20130111Avista to Staff 72revised,147,150,154,155,etc.pdf

Avista Corp.
1411 East Mission P.O. Box 3727 a,ISTA Spokane. Washington 99220-0500
Telephone [phone] REC Corp. Toll Free 800-727-9170
2813 JAN 1 I AM 11: 02
IE.A•F4UISL January 10, 2013 JTILITIES ' )MMIS 2
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83720-0074
Attn: Karl T. Klein
Weldon B. Stutzman
Deputy Attorney General
Re: Production Request of the Commission Staff in Case Nos. AVU-E-12-08 and
AVU-G- 12-07
Dear Mr. Klein and Mr. Stutzman,
Enclosed are an original and three copies of Avista's responses to IPUC Staffs production
requests in the above referenced docket. Included in this mailing are Avista's responses to
production requests 072 Supplemental, 147, 150, 154, 155, and 157 - 159. The electronic
versions of the responses were emailed on 01/10/13 and are also being provided in electronic
format on the CD included in this mailing.
Also included are Avista's CONFIDENTIAL responses to PR 072C, 155C, and 158C. The
responses contain TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and
is separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code,
and pursuant to the Protective Agreement between Avista and IPUC Staff dated October 16,
2012. They are being provided under a sealed separate envelope, marked CONFIDENTIAL.
If there are any questions regarding the enclosed information, please contact Paul Kimball at
[phone] or via e-mail at paul.kimballavistacorp.com
Sincerely,
Paul Kimball
Regulatory Analyst
Enclosures
CC: all parties
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 01/07/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Dave DeFelice
REQUESTER: IPUC RESPONDER: Mike Faulkenberry
TYPE: Production Request DEPARTMENT: Gas Engineering
REQUEST NO.: Staff-072 Supplemental TELEPHONE: [phone]
REQUEST:
Please describe and justify the following projects and how the Company ensures they are
completed at least-cost. This should include a detailed description, cost (budget vs actual), and
timing of specific 2012 and 2013 capital project amounts proposed to be pro formed in this filing.
If vendors are used, please explain how the Company selected them and summarize the results.
Projects include:
a)Jackson Prairie Storage Project;
b)Gas Reinforce Minor Blanket;
c)Replace Deteriorated Pipe;
d)Regulator Station Reliability Projects;
e)Natural Gas Replacement Street/Highways;
f)Cathodic Protection Projects;
g)Gas Distribution Non-Revenue Blanket;
h)Isolated Steel Replacement;
i)Overbuilt Pipe Replacement Blanket;
j)Gas Telemetry;
k)Replacement 6" PE;_
1) Old Hwy 95 Relocation;
m)Klamath Falls Lateral; and
n)Reinforce Chase Rd Gate Station in Post Falls.
RESPONSE:
Please see Avista's response 072C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 3 1.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
Avista's Business Cases for the Programs and Projects for letter a. through n. above are provided
in Staff _PR_072C Confidential Attachments A-M. The Business Cases describe and define the
need for the Program or Project and weigh the alternatives considered. Please note that these
business cases were completed as a part of the 2012 budgeting process and the expected costs have
not been updated since then. Therefore, the most current budgeted amounts are included in
DeFelice workpapers as mentioned below. Also, a business case was not provided for the Klamath
Falls Lateral project as this project relates solely to Oregon operations.
Following is more specific information regarding each:
Page 2
Jackson Prairie Storage Project: Jackson Prairie (JP) is managed by Puget Sound Energy.
Avista is a 1/3 partner in this underground storage project with Williams Pipeline and Puget Sound
Energy.
Avista participates in upwards of 4 project meetings yearly to assure that its funding is spent
appropriately. Usually at least one of these meetings occurs at the site. Avista sends an Engineer
and a Management representative to each of these meetings. The Management representative has
voting rights among the partners and protects the interest of Avista's ratepayers. Key decisions
require a unanimous vote of the partners. The engineer advises our Management representative as
needed.
Gas Programs:
The following list represents what Avista terms "Gas Programs". These are also referred to as
"Gas Blankets". Each is made up of many small projects.
