Working on a complex audit for Avista here in Spokane and I'm struggling with their rate unbundling methodology. They're charging my client $0.034/kWh for delivery and $0.058/kWh for supply on Schedule 25 (large general service). The delivery component includes transmission, distribution, and several mysterious "system benefit" charges totaling $0.008/kWh. Anyone familiar with how Avista allocates these costs? Some of these charges look like they should be in the supply bucket, not delivery.
Avista rate unbundling questions - delivery vs supply
Jan, I've seen similar issues with unbundling in other states. The "system benefit" charges often include things like energy efficiency programs, low-income assistance, and renewable energy credits. These should technically be supply-related costs but utilities often put them in delivery to avoid competitive pressure. Check Washington's deregulation rules - there might be specific guidelines on cost allocation that Avista is violating.
Tim's right about the cost shifting. We see the same games here in Wisconsin with WE Energies. The trick is identifying which charges are truly delivery-related (wires, poles, transformers) versus supply-related (generation, fuel, capacity, environmental compliance). Request a detailed cost allocation study from Avista. If they can't justify the allocation methodology, file a complaint with the Washington UTC.
I'm new to deregulated market auditing but this sounds similar to what we're seeing here in Arkansas with Entergy. They bundle all kinds of costs into "delivery" that really should be competitive supply charges. The regulatory agencies often don't have the resources to properly review these allocations so utilities get away with creative accounting. Have you tried comparing Avista's allocation to other utilities in the Pacific Northwest?
Good suggestion Lucille. I pulled comparable data from Puget Sound Energy and Idaho Power - both allocate renewable energy costs to supply, not delivery. Avista is definitely playing games here. Their $0.008/kWh in "system benefits" includes $0.003 for renewable portfolio compliance and $0.002 for demand-side management programs. Both should be supply costs since they affect generation planning and procurement.
Jan, you've got a solid case there. Here in Oklahoma we went through similar battles with OG&E during our deregulation discussions. The key is showing that competitive suppliers would include those costs in their pricing, which proves they're supply-related. Document everything and prepare for a long fight - utilities hate admitting they've been misallocating costs for years.
Susan's absolutely right about the long fight. We battled PPL here in Pennsylvania for three years over similar cost allocation issues. The utilities have armies of lawyers and rate experts to defend their methodology. But if you can prove the costs are supply-related, you can potentially save clients thousands annually. In our case, we got $0.004/kWh moved from delivery to competitive supply pricing.
Update: Filed a formal complaint with the Washington UTC last week. Avista's response was predictably defensive but their cost allocation expert couldn't explain why renewable compliance costs belong in delivery rather than supply. The hearing is scheduled for May. I'll keep everyone posted on how this plays out. Thanks for all the input - having comparable data from other states really strengthened our case.
Jan, great work building that case. These cost allocation battles are crucial for maintaining competitive markets. When utilities can artificially inflate delivery charges, it reduces the potential savings from competitive supply. Keep fighting the good fight and definitely share the outcome. We need more precedents showing proper cost allocation methodology. The Washington UTC decision could influence similar cases in other states.