Item 8.01 Other Events.

On June 14, 2021, Avista Corporation (the Company) and all parties to the Company's Idaho electric and natural gas general rate cases reached a settlement agreement that has been submitted to the Idaho Public Utilities Commission (the IPUC) for consideration. If approved, new rates would take effect September 1, 2021 and 2022.

The proposed rates under the settlement agreement are designed to increase annual base electric revenues by $10.6 million (or 4.3 percent), effective September 1, 2021, and $8.0 million (or 3.1 percent), effective September 1, 2022.

For natural gas, the proposed rates under the settlement agreement are designed to decrease annual base natural gas revenues by $1.6 million (or 3.7 percent), effective September 1, 2021, and increase annual base revenues by $0.9 million (or 2.2 percent), effective September 1, 2022.

The parties have agreed to use the customer tax credits included in the Company's original filing to offset overall proposed changes to base electric and natural gas rates over the two-year plan. The revenue increases described above are net of this offset.

The primary element of the difference in the agreed upon base revenues in the settlement agreement from the Company's original request is the continued recovery of costs for the Company's wind generation power purchase agreements, which will include Palouse Wind and Rattlesnake Flat, through the Power Cost Adjustment mechanism rather than through base rates, as well as reductions in overall net power supply costs, together totaling $5 million.

The settlement is based on a 9.4 percent return on equity with a common equity ratio of 50 percent and a rate of return on rate base of 7.05 percent.

The Company's original request included an increase of annual electric base rate revenues of $24.8 million (or 10.1 percent), effective September 1, 2021, and $8.7 million (or 3.2 percent), effective September 1, 2022. For natural gas, the original request included an increase of annual base revenues by $0.1 million (or 0.1 percent), effective September 1, 2022, and $1.0 million (or 2.2 percent), effective September 1, 2022.

The recommendation to the IPUC by the parties to approve the settlement agreement is not binding on the IPUC itself.

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