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Home My WebLink About20040326Response of Avista to Staff Part XIX.pdf/~d XlK Retirement Plan for Employees of A vista Corporation Actuarial Valuation for Purposes of Determining Contributions for the Plan Year Beginning January 2000 Actuarial Valuation for Purposes of FASB Statement 87 for the Fiscal Year Beginning January 2000 September, 2000 t/ ~Watson Wyatt ~rldwide TABLE OF CONTENTS Expense Information Contribution Information SF AS Assets Liabilities Historical Information Data EXECUTIVE SUMMARY Summary of Key Results. ..., """""""""""""""'" ................................ Review of Changes Since Last Year .................................................... Annual Expense............... ........... ...................... .............................. ...... Cash Contributions................. ........ .................. .................... """""""" SF AS 87 Funded Status... """"" """""""""" .......... """"""""'" .......... PBGC Premium.......... ............................................. ............................. Regulatory Environment...................................................... """""""" Actuarial Statement......... ...... ..................................................... """"" EXHIBITS 1. Funded Status and Accrued Benefit Cost....................................... 2. Summary and Comparison of Expense .......................................... 3. Development of Expense Components..................................... """4. Reconciliation of Accrued Benefit Cost and of Unrecognized Balances ......................................................"""""" 5. Amortization of Unrecognized Net (Gain)/Loss ......... :.................. 6. Summary and Comparison of Funding Requirements """"""""'" 7. Minimum Required Contribution ................................................... 8. Maximum Deductible Contribution ............................................... 9. Present Value of Accumulated Benefits......................................... 10. Change in Plan Assets During Plan Year ....................................... 11. Development of Actuarial Value of Assets .................................... 12. Details of Actuarial Accrued Liabilities......................................... 13. Historical Information........... .............................. ......... """"""""" 14. Summary of Plan Participants ......... .................. ............ ........... ...... 15. Age and Service Distribution ......................................................... 16. Reconciliation of Participant Data.. .............................. """"" ........ \ \sea I Ida ta \clien t\avista \d b 1 \rept\ va 12000.doc Retirement Plan for Employees of A vista Corporation Page TABLE OF CONTENTS (cont' Page APPENDICES A. Statement of Actuarial Assumptions and Methods........................ B. Summary of Principal Plan Provisions .......................................... GLOSSARY Retirement Plan for Employees of A vista Corporation : '. . EXECUTIVE SUMMARY SUMMARY OF KEY RESULTS As requested by Avista Corporation, this report presents the results of the actuarial valuation of the Retirement Plan for Employees of A vista Corporation. In addition, the report documents the funded status of the plan, the provisions on which the valuation is based, and the actuarial assumptions and methods used in the calculations. Plan Years Beginning:01/01/2000 01/01/1999 01101/2000 01/01/1999 $842 290 440 020 Fiscal Years Beginning: Annual Expense Net Periodic Benefit Cost/(Income) Percentage of participant compensation Cash 1 Contributions Minimum Required Contribution Percentage of compensation Maximum Deductible Contribution Percentage of participant compensation 146 250 303,632 $14 186 691 20. Quarterly Contribution Requirement Payable April 14, 2000 Payable July 14, 2000 Payable October 13, 2000 Payable January 12 2001 Preliminary Future Contribution Req uirements Payable April 13 , 2001 Payable July 13 2001 Payable October 15 2001 Payable January 15, 2002 These amounts are calculated assuming that contributions will be made in these amounts and on these dates and that any receivable contributions for the prior plan year will be made when due. To the extent that actual deposits are shown, theireffect on subsequent requirements has been reflected. Quarterly contribution requirements for the next plan year may, depending on the results of the next actuarial valuation, be less than these amounts. They will not be more unless actual contributions for the current plan year are smaller or later thanrequired. Retirement Plan for Employees of A vista Corporation SUMMARY OF KEY RESULTS (cont' Plan Years Beginning:01/01/2000 01/0111999 Fiscal Years BeginnIng:01101/2000 0110111999 Prior Year Projected Benefit Obligation ($162 097 055)($178 589 152) Disclosed Fair Value of Assets 185 564 598 178 878 604 Funded Funded Status 467 543 289 452 Status Prepaid Benefit Cost/(Accrued Benefit Liability)($9 477 598)($7 037 578) Intangible Asset PBGC Flat Rate Premium Variable Rate Premium Total Rate Premium $46 170 $46 170 $46 455 $46,455 Participant Information Participating Employees Participant Compensation Deferred Vested Participants Retirees and Beneficiaries Retiree and Beneficiary Annual Benefit Payments Total Plan Participants Total Benefit Payments in Prior Year 323 $67 830 210 337 770 354 $67 984 647 319 772 920 960 2,430 $12 108,417 $9,439 805 445 747 603 Retirement Plan for Employees of A vista Corporation REVIEW OF CHANGES SINCE LAST YEAR Plan Provisions Appendix B summarizes the main provisions of the plan as of the valuation date. The plan was amended effective July I , 1999 to provide a lump sum payment option for non-union employees. The change was reflected in the F AS 87 results during 1999 and was reflected in the funding results as of January 1 2000. To our knowledge, no additional changes are pending. Assumptions Appendix A summarizes the actuarial assumptions and cost methods used to determine plan liabilities and cash contribution requirements. A comparison of assumptions for the current and prior years is shown below. Fiscal Years Beginning:01/0112000 01/01/1999 Ass umptions for Expense Discount rate 75%75% Expected long-term return on assets 00%00%Compensation increase rate 00%00% The discount rate for FAS 87 was increased from 6.75% to 7.75% effective December 31 , 1999. Effective January 1 2000, the annual compensation increase rate was increased from 4.00% to 5.00%. Plan Years Beginning:0110112000 0110111999 Assumptions for Contributions Valuation interest rate 00%50%Current liability interest rate 31%55%Compensation increase rate 00%00% The valuation interest rate for funding was increased from 8.50% to 00%, effective January 1 2000. The annual compensation increase rate was increased from 4.00% to 5.00%, also effective January 1 2000. The decrease in unfunded actuarial accrued liability due to changes in assumptions is $2 909 373 under the funding method Retirement Plan for Employees of AviJ'ta Corporation REVIEW OF CHANGES SINCE LAST YEAR (cont' Actuarial Methods There have been no changes since last year. Plan Experience The actuarialloss/(gain), not due to plan, assumption or method changes during the prior year has been determined in accordance with Revenue Ruling 81-213 to be $0 due to the plan s overfunded status. Prior to such special calculations, the actuarialloss/(gain) was ($8 843 049) under the funding method. The components of this loss/(gain) are ($10 805 623) due to investment results and $1 962 574 from sources related to plan liabilities. Retirement Plan for Employees of A vista Corporation ANNUAL EXPENSE The net periodic benefit cost (income statement expense) was determined in accordance with Statement of Financial Accounting Standards 87 (SF AS 87) for the year beginning January I 2000. A comparison of the net periodic benefit cost for 2000 and 1999 is shown below: Plan Years Beginmng:01101/2000 01101/1999 Fiscal Years BegInning:01/0112000 0110111999 Annual Expense / (Income)$842 290 $2,440 020 Assumptions Discount rate Compensation increase rate Expected long-tenn return on assets 75% 00% 00% 75% 00% 00% Projection of Refer to graphs in "Recent Experience and Projections Benefit Expense! (Income) Retirement Plallfor Employees of A vista Corporation CASH CONTRIBUTIONS The Internal Revenue Code (IRC) permits flexibility in plan contributions so that nonnally a range of contributions is possible. A contribution in the range shown below will be fully tax deductible and satisfy minimum funding requirements. For a contribution to be deductible for a tax year, it must be made before the due date for filing the tax return for that year, with extensions if applicable. Plan Years Beginning: Tax Years Ending: 01/01/2000 12/31/2000 01/01/1999 12/31/1999 Permitted Contribution Range Minimum Required Maximum Deductible 146 250 303 632 $14 186 691 The minimum required contribution changed from $3 303 632 for the plan year beginning in 1999 to $0 for the plan year beginning in 2000 primarily due to investment gains greater than expected, and a gain from plan amendments. Sponsor Funding Policy The current sponsor funding policy has been generally to contribute an amount equal to the Net Periodic Pension Cost, within the ranges of the minimum required and maximum tax deductible contributions. A contribution of $3 303 632 was made for the prior plan year under this policy. For 2000, the policy would suggest a contribution of $842 290. Assumptions Valuation interest rate Compensation increase rate 00% 00% 50% 00% Projection of Permitted Contribution Range Refer to graphs in "Recent Experience and Projections Retirement Plan for Employees of A vista Corporation SFAS 87 FUNDED STATUS The Financial Accounting Standards Board requires disclosure of the plan s funded status as well as a statement of the prepaid benefit cost/(accrued benefit liability) along with any intangible asset recognized due to an unfunded accumulated benefit obligation. The table below summarizes the plan s current funded status as of the end of the fiscal year, December 31 1999 along with comparable information as remeasured on January 1 , 2000, with a new census. Fiscal Years Ending: Funded Status 12/31/2000 Projected Benefit Obligation Fair Value of Assets Funded Status Accumulated Benefit Obligation ABO Funded Ratio Remeasured as of beginning of fiscal year $169 093 051 185 564 598 $16,471 547 137 192 854 135.3% 12/31/1999 Disclosed at end of fiscal year , $162 097 055 185 564 598 $23,467 543 134 425,464 138. Balance Sheet Entries Prepaid Benefit Cost Accrued Benefit Liability Intangible Asset Accumulated Other Comprehensive Income Adjustments N/A ($9,477 598) Assumptions Discount rate Compensation increase rate 75% 00% 75% 00% Projection of Refer to graphs in "Recent Experience and Projections Obligations and Assets Retirement Plan for Employees of A vista Corporation PBGC PREMIUM The Pension Benefit Guaranty Corporation (PBGC) requires annual premium payments to cover all participants in the plan. The premium is composed of a flat rate portion and a variable rate portion. For the plan year beginning January 1 , 2000, the flat rate premium is $19 per participant. The variable rate premium is based on the plan s unfunded vested benefits. The table below summarizes the determination of the PBGC premium for the plan year beginning January 1 2000. Flat Rate Premium Number of covered participants Amount of flat rate premium per participant Total flat rate premium 430 $19 $46 170 Variable Rate Premium This plan is exempt from the variable rate premium because it is at the full funding limit. Total Premium Total PBGC premium $46 170 Assumptions Premium for plan year beginning Determination date Required interest rate 01/01/2000 12/31/1999 5.40% Retirement Plan for Employees of A vista Corporation REGULATORY ENVIRONMENT Full Funding Limit The Taxpayer Relief Act of 1997 increased the 150% of current liability full funding limit to 155% for plan years beginning in 1999 and 2000, 160% for 200 I and 2002 plan years, 165% for 2003 and 2004 plan years, and 170% for subsequent plan years. It also increased the amortization period over which the resulting credit is paid back from 10 to 20 years beginning with the 1999 plan year. Deficit Reduction Contribution The Retirement Protection Act (RP A), part of the 1994 GAIT free trade agreement, requires plan sponsors to pay additional "deficit reduction" contributions based on unfunded current liability amounts. Since the passage of the RP A, the maximum assumed interest rate for current liability valuations has decreased from 110% in 1994 to 105% in 1999 of the four year weighted average of 30-year treasury bond rates. Under current law, the percentage is not reduced below 105%. Decreasing the top end of the acceptable range of assumed interest rates increases unfunded current liability valuation results. The acceptable range of assumed interest rates for plan years beginning January I 2000, is 5.41 % to 6.31 %. The mortality assumptions used for this purpose are also regulated by the IRS. Benefit and Compensation Limits ... RP A also slows the rise of qualified plan limits due to cost-of-living adjustments. Specifically, the maximum dollar limit for defined benefit plans is rounded down to the next lower $5 000. For plan years beginning in 2000 , the maximum defined benefit amount payable at social security retirement age is $135,000 per year. The qualified pay limitation is rounded down to the next lower $10 000. For 2000, the maximum qualified pay is $170 000. Participant Notifications For this plan year beginning January I , 2000, the PBGC underfunding notices to plan participants are not required. The PBGC underfunding notices will not be required for the next plan year either. Retirement Plan for Employees of A vista Corporation REGULATORY ENVIRONMENT (cont' PBGC Premiums In addition to the flat $19 per participant paid by all sponsors of single- employer pension plans guaranteed by the PBGC, sponsors must pay additional premiums based on any unfunded vested current liability as determined using the required interest rate, 85% of the prior month' average 30-year treasury bond rates. For years beginning January 1 2000, the required interest rate is 5.40%. There is no cap on these additional premiums. Retirement Plan for Employees of vista Corporation ACTUARIAL STATEMENT Primary Purposes of Actuarial Valuation As requested by the Retirement Committee of A vista Corporation, this report presents the results of the actuarial valuation of the Retirement Plan for Employees of A vista Corporation. The primary purpose of the valuation is to determine the permitted contribution range - minimum required contribution and the maximum tax-deductible contribution - under the Internal Revenue Code for the plan year ending December 31 2000, and the tax year ending December 31 2000. The report also documents the Net Periodic Benefit Cost, the funded status of the plan the provisions on which the valuation is based, and the actuarial assumptions and methods used in the calculations. Sources of Data Employee data as of January 1 2000 were provided by Avista Corporation. Data for other participants were provided by A vista Corporation. We did not audit the participant data. We did check the data we received thoroughly, reconciling last year s data with the new data. This reconciliation accounted for all changes to the covered population. All data were checked for internal consistency and for consistency with last year s data. Asset data were provided by the plan trustee. Retirement Plan for Employees of A vista Corporation ACTUARIAL STATEMENT (cont' Certification of Compliance and Independence To the best of our knowledge, all plan participants on January 1 2000 and all plan provisions have been reflected in the valuation. In our opinion, all calculations and procedures are in conformity with generally accepted actuarial principles and practices; and the results presented comply with the requirements of the Internal Revenue Code ERISA, or Statements of Financial Accounting Standards including modifications made by Statements 130 and 132, as applicable. There is no relationship between Avista Corporation and Watson Wyatt Worldwide that impacts our objectivity. A vista Corporation is