Agenda Date:  December 27, 2000
Item Number: 

Docket:  UG-001980
Company:  Avista Utilities (Gas)

Staff:  James M. Russell, Policy Research Specialist

Recommendation:

Grant the filing in Docket UG-001980 to become effective January 1, 2001, on 
less than statutory notice.

Discussion:

On December 15, 2000, Avista Utilities filed a revision to sheet 163B (PGA 
incentive mechanism).  The revision specifically allows the deferral of costs 
associated with hedging activities by adding the following language to the 
description of costs that may be deferred:

“Revenues and expenses of additional fixed–price transactions designed to hedge 
the future commodity price of gas will also be included in total commodity 
costs.”

Due to the dramatic change in the market for natural gas supplies, the Company 
believes that additional flexibility beyond the current benchmark mechanism is 
needed to manage the cost of natural gas supplies for their customers.  Given 
the current market for natural gas supplies, the Company has requested that the 
Commission approve this tariff revision to become effective on January 1, 2001, 
on less than statutory notice, in order to specifically allow the Company to 
begin deferring hedging costs and revenues as soon as practicable.

Staff concurs, and would add that the approval of this tariff change should not 
prohibit the Staff from taking any position in a future proceeding regarding 
the timing or prudence of Avista Utility’s hedging activities.

Conclusion:

Staff has reviewed the proposed tariff changes and believes them to be 
appropriate and in the public interest.  Therefore, Staff recommends that the 
filing be granted to become effective January 1, 2001, on less than statutory 
notice.