• Gas Reinforce Minor Blanket;
• Replace Deteriorated Pipe;
• Regulator Station Reliability Projects;
• Natural Gas Replacement Street/Highways;
• Cathodic Protection Projects;
• Gas Distribution Non-Revenue Blanket;
• Isolated Steel Replacement;
• Overbuilt Pipe Replacement Blanket;
• Gas Telemetry;
These Programs are budgeted and monitored throughout the year by the Manager of Gas Design.
Many of these projects are designed within Avista's Gas Engineering Department, but some are
designed within decentralized Operation offices.
These Programs are reviewed at monthly Gas Manager's meetings to assure that projects within
these programs are on track and running smoothly. Most of these projects have field inspectors
that monitor construction process and report back to the local Gas Managers or Gas Engineering
Department engineers.
Replacement 6" PE and the Old Hwy 95 Relocation: These two specific projects were
conducted at the request of the ID DOT to make way for road reconstruction of both the Old Hwy
95 frontage road and the existing Hwy 95. These projects were designed by Gas Engineering. The
Design Engineer acted as the Project Manager participating in all facets of the project from
coordination, design, contract assignment, ongoing project support and project close out.
The bulk of the work associated with the Old Hwy 95 Relocation project was competitively bid.
Klamath Falls Lateral: The project evaluation supporting this pipeline purchase from William's
Pipeline is complete in the Business Plan and is pertinent to OR customers only. A thorough
review of the pipeline assets with regards to maintenance records and pipeline records was
conducted by Gas Engineering prior to the purchase.
Reinforce Chase Rd Gate Station in Post Falls: The project evaluation and supporting
documentation for the reinforcement in this area is complete in the Business Plan. Work has not
Page 3
yet begun on this project. The Design Engineer assigned to this project will act as the Project
Manager and will participate in all facets of the project from coordination, design, contract
assignment, ongoing project support and project close out.
Please see the Company's response to Staffs Production Request No. 45 for updated transfers to
plant through October 31, 2012.
Company witness Dave DeFelice's-testimony and workpapers provide the requested budget
information for 2012 and 2013. Pages 53 through 63 of the workpapers list 2012, and pages 89
through 101 list 2013 projects by ER and details the expected month the project will be completed
and will be transferred to plant in service. The source of this data is the Company's 2012 capital
budget. Both hardcopies and electronic copies were provided with the original filing.
SUPPLEMENTAL:
Please see Staff _PR_072C Confidential Supplemental Attachment A for details of the Jackson
Prairie budget for 2012 and 2013.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 01/09/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Dave Defelice
REQUESTER: IPUC RESPONDER: Chris Schlothauer
TYPE: Production Request DEPARTMENT: Fleet
REQUEST NO.: Staff-147 TELEPHONE: [phone]
REQUEST:
Please provide a schedule showing all vehicle retirements since January 2011.
a.Please include the vehicle description, book value of the vehicle, date of retirement and
method of disposal.
b.If the vehicle was sold at auction, please also provide the sales price for each vehicle.
c.If the vehicle was donated, please also provide the cost basis used for the donation.
RESPONSE:
Please see Staff _PR_i 47 Attachment A for details of vehicle descriptions, date of retirement and
method of disposal. The Company cannot provide detailed information as listed in Attachment A,
for the book value of vehicles.
The Company uses mass asset accounting, and as such, when a vehicle is retired it is retired by
debiting the original cost of the vehicle to accumulated depreciation and crediting the appropriate
plant account. The net book value of assets can be determined by FERC account, which for
transportation vehicles is segregated into vehicle type. However, the net book value of the retired
vehicle is not tracked in the accounting system.
Page 1 of!
RETIREMENTS
MqDE. -
ARCTIC CAT 700 EFI - W/TRACK
ApTE!!