responsible for the selection of assumptions for SF AS 87 purposes. We will be pleased to review this report with you at your convenience. Sincerely, 4. ~LL Valerie A. Paganelli, F . Consulting Actuary Susan E. Hedrick, F. Consulting Actuary Retirement Plan for Employees of A vista Corporation EXHIBITS FUNDED STATUS AND ACCRUED BENEFIT COST Fiscal Years Ending: Reconciliation of Funded Statlls a. Measurement date b. Accumulated benefit obligation c. Projected benefit obligation d. Plan assets at fair value e. Funded status f. Unrecognized net loss/(gain) g. Unrecognized prior service costs h. Unrecognized net transition obligation/(asset) 1. Prepaid/(accrued) benefit cost j. (Additional minimum liability) k. Prepaid benefit cost/(accrued benefit liability) 1. Intangible asset ffi. Accumulated other comprehensive income adjustments n. Net amount recognized 12/3112000 For NPBC development remeasured on 12/31/1999 ($137 192 854) ($169 093,051) 185 564 598 $16,471 547 (31 670 917) 650 772 929 000) ($9 477 598) 12/31/1999 Balance sheet disclosure as of 12/31/1999 ($134 425 464) ($162 097 055) 185 564 598 $23 467 543 (38 666 913) 650 772 929 000) ($9 477 598) ($9 477 598) ($9,477 598) Assumptions o. Discount rate p. Compensation increase rate 750% 000% 750% 000% Retirement Plan for Employees of A vista Corporation SUMMARY AND COMPARISON OF EXPENSE Fiscal Years Beginning:0110112000 01101/1999 Basis Measurement date 12/31/1999 12/31/1998 Service cost 346 978 951 1191CalculationsProjected benefit obligation 169 093 051 177 924 885 Fair value of assets 185 564 598 178 878 604 Market-related value of assets 185 564 598 178 878 604 Net Periodic Service cost 346 978 951 1191Benefit Cost Interest cost 710 665 914 600 I Expected return on assets (16 243,212)(15 681 119) Net (gain)/loss recognition (857 602) Prior service cost amortization 971,461 341 420 I Transition (asset)/obligation recognition 086,000)086 000) Net periodic benefit cost/(income)$842 290 440 020 Assumptions m. Discount rate n. Expected long-term return on assets o. Compensation increase rate 750%750% 000% 000% 000% 000% Adjusted to reflect lump sum plan amendment effective July I, 1999. Retirement Plan for Employees of A vista Corporation DEVELOPMENT OF EXPENSE COMPONENTS Service Cost Fiscal Year Beginning: a. Service cost at beginning of year b. Expected administrative expensesc. Interest on service cost at discount rate (7.750%) d. Total 01/01/2000 962 393 384 585 346 978 Projected Benefit Obligation e. Participating employees f. Deferred vested g. Retirees and beneficiaries h. Total $80 980 290 231 549 881 212 $169 093 051 Interest Cost I. Projected benefit obligation j. Expected benefit payments during yeark. Interest on time-weighted amounts at discount rate (7.750%) $169 093 051 (10 168 932) $12 710 665 Market-Related Value of Assets 1. F air value of assets as of 0 1 /0 I /2000 m. Market-related value of assets $185 564 598 $185 564 598 Expected Return on Assets n. Market-related value of assets o. Expected contributions during fiscal year p. Expected benefit payments q. Expected administrative expenses r. Expected rate ofretum s. Expected return on assets adjusted for timing of above contributions and payments $185 564 598 (10 168 932) 000% $16 243 212 Retirement Plan for Employees of A vista Corporation RECONCILIATION OF ACCRUED BENEFIT COST AND OF UNRECOGNIZED BALANCES Reconciliation of Prepaidl(Accrued) Benefit Cost a. Prepaid/(accrued) benefit cost as of 01/01/1999 b. Net periodic benefit cost/(income) for fiscal year ending 12/3 1/1999 c. Employer contributions paid during fiscal year ending 12/31/1999 d. Prepaid/(accrued) benefit cost as of 01/01/2000 (a - b + c) e. Net periodic benefit cost/(income) for fiscal year ending 12/31/2000 f. Expected employer contributions paid during fiscal year ending 12/31/2000 g. Expected prepaid/(accrued) benefit cost as of 01/01/2001 (d - e + f) ($7 037 578) 440 020 ($9 477 598) 842 290 303 632 ($7 016 256) Reconciliation Unrecognized Unrecognized of Transition Date Original Amount as of Amount as of AmortizationObligation!Established Amount 01/01/1999 01/01/2000 Amount(Asset) 01/01/1994 ($21 768 000)($7 015 000)($5 929 000)($1 086 000) Reconciliation Unrecognized Unrecognized 2000of Prior Date Original Amount as of Amount as of AmortizationService Costs Established Amount 01/0 1/ 1999 01/01/20001 Amount 01/01/1988 331 000 472 000 01/01/1989 529 000 939 000 01/01/1993 989 000 647 000 01/01/1994 884 000 489 000 389 661 324 08201/01/1995 947 349 742 629 441,449 301 18003/01/1998 5,454 360 165 861 819 662 346 199Total$19 455,490 $11 650 772 $971 461 Due to 1999 plan amendment, some amortization amounts were accelerated. Retirement Plan for Employees of A vista Corporation AMORTIZATION OF UNRECOGNIZED NET (GAIN)/LOSS Fiscal Year Beginning: Total Unrecognized (Gain)/Loss Adjustedfor Deferred Asset (Gain)/Loss a. Total unrecognized (gain)/loss b. Deferred (gain)/loss i. Market-related value of assets ii. Fair value of assets iii. Deferred (gain)/loss (i-ii) c. Unrecognized (gain)/loss adjusted for deferred asset (gain)/loss (a- 01/0112000 ($31 670 917) $185 564 598 185 564 598 ($31 670 917) Amortization of Unrecognized Net (Gain)/Loss d. Absolute value of adjusted unrecognized (gain)/losse. Projected benefit obligationf. Market-related value of assets g. Larger of e and f h. 10% ofg 1. Absolute value of (gain)/loss in excess of 10% corridor (d-h, not less than zero) j. Unrecognized (gain)/loss subject to amortization with sign from c k. Average future expected working lifetime of participants expected to receive benefits 1. Amortization amount G + k) $31 670 917 169 093 051 185 564 598 185 564 598 556 460 $13,114 457 ($13 114,457) 15.292 years ($857 602) Retiremellt Plan for Employees of A vista Corporation SUMMARY AND COMPARISON OF FUNDING REQUIREMENTS Plan Years Beginning:01101/2000 01/0111999 Current Under RPA '94 (IRS mortality)$161 164,402 $155 809 086 Liability Under OBRA '87 (Valuation mortality)161 164 402 155 809 086 Actuarial ParticipatIng employees $65 540 935 $67 220 596 Accrued DefelTed vested participants 721 683 370 624 Liability Retirees and beneficiaries 608 319 671 121 Total $145 870 937 $145 262 341 Assets Market value of assets $188 868 230 $178 878 604 Actuarial value of assets 158 913 107 146 146 934 UAAL Unfunded actuarial accrued liability ($13 042 170)($884 593) Normal Cost Normal cost 345 711 929 415 As a percentage of compensation 6.4% Contrib ution Minimwn required contribution 303 632RangeAs a percentage participant compensation Maximum deductible contribution 146 250 $14 186 691 As a percentage participant compensation 20. Assumptions Valuation interest rate 00%50% RP A ' 94 current liability interest rate 31%55% OBRA '87 current liability interest rate 31%55% Compensation increase rate 00%00% These amounts are calculated assuming that contributions will be made in the amounts and on the dates described in the Executive Summary and that any receivable contributions for the prior plan year will be made when due. If actual contributions differ from this schedule, these amounts may need to be adjusted. Retirement Plan for Employees of A vista Corporation MINIMUM REQUIRED CONTRIBUTION Plan Year Beginning: Regular Minimum Contribution a. Normal cost b. Net amortization chargesc. Interest to end of year d. Additional funding chargee. Interest penalty due to late quarterly contributions f. Total charges 0110112000 345 711 391 114 N/A 736 825 Full Funding Limitation g. Full funding limitation adjusted by credit balance Preliminary Minimum Contribution h. Minimum required contribution after recognition of full funding limitation (lesser of f and g) Credit Balance i. Prior year credit balance j. Interest to end of year k. End of year credit balance Minimum Required Contribution 1. Minimum required contribution, if paid on or after December 31 , 2000 (h-, not less than zero) m. Interest to the end of the plan year on accumulated quarterly installments n. Minimum required contribution, if paid on January I 2000 o. Minimum required contribution for plan year ending December 31 , 2000 (l-m, not less than n) Retirement Plan for Employees of A vista Corporation MAXIMUM DEDUCTIBLE CONTRIBUTION Plan Year Beginning: Tax Year Ending: Regular Maximum Contribution 01101/2000 12/31/2000 345 711 391 114 736 825 a. Normal cost b. Net amortization chargesc. Interest to end of plan year d. Total Full Funding Limitation e. Full funding limitationf. Ll::sser of regular maximum and full funding limitation Minimum Contribution for Current Tax Year g. Minimum required contribution (for the plan year ending within the current tax year) not claimed as a deduction for the prior tax year h. Contributions not claimed as a deduction for the prior tax year but required to satisfy minimum funding for earlier plan years 1. Minimum required contributions for plan years ending within or before the current tax year (g+h) Unfunded Current Liability j. Adjusted current liability at end of year k. Actuarial value of assets at end of year 1. Deductible contributions included in assets but not yet deducted less deducted contributions not included in assets m. Unfunded current liability G-k+l, not less than zero) $167 235 003 162 088 753 146 250 Maximum Contribution n. Maximum deductible contribution (largest of f, i, and m) 146 250 The fact that, if a qualified defined contribution plan covers the same employees as this plan, the total amount of the tax - deduction under both plans cannot exceed 25% of the total compensation of the covered employees for that tax year, has not been considered here. \\1Retirement Plan for Employees of A vista Corporation PRESENT VALUE OF ACCUMULATED BENEFITS Accumulated Benefits As of 0110112000 Number of Participants Vested Present Value a. Participating employees b. Deferred vestedc. Retirees and beneficiaries d. Total vested accumulated benefits e. Nonvested accumulated benefits f. Total accumulated benefits 0261 337 770 133 $29 014 835 721 683 608 319 $109 344 837 309 242 $121 654 079 Benefit Security g. Market value of assets Ratio h. Asset value divided by total accumulated benefits value $188 868 230 155.25% Reconciliation of Present Value of Accumulated Benefits 1. Present value of accumulated benefits as of January I , 1999 J. Changes during the year due to: Benefits accumulated4 Decrease in the discount period Actual benefits paid Plan amendment Change of assumptions Net increase (decrease) k. Present value of accumulated benefits as ofJanuary 1 2000. $124 030 176 355 283 027 957 (12 108,417) (1,016 777) 634 143) ($2 376 097) $121 654 079 Actuarial assumtJtions: The same actuarial assumptions are used to value the F ASB Statement 35.liabilities as are used for purposes of determining the plan s funding requirements. as described inAppendix A. An investment return assumption of9.00% was used. Ofthese, 1 026 are fully vested. There are also 297 non-vested participating employees for a total of 1 323 participatingemployees. This does not represent liabilities on a plan tennination basis for which a separate extensive analysis would be required. Assets include accrued contributions of $3 303,632, not yet deposited as of December 31, 1999. Includes actuarial gains and losses due to noninvestment experience. Retirement Plan for Employees of A vista Corporation 10.CHANGE IN PLAN ASSETS DURING PLAN YEAR Market Value Actuarial Value Change in Plan assets as ofOl/0l/1999 I $178 878 604 $146 146 934AssetsEmployer contributions 303 632 303 632 Benefit payments made (12 108 417)(12 108 417) Administrative expenses paid (1,106 936)106 936) Investment return 677 894 Interest and dividends 412 614 Net realized appreciation 134 136 Change in net unrealized appreciation (23 645,403) Plan assets as of 12/31/1999 $188 868 230 $158 913 107 Return on Assets Rate of return on average invested assets 11.54%16.24% There were no contributions receivable at the beginning of the plan year. Includes contributions receivable of $3,303,632 at the end of the plan year that were deposited after that date. Retirement Plan for Employees of A vista Corporation 10.CHANGE IN PLAN ASSETS DURING PLAN YEAR (cont' Historical Return on Assets The schedule below summarizes the total rate of rerum in recent years. Year Ending In - Market Value -Actuarial Value Return on Assets 18. 16. 14. 12. 10. 1996 12. 10. 1997 14. 13. 1998 13. 12. 1999 11. 16. Retirement Plan for Employees of A vista Corporation 11.DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS Capital Appreciation Net realized appreciation in market value Change in net unrealized appreciation in market value Total capital appreciation $37 134 136 (23 645 403) $13 488 733 Actuarial Market value of assets as of January 1 , 2000 $188 868 230 Value of Assets Plan Capital Percent Percent Deferred Year Appreciation Recognized Deferred Appreciation (1)(2)(3)(4)(5) 1995 $22 403 212 100.000%000% 1996 490 616 80.000%20.000%498,123 1997 501 455 60.000%40.000%200 582 1998 442 386 40.000%60.000%465 432 1999 488 733 20.000%80.000%790 986 Total $29 955,123 Asset value minus total deferred appreciation $158 913 107 Corridor for actuarial value 80% of market value 120% of market value $151 094 584 $226 641 876 Actuarial value of plan assets as of January 1 , 2000 $158 913 107 Note: The actuarial value of assets is a calculated value detennined by starting with market value of assets at January 1 1989. For subsequent years the calculated value is detennined by adjusting the market value of assets to reflect the capital appreciation during each of the last five years or, iff ewer, the completed years since January I , 1989, at the rateof20% per year. The actuarial value is subject to a restriction of not less than 80% or more than 120% of market value. Retirement Plan for Employees of A vista Corporation 12.DETAILS OF ACTUARIAL ACCRUED LIABILITIES Plan Year Beginning: Funding Unit Credit Method Liabilities Applicable interest rate 00% Normal cost Benefits Administrative expenses Total 886 995 458 716 345 711 Liability Participating employees $65 540 935Deferred vested 5 721 683 Retirees and beneficiaries 608 319Total $145 870 937 Preparticipation service exclusion Net Expected Benefit Payments $10 168 932 Vested Current Liability Participating employees Deferred vested Retirees and beneficiaries Total Present Value of Future Benefits Participating employees Deferred vested Retirees and beneficiaries Total $115 603 403 721 683 608 319 $195 933 405 0110112000 Current Liabilities OBRA '87 based on RP A '94 based Funding Assumed on IRS AssumedMortality Mortality 31%31% 023 494 470 323 493 817 023,494 470 323 $6,493 817 $62 026 126 648 442 489 834 $161,164,402 $161 164 402 $62 026 126 648 442 489 834 $161 164,402 $161 164,402 $10 181 232 $10 181,232 $60 642 309 648 442 489 834 $159 780 585 Retirement Plan for Employees of A vista Corporation 13.HISTORICAL INFORMATION Plan Years Begmning:01/0112000 0110111999 01101/1998 0110111997 Participant Data Participating employees 323 354 310 272Participant compensation $67 830 210 $67 984 647 $61 797 398 $61,466 819Deferred vested participants 337 319 327 271Retirees and beneficiaries 770 772 756 738Retiree and beneficiary annual benefit payments 920 960 $9,439 805 140 934 114 327Total plan participants 430 445 393 281 Asset History Market value $188 868 230 $178 878 604 $166 242 219 $150 080 047Actuarial value 158 913 107 146 146 934 138,446 238 126 854 324Benefit payments In pnor year 108,417 747 603 964 248 579 134Employer contributions In pnor year 303 632 084 521 233 956Return on market value 11.54%13.20%14.31 %12.35%Return on actuarial value 16.24%12.26%13.29%10.80% ERISA Funding N onnal cost 345 711 929,415 533,416 523 844 Unfunded actuarial liability (13 042 170)(884 593)690 947)(680 967)Minimum contribution 303 632 084 521Maximum contribution 146 250 186 691 084 521Funded current liability %98.60%93.80%103.23%103.80% Fiscal Years Beginnmg:0110112000 01101/1999 01101/1998 0110111997 SF AS 87 Expense Annual expense.