20240522Staff Comments.pdf

RECEIVED
Wednesday, May 22, 2024 10:17:01 AM
IDAHO PUBLIC
UTILITIES COMMISSION
CHRIS BURDIN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 9810
Street Address for Express Mail:
11331 W CHINDEN BLVD, BLDG 8, SUITE 201-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )
CORPORATION'S APPLICATION FOR AN ) CASE NO. AVU-E-24-04
ACCOUNTING ORDER FOR APPROVAL OF )
DEPRECIATION AND AMORTIZATION ) COMMENTS OF THE
RATES FOR OUTAGE MANAGEMENT ) COMMISSION STAFF
SYSTEM &ADVANCED DISTRIBUTION )
MANAGEMENT SYSTEM SOFTWARE )
INVESTMENT )
STAFF OF the Idaho Public Utilities Commission ("Staff'), by and through its Attorney
of record, Chris Burdin, Deputy Attorney General, submits the following comments.
BACKGROUND
On March 5, 2024,Avista Corporation dba Avista Utilities ("Company") applied to the
Commission seeking an order authorizing the approval of depreciation and amortization rates for
its Outage Management System&Advanced Distribution Management System("OMS &
ADMS") Software Investment.
The purpose of depreciation and amortization expense is to provide for recovery of the
original cost of plant(less estimated net salvage) over the used and useful life of the property by
means of an equitable plan of charges to operating expense. Tangible assets, usually referred to
as plant,property, and equipment, are depreciated. Intangible assets, such as software, land
STAFF COMMENTS 1 MAY 22, 2024

rights and rights-of-way, are amortized. The Company's depreciation rates were updated in 2023
by Commission Order No. 36020.
In that depreciation study, certain capitalized software recorded in FERC Account No.
303.1 —Intangibles Software, requires a five-year life. The Company is requesting approval to
use a 15-year depreciable life for certain software assets transferring to plant in 2025 within the
OMS &ADMS projects, or 12-years (remaining useful life of project) for assets transferring in
2028, due to a longer expected life of those software assets.
The Company is not requesting a change to customers'rates at this time and will only
begin to utilize the new amortization period for projects that become used and useful upon
Commission approval.
STAFF ANALYSIS
Staff recommends the Commission approve the Company's Application allowing the
Company to use a 15-year depreciable life for OMS &ADMS software transferring to plant in
2025 and 12-years for software transferring in 2028. Staff believes that matching the
depreciation life of OMS &ADMS software projects with the useful life of the assets provides
the proper matching of revenues with the benefits received from the assets and would not require
the Company to maintain multiple depreciation accounts for each regulated jurisdiction.
OMS &ADMS Software
The Company plans to replace its current Outage Management Tracker("OMT") and
Distribution Management Software ("DMS") with a single ADMS. ADMS has the capability to
integrate multiple software domains and includes benefits such as: 1) improved operational
awareness; 2) grid management capabilities; and 3) real-time automated outage restoration. The
installation of the new ADMS will occur in three phases which the Company refers to in its
Application as Phase 0, Phase IA and Phase 1B.
The Company is not requesting any changes to depreciation or amortization rates
investments in Phase 0, which occurred in 2023. Both Phase IA and 113 will deliver OMS and
DMS products in 2025. The Company is requesting a 15-year deprecation life for software
investments occurring in Phase IA and 1B, an investment of approximately $21.3 million. The
Company is not requesting any changes to depreciation rates for hardware costs of OMS product
STAFF COMMENTS 2 MAY 22, 2024

delivery in Phase IA. In addition, the Company will incur ongoing software licensing costs of
approximately$2.3 million to be paid in 2028 for which the Company is requesting a 12-year
depreciation rate.
Accounting Treatment
The Company requested the Commission approve a 15-year useful life for OMS &
ADMS software transferring in 2025 and 12-years for software transferring in 2028. In Order
No. 36020, the Commission approved a 5-year amortization rate for software transferring into
FERC Account No. 202.1 —Intangible Software. The Company's previous OMT software was
useful beyond its amortization life and the Company anticipates the new ADMS software will
have a useful life greater than the amortization life currently approved by the Commission.
Without Commission approval of a 15-year and 12-year amortization life, the Company would
be required to amortize the project costs over 5 years. This would increase costs to customers
and not reflect the useful life of the software, which the Company estimates will last beyond 15
years. The Company anticipates approximately $21.3 million of OMS &ADMS software
investments in 2025, and the remaining $2.3 million in 2028.
STAFF RECOMMENDATIONS
Staff recommend the Commission approve the Company's request to amortize specific
OMS &ADMS software investments using a 15-year depreciation life for assets transferring in
2025 and 12-year life for assets transferring in 2028.
Respectfully submitted this 22nd day of May 2024.
Chris Burdin
Deputy Attorney General
Technical Staff: Ty Johnson
I:\Utility\UMISC\COMMENTS\AVU-E-24-04 Comments.docx
STAFF COMMENTS 3 MAY 22, 2024

I
l
i CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 4-cf- DAY OF MAY 2024,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. AVU-E-24-04, BY E-MAILING A COPY THEREOF TO THE FOLLOWING:
PATRICK EHRBAR DAVID J MEYER
DIR OF REGULATORY AFFAIRS VP & CHIEF COUNSEL
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail: patrick.ehrbar a,avistacorp.com E-mail: david.meyer(i4avistaco1p.com
PATRICIA JORDAN,6ECRETARY
CERTIFICATE OF SERVICE