1/29/2011
VAUJE
AUCTION
SALEPR1GE
$3,250 R77536 2008 ARCTIC CAT 700 EFI
R76423 1988 JOHN DEERE 410C 4X4 BKHOE LOADER 1/29/2011 AUCTION $9,500
R76463 1997 VERMEER V3550A TRENCHER W/BACKHOE/PLOW 1/29/2011 AUCTION $3,000
R67600 2000 FORD F550 MED DUTY4X4 CAB & CHASSIS W/32FOOT BKT 3/12/2011 AUCTION $4,500
R47440 1997 CHEV CG21405 3/4 T CARGO VAN 3/12/2011 AUCTION $1,500
R76422 1988 JOHN DEERE 410C 4X4 BKHOE LOADER 3/12/2011 AUCTION $14,000
R46152 1991 CHEV CV20906 3/4 T SUBURBAN 4X4 3/12/2011 AUCTION $1,000
R67418 1996 CHEV CK31003 MED DUTY4X4 CAB CHASSIS W/30FOOT BUCKET 4/23/2011 AUCTION $7,500
R68055 1986 INTERNATIONAL S1954 MED DUTY CAB & CHASSIS W/50 FOOT BUCKET 6/4/2011 AUCTION $5,625
R68713 1997 INTERNATIONAL 4700 33K CAB CHASSIS W/50 FOOT BUCKET 6/4/2011 AUCTION $7,000
R46504 1979 CHEV TK20906 3/4 T SUBURBAN 4X4 6/4/2011 AUCTION $1,000
R58058 1987 INTERNATIONAL 51954 33K CAB CHASSIS SERVICE BODY/WELDER 6/4/2011 AUCTION $2,250
R85058 1997 MILLER WELDER MILLER WELDER ON 58058 6/4/2011 AUCTION $800
R56438 1997 CHEV CK31003 MED DUTY4X4CAB CHASSIS W/ FLATBED 6/4/2011 - AUCTION $3,000 -
R58087 1990 INTERNATIONAL 2674 33KCAB CHASSIS SERVICE BODY -WELDER 6/4/2011 AUCTION $3,250
R48541 2000 FORD F350 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 6/4/2011 AUCTION $3,400
R48542 2000 FORD F350 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 6/4/2011 AUCTION $3,850
R46586 2000 FORD F150 1/2 T PICKUP 4X4 EXT CAB CNG 6/4/2011 AUCTION $3,500
R66084 1989 INTERNATIONAL 4900 HD6X6 CAB CHASSIS W/5000 DIGGER DERRICK 6/4/2011 AUCTION $4,750
R87158 1968 ALLOY 2ATPF-16 EQMTTLR 6/4/2011 AUCTION $700
R56554 2000 FORD F450 MED DUTY4X4CAB CHAS W/FLATBED CRANE 6/4/2011 AUCTION $5,500
R48510 1999 FORD F250 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 6/4/2011 AUCTION $3,500
R86285 1984 JACKSON'S FLTBED EQMTTLR 7/7/2011 AUCTION $900
R76440 1992 VERMEER V-8050 TRENCHER W/BACKHOE & PLOW 7/7/2011 AUCTION $7,000
R67732 2004 FORD F550 MED DUTY4X4 CAB & CHAS W/38 FOOT BUCKET 7/7/2011 AUCTION $6,000
R56274 1993 CHEV CC30943 MED DUTY CREWCAB CHASSIS W/SERVICE BODY 7/7/2011 AUCTION $1,500
R46097 1990 CHEV CV20906 3/4 T SUBURBAN 4X4 7/7/2011 AUCTION $800
R76392 1980 JOHN DEERE 310A 4X2 BACKHOE LOADER 7/7/2011 AUCTION $7,000
R87302 1989 TRAIL KING TK 20 EQMTTLR 7/7/2011 AUCTION $4,500
R48654 2001 FORD F350 1 T CAB & CHASSIS 4X4 SRW 7/7/2011 AUCTION $2,750
R87273 1978 GREAT DANE FTBD TRAILER- FLATBED 40' 7/7/2011 AUCTION $2,000
R56243 1992 FORD F350 MED DUTY 4X2 CAB CHASSIS W/ SERVICE BODY 7/7/2011 AUCTION $1,000