$842 290 440 020 466 593 224 987 Prior YearSFAS Disclosure Prepaid/(accrued) benefit cost (9,477 598)037 578)570 985)664 475)Accumulated benefit obligation $134 425 464 $147 551 325 $127 776 989 $125 657 727ABO funded ratio 138.121.2%130.1 %119.2% Retiremellt Plan for Employees of A vista Corporation 14.SUMMARY OF PLAN PARTICIPANTS As of:01/01/2000 01/01/1999 Participating Number 323 354EmployeesTotal plan compensation $67 830 210 $67 984 647 Average plan compensation $51 270 $50 210 Average age 44.44. Average credited service 13.13.40 Retirees and Number 770 772BeneficiariesTotal annual pension 920 960 439 805Average annual pension $12 884 $12 228 Average age 72.72. Distribution Age Last Birthday Number Annual Pension as of Under 55 $226 949 01/01/2000 55 - 59 060 108 60 - 64 107 820 139 65 - 69 136 868 092 70 - 74 153 789 838 75 - 79 146 689,491 80 - 84 939 509 85 and Over 526 836 Participants Number 337 319with Deferred Total annual pension 250 581 034 030PensionsAverage annual pension 678 376 Average age 48.48. Distribution Age Last Birthday Number Annual Pension as of Under 40 $215 565 01/01/2000 40 - 44 483 542 45 - 49 541 088 50 - 54 630 131 55 - 59 269 536 60 - 64 107 907 65 and Over 811 Retirement Plallfor Employees of A vista Corporation 15 . AG E A N D S E R V I C E D I S T R I B U T I O N Co m p l e t e d Y e a r s o f C r e d i t e d S e r v i c e 10 - 15 - 20 - 25 - 30 - 35 - 40 & O v e r To t a l No . & No . & No . & No . & No . & No . & No . & No . No . No . No . & No . & No . & No . & At t a i n e d Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Ag e Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Un d e r 2 5 $3 0 86 8 $3 2 38 8 $3 5 12 7 $4 1 , 80 2 $3 4 27 8 25 - $3 5 , 15 5 $3 5 49 8 $4 6 34 1 $3 4 16 6 $4 5 28 5 $3 9 71 1 30 - 10 7 $2 6 67 6 $3 9 38 0 $4 8 16 4 $4 4 62 8 $3 6 , 46 9 $4 4 46 3 $4 9 05 2 $5 6 85 7 $4 4 34 1 35 - 16 2 $1 8 83 0 $4 0 41 3 $3 6 49 9 $4 5 , 23 2 $4 4 68 5 $4 7 46 2 $4 9 56 2 $4 7 81 1 $4 4 92 5 $4 5 46 6 40 - 4 4 29 2 $4 0 85 8 $5 1 47 1 $4 2 59 2 $4 7 03 5 $4 6 04 3 54 7 45 4 $4 7 01 7 $5 2 07 7 $6 7 53 9 $5 9 62 0 $5 0 96 3 45 - 4 9 25 4 $7 5 44 7 $4 8 06 3 $3 8 79 0 $4 9 68 7 $4 8 37 9 $4 4 35 2 $4 8 85 5 $5 9 92 2 $6 0 96 4 $5 2 76 0 50 - 24 7 $5 4 50 5 $5 1 75 0 $4 9 , 04 7 $3 8 37 3 $4 6 96 1 $5 4 54 0 $5 1 48 1 $5 3 32 5 $6 6 28 1 $6 5 84 3 $5 5 30 6 55 - 13 3 $7 3 , 67 6 $5 5 34 4 $6 0 09 7 $4 0 68 0 $4 9 03 7 $5 2 50 5 $5 3 20 6 $5 5 95 1 $5 8 22 3 $5 3 51 0 60 - $4 3 87 0 $5 8 , 3 5 9 $6 3 81 9 $4 7 61 2 $4 1 20 0 $6 2 41 1 $4 1 07 1 $5 5 95 8 $3 7 34 9 $5 0 69 0 65 - $6 2 43 0 $4 2 67 2 $5 2 55 1 70 & O v e r To t a l 30 0 15 7 23 8 16 5 10 9 32 3 $3 1 80 6 $4 5 59 6 $4 2 , 05 3 $4 4 13 4 $4 1 , 2 0 9 $4 8 54 8 $4 7 , 79 2 $5 0 60 0 $5 8 03 2 $6 1 50 6 $5 8 05 0 $5 7 65 7 $3 7 34 9 $5 0 32 6 Av e r a g e : Ag e 44 . Nu m b e r o f p a r t i c i p a n t s : Fu l l y v e s t e d 02 6 Ma l e s 93 4 Se l V i c e 13 . Pa r t i a l l y v e s t e d Fe m a l e s 38 9 Re t i r e m e n t P l a n f o r E m p l o y e e s o f vi s t a C o r p o r a t i o n . - 16 . RE C O N C I L I A T I O N O F PA R T I C I P A N T D A T A Pa r t i c i p a t i n g Ve s t e d T e r m i n a t e d Pa r t i c i p a n t s Em p l o y e e s Pa r t i c i p a n t s Re c e i v i n g B e n e f i t s To t a l (I ) (2 ) (3 ) (4 ) Re c o n c i l i a t i o n o f Nu m b e r a s o f 01 1 0 1 / 1 9 9 9 35 4 31 9 77 2 44 5 Pa r t i c i p a n t s Ch a n g e s b y c a t e g o r y : by S t a t u s No n v e s t e d t e r m i n a t i o n s (4 1 ) (2 ) (4 3 ) Ve s t e d t e r m i n a t i o n s (1 9 ) Lu m p s u m s p a i d (2 9 ) (2 ) (3 1 ) Re t i r e m e n t s I (3 7 ) (6 ) Be n e f i t s c e a s e d (1 ) (3 0 ) (3 1 ) Ne w e n t r a n t s a n d r e h i r e s (2 ) Ad j u s t m e n t s (1 ) (1 ) (1 7 ) (1 9 ) Nu m b e r a s o f 0 I / 0 I / 2 0 0 0 32 3 33 7 77 0 2, 4 3 0 In c l u d i n g d i s a b i l i t i e s a n d d e a t h s i n s e r v i c e . Re t i r e m e n t P l a n f o r E m p l o y e e s o f A vi s t a C o r p o r a t i o n .. " . ;" . ~ . rJ 1 , ' APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS Plan Sponsor A vista Corporation 91-0462470/001EIN/PN For Determining Cash Contributions Interest Rates 00%Valuation RPA '94 Current liability 31% OBRA '87 Current liability 31% Compensation Increases Future compensation will increase at the rate of 5.00% per year compounded annually. Future Increases in Social Security 00% annual increases in the national average wage index are assumed. Future Increases in Maximum Benefits and Plan Compen- sation Limitations It is assumed that maximum benefit and plan compensation limitations under the Internal Revenue Code will not increase in the future. Assumed Cost-of- Living Adjustments None. Expenses Expenses are assumed to be $500 000 during 2000. Mortality The 1983 Group Annuity Mortality Tables for males and females. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Retirement It was assumed that participants will retire upon becoming eligible for nonnal retirement. The following table shows rates at various ages. Rate Male Female 56- 30.30. 63-20.20. 100.100. Disability Rates Rates of disability are based on the Society of Actuaries Reports on Group Long- Tenn Disability Insurance from four recent years. Disabled Mortality 1992 Railroad Retirement Board Disabled Annuitants. However, the 1983 Group Annuity Mortality Tables for males and females are used for current liability, Representative Termination Rates (per 100 employees) Attained Age Males Females 60 and over 1.5 1.0 12. 1.5 1.0 Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Form of Payment Union participants:Annuity benefit payable in the normal form. Non Union participants:80% lump sum benefit; 20% annuity benefit payable in the normal form. Lump Sum Assumptions Interest Rate:00% interest Mortality:1983 Group Annuity Mortality Table (blended 50% male / 50% female) Marriage It was assumed that 100% of all active and terminated employees are married to an Eligible Spouse. Wives are assumed to be three years younger than husbands. Employees It was assumed that there will be no new or rehired employees. Inclusion Date The valuation date coincident with or next following the enrollment date on which the employee becomes a participant. Compensation for Plan Participants Compensation assumed paid in the current year beginning on the valuation date is the prior year pay increased by the salary scale. It is limited by Internal Revenue Code Section 401(a)(17). Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Cost Method The Projected Unit Credit Cost Method was used to determine the nonnal cost and the actuarial accrued liability for retirement tennination, and ancillary benefits. Under this method, a "projected accrued benefit" is calculated as of the beginning of the year and as of the end of the year for each benefit that may be payable in the future. The "projected accrued benefit" is based on the plan s accrual formula and upon service as of the beginning or end of the year, but using final average compensation, social security benefits, etc., projected to the age at which the employee is assumed to leave active service. For benefits where the plan s accrual fonnula is not relevant, benefits are assumed to accrue on a straight-line basis over the period during which the employee earns credited service. The actuarial accrued liability is the present value of the "projected accrued benefits" as of the beginning of the year for employed participants and is the present value of all benefits for other participants. The normal cost is the present value ofthe difference between the "projected accrued benefits" as of the beginning and end of the year. The normal cost and actuarial accrued liability for the plan are the sums of the individually computed normal costs and actuarial accrued liabilities for all plan participants. Asset Method The actuarial value is calculated under the IRS average of market value method that recognizes realized and unrealized growth in capital appreciation over 5 years, starting with the market value of assets at January I , 1989. The actuarial value is subject to a restriction that it not be less than 80% nor more than 120% of market value. Participant Data Employee data was supplied on diskette as of the valuation date. Data on persons receiving benefits was supplied on diskette from A vista Corporation. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Benefits Not Included in Valuation None. Changes in Assumptions and Methods Since Last Actuarial Valuation The valuation interest rate was increased from 8.50% to 9.00% and the annual salary increase rate was increased from 4.00% to 5.00%, An explicit administrative expense assumption for 2000 of $500 000 was also reflected. The required changes in current liability interest rates were made. Since a lump sum payment option was adopted during 1999 for non- union employees, we modified our assumptions to assume 80% of non- union participants select the lump sum option upon terminatio n/ retirement. Retirement Planfor Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS For Determining Accounting Entries Interest Rates 75%Discount rate Expected long-term return on assets 00% Compensation Increases Future compensation will increase at the rate of 5.00% per year compounded annually. Future Increases in Social Security 00% annual increases in the national average wage index are assumed. Future Increases in Maximum Benefits and Plan Compen- sation Limitations It is assumed that maximum benefit and plan compensation limitations under the Internal Revenue Code will increase 4.00% per year in the future. Assumed Cost-of- Living Adjustments None. Expenses None. Mortality The 1983 Group Annuity Mortality Tables for males and females. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Retirement It was assumed that participants will retire upon becoming eligible for normal retirement. The following table shows rates at various ages. Rate Male Female 56- 30.30. 63-20.20. 100.100. Disability Rates Rates of disability are based on the Society of Actuaries Reports on Group Long-Term Disability Insurance from four recent years. Disabled Mortality 1992 Railroad Retirement Board Disabled Annuitants. Representative Termination Rates Attained Age Males Females (per 100 employees) 7.5 12. 3.5 1.5 1.0 1.5 1.0 60 and over Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Form of Payment Union participants:Annuity benefit payable in the normal fonn. Non Union participants:80% lump sum benefit; 20% annuity benefit payable in the normal fonn. Lump Sum Assumptions Interest Rate:00% interest Mortality:1983 Group Annuity Mortality Table (blended 50% male /50% female) Marriage It was assumed that 100% of all active and tenninated employees are married to an Eligible Spouse. Wives are assumed to be three years younger than husbands. Employees It was assumed that there will be no new or rehired employees. Inclusion Date The valuation date coincident with or next following the enrollment date on which the employee becomes a participant. Compensation for Plan Participants Compensation assumed paid in the current year beginning on the valuation date is the prior year pay increased by the salary scale. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont'd) For Determining Accounting Entries Cost Method The Projected Unit Credit Cost Method was used to detennine the service cost and the projected benefit obligation for retirement termination, and ancillary benefits. Under this method, a "projected accrued benefit" is calculated as of the beginning of the year and as of the end of the year for each benefit that may be payable in the future. The "projected accrued benefit" is based on the plan s accrual fonnula and upon service as of the beginning or end of the year, but using final average compensation, social security benefits , etc., projected to the age at which the employee is assumed to leave active service. The projected benefit obligation is the actuarial present value of the projected accrued benefits" as of the beginning of the year for employed participants and is the actuarial present value of all benefits for other participants. The service cost is the actuarial present value of the difference between the "projected accrued benefits" as of the beginning and end of the year. Asset Method The investments in the trust fund are valued on the basis of their fair market value. Participant Data Employee data was supplied on diskette as of the census date. Data on persons receiving benefits was supplied on diskette from A vista Corporation. Retirement Plan for Employees of A vista Corporation \\1 APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Valuation Date Measurement Date The measurement date is January 1 , 1999. The last day of the fiscal year is December 31 , 1999. For purposes of determining the net periodic benefit cost for the fiscal year, results as of the valuation date January I , 1999, are used. Material mid-year plan amendments are recognized as of their respective effective dates. For year-end disclosure, results are projected from the valuation date to the next measurement date, by assuming no actuarial gains or losses occurred in the interim, except for those due to changes in the assumptions necessary to reflect the situation at the measurement date and those due to recognizing differences between actual and expected benefit payments and administrative expenses and, if employee contributions are required by the plan, between actual and expected amounts. Amortization of Unrecognized Net Gain or Loss Amortization of unrecognized net gain or loss resulting from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in market-related value) is included as a component of net periodic benefit cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. If amortization is required, the amortization is that excess divided by the average remaining service period of participating employees expected to receive benefits under the plan. Amortization of Prior Service Costs Amortization of prior service costs resulting from a plan change are included as a component of net periodic benefit cost in the year first recognized and every year thereafter until such time as they are fully amortized. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont'd) . For Determining Accounting Entries Benefits Not Included in Valuation None. Changes in Assumptions and Methods Since Last Actuarial Valuation The discount rate was increased from 6.75% to 7.75% effective December 31 , 1999. The annual salary increase rate was increased from 4.00% to 5.00%. There were no other changes in assumptions since the prior valuation. Retirement Plan for Employees of A vista Corporation APPENDIX B SUMMARY OF PRINCIPAL PLAN PROVISIONS Effective Date March I , 1948. Restated as of January I , 1989. Last amended effective as of July 1 , 1999. Eligibility An employee becomes a Member after completing a year of service with at least 1 000 Hours of Service. Benefit Service Prior to 1/1/80 One month of Benefit Service for each month of employment beginning on or after the Hire Date. After 1/1/80 One year of Benefit Service for each Plan Year after the Hire Date in which the Member has 2 080 Hours of Service. Partial credit is given for a year in which the Member has at least 1 000 Hours of Service at the rate of one-twelfth of a year for each 173-1/3 Hours of Service (rounded up), Vesting Service One month of Vesting Service for each month of employment. Earnings Base Pay excluding overtime and other special compensation, butincluding contributions to a 401(k) Plan. Final A verage Earnings Highest consecutive 36 months earnings during Member s last 120 months. Normal Retirement . Eligibility First day of month coinciding with or next following 65th birthday. Benefit 5% of Final Average Earnings for each year of Benefit Service. Retirement Plan for Employees of A vista Corporation APPENDIX B - SUMMARY OF PRINCIPAL PLAN PROVISIONS (cont'd) Early Retirement Eligibility Attained age 55 and at least 15 years Vesting Service. Benefit Accrued benefit based on Benefit Service to early retirement date payable in full at or after age 62. If payments commence immediately at date of early retirement the benefit is multiplied by the appropriate factor from the following table: Age Early Retirement Factor 100% 96% 92% 88% 84% 80% 76% 72% The Early Retirement Factor is increased, up to a maximum of 100%, by 1.0% (one percentage point) for each year of vesting service above 15. Deferred Retirement Eligibility Continued employment beyond Normal Retirement Date. Benefit The Normal Retirement Benefit Formula applied to earnings and Service up to deferred retirement date. Payment commences on the actual retirement date. Disability Eligibility Five Years of Vesting Service and a disability which prevents the Member from performing assigned duties and which is expected to be a permanent condition. Retirement Plan for Employees of A vista Corporation APPENDIX B SUMMARY OF PRINCIPAL PLAN PROVISIONS (cont' Benefit Accrued Benefit commencing at Normal Retirement Date based on Final Average Earnings at time of disability but including as Benefit Service the period of the Member s disability, contingent upon five years of Vesting Service (10 years if employed in a position covered by a collective bargaining agreement). A disabled Member may elect Early Retirement when first eligible to do so, in which case the benefit is reduced. Vesting Eligibility Five years of Vesting Service. Benefit Accrued benefit at date of termination with payments commencing at normal retirement date. If the Member has 15 years Vesting Service, an election may be made for benefits to commence at any time after age 55 , in which case benefits will be actuarially reduced from age 65. Cost-of-Living Adjustments Benefits in pay status have been increased from time to time through ad hoc adjustments to partially offset the reduction in purchase power due to inflation. The most recent adjustments took effect as of March I , 1998. The Company is under no obligation to make further adjustments in the future. Changes in Plan Provisions Effective July I , 1999, a lump sum benefit option was added for non-union employees. There have been no other changes in plan provisions since the prior valuation report. Retirement Plan for Employees of A vista Corporation GLOSSARY Accumulated Benefit Obligation This is the same as the Projected Benefit Obligation except that it is based on current and past compensation levels instead of future compensation levels. Actuarial Accrued Liability This is computed differently under different actuarial cost methods. Generally, the actuarial accrued liability represents the portion of the cost of the participants' anticipated retirement, termination and/or death and disability benefits allocated to the years before the current plan year. Actuarial Gain or Loss From one plan year to the next, if the experience of the plan differs from that anticipated using the actuarial assumptions, an actuarial gain or loss occurs. For example, an actuarial gain would occur if the assets in the trust earned 12% for the year while the assumed rate of return used in the valuation was 8%. Additional Minimum Liability If a plan has a minimum liability, the sponsor may be required to post a liability on the balance sheet in addition to the accrued/(prepaid) benefit cost already recorded. If the Accumulated Benefit Obligation exceedsthe fair value of assets, the plan has a minimum liability equal to the excess, If there is a minimum liability and it exceeds the Accrued/(Prepaid) Benefit Cost, the difference is called the Additional Minimum Liability and the accrued benefit liability equals the minimum liability. Current Liability This is computed the same as the Present Value of Accumulated Benefits, but using interest rate and mortality assumptions specified by the IRS. This quantity is used in the calculation of the plan s fundedpercentage, to determine whether the plan sponsor will be allowed to make a tax-deductible contribution to the plan for the year, whether quarterly contribution deposits are required, whether the plan is exempt from the deficit reduction contribution and, if not, the amount of the additional funding charge. Retirement Plan for Employees of A vista Corporation GLOSSARY (cont' d) Funded Status This is the excess/( shortfall) of the fair value of plan assets over the Projected Benefit Obligation. Normal Cost Computed differently under different actuarial cost methods, the normal cost generally represents the portion of the cost of the participants' anticipated retirement , termination and/or death and disability benefits allocated to the current plan year. Prepaid/(Accrued) Benefit Cost The sponsor s balance sheet asset/(liability) entry, the net recognized amount, is the sum of the cumulative excess of contributions to the plan over net periodic benefit costs and other plan-related charges to income due either to business combination or accelerated recognition pursuant to SF AS 88. The difference between this account and the Funded Status is the unrecognized net loss/(gain) and prior service costs. Present Value of Accumulated Benefits Computed in accordance with SF AS 35, this quantity is determined independently from the plan s actuarial cost method. Basically, this is the present value of a participant's accrued benefit as of the valuation date, assuming the participant will earn no more credited service and will receive no future salary. Present Value of Future Benefits This is computed by projecting the total future benefit cash flow from the plan, using actuarial assumptions, and then discounting the cash flow to the valuation date. Present Value of Vested Benefits This is the portion of the Present Value of Accumulated Benefits in which the 'employee has a vested interest if the employee were to separate from service with the employer on the valuation date. Retirement Plan for Employees of A vista Corporation GLOSSARY (cont'd) Projected Benefit Obligation Computed in accordance with SF AS 87, this quantity is the actuarial present value of all benefits attributed by the plan s benefit formula to service rendered prior to the measurement date. It is measured using an assumption as to future compensation levels when the benefit formula is based on future compensation levels. Service Cost Computed in accordance with SF AS 87, this component of the net periodic benefit cost is the actuarial present value of benefits attributed by the plan s benefit formula to services rendered by employees during the period over which the net periodic benefit cost is incurred. It is measured using an assumption as to future compensation levels when the benefit formula is based on those future compensation levels. Retirement Plan for Employees of A vista Corporation i., Retirement Plan for Employees of Avista Corporation Actuarial Valuation - January 1, 2000 RECENT EXPERIENCE - FUNDING 1996 1997 1998 1999 Contribution for Plan Year 233 956 084 521 303 632 Contribution as % of Pay 38%02%00%86% Nannal Cost 418,416 523,844 533,416 929 415 Nonna! Cost as % of Pay 62%73%72%78% Actuarial Value of Assets 121 479 209 126 854 324 138,446 238 146 146 934 Actuarial Accrued Liability 118 276 421 126,173 357 134 755,291 145 262 341 Percentage Funded 103%101%103%101% Current Liability 111 259 837 122 208 074 134 120,592 155 809 086 Percentage Funded 109%104%103%94% 000,000 000 000 000,000 $2,000 000 000 000 1996 Comparison of Assets and Liabilities for Contribution Determination Purposes $200,000 000 $150,000 000 2000 00% 345 711 6.41 % 158 913,107 145 870 937 109% 161 164 402 99% $100 000 000 $50 000 000 1996 1997 1998 1999 2000 Plan Year .Actuarial Value of Assets .Actuarial Accrued Liability . Current Liability Contribution and Normal Cost 1997 1998 1999 Plan Year -+- Contribution for Plan Year Normal Cost K:\AVIST AIDB1 IV AL\2000\2000hisLxls 2000 Retirement Plan for Employees of Avista Corporation Actuarial Valuation - January 1 2000 PROJECTED RESULTS - FUNDING Recognize Realized & Unrealized (Gains)/Losses Over Five Years Expected Future Return on Assets = 9.00% 2000 2001 2002 2003 2004 Minimum Contribution Maximum Contribution Actual Contribution 146 000 187 000 825 000 669 000 691 000 158,913 000 166 290 000 173 422 000 179 757 000 184 959 000 145 871 000 152 610 000 159 660 000 167 025 000 174 704 000 109%109%109%108%106% 161 164 000 168 418 000 176 002 000 183,902 000 190 803 000 99%99%99%98%97% Comparison of Assets and Liabilities for Contribution Determination Actuarial Value of Assets Actuarial Accrued Liability Percentage Funded Current Liability Percentage Funded $50 000 000 $200 000 000 $150 000 000 $100 000 000 2000 2001 2002 2003 2004 .Actuarial Value of Assets . Actuarial Accrued Liability . Current Liability Projected Contributions 2000 2001 2002 2003 2004 . Minimum Contribution . Maximum Contribution K:\A VISTA \DB 1 IV AL \2000\2000PROJECTION - assmnptl- fmal.xls Retirement Plan for Employees of Avista Corp. Actuarial Valuation - January 1, 2000 RECENT EXPERIENCE - FINANCIAL ACCOUNTING (FAS 87) 1996 1997 1998 1999 2000 Net Periodic Pension Cost 367 524 224 987 466 593 440,020 842 290 Fair Market Value of Assets 140,528 204 149,846,091 166,242 219 178,878,604 185 564 598 Projected Benefit Obligation 136 252,786 145 186 985 159 163 997 177 ,924 885 169 093 051 Percentage Funded 103%103%104%101%110% Accumulated Benefit Obligation 112 334 673 120,165 105 132 861 529 147 551 325 137,192 854 Percentage Funded 125%125%125%121%135% (Accrued)/Prepaid Pension Cost 296 951)664,475)(5,570 985)037 578)(9,477 598) Net Periodic Pension Cost (Income) 500.000 000,000 $1,500,000 000,000 $500,000 $0 1996 1997 1998 1999 2000 Year (Accrued) Prepaid Pension Cost on Balance Sheet at Beginning of Year $0 ,, ~,,~ ~~" ($1 SOO,OOO) ($3 000.000) ($4 500,000) ($6,000.000) ($7 500 000) ($9.000,000) ($10.500,000) 1996 1997 1998 1999 2000 Year k:\avista\db 1 \ val\2000\2000histxls Retirement Plan for Employees of A vista Corporation Actuarial Valuation - January 1 2000 PROJECTED RESULTS - FINANCIAL ACCOUNTING (FAS 87) Expected Future Return on Assets = 9.00% 2000 2001 2002 2003 2004 Net Periodic Pension Cost 842 000 027 000 527 000 049 000 595,000 Fair Market Value of Assets 185 565 000 194 739 000 200 607 000 206 445 000 212 223 000 Projected Benefit Obligation 169 093 000 176 982 000 185 221 000 193 811 000 202 752 000 Percentage Funded 110%110%108%107%105% (Accrued)/Prepaid Pension Cost (9,478 000)017 000)044 000)571 000)(11 620 000) Net Periodic Pension Cost (Income) 2000 2001 2002 2003 2004 Year (Accrued) Prepaid Pension Cost on Balance Sheet at Beginning of Year ($3 000 000) ($6 000 000) ($9 000,000) ($12,000 000) , 2000 2001 2002 2003 2004 Year K:IA VISTA \DB 1 \ V AL\2000\2000PROJECTION - assumptl- fmal.xls ... Retirement Plan for Employees of Avista Corporation Actuarial Valuation as of January 1,2000 Allocation of Assets, Obligations and Costs Among Participating Employers by Participant Liabilities Pentzer A vista Pentzer Develo ment Total Vested Benefit Obligation 135,455 122 417 466 213 876 136 086 464Accumulated Benefit Obligation 136,459 183 519 795 213 876 137 192 854Projected Benefit Obligation 168 201 194 677 981 213 876 169 093 051 Funded Status Projected Benefit Obligation $ (168 201 194)(677 981)(213 876)$ (169 093 051)Plan Assets at Fair Value 183 811 074 814 998 938 526 185 564 598Funded Status 609 880 137 017 724 650 16,471 547 Reconciliation of Funded Status Funded Status 609 880 137 017 724 650 471 547Unrecognized Net Asset 921 851)149)929 000)Unrecognized Prior Service Cost 578 883 (15 845)734 650 772Unrecognized Net (Gain) or Loss (31 503 873)(126 985)(40 059)(31 670 917)Capitalized Cost (Accrued) Pension Cost (10 236 961)813)765 176 477 598) Net Periodic Pension Cost for 2000 Service Cost 251,483 495 346 978Interest Cost 643 624 964 077 710 665Expected Return on Assets (16 089 633)(74 963)(78 616)(16 243 212)Amortization of Unrecognized Net Asset 084 691)309)086 000)Prior Service Cost 963 975 094)581 971,461 Net (Gain) or Loss (853 078)(3,439)085)(857 602)Net Periodic Pension Cost or (Income)831 680 963 (56 352)842 290 Retirement Plan for Employees of Avista Corporation Actuarial Valuation as of January 1,2000 Allocation of Assets, Obligations and Costs Among Participating Employers by Participant Liabilities Pentzer Avista Pentzer Develo ment Total Assets - Adjusted Value Total at 1/1/1999 144 675 535 707 236 764 163 146 146 934Contributions271411634(24 413)303 632Investment Income 348 052 032 530 6,412 614Adjusted Gains 101 522 711 047 265 280Benefit Payments (12 100 303)114)(12 108,417)Expenses 095 791)357)788)106 936)Transfer Total at 1/1/2000 157 200 426 868 256 844,425 158 913,107 Assets - Market Value Total at 1/1/1999 177 291 394 733 213 853 997 178 878 604Contributions271411634(24 413)303 632Investment Income 348 052 032 530 412 614Adjusted Gains 369 045 290 398 488 733Benefit Payments (12 100 303)114)(12 108 417)Expenses 097 114)537)285)106 936)Transfer Total at 1/1/2000 187 082 485 871 632 914 113 188 868 230 Contribution Allocation for 2000 (Based on Net Periodic Pension Cost) Net Periodic Pension Cost 831 680 963 (56 352)842 290(for accounting purposes only) Expected Cash Contribution 775 327 963 842 290(to collect from subsidiaries) 1 Based on current funding policy. Retirement Plan for Employees of A vista Corporation Actuarial Valuation for Purposes of Determining Contributions for the Plan Year Beginning January 1999 Actuarial Valuation for Purposes of F ASB Statement 87 for the Fiscal Year Beginning January , 1999 September 1999 t' ~atson Wyatt W' ~rldwide TABLE OF CONTENTS' Expense Information Contribution Information SF AS Assets Liabilities Historical Informqtion Data EXECUTIVE SUMMARY Summary of Key Results ......................................... ...... "' """""""""" Review of Changes Since Last Year .................................................... Annual Expense.. ....... .......................... .......... .........,... """"""""""""" Cash Contributions. ..... .................... """"""""" .................... """"""'" SFAS 87 Funded Status' ;....................................................................,.. PBGC Premium ................................ .... .... ..... ...... """"""""""'" .......... Regulatory Environment .............,.....................................................'.. Actuarial Statement ................................................................... ........... EXHIBITS I. Funded Status and Accrued Benefit Cost ....................................... 2. Summary and Comparison of Expense .......................................... 3. Development of Expense Components.......... """""""""""""""'" 4. Reconciliation of Accrued Benefit Cost and of Unrecognized Balances ............... """""" ........... .........................:.. 5. Amortization of Unrecognized Net (Gain)/Loss ............................ 6. Summary and Comparison of Funding Requirements ......,............ 7. Minimum Required Contribution ................................................... 8. Maximum Deductible Contribution ......,........................................ 9. Present Value of Accumulated Benefits......................................... 10. Change in Plan Assets During Plan Year ....................................,.. 11. Development of Actuarial Value of Assets .................................... 12. Details of Actuarial Accrued Liabilities......................................... 13. Historical Information ......... ............... ...................... ......... ............. 14. Summary of Plan Participants ........................................................ 15. Age and Service Distribution ......................................................... 16. Re~onciliation of Participant Data............ ..... ....................... """"" Retirement Plan for Employees of A vista Corporation Page TABLE OF CONTENTS (cont' Page APPENDICES Statement of Actuarial Assumptions and Methods................... Summary of Principal Plan Provisions ..................................... Glossary ....... """""'" ............ """"""""'" ...... ........ ...... .... ......... k:lavista\db Ilrepllval99 .doc Retirement Plan for Employees of A vista Corporation EXECUTIVE SUMMARY ,.. SUMMARY OF KEY RESULTS As requested by Avista Corporation, this report presents the results of the actuarial valuation of the Retirement Plan for Employees of A vista Corporation. In addition, the report documents the funded status of the plan, the provisions on which the valuation is based, and the actuarial assumptions and methods used in the calculations. Plan Years Beginning: Fiscal Years Beginning: 01/01/1999 01/01/1999 01/01/1998 01/01/1998 Annual Expense Net Periodic Benefit Cost/(Income) Percentage of compensation 440 020 $1,466 593 2.4% Cash Minimum Required Contribution Contributions Percentage of compensation Maximum Deductible Contribution Percentage of compensation 303 632 $14 186 691 20. Quarterly Contribution Requirement Payable April 15, 1999 Payable July 15 , 1999 Payable October 15, 1999 Payable January 14 2000 Payable September 15 2000 303 632 N/A N/A N/A N/A N/A Retirement Plan for Employees of A vista Corporation SUMMARY OF KEY RESULTS (cont' Plan Years Beginning: Fiscal Years Beginning: 0110111999 01/0111999 0110111998 01101/1998 Prior Year Disclosed Funded Status Projected Benefit Obligation Fair Value of Assets Funded Status ($178 589 152) 178 878 604 289,452 ($155 565 384) 166 242 219 676 835 Prepaid Benefit Cost/(Accrued Benefit Liability) Intangible Asset ($7 037,578)($5 570 985) PBGC Variable Rate Premium Participant Participating Employees 354 310 Information Participant Compensation $67 984 647 $61 797 398 Defen-ed Vested Participants 319 327 Retirees and Beneficiaries 772 756 Retiree and Beneficiary Annual Benefit Payments 439 805 $9,140 934 Total Plan Participants 445 393 Retirement Plan for Employees of A vista Corporation REVIEW OF CHANGES SINCE LAST YEAR Plan Provisions Appendix B summarizes the main provisions of the plan as of the valuation date. The plan was amended effective July I , 1999 to provide a lump sum payment option for non-union employees. The change was reflected in the F AS 87 results and will be reflected in the funding results next year. To our knowledge, no other changes are pending. Assumptions Appendix A summarizes the actuarial assumptions and cost methods used to detennine plan liabilities and cash contribution requirements. A comparison of assumptions for the current and prior years is shown below. Fiscal Years Beginning:0110111999 0110111998 Assumptions for Expense Discount rate 75%25% Expected long-tenn return on assets 00%00% Compensation increase rate 00%00% Plan Years Beginning:0110111999 0110111998 Ass umptions for Contributions Valuation interest rate 50%50% Current liability interest rate 55%17% Compensation increase rate 00%00% The discount rate for FAS 87 was lowered from 7.25% to 6.75% effective December 31 , 1998. Actuarial Methods There have been no changes since last year. Plan Experience The actuarialloss/(gain), not due to plan, assumption or method changes during the prior year was ($713 672) under the funding method. The components of this loss/(gain) are ($5 044 561) due to investment results and $4 330 889 from sources related to planliabilities. Retirement Plan for Employees of vista Corporation ANNUAL EXPENSE The net periodic benefit cost (income statement expense) was determined in accordance with Statement of Financial Accounting Standards 87 (SF AS 87) for the fiscal year beginning January , 1999. A comparison of the net periodic benefit cost for 1999 and 1998 is shownbelow: Plan Years Beginning: Fiscal Years Beginning: 01/0111999 01/0111999 01/01/1998 01/01/1998 Annual Expense I (Income)440 020 466 593 Assumptions Discount rate Compensation increase rate Expected long-term return on assets 75% 00% 00% Projection of Refer to graphs in "Recent Experience and Projections Benefit Expense! (Income) Retirement Plan for Employees of vista Corporation CASH CONTRIBUTIONS The Internal Revenue Code (IRC) permits flexibility in plan contributions so that normally a range of contributions is possible. A contribution in the range shown below will be fully tax deductible and satisfy minimum funding requirements. For a contribution to be deductible for a tax year, it must be made before the due date for filing the tax return for that year, with extensions if applicable. Plan Years Beginning: Tax Years Ending: 01/01/1999 12/31/1999 01/01/1998 12/31/1998 Permitted Contribution Range Minimum Required Maximum Deductible 303 632 $14 186 691 The minimum required contribution changed from $0 for the plan year beginning in 1998 to $3 303 632 for the plan year beginning in 1999. Sponsor Funding Policy The current sponsor funding policy has been generally to contribute an amount equal to the Net Periodic Pension Cost, within the ranges of the minimum required and maximum tax deductible contributions. Assumptions Valuation interest rate Compensation increase rate 50% 00% 50% 00% Projection of Permitted Contribution Range Refer to graphs in "Recent Experience and Projections Retirement Planfor Employees of A vista Corporation SFAS 87 FUNDED STATUS The Financial Accounting Standards Board requires disclosure of the plan s funded status as well as a statement of the prepaid benefit cost/(accrued benefit liability) along with any intangible asset recognized due to an unfunded accumulated benefit obligation. The table below summarizes the plan s current funded status as of the end of the fiscal year, June 30, 1999, along with comparable information as remeasured on July 1 , 1999, with a new census. Fiscal Years Ending: Funded Status 12/31/1999 Projected Benefit Obligation Fair Value of Assets Funded Status Accumulated Benefit Obligation ABa Funded Ratio Remeasured as of beginning of fiscal year $177 924 885 178 878 604 953 719 147 551 325 121.2% 12/31/1998 Disclosed at end of fiscal year $178 589 152 178 878,604 289,452 147 331 060 121.4% Balance Sheet Entries Prepaid Benefit Cost Accrued Benefit Liability Intangible Asset Accumulated Other Comprehensive Income Adjustments N/A ($7 037 578) Assumptions Discount rate Compensation increase rate 75% 00% 75% 00% Projection of Refer to graphs in "Recent Experience and Projections Obligations and Assets Retirement Planfor Employees of A vista Corporation PBGC PREMIUM The Pension Benefit Guaranty Corporation (PBGC) requires annual premium payments to cover all participants in the plan. The premium is composed of a flat rate portion and a variable rate portion. For the plan year beginning January I , 1999, the flat rate premium is $19 per participant. The variable rate premium is based on the plan s unfunded vested benefits. The table below summarizes the determination of the PBGC premium for the plan year beginning January I , 1999. Flat Rate Premium Number of covered participants Amount of flat rate premium per participant Total flat rate premium 2,441 $19 $46 379 Variable Rate Premium This plan is exempt from the variable rate premium because it is at the full funding limit. Total Premium Total PBGC premium $46 379 Assumptions Premium for plan year beginning Determination date Required interest rate 01/01/1999 12/31/1998 4.30% Retirement Plan for Employees of A vista Corporation REGULATORY ENVIRONMENT Full Funding Limit The Taxpayer Relief Act of 1997 increased the 150% of current liability full funding limit to 155% for plan years beginning in 1999 and 2000, 160% for 2001 and 2002 plan years, 165% for 2003 and 2004 plan years, and 170% for subsequent plan years. It also increased the amortization period over which the resulting credit is paid back from 10 to 20 years beginning with the 1999 plan year. Deficit Reduction Contribution The Retirement Protection Act (RPA), part of the 1994.GATT free trade agreement, requires plan sponsors to pay additional "deficit reduction" contributions based on unfunded current liability amounts. . Since the passage of the RP A, the maximum assumed interest rate for current liability valuations has decreased from 110% in 1994 to 105% in 1999 of the four year weighted average of 30-year treasury bond rates. Under current law, the percentage is not reduced below 105%. Decreasing the top end of the acceptable range of assumed interest rates increases unfunded current liability valuation results, The acceptable range of assumed interest rates for plan years beginning January 1 1999, is 5.62% to 6,55%. The mortality assumptions used for this purpose have also been mandated by the IRS. Benefit and Compensation Limits RP A also slows the rise of qualified plan limits due to cost-of-living adjustments. Specifically, the maximum dollar limit for derIDed benefit plans is rounded down to the next lower $5 000. For plan years beginning in 1999, the maximum defined benefit amount payable at social security retirement age is $130 000 per year. The qualified pay limitation is rounded down to the next lower $10 000. For 1999, the maximum qualified pay is $160 000, Participant Notifications For this plan year beginning January I , 1999, the PBGC underfunding notices to plan participants are not required because the plan is exempt from the Deficit Reduction Contribution. Therefore, the PBGC underfunding notices will not be required for the next plan year either. PBGC Premiums In addition to the flat $19 per participant paid by all sponsors of single- employer pension plans guaranteed by the PBGC, sponsors must pay additional premiums based on any unfunded vested current liability as determined using the required interest rate, 85% of the prior month' s average 30-year treasury bond rates. For years beginning January I 1999, the required interest rate is 4.30%. There is no cap on these additional premiums. Retirement Plan for Employees of A vista Corporation ACTUARIAL STATEMENT Primary Purposes of Actuarial' Valuation As requested by A vista Corporation, this report presents the results of the actuarial valuation of the Retirement Plan for Employees of A vista Corporation. The primary purpose of the valuation is to detennine the permitted contribution range - minimum required contribution and the maximum tax-deductible contribution - under the Internal Revenue Code for the plan year ending December 31 , 1999, and the tax year ' ending December 31 , 1999. The report also documents the Net Periodic Benefit Cost, the funded status of the plan, the provisions on which the valuation is based, and the actuarial assumptions and methods used in the calculations. Sources of Data Employee data as of January 1 , 1999, was provided by Avista Corporation. Data for other participants was provided by A vista Corporation. An audit of the data was not made. A thorough check of data was done, reconciling last year s data with the new data. This reconciliation accounted for all changes to the covered population. All data was checked for internal consistency and for consistency with last year s data. Asset data was provided by the plan trustee. Retirement Plan for Employees of A vista Corporation ACTUARIAL STATEMENT (cont' Certification of Compliance and Independence To the best of our knowledge, all plan participants on January I; 1999 and all plan provisions have been reflected in the valuation. In our opinion, all calculations and procedures are in conformity with generally accepted actuarial principles and practices; and the results presented comply with the requirements of the Internal Revenue Code ERISA, or Statements of Financial Accounting Standards including modifications made by Statements 130 and 132, as applicable. There is no relationship between Avista Corporation and Watson Wyatt Worldwide that impacts our objectivity. Avista Corporation is responsible for the selection of assumptions for SF AS 87 purposes. We will be pleased to review this report with you at your convenience. /1 Ilr / / (I- /-( a~. Valerie A. Paganelli, F . Consulting Actuary Sincerely, At!Jt.4 ~t;. Susan E. Hedrick, F. Consulting Actuary Retirement Plan for Employees of vista Corporation EXHIBITS FUNDED STATUS AND ACCRUED BENEFIT COST Fiscal Years Ending: Reconciliation of Funded Status a. Measurement date b. Vested benefit obligation c. Accumulated benefit obligation d. Projected benefit obligation e. Plan assets at fair value f. Funded status g. Unrecognized net loss/(gain) h. Unrecognized prior service costs 1. Unrecognized net transition obligation/(asset) j. Prepaid/(accrued) benefit cost k. (Additional minimum liability) 1. Prepaid benefit cost/( accrued benefit liability) m. Intangible asset n. Accumulated other comprehensive income adjustments o. Net amount recognized 12/31/1999 For NPBC development remeasured on 01101/1999 ($146 361 399) (147 551 325) ($177 924 885) 178 878 604 $953,719 (13 968,489) 992 192 015 000) ($7 037 578) 12/31/1998 Balance sheet disclosure as of 12/31/1998 ($146 453 752) (147 331 060) ($178 589 152) 178 878 604 $289,452 (19 767 520) 455 490 015 000) ($7 037 578) ($7 037 578) ($7 037 578) Assumptions p. Discount rate q. Compensation increase rate 75% 00% 75% 00% Retirement Plan for Employees of A vista Corporation SUMMARY AND COMPARISON OF EXPENSE Fiscal Years Begmning:0110111999 01/0111998 Basis Measurement date 12/31/1998 12/31/1997 Service cost 951 1191 981 736 Calculations Projected benefit obligation 177 924 885 159 163 997 d. Fair value of assets 178 878 604 166 242 219 Market-related value of assets 178 878 604 166 242 219 Net Periodic Service cost 951 119'981 736 Benefit Cost Interest cost 914 6001 247 0302 Expected return on assets (15 681 119)1 (14 767 691)2 Net (gain)/loss recognition (562 161) Prior service cost amortization 341 420'653 6792 Transition (asset)/obligation recognition (1,086 000)(1,086 000)2 Net periodic benefit cost/(income)440 020 466 593 Assumptions ID. Discount rate 75%25% I;:xpected long-tenn return on assets 00%00% Compensation increase rate 00%00% , 2 Adjusted to reflect lump sum plan amendment effective July I, 1999. Adjusted to reflect retiree cost of living adjustment amendment effective March 1, 1998. Retirement Plan for Employees of A vista Corporation DEVELOPMENT OF EXPENSE COMPONENTS Fiscal Year Beginning: Service Cost a. Service cost at beginning of year b. Expected administrative expensesc. Interest on service cost at discount rate (6.75%) d. Total 0110111999 574 8191 376 300 951 119 Projected Benefit Obligation e. Participating employees f. Deferred vested g. Retirees and beneficiaries h. Total $88 480 141 610 937 833,807 $177 924 885 Interest Cost 1. Projected benefit obligation j. Expected benefit payments during year k. Interest on time-weighted amounts at discount rate (6.75%) $177 924 885 288 000) $11 914 600. Market-Related Value of Assets 1. Fair value of assets as ofOl/01l1999 m. Market-related value of assets $178 878,604 $178 878 604 Expected Return on Assets n. Market-related value of assets $178 878 604 o. Expected contributions during fiscal year p. Expected benefit payments q. Expected administrative expenses r. Expected rate ofretum s. Expected return on assets adjusted for timing of above contributions and payments 288 000) 00% $15 681 1191 Adjusted to reflect lump sum plan amendment effective July \, 1999. Retirement Plan for Employees oJ A vista Corporation RECONCILIATION OF ACCRUED BENEFIT COST AND OF UNRECOGNIZED BALANCES Reconciliation of Prepaid/(Accrued) Benefit Cost a. Prepaid/(accrued) benefit cost as of 01/01/1998 b. Net periodic benefit cost/(income) for fiscal year ending 12/31/1998 c. Employer contributions paid during fiscal year ending 12/31/1998 d. Prepaid/(accrued) benefit cost as of 01/0111999 (a - b + c) ($5 570 985) 1,466 593 ($7 037 578) Reconciliation Unrecognized Unrecognized of Transition Date Original Amount as of Amount as of Amortization Obligation/Established Amount 01/01/1998 01/01/1999 Amount (Asset) 01/01/1994 ($21 768 000)($8 101 000)($7 015 000)($1 086 000) Reconciliation Unrecognized Unrecognized 1999 of Prior Date Original Amount as of Amount as of Amortization Service Costs Established Amount 01/01/1999 07/01/1999 Amount 01/01/1988 331 000 472 000 $84 500 01101/1989 529 000 939 000 179 500 01/01/1993 989 000 647 000 500 01/01/1994 884 000 489 000 551 702 401 ,541 01/01/1995 947 349 742 629 592,039 301 180 03/01/1998 454 360 165 861 992 761 346 199Total$19,455 490 $12 136 502 341 420 Retirement Planfor Employees of vista Corporation AMORTIZA TION OF UNRECOGNIZED (GAIN)/LOSS Fiscal Year Beginning: Total Unrecognized (Gain)/Loss Adjusted for Deferred Asset (Gain)/Loss a. Total unrecognized (gain)/loss b. Deferred (gain)llossi. Market-related value of assets ii. Fair value of assets iii. Deferred (gain)/loss (i-ii) c. Unrecognized (gain)lloss adjusted for deferred asset (gain)/loss (a- 01/01/1999 ($13 968 489) $178 878 604 178 878 604 ($13 968 489) Amortization of Unrecognized (Gain)/Loss d. Absolute value of adjusted unrecognized (gain)llosse. Projected benefit obligationf. Market-related value of assets g. Larger of e and f h. 10% ofg i. Absolute value of (gain)lloss in excess of 10% conidor (d-, not less than zero) j. Unrecognized (gain)lloss subject to amortization with sign from c k. Average future expected working lifetime of participants expected to receive benefits 1. Amortization