
of October, covering implementation during July, August and September.  These 
reports will provide Staff and the Commission the ability to monitor 
implementation and ease the burden on the Company of filing monthly reports, as 
was required by the Order Granting Less than Statutory Notice in Docket 
UE-001923.  

Additionally, the Order in Docket UE-001923 required Avista to "post offered 
curtailment prices on a publicly available website."  Avista has complied on 
this point and Staff recommends that this requirement remain in effect for the 
extended period.

Recommendation

Staff recommends that the tariff revision in Docket UE-010295 become effective 
April 1, 2001, as filed.  Furthermore, Staff recommends that the Commission 
issue an Order requiring 1) reports to be filed with the Commission on program 
implementation, due by the end of July and the end of October and 2) requiring 
the Company to continue to post current offer prices on a publicly available 
website.