R67298 1993 CHEV CK31003 MED DUTY4X4 CAB CHASSIS W/ 30 FOOT BKT 8/20/2011 AUCTION $3,750
R86286 1988 HOMEMADE FLTBED EQMTTLi 8/20/2011 AUCTION $550
R76454 1994 VERMEER LM-40 TRENCHER W/CABLE PLOW & BLADE 8/20/2011 AUCTION $2,500
R76474 2000 VERMEER V3550A TRENCHER W/BACKHOE /PLOW 10/1/2011 AUCTION $4,750
R56672 1987 INTERNATIONAL 51700 MED DUTY4X2 CAB CHASSIS W/DUMP BED 10/1/2011 AUCTION $11,250
R46637 2001 FORD F150 1/2 T PICKUP 4X4 CNG 10/1/2011 AUCTION $3,700
R87427 2000 CONTRAIL C-8 EQMTTLR 10/1/2011 AUCTION $17,500
R86599 1999 HAULI UTILITY UTILITY TRAILER 10/1/2011 AUCTION -$750
R46202 1992 CHEV CK10703 11/2 T PICKUP 4X4 10/1/2011 AUCTION $1,700
Staff-PR-147 Attachment A.xlsx 2011 Page 1 of 6
RETIREMENTS
$M
R46269 1993
EEL
CHEV CK10703
E1
1/2 T PICKUP 4X4 10/1/2011
# !I$PQSM.H4! WALUE SALE PRICE
AUCTION $14,000
R47652 2001 CHEV G2500 3/41 CARGO VAN CNG/ BYPASS SYS 10/1/2011 AUCTION $1,200
R87433 1995 TOWMASTER EQMT TLR 10/1/2011 AUCTION $4,750
R87294 1988 TRAIL KING TK2O EQMTTLR 10/1/2011 AUCTION $3,750
R86173 1972 ALLOY MATRL TRAILER- POLE/CARGO 10/1/2011 AUCTION $250
R87326 1991 CZ CZ-20KT EQMTTLR 10/1/2011 AUCTION $3,750
R87335 1992 CZ CZ-20KT EQMTTLR 10/1/2011 AUCTION $3,500
R87342 1992 a CZ-20KT EQMTTLR 10/1/2011 AUCTION $3,500
R47505 1999 CHEV CG21405 3/41 CARGO VAN 10/1/2011 AUCTION $1,500
R56862 1984 GMC K35 MED DUTY CAB CHASSIS W/SERVICE BODY 10/1/2011 AUCTION $6,500
R86050 1939 HOMEMADE POLE TRAILER- POLE 10/1/2011 AUCTION $25
R85704 2000 VERMEER E550 EVACUATOR 10/27/2011 AUCTION $8,000
R1005 2004 DITCH WITCH FM13 MUD PUMP 10/27/2011 AUCTION $5,000
R76703 2008 DITCH WITCH iT 3020 DITCH WITCH DIRECTIONAL BORING MACHINE 10/27/2011 AUCTION $159,650
R65601 1997 KENWORTH T300 HD6X4 CAB CHASSIS W/FI..ATBED 10/27/2011 AUCTION $15,700
R65602 2001 KENWORTH T300 HD6X4 CAB & CHASSIS W/FLATBED 10/27/2011 AUCTION $27,000
R85474 2000 VERMEER ST750A MUD SYSTEM 10/27/2011 AUCTION $3,800
R85475 2000 VERMEER ST750A MUD SYSTEM 10/27/2011 AUCTION $3,800
R76543 2008 DITCH WITCH iT 3020 DITCI-IWITCH BORING MACHING 10/27/2011 AUCTION $145,475
R87803 2000 TOWMASTER T-40 EQMT TLR 10/27/2011 AUCTION $14,483
R48688 2001 FORD F250 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 11/4/2011 AUCTION $2,000
R46680 2003 CHEV CK15703 1/21 PICKUP 4X4 11/4/2011 AUCTION $4,750
R47447 1997 CHEV CG21405 3/4 T CARGO VAN 11/4/2011 AUCTION $2,075
R76429 1988 DITCHWITCH 1010 B/S TRENCHER 11/4/2011 AUCTION $225
R87295 1988 TRAIL KING 1K 20 EQMT hR 11/4/2011 AUCTION $2,000