amount G + k) $13 968,489 177 924 885 178 878 604 178 878 604 887 860 15.485 years Retirement Plan for Employees of A vista Corporation SUMMARY AND COMPARISON OF FUNDING REQ UIREMENTS Plan Years Beginning:01/01/1999 01/01/1998 Current Under RP A '94 (IRS mortality)$155 809 086 $134 120 592 Liability Under OBRA '87 (Valuation mortality)155 809 086 134 120 592 Actuarial Participating employees $67 220 596 $60 201 815AccruedDeferred vested participants 370 624 653 329LiabilityRetirees and beneficiaries 671 121 69,900 147 Total $145 262 341 $134 755 291 Assets Market value of assets $178 878 604 $166 242 219 Actuarial value of assets 146 146 934 138 446 238 UAAL Unfunded actuarial accrued liability ($884 593)($3 690 947) Normal Cost Normal cost 929 415 533,416 As a percentage of compensation Contribution Minimum required contribution 303 632RangeAs a percentage of compensation Maximum deductible contribution I $14 186 691 As a percentage of compensation 20. Assumptions Valuation interest rate 50%50% RP A '94 current liability interest rate 55%17% OBRA ' 87 current liability interest rate 55%17% Compensation increase rate 00%00% These amounts are calculated assuming that contributions will be made in the amounts and on the dates described in the Executive Summary and that receivable contributions for the prior plan year will be made when due. If actual contributionsdiffer from this schedule, these amounts may need to be adjusted. Retirement Plan for Employees of vista Corporation MINIMUM REQUIRED CONTRIBUTION Plan Year Beginning: Regular Minimum Contribution a. Normal cost b. Net amortization chargesc. Interest to end of year d. Additional funding charge e. Interest penalty due to late quarterly contributions f. Total charges 0110111999 929 415 20;321 335 727 N/A 285,463 Full Funding Limitation g. Full funding limitation 397 902 Preliminary Minimum Contribution h. Minimum required contribution after recognition of full funding limitation (lesser of f and g)397 902 ' Credit Balance i. Prior year credit balance j. Interest to end of year k. End of year credit balance $86 885 385 $94 270 Minimum Required Contribution 1. Minimum required contribution, if paid on or after December 31 , 1999 (h-, not less than zero) m. Interest to the end of the plan year on accumulated quarterly installments n. Minimum required contribution for plan year ending December 31 , 1999 (l-m) 303 632 303 632 Retirement Plan for Employees of A vista Corporation MAXIMUM DEDUCTIBLE CONTRIBUTION Plan Year Beginning: Tax Year Ending: Regular Maximum Contribution a. Normal cost b. Net amortization chargesc. Interest to end of plan year ' d. Total 0110111999 12/31/1999 929 415 334 000 263 415 Full Funding Limitation e. Full funding limitation f. Lesser of regular maximum and full funding limitation 303 632 303 632 Minimum Contribution for Current Tax Year g. Minimum required contribution (for the plan year ending within the current tax year) not claimed as a deduction for the prior tax year h. Contributions not claimed as a deduction for the prior tax year but required to satisfy minimum funding for earlier plan years i. Minimum required contributions for plan years ending within or before the current tax year (g+h) - $3 303 632 303 632 Unfunded Current Liability j. Adjusted current liability at end of year k. Actuarial value of assets at end of year 1. Deductible contributions included in assets but not yet deducted less deducted contributions not included in assets m. Valuation interest rate n. Interest to end of year on I o. Unfunded current liability G-k+l+n, not less than zero) $163 324 605 149 137 914 50% $14 186 691 Maximum Contribution p. Maximum deductible contribution (largest of f, i, and 0) $14 186,691 The fact that, if a qualified defined contribution plan covers the same employees as this plan, the total amount of the taxdeduction under both plans cannot exceed 25% of the total compensation of the covered employees for that tax year, has notbeen considered here. Retirement Plan for Employees of A vista Corporation PRESENT VALUE OF ACCUMULATED BENEFITS Accumulated Benefits As of 0110111999 N umber Participants Vested Present Value a. Participating employees b. Deferred vestedc. Retirees and beneficiaries d. Total vested accumulated benefits e, Nonvested accumulated benefits f. Total accumulated benefits 0731 319 772 164 $45 547 706 370 624 671 121 $123 589 451 440 725 $124 030 176 Benefit Security g. Market value of assets 3 Ratio h. Asset value divided by total accumulated benefits value $178 878 604 144.22% Reconciliation of Present Value of Accumulated Benefits i. Present value of accumulated benefits as of January 1 , 1998 j. Changes during the year due to: Benefits accumulated 4 Decrease in the discount period Actual benefits paid Plan amendment Change of assumptions Net increase (decrease) k. Present value of accumulated benefits as of December 31 , 1998 $115 483 359 850 107 444 313 747 603) 546 817 $124 030 176 Actuarial assumptions : The same actuarial asswnptions are used to value the F ASB Statement 35 liabilities as are used for purposes of determining the plan s funding requirements, as described in Appendix A. An investment return assumption of 8.50% was used. Of these, 1 073 are fully vested. There are also 281 non-vested participating employees for a total of 1 354 participatingemployees. This does not represent liabilities on a plan termination basis for which a separate extensive analysis would be required. There were no accrued contributions as of December 31, 1998. Includes actuarial gains and losses due to noninvestment experience. Retirement Plan for Employees of A vista Corporation 10.CHANGE IN PLAN ASSETS DURING PLAN YEAR Market Value Actuarial Value Change in Plan assets as of 0 I /0 1/1998 I $166 242 219 $138,446 238AssetsEmployer contributions Benefit payments made 747 603)747 603) Expenses paid from trust Investment return Interest and dividends 941 602 Net realized appreciation 290,464 Change in net unrealized appreciation 151 922 Total investment return 383 988 448 299 Plan assets as of 12/31/1998 2 $178,878 604 $146 146 934 Return on Assets Rate of return on average invested assets 13.20%12.26% There were no contributions receivable at the beginning of the plan year. There were no contributions receivable at the end of the plan year. Retirement Plan for Employees of A vista Corporation 10.CHANGE IN PLAN ASSETS DURING PLAN YEAR (cont' Historical Return on Assets The schedule below summarizes the total rate of return in recent years. Year Ending In . Market Value . Actuarial Value Return on Assets 30. 25. 20. 15.0 . 10. 1995 24. 13. 1996 12. 10. 1997 14. 13. 1998 13. 12. Retirement Plan for Employees of A vista Corporation 11.DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS Capital Appreciation Net realized appreciation in market value Change in net unrealized appreciation in market value Total capital appreciation 290,464 151 922 $17,442 386 Actuarial Market value of assets as of January 1 , 1999 $178 878 604 Value of Assets Plan Capital Percent Percent Deferred Year Appreciation Recognized Deferred Appreciation (1)(2)(3)(4)(5) 1994 ($5,304 190)100.000%000% 1995 22,403 212 80.000%20.000%480 642 1996 12,490 616 60.000%40.000%996 246 1997 15,501,455 40.000%60.000%300 873 1998 17,442 386 20.000%80.000%953 909 Total $32 731 670 Asset value minus total deferred appreciation $146,146 934 Corridor for actuarial value 80% of market value 120% of market value $143,102 883 $214 654 325 Actuarial value of plan assets as of January 1 , 1999 $146 146 934 Note: The actuarial value of assets is a calculated value detennined by starting with market value of assets at January 1 , 1989. For subsequent years the calculated value is determined by adjusting the market value of assets to reflect the capital appreciation during each of the last 5 years or, if fewer, the completed years since January 1 , 1989, at the rate of20% per year. The actuarial value is subject to a restriction that it not be less than 80% or more than 120% of market value. Retirement Plan for Employees of A vista Corporation 12.DET AILS OF ACTUARIAL ACCRUED LIABILITIES Plan Year Beginning: Applicable interest rate Normal cost Benefits Administrative expenses Total Funding Unit Credit Method Liabilities 50% 929,415 929,415 Liability Participating employees $67 220,596Deferred vested 5 370 624 Retirees and beneficiaries 671 121Total $145 262 341 Preparticipation service exclusion Net Expected Benefit Payments Vested Current Liability Participating employees Deferred vested Retirees and beneficiaries Total Present Value of Future Benefits Participating employees Deferred vested Retirees and beneficiaries Total 047 011 $117 716,420 370 624 72,671 121 $195 758 165 0110111999 Current Liabilities OBRA '87 RP A '94 based on based on Funding IRS Assumed Assumed Mortality Mortality 55%55% 244 321 244 321 244 321 $6,244 321 $64 851 265 935 586 022 235 $155 809 086 $155 809 086 $64 851 265 935 586 022 235 $155 809 086 $155 809 086 047 011 047 011 $63 641 537 935 586 022 235 $154 599 358 Retirement Plan for Employees of A vista Corporation 13.HISTORICAL INFORMATION Plan Years Beginning:01/01/1999 01/01/1998 01/0111997 0110111996 Participant Data Participating employees 354 310 272 345 Participant compensation $67 984 647 $61 797 398 $61,466 819 $60 793 620 DefeITed vested participants 319 327 271 247 Retirees and beneficiaries 772 756 738 703 Retiree and beneficiary annual benefit payments 439 805 140 934 114 327 837 711Total plan participants 445 393 281 295 Asset History Market value $178 878 604 $166 242 219 $150 080 047 $140 528 204Benefit payments in pnor year 747 603 964 248 579 134 087 772Employer contributions m pnor year 084 521 233 956 Return on market value 13.20%14.31%12.35%24.01 %Return on actuarial value 12.26%13.29%10.80%13.33% ERISA Funding Normal cost 929 415 $3,533,416 523 844 $3,418 416 Unfunded actuarial liability (884 593)690 947)(680 967)(3,202 788)Minimum contribution 303 632 084 521 233 956Maximum contribution 186 691 084 521 233 956Funded current liability %93.80%103.23%103.80%109.19% Fiscal Years Beginning:01/01/1999 0110111998 0110111997 0110111996 SFAS 87 Expense Annual expense 440 020 466 593 224 987 367 533 Prior Year SF AS Disclosure Prepaid/( accrued) benefit cost 037 578)570 985)664 475)296 942)Accumulated benefit obligation $147 551 325 $127 776 989 $125 657 727 $116 877 366ABa funded ratio 121.2%130.1 %119.120. Retirement Plan for Employees of A vista Corporation 14.SUMMARY OF PLAN PARTICIPANTS As of:0110111999 0110111998 Participating Number 354 310EmployeesTotal plan compensation $67 984 647 $61 797 398 Average plan compensation $50 210 $47 174 Average age 44.44. Average credited service 13.40 13. Retirees and Number 772 756BeneficiariesTotal annual pension 439 805 140 934 Average ~ual pension $12 228 $12 091 Average age 72.35 72. Distribution Age Last Birthday Number Annual Pension as of Under 55 $225 609 01/01/1999 55 - 59 624 526 60 - 64 120 855 477 65 - 69 137 865 267 70 - 74 153 884 537 75 - 79 134 464 344 80 - 84 974 677 85 and Over 545 368 Participants Number 319 327with Deferred Total annual pension 034 030 857 357PensionsAverage annual pension 376 680 Average age 48.47. Distribution Age Last Birthday Number Annual Pension as of Under 40 214 962 01/01/1999 40-425 970 45 - 49 488 544 50 - 54 549 203 55 - 59 272 62960-988 65 and Over 734 Retirement Plan for Employees of A vista Corporation 15 . AG E A N D S E R V I C E D I S T R I B U T I O N Co m p l e t e d Y e a r s o f C r e d i t e d S e r v i c e 40 & O ve r To t a l No . & No . & No . & No . & No . & No . & No . & No . & No . & No . No . No . No . & No . & At t a i n e d Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g . Av g : Ag e Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Co m p o Un d e r 2 5 $1 4 93 9 $2 6 , 47 9 $3 0 , 58 8 $4 0 , 2 3 8 53 0 57 7 25 - $3 3 67 0 $3 6 . 43 4 $3 7 , 79 0 $4 0 98 6 $4 5 06 4 $4 0 52 1 $3 8 84 6 30 - 11 0 53 6 49 8 $4 5 10 3 $3 5 , 89 5 $4 1 , 96 3 $4 4 , 67 7 $4 9 , 73 1 $4 7 75 6 $4 3 , 24 9 35 - 19 6 $3 3 , 34 9 $3 9 , 35 9 $4 7 81 0 $4 4 , 97 6 $4 6 , 28 1 $4 8 93 5 $4 6 39 0 $4 4 38 3 40 - 4 4 10 0 27 9 $5 3 07 8 $4 4 43 0 $4 3 80 5 $4 1 44 4 54 6 , 49 2 $4 8 78 0 $5 4 70 9 $6 5 39 7 $5 1 , 44 2 45 - 4 9 28 4 $4 4 20 0 $3 6 74 1 $3 4 51 9 $3 8 35 8 $4 8 , 26 8 $4 4 10 4 $5 0 35 6 $6 3 , 91 2 $6 3 , 11 9 $5 2 05 3 50 - 23 9 $5 2 , 39 6 $4 5 , 52 2 $4 1 15 8 $5 0 , 4 8 3 $4 6 , 86 3 $4 6 97 0 $5 0 , 91 3 $5 3 , 11 7 $6 1 64 0 $6 3 51 6 $5 3 , 56 7 55 - 12 1 $5 4 77 0 $1 7 , 14 1 $5 3 , 4 1 3 $6 0 87 7 $4 3 , 20 1 $4 5 , 01 2 $5 2 83 2 $6 2 56 8 $6 3 94 4 $5 1 43 2 $2 5 39 3 $5 5 60 2 60 - $3 1 , 30 4 $5 6 , 02 3 $9 4 , 29 0 $4 9 85 4 $5 0 79 9 $4 9 37 0 $4 7 , 87 5 $5 9 48 7 $5 2 84 2 $5 2 86 5 65 - 70 & O v e r To t a l 11 0 30 9 17 2 26 7 14 2 11 3 35 4 $1 4 93 9 $3 8 58 0 53 9 56 4 $4 0 51 8 $4 3 , 17 2 $4 7 94 4 $4 7 60 8 $5 1 , 29 9 $5 9 76 5 $6 1 45 8 $6 2 37 0 $5 5 01 2 $3 9 11 8 $4 9 71 3 Av e r a g e : Ag e 44 . Nu m b e r o f p a r t i c i p a n t s : Fu l l y v e s t e d 07 3 Ma l e s : 92 4 Se r v i c e 13 . 4 0 Pa r t i a l l y v e s t e d Fe m a l e s : 43 0 Re t i r e m e n t P l a n f o r E m p l o y e e s o f Av i J i t a C o r p o r a t i o n ,;. ' ~ ' 16 . RE C O N C I L I A T I O N O F P A R T I C I P A N T DA T A Re c o n c i l i a t i o n o f Pa r t i c i p a n t s by S t a t u s Nu m b e r a s o f 01 1 0 1 1 1 9 9 8 Ch a n g e s b y c a t e g o r y : a. N o n v e s t e d te r m i n a t i o n s b. V e s t e d te r m i n a t i o n s c. L u m p s u m s pa i d d. R e t i r e m e n t s e. B e n e f i t s ce a s e d f. Ne w e n t r a n t s a n d r e h i r e s g. A d j u s t m e n t s Nu m b e r a s o f O l l 0 1 / 1 9 9 9 In c l u d i n g d i s a b i l i t i e s a n d d e a t h s i n s e r v i c e . Pa r t i c i p a t i n g Em p l o y e e s (I ) 31 0 Ve s t e d T e r m i n a t e d Pa r t i c i p a n t s (2 ) 32 7 Pa r t i c i p a n t s Re c e i v i n g B e n e f i t s (3 ) 75 6 10 9 35 4 31 9 77 2 To t a l (4 )39 3 44 5 Re t i r e m e n t P l a n f o r E m p l o y e e s o f A vi s t a C o r p o r a t i o n ' " :i' " " rJ ) . " t APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS Plan Sponsor A vista Corporation 91-0462470/001EIN/PN For Determining Cash Contributions Interest Rates 50%Valuation RP A '94 Current liability 55% OBRA '87 Current liability 55% Compensation Increases Future compensation will increase at the rate of 4.00% per year compounded annually. Future Increases in Social Security 00% annual increases in the national average wage index are assumed. Future Increases in Maximum Benefits and Plan Compen- sation Limitations It is assumed that maximum benefit and plan compensation limitations under the Internal Revenue Code will not increase in the future. Assumed Cost-of- Living Adjustments None. Expenses None. Mortality The 1983 Group Annuity Mortality Tables for males and females. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Retirement It was assumed that participants will retire upon becoming eligible for normal retirement. The following table shows rates at various ages. Rate (s)Mgk ale 56- 30.30. 63-20.20. 100.100. Disability Rates Rates of disability are based on the Society of Actuaries Reports on Group Long-Term Disability Insurance from four recent years. Disabled Mortality 1992 Railroad Retirement Board Disabled Annuitants. However, the 1983 Group Annuity Mortality Tables for males and females are used for current liability. Representative Termination Rates Attained Age Males Females (per 100 employees) 12. 