R87356 1994 KIEFER ILPF1825 EQMT TLR 11/4/2011 AUCTION $2,000
86380 1964 POWERS IL MATERIAL/POLE TRAILER 11/18/2011 AUCTION $250
R86077 1948 AMERICAN MACH POLE TRAILER- POLE 12/9/2011 AUCTION $150
R56025 1986 CHEV CK31003 MED DUTY4X4 CAB CHASSIS FLATBED 12/15/2011 AUCTION $3,500
R67242 1992 CHEV C7H042 MED DUTY4X2 CAB CHASSIS W/40 FOOT BKT 12/15/2011 AUCTION $7,500
R87405 1997 TRAIL KING 1K 20 EQMT TLR 12/15/2011 AUCTION $6,000
R66031 1986 INTERNATIONAL F1954 HD6X4 CAB CHASSIS W/5000 DIGGER DERRICK 12/15/2011 AUCTION $1,700
R67571 1999 FORD F450 MED DUTY CAB CHASSIS W/36FOOT BUCKET 12/15/2011 AUCTION $9,500
R67169 1991 FORD F350 MED DUTY CAB CHASSIS W/ 35 FOOT BUCKET 12/15/2011 AUCTION $4,500
R67697 2003 FORD 1`550 MED DUTY4X4 CAB & CHASSIS W/38 FOOT BKT 12/15/2011 AUCTION $10,000
R46446 1997 CHEV CK10753 1/21 PICKUP 4X4 EXT CAB 12/15/2011 AUCTION $2,500
R56295 1993 CHEV CC30943 MED DUTY CREWCAB CHASSIS W/SERVICE BODY 12/15/2011 AUCTION $1,600
R47572 2000 CHEV ASTRO CARGO VAN 4X2 12/15/2011 AUCTION $1,500
R86249 1984 HOMEMADE FIRE EXT TRAILER- FIRE PUMP-TANK 12/15/2011 AUCTION $800
R86245 1979 A-i IRON & CSTM T-4X8 TRAILER- REEL W/TILT 12/15/2011 AUCTION $100
R87371 I 1995J EAGER BEAVER JAP10 EQMT hR 12/15/2011 AUCTION $2,250
Staff-PR-147 Attachment A.xlsx 2011 Page 2 of 6
RETIREMENTS
EQUJ fEMiL ØD.II ØEs - ilL ALEpA
LINCOLN RANGER8 WELDER 12/15/2011 AUCTION
.UE.SA11PRICE
$750 R85527 1996 LINCOLN RANGER 8
R86098 1949 FWD POLE TRAILER- POLE 12/15/2011 AUCTION $150
R46433 1997 CHEV CK10703 1/2 T PICKUP 4X4 1/15/2011 DONATION $1,725
R56357 1994 FORD F350 MED DUTY CREWCAB CHASSIS W/SERVICE BODY 3/11/2011 DONATION $3,500
R56288 1993 CHEV CC30943 MED DUTY CREWCAB CHASSIS W/SERVICE BODY 3/11/2011 DONATION $3,500
R47540 2000 FORD F250 MED DUTY4X2CAB & CHASSIS SERVICE BODY 3/11/2011 DONATION $3,500
R46585 2000 FORD F150 1/2 T PICKUP 4X4 EXT CAB CNG 4/8/2011 DONATION $2,500
R48450 2000 FORD F250 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 4/15/2011 DONATION $3,000
R87278 1984 BUTLER B-2420 EQMT TLR 4/18/2011 DONATION $1,000
R48406 1995 CHEV CK20903 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 4/18/2011 DONATION $3,000
R45237 1992 FORD F250 3/4 T PICKUP 4X2 4/26/2011 DONATION $1,200
R56311 1993 CHEV CC31003 MED DUTY4X2 CAB CHASSIS W/DUMPBODY 5/9/2011 DONATION $2,800
R48656 2001 FORD F350 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 5/10/2011 DONATION $7,500
R45291 1993 CHEV CC10703 1/2 T PICKUP 4X2 5/19/2011 DONATION $1,700
R56503 1998 CHEV CC31403 MED DUTY4X4 CAB CHASSIS W/SERVICE BODY 5/25/2011 DONATION $4,500
R46497 1998 FORD F150 1/2 T PICKUP 4X4 5/25/2011 DONATION $2,500
R56273 1993 CHEV CC30943 MED DUTY CREWCAB CHASSIS W/SERVICE BODY 6/14/2011 DONATION $3,000
R45392 1995 FORD F250 3/4 T PICKUP 4X2 8/26/2011 DONATION $1,500
R45276 1993 CHEV CC10753 1/2 T PICKUP 4X2 EXT CAB 8/26/2011 DONATION $1,200
R47171 1991 FORD E250 3/41 VAN 9/1/2011 DONATION $1,800
R45395 1995 FORD F250 3/4 T PICKUP 4X2 9/13/2011 DONATION $2,200
R45236 1992 FORD F250 3/4 T PICKUP 4X2 9/20/2011 DONATION $2,000
R45147 1991 FORD F250 3/4 T PICKUP 4X2 9/28/2011 DONATION
R47465 2000 CHEV C2500 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 12/5/2011 DONATION $2,000
R47475 2000 CHEV C3500 IVIED DUTY4X4CAB & CHAS SERV BODY W/CNG 12/15/2011 DONATION $2,800
R56499 1993 CHEV CG31603 1 T DELIVERY VAN (HIGH CUBE) 12/15/2011 DONATION $2,200
R45418 1982 GMC CC10903 1/2 T PICKUP 4X2 12/19/2011 DONATION $1,200
R67484 1999 INTERNATIONAL 4700 33K CAB CHASSIS W/40 FOOT BUCKET 3/17/2011 DONATION $5,000
R35342 1997 FORD CROWN VIC 4-DOOR SEDAN 2/28/2011 SCRAP _ $350
_____________________________ $68,3251 $664,058
Staff—PR-147 Attachment A.xlsx 2011 Page 3 of 6
RETIREMENTS
OE:E:IE CEL IJIE]LJ II UP.::.'$ [PA1.... pRIcE
R56819 19841 FORD F350 MED DUTY CAB CHASSIS W/FLATBED 2/4/2012 AUCTION $1,750
R57306 1993 FORD F800 MED DUTY4X2 CAB CHASSIS W/FLAT BED 2/4/2012 AUCTION $4,500
R76430 1988 CASE 580K BACKHOE 4X4 2/4/2012 AUCTION $16,000
R56234 1965 CHEV C30 1 T CAB & CHASSIS 4X2W/FLATBED 2/4/2012 AUCTION $700
R56553 2000 FORD F450 MED DUTY4X2CAB CHASSIS W/FLATBED PUSHER 2/4/2012 AUCTION $3,400
R68411 1996 CHEV CC71-1042 33K CAB CHASSIS W/55 FOOT BUCKET 2/4/2012 AUCTION $9,500
R48712 2004 FORD F350 MED DUTY4X4CAB & CHAS SERV BODY W/CNG 2/4/2012 AUCTION $8,000
R76405 1985 JOHN DEERE 410 BACKHOE 4X2 2/4/2012 AUCTION $10,500
R76449 1993 JOHN DEERE 310D 4X4 BKHOE LOADER 2/4/2012 AUCTION $18,000
R76451 1994 JOHN DEERE 310D 4X4 BKHOE LOADER 2/4/2012 AUCTION $18,000
R58407 1996 FORD F80260 33KCAB & CHASSIS SERVICE BODY WELDER 3/17/2012 AUCTION $4,500
R56692 1992 CHEV CC31403 MED DUTY CAB CHASSIS W/SERV BODY-WELDER 3/17/2012 AUCTION $6,750
R76442 1993 JOHN DEERE 310D 4X4 BKHOE LOADER 3/17/2012 AUCTION $20,000
R78414 1986 TUCKER 1644 TUCKER SNOW CAT 3/17/2012 AUCTION $27,000
R78387 1979 BOMBARDIER SV-252-G-29 BOMBARDIER SNOW CAT 3/17/2012 AUCTION $10,000
R87262 1984 BUTLER BT-620-VH EQMTTLR 3/17/2012 AUCTION $3,075
R86509 2005 HOMEMADE TRAILER AN TRAILER 3/17/2012 AUCTION $250
R57729 1995 INTL 8100 33K CAB CHASSIS W