1.5 1.0 1.5 1.0 60 and over Retirement Plan for Employees of Avista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Form of Payment Participants are assumed to elect the nonnal fonn. Marriage It was assumed that 100% of all active and tenninated employees are married to an Eligible Spouse. Wives are assumed to be three years younger than husbands. Employees It was assumed that there will be no new or rehired employees. Inclusion Date The valuation date coincident with or next following the enrollment date on which the employee becomes a participant. Compensation for Plan Participants Compensation assumed paid in the current year beginning on the valuation date is the prior year pay increased by the salary scale. It is limited by Internal Revenue Code Section 401(a)(17). Retirement Plan for Employees of Avista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Cost Method The Projected Unit Credit Cost Method was used to determine the normal cost and the actuarial accrued liability for retirement termination, and ancillary benefits. Under this method, a "projected accrued benefit" is calculated as of the beginning of the year and as of the end of the year for each benefit that may be payable in the future. The "projected accrued benefit" is based on the plan s accrual formula and upon service as of the beginning or end of the year, but using fmal average compensation, social security benefits, etc., projected to the age at which the employee is assumed to leave active service. For benefits where the plan s accrual formula is not relevant, benefits are assumed to accrue on a straight-line basis over the period during which the employee earns credited service. The actuarial accrued liability is the present value of the "projected accrued benefits" as of the beginning of the year for employed participants and is the present value of all benefits for other participants. The normal cost is the present value of the difference between the "projected accrued benefits" as of the beginning and end of the year. The normal cost and actuarial accrued liability for the plan are the sums of the individually computed normal costs and actuarial accrued liabilities for all plan participants. Asset Method The actuarial value is calculated under the IRS average of market value method that recognizes realized and unrealized growth in capital appreciation over 5 years, starting with the market value of assets at January I, 1989. The actuarial value is subject to a restriction that it not be less than 80% nor more than 120% of market value. Participant Data Employee data was supplied on diskette as of the valuation date. Data on persons receiving benefits was supplied on diskette from A vista Corporation. Benefits Not Included in Valuation None. Retirement Plan for Employees of Avista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Cash Contributions Changes in Assumptions and Methods Since Last Actuarial Valuation There were no changes in actuarial assumptions for funding purposes other than required changes in current liability interest rates. . Retirement Planfor Employees of Avista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS For Determining Accounting Entries Interest Rates 75%Discount rate Expected long-term return on assets 00% Compensation Increases Future compensation will increase at the rate of 4.00% per year compounded annually. Future Increases in Social Security 00% annual increases in the national average wage index are assumed. Future Increases in Maximum Benefits and Plan Compen- sation Limitations It is assumed that maximum benefit and plan compensation limitations under the Internal Revenue Code will increase 4.00% per year in the future. j.' Assumed Cost-of- Living Adjustments None. Expenses None. Mortality The 1983 Group Annuity Mortality Tables for males and females. .ll.etirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Retirement It was assumed that participants will retire upon becoming eligible for normal retirement. The following table shows rates at various ages. Rate emal 56- 30.30. 63-20.20. 100.100. Disability Rates Rates of disability are based on the Society of Actuaries Reports on Group Long-Term Disability Insurance from four recent years. Disabled Mortality 1992 Railroad Retirement Board Disabled Annuitants. Representative Males FemalesTermination Rates Attained Age (per 100 employees) 12. 1.5 1.0 1.5 1.0 60 and over Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Form of Payment Union participants: Annuity benefit payable in the normal form. Non Union participants:80% lump sum benefit; 20% annuity benefit payable in the normal form. Lump Sum Ass umptions Interest Rate:00% interest Mortality:1983 Group Annuity Mortality Table (blended 50% male /50% female) Marriage It was assumed that 100% of all active and terminated employees are manied to an Eligible Spouse. Wives are assumed to be three years younger than husbands. Employees It was assumed that there will be no new or rehired employees. Inclusion Date The valuation date coincident with or next following the enrollment date on which the employee becomes a participant. Compensation for Plan Participants Compensation assumed paid in the current year beginning on the valuation date is the prior year pay increased by the salary scale. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Cost Method The Projected Unit Credit Cost Method was used to determine the service cost and the projected benefit obligation for retirement termination, and ancillary benefits. Under this method, a "projected accrued benefit" is calculated as of the beginning of the year and as of the end of the year for each benefit that may be payable in the future. The "projected accrued benefit" is based on the plan s accrual formula and upon service as of the beginning or end of the year, but using final average compensation, social security benefits, etc., projected to the age at which the employee is assumed to leave active service. The projected benefit obligation is the actuarial present value of the projected accrued benefits" as of the beginning of the year for employed participants and is the actuarial present value of all benefits for other participants. The service cost is the actuarial present value of the difference between the "projected accrued benefits" as of the beginning and end of the year. Asset Method The investments in the trust fund are valued on the basis of their fair market value. Participant Data Employee data was supplied on diskette as of the census date. Data on persons receiving benefits was supplied on diskette from A vista Corporation. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Valuation Date Measurement Date The measurement date is January I , 1999. The last day of the fiscal year is December 31 , 1999. For purposes of determining the net periodic benefit cost for the fiscal year, results as of the valuation date January I , 1999, are used. Material mid-year plan amendments are recognized as of their respective effective dates. For year-end disclosure, results are projected from the valuation date to the next measurement date, by assuming no actuarial gains or losses occurred in the interim, except for those due to changes in the assumptions necessary to reflect the situation at the measurement date and those due to recognizing differences between actual and expected benefit payments and administrative expenses and, if employee contributions are required by the plan, between actual and expected amounts. Amortization of Unrecognized Net Gain or Loss Amortization of unrecognized net gain or loss resulting from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in market-related value) is included as a component of net periodic benefit cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. If amortization is required, the amortization is that excess divided by the average remaining service period of participating employees expected to receive benefits under the plan. Amortization of Prior Service Costs Amortization of prior service costs resulting from a plan change are included as a component of net periodic benefit cost in the year first recognized and every year thereafter until such time as they are fully amortized. Retirement Plan for Employees of A vista Corporation APPENDIX A - STATEMENT OF ACTUARIAL ASSUMPTIONS AND METHODS (cont' For Determining Accounting Entries Benefits Not Included in Valuation None. Changes in Assumptions and Methods Since Last Actuarial Valuation The discount rate was lowered from 7.25% to 6.75% effective December 31 , 1998. Since a lump sum payment option was adopted during 1999 for non-union employees, we modified our assumptions to assume 80% of non-union participants selected the l!lffip sum option. There were no other changes in assumptions since the prior valuation. "., Retirement Plan for Employees of A vista Corporation APPENDIX B - SUMMARY OF PRINCIPAL PLAN PROVISIONS Effective Date March I , 1948. Restated as of January 1 , 1989. Last amended effective as of March 1 , 1998. Eligibility An employee becomes a Member after completing a year of service with at least 1 000 Hours of Service. Benefit Service Prior to 1 /l /80 One month of Benefit Service for each month of employment beginning on or after the Hire Date. After 1/1/80 One year of Benefit Service for each Plan Year after the Hire Date in which the Member has 2 080 Hours of Service. Partial credit is given for a year in which the Member has at least 1 000 Hours of Service at the rate of one-twelfth of a year for each 173-1/3 Hours of Service (rounded up). ,.' Vesting Service One month of Vesting Service for each month of employment. Earnings Base Pay excluding overtime and other special compensation, but including contributions to a 401 (k) Plan. Final Average Earnings Highest consecutive 36 months earnings during Member s last 120 months. Normal Retirement Eligibility First day of month coinciding with or next following 65th birthday. Benefit 5% of Final Average Earnings for each year of Benefit Service. Retirement Plan for Employees of A vista Corporation APPENDIX B SUMMARY OF PRINCIPAL PLAN PROVISIONS (cont' Early Retirement Eligibility Attained age 55 and at least 15 years Vesting Service. Benefit Accrued benefit based on Benefit Service to early retirement date payable in full at or after age 62. If payments commence immediately at date of early retirement the benefit is multiplied by the appropriate factor from the following table: Early Retirement Factor 100% 96% 92% 88% 84% 80% 76% 72% The Early Retirement Factor is increased, up to a maximum of 100%, by 1.0% (one percentage point) for each year of vesting service above 15. Deferred Retirement Eligibility Continued employment beyond Normal Retirement Date. Benefit The Normal Retirement Benefit Formula applied to earnings and Service up to deferred retirement date. Payment commences on the actual retirement date. Disability Eligi hili ty Five Years of Vesting Service and a disability which prevents the Member from performing assigned duties and which is expected to be a permanent condition. Retirement Plan for Employees of A vista Corporation APPENDIX B SUMMARY OF PRINCIPAL PLAN PROVISIONS (cont' Benefit Accrued Benefit commencing at Nonnal Retirement Date based on Final Average Earnings at time of disability but including as Benefit Service the period of the Member s disability, contingent upon five years of Vesting Service (10 years if employed in a position covered by a collective bargaining agreement). A disabled Member may elect Early Retirement when first eligible to do so, in which case the benefit is reduced. Vesting Eligibility Five years of Vesting Service. Benefit Accrued benefit at date of termination with payments commencing at normal retirement date. If the Member has 15 years Vesting Service, an election may be made for benefits to commence at any time after age 55, in which case benefits will be actuarially reduced from age 65. ,.. Cost-of-Living Adjustments Benefits in pay status have been increased from time to time through ad hoc adjustments to partially offset the reduction in purchase power due to inflation. The most recent adjustments took effect as of March 1 , 1998. The Company is under no obligation to make further adjustments in the future. Changes in Plan Provisions Effective July 1 , 1999, a lump sum benefit option was added for non-union employees. There have been no other changes in plan provisions since the prior valuation report. Retirement Plan for Employees of A vista Corporation GLOSSARY Accumulated Benefit Obligation This is the same as the Projected Benefit Obligation except that it is based on current and past compensation levels instead of future compensation levels. Actuarial Accrued Liability This is computed differently under different actuarial cost methods. Generally, the actuarial accrued liability represents the portion of the cost of the participants' anticipated retirement , termination and/or death and disability benefits allocated to the years before the current plan year. Actuarial Gain or Loss From one plan year to the next, if the experience of the plan differs from that anticipated using the actuarial assumptions, an actuarial gain or loss occurs. For example, an actuarial gain would occur if the assets in the trust earned 12% for the year while the assumed rate of return used in the valuation was 8%. Additional Minimum Liability If a plan has a minimum liability, the sponsor may be required to post a liability on the balance sheet in addition to the accrued/(prepaid) benefit cost already recorded. If the Accumulated Benefit Obligation exceeds the fair value of assets, the plan has a minimum liability equal to the excess. If there is a minimum liability and it exceeds the Accrued/(Prepaid) Benefit Cost, the difference is called the Additional Minimum Liability and the accrued benefit liability equals the minimum liability. ,i. Current Liability This is computed the same as the Present Value of Accumulated Benefits, but using interest rate and mortality assumptions specified by the IRS. This quantity is used in the calculation of the plan s funded percentage, to determine whether the plan sponsor will be allowed to make a tax-deductible contribution to the plan for the year, whether quarterly contribution deposits are required, whether the plan is exempt from the deficit reduction contribution and, if not, the amount of the additional funding charge. Retirement Plan for Employees of A vista Corporation GLOSSARY (cont' Funded Status This is the excess/(shortfall) of the fair value of plan assets over the Projected Benefit Obligation. Normal Cost Computed differently under different actuarial cost methods, the normal cost generally represents the portion of the cost of the participants' anticipated retirement, termination and/or death and disability benefits allocated to the current plan year. ~repaidl~ccrued) Benefit Cost The sponsor s balance sheet asset/(liability) entry, the net recognized amount, is the sum of the cumulative excess of contributions to the plan over net periodic benefit costs and other plan-related charges to income due either to business combination or accelerated recognition pursuant to SFAS 88. The difference between this account and the Funded Status is the unrecognized net loss/(gain) and prior service costs. ~resent Value of Accumulated Benefits Computed in accordance with SF AS 35, this quantity is determined independently from the plan s actuarial cost method. Basically, this is the present value of a participant s accrued benefit as of the valuation date, assuming the participant will earn no more credited service and will receive no future salary. i.. ~resent Value of Future Benefits This is computed by projecting the total future benefit cash flow from the plan, using actuarial assumptions, and then discounting the cash flow to the valuation date. ~resent Value of Vested Benefits This is the portion of the Present Value of Accumulated Benefits in which the employee has a vested interest if the employee were to separate from service with the employer on the valuation date. Retirement Plan for Employees of A vista Corporation GLOSSARY (cont' Projected Benefit Obligation Computed in accordance with SF AS 87, this quantity is the actuarial present value of all benefits attributed by the plan s benefit formula to service rendered prior to the measurement date. It is measured using an assumption as to future compensation levels when the benefit formula is based on future compensation levels. Service Cost Computed in accor.dance with SF AS 87, this component of the net periodic benefit cost is the actuarial present value of benefits attributed by the plan s benefit formula to services rendered by employees during the period over which the net periodic benefit cost is incurred. It is measured using an assumption as to future compensation levels when the benefit formula is based on those future compensation levels. Vested Benefit Obligation This is the portion of the Accumulated Benefit Obligation in which the employee has a vested interest if the employee were to separate from service with the employer on the measurement date. Retirement Plan for Employees of A vista Corporation ),. Retirement Plan for Employees of A vista Corp. Actuarial Valuation - January 1, 1999 RECENT EXPERIENCE - FUNDING 1995 1996 1997 Contribution for Plan Year 233 956 084 521Contribution as % of Pay 00%38%02% Nonnal Cost 143 682 3,418,416 523,844Nonnal Cost as % of Pay 5.46%62%73% Actuarial Value of Assets 113 852 385 121,479 209 126 854 324Actuarial Accrued Liability 110 214 144 118 276,421 126 173 357Percentage Funded 103%103%101% CuITent Liability 586 333 111 259 837 122 208 074 Percentage Funded 114%109%104% $180 OOO OOOf,;( $150 000 000 ~( $120 000 000 ;~;; ;". $90,000 000 . \:: $60 000 000 J $30 000 000 ~;f $0 . Comparison of Assets and Liabilities for Contribution Determination Purposes 1995 1996 1997 1998 Plan Year . Actuarial Value of Assets .Actuarial Accrued Liability Contribution and Normal Cost 000,000 000,000 000,000 $2,000 000 000 000 1995 1998 00% 533,416 72% 138 446 238 134 755 291 103% 134 120 592 103% 1999 . Current Liability 1999 303 632 86% 929 415 78% 146 146 934 145 262 341 101% 155 809 086 94% 1996 1997 Plan Year -+- Contribution for Plan Year 1998 Normal Cost K:\A VISTA IDB 1 IV AL 119991 1999histxls 1999 Retirement Plan for Employees of Avista Corp. Actuarial Valuation - January 1 , 1999 PROJECTED RESULTS - FUNDING * Recognize Realized & Unrealized (Gains)/Losses Over Five Years Expected Future Return on Assets = 8.50% 1999 2000 2001 2002 2003 Minimum Contribution 303 000 Maximum Contribution 186 000 105 000 516,000 218 000 845 000Actual Contribution 303 000 Actuarial Value of Assets 146 147 000 159 534 000 167 538,000 175 340 000 182 415 000Actuarial Accrued Liability 145 262 000 150,459 000 159 926 000 167 993 000 176 611 000Percentage Funded 101%106%105%104%103%Current Liability 155 809 000 158 272 000 173 160 000 182,486 000 191 050 000Percentage Funded 94%101%97%96%95% Comparison of Assets and Liabilities for Contribution Determination (OOO' $200,000 $160 000 $120 000 $80 000 $40 000 1999 2000 2001 2002 2003 . Current Liability.Actuarial Value of Assets . Actuarial Accrued Liability $15 000 ~;~: $12 000 ir. 000 $6,000 000 Projected Contributions (OOO' 1999 2000 2001 2002 2003 . Minimum Contribution . Maximum Contribution .Actual Contribution Years 2000 2003 adjusted to rejIectlump sum plan amendment adopted effective July , 1999. K:\A VIST A\DB I\V AL\1999\1999PROJECTION FINALXLS Retirement Plan for Employees of A vista Corp. Actuarial Valuation - January 1 , 1999 RECENT EXPERIENCE - FINANCIAL ACCOUNTING (FAS 87) 1995 1996 1997 1998 1999Net Periodic Pension Cost 967 942 367 524 224 987 1,466 593 440,020 Fair Market Value of Assets 119 706 125 140 528 204 149 846 091 166,242 219 178 878 604Projected Benefit Obligation 111 001 034 136 252 786 145 186 985 159 163 997 177 924 885Percentage Funded 108%103%103%104%101%Accumulated Benefit Obligation 93,429 617 112 334 673 120 165 105 132 861 529 147 551 325Percentage Funded 128%125%125%125%121% (Accrued)/Prepaid Pension Cost 329 000)296 951)664 475)(5,570 985)(7,037 578) Net Periodic Pension Cost (Income) $500 000 1995 1996 1997 1998 1999 $2.500 000 $2.000 000 $1,500 000 000.000 Year (Accrued) Prepaid Pension Cost on Balance Sheet at Beginning of Year 1995 1996 1997 1998 1999 ($1 500,000) ($3 000 000) ($4 500,000) ($6 000 000) ($7 500,000) : Year Retirement Plan for Employees of Avista Corp. Actuarial Valuation - January 1, 1999 PROJECTED RESULTS - FINANCIAL ACCOUNTING (FAS 87) * Expected Future Return on Assets = 8.50% 1999 2000 2001 2002 2003Net Periodic Pension Cost 440 000 712 000 210 000 529 000 806 000 Fair Market Value of Assets 178 879 000 187 845 000 193 998,000 200 380 000 207 001 000Projected Benefit Obligation 177 925 000 186 503 000 195 398,000 205 051 000 215,292 000Percentage Funded 101%101%99%98%96% (Accrued)/Prepaid Pension Cost 038 000)(6,175 000)887 000)(10 097 000)(12 626 000) Net Periodic Pension Cost (Income) (OOO' 000 ; 000 000 1999 2000 2001 2002 2003 Year (Accrued) Prepaid Pension Cost on Balance Sheet at Beginning of Year (OOO' $0 , ($5 000) 1999 2000 2001 2002 2003 ($10 000) ($15 000) Year Adjusted to reflect lump sum plan amendment adopted effective July J, J 999. K:\A VISTA \DB 1 \V AL\ 1999\ 1999PRO1ECT10N _FINAL.XLS ,., Retirement Plan for Employees of A vista Corporation Actuarial Valuation as of January 1, 1999 Allocation of Assets, Obligations and Costs Among Participating Employers by Participant Liabilities Pentzer A vista Pentzer Develo ment Total Assets - Adj usted Value Total at 1/1/98 137 105 638 587 739 752 861 138 446 238Contributions(24 574)670 (25 096)Investment Income 903,435 733 434 941 602Adjusted Gains 385 592 094 011 506 697Benefit Payments 694 556)(53 047)747 603)Expenses Transfer Total at 1/1/99 144 675 535 707 236 764 163 146 146 934 Assets - Market Value Total at 1/1/98 164 814 501 603,491 824 227 166 242,219Contributions(24 574)670 (25 096) Investment Income 903,435 733 21,434 941 602 Adjusted Gains 292 588 319 479 442 386Benefit Payments 694 556)(53 047)747 603)Expenses Transfer Total at 1/1/99 177 291 394 733 213 853 997 178 878 604 Contribution Allocation for 1999 (Based on Net Periodic Pension Cost) Net Periodic Pension Cost 407 800 634 (24,413)440 020(for accounting purposes only) Expected Cash Contribution (to collect from subsidiaries) Retirement Plan for Employees of A vista Corporation Actuarial Valuation as of January 1, 1999 Allocation of Assets, Obligations and Costs Among Participating Employers by Participant Liabilities Pentzer Avista Pentzer Develo ment Total Vested Benefit Obligation 145 320 676 395 921 644 802 146 361 399Accumulated Benefit Obligation 146,423 335 483 188 644 802 147 551 325Projected Benefit Obligation 176 672 954 607 129 644 802 177 ,924 885 Funded Status Projected Benefit Obligation $ (176 672 954)(607 129)(644 802)$ (177 924 885)Plan Assets at Fair Value 177 291 394 733 213 853 997 178 878 604Funded Status 618 440 126 084 209 195 953 719 Reconciliation of Funded Status Funded Status 618 440 126 084 209 195 953 719Unrecognized Net Asset 006 542)(8,458)015 000)Unrecognized Prior Service Cost 912 816 (16 939)315 992 192Unrecognized Net (Gain) or Loss (13 870 203)(47 664)(50 622)(13 968,489)Capitalized Cost (Accrued) Pension Cost 345,489)61,481 246 430 037 578) Co' Net Periodic Pension Cost for 1999 Service Cost 869 771 348 951 119Interest Cost 830 765 656 179 914 600Expected Return on Assets (15 541 979)(64 276)(74 864)(15 681 119)Amortization of Unrecognized Net Asset 084 691)(1,309)086 000)Prior Service Cost 333 934 094)581 341,420Net (Gain) or Loss Net Periodic Pension Cost or (Income)2,407 800 634 $(24 413) $440 020 VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-Q4- IPUC Data Request 157 DATE PREPARED: WITNES S RESPONDER: DEPARTMENT: TELEPHONE: 3/25/2004 Don Falkner Don Falkner Rates (509) 495-4326 REQUEST: Please provide copies of Board of Directors' Materials distributed for/at meetings from 2001 2002, 2003 , and 2004. Include the 2001 Strategic Plan Board Summary and any similar summaries since 2001. RESPONSE: As has been done previously, Board of Directors' Materials distributed for/at meetings from 2001, 2002, 2003, and 2004, including the 2001 Strategic Plan Board Summary and any similar summaries since 2001 will be available for review at the Company s offices in Spokane during on-site visits JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. REQUEST: A VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION Idaho A VU-O4-01/ A VU-O4- IPUC Data Request 171 DATE PREPARED: WITNES S RESPONDER: DEPARTMENT: TELEPHONE: 3/25/2004 Don Falkner Craig Bertholf Rates (509) 495-4124 Please provide the full electronic version with formulas intact of the rate case Commission Basis Report (Jurisdictional Separation Model) for the natural gas utility. RESPONSE: Please see the file named DR171-GasOps.xls on the enclosed compact disk. JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. REQUEST: A VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION Idaho A VU-O4-01 / A VU-O4- IPUC Data Request 172 DATE PREPARED: WITNES S RESPONDER: DEPARTMENT: TELEPHONE: 3/25/2004 Don Falkner Craig Bertholf Rates (509) 495-4124 Please provide the full electronic version with formulas intact of the rate case Commission Basis Report (Jurisdictional Separation Model) for the electric utility. RESPONSE: Please see the file named DRI72-ElecOps.xls on the enclosed compact disk. AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 173 DATE PREPARED: WITNESS: RESPONDER: DEP ARTMENT: TELEPHONE: 03/24/2004 Clint Kalich Jason Fletcher Energy ResQurces (509) 495-8626 REQUEST: Please provide an electronic copy of all input and output files used in the AURORA system dispatch model for determining power supply costs. Include an electronic copy of any other linked files or files used for preparing data for input to the AURORA model. RESPONSE: Please see A vista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL information, is exempt from public view, and is separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code. VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQ DES TER: TYPE: REQDESTNO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 174 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 03/24/2004 Clint Kalich Jason Fletcher Energy Resources (509) 495-8626 REQUEST: Please provide a copy of the natural gas forward prices upon which the prices used in the AURORA model are based. Please cite the source used for the price estimates, the date on which price data was obtained, the product represented by the prices (e., 12-mo. strip, finn etc.), the location associated with the prices (e., Henry Hub, Sumas, etc.) and explain any adjustments made to reflect price differences between specific plants. Also quantify and describe any adders made to the commodity price to reflect transportation, taxes, pipeline charges, etc. RESPONSE: The natural gas prices used in AURORA are based on December 10, 2003 NYMEX forward monthly prices for Henry Hub. In AURORA, fuel costs for all natural gas-fired resources in the WECC are based on estimated basis differentials from Henry Hub. These differentials are detennined by EPIS and intended to capture ancillary costs, such as transportation and taxes. The NYMEX forwards combined with basis differential estimates, are used to estimate Malin prices. Fuel costs for Coyote Springs 2 are taken directly from the Malin estimates. Rathdrum fuel costs are based on NYMEX, including basis differential estimates. Fuel costs at Northeast Boulder Park, and Kettle Falls CT are based on the cost of Rathdrum fuel adjusted by the basis differential and Washington use tax of approximately 4%. The source of these prices is the same system A vista uses to make natural gas-fired resource dispatch decisions. Please refer to page 8 of Witness Kalich's testimony for further discussion of natural gas prices, and page 9 for a tabulation of Avista s natural gas-fired resource fuel costs. The spreadsheet utilized for natural gas prices is included in A vista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL infonnation, is exempt from public view, and is separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code. VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 175 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 03/24/2004 Clint Kalich Jason Fletcher Energy Resources (509) 495-8626 REQUEST: Please provide a copy of the Colstrip fuel prices used in the AURORA modeling. Please cite the source used for the price estimates. RESPONSE: The Colstrip coal fuel price used in the AURORA model is $10.35 per ton (or $6.53 per MWh). It is based on long-term coal supply and transportation agreements. Please refer to page P83 of Witness Johnson s workpapers. The spreadsheet utilized for Colstrip fuel prices is included in Avista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL information, is exempt from public view, and is separately filed under IDAP A 31.01.01 , Rule 067, and Section 9-340D, Idaho Code. A VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 176 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 03/24/2004 Clint Kalich Jason Fletcher Energy Resources (509) 495-8626 REQUEST: Please provide a copy of the Kettle Falls fuel prices used in the AURORA modeling. Please cite the source used for the price estimates. RESPONSE: The Kettle Falls wood fuel price used in the AURORA model is $13.82 per green ton (or $22. per MWh). It is based on inventory and future fuel deliveries. Please refer to page P80 of Witness Johnson s workpapers. The spreadsheet utilized for Kettle Falls fuel prices is included in Avista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL information, is exempt from public view, and is separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code. A VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 177 DATE PREPARED: WITNESS: RESPONDER: DEP ARTMENT: TELEPHONE: 03/2412004 Clint Kalich Jason Fletcher Energy Resources (509) 495-8626 REQUEST: Please identify the source for all hydro data used in the AURORA modeling. Include a copy any data and spreadsheets used to determine "normal" hydro conditions for use in the model along with a brief description of how "normal" conditions are determined. Please describe how normal hydro conditions are reflected in the generation for Avista s hydro plants in the AURORA model. How is "normal" monthly generation determined for other plants in the WECC? RESPONSE: Hydroloelectric generation for the Northwest is based on the Northwest Power Pool's 2000-2001 Headwater Benefits Study. The study provides generation estimates for Northwest hydroelectric plants, including A vista s resources, utilizing current regulation and sixty water years (1929- 1988) of historical streamflows. Monthly averages from this study were converted into an AURORA format and utilized in place of the default Northwest data sets. This approach is consistent with the methodology used in the 2003 Integrated Resource Plan. AURORA data sets for hydroelectric systems outside the Northwest (e., Canada and California) were not modified. According to EPIS (the developer of AURORA) the hydro data for resources in Canada is based on hydro generation from StatCanada CanSim Table 127-0001 - Electric Power Statistics Monthly 1996-2001. The hydro data for the all other AURORA areas is based on hydro generation for the USDOE-EIA906 (utility and non-utility) report (formerly EIA759 report). California hydro data is based on average data for 1991 to 1998. The spreadsheet utilized for hydroelectric generation is included in Avista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL information, is exempt from public view, and is separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code. VISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO. Idaho A VU-O4-01 / A VU-O4- IPUC Data Request Staff - 178 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 03/24/2004 Clint Kalich Jason Fletcher Energy Resources (509) 495-8626 REQUEST: Please identify the source for all Avista-specific load data used in the AURORA modeling. Include a copy of any data and spreadsheets used to detennine test year loads for use in themodel. Please provide a description of how test year loads detennined in the weather nonnalization process are prepared and entered into AURORA to represent hourly system loads. How are "normal" hourly loads detennined for other (non-Avista) loads in the WECC? RESPONSE: A vista-specific load is based on a combination of weather nonnalized monthly loads and actual hourly loads. Weather nonnalized monthly loads are used to establish the average monthly loads in AURORA, while actual hourly loads are used to detennine the hourly shape. Please refer to page P141 of Witness Johnson s workpapers for the derivation of the weather nonnalized test year monthly loads. According to EPIS (the developer of AURORA), monthly loads for the WECC are based on a thirteen-year analysis using EIA826 data. The hourly shapes and annual average loads are based on 2002 FERC714 data. The spreadsheet utilized for test year loads is included in Avista s response 173(C), which contains TRADE SECRET or CONFIDENTIAL information, is exempt from public view, and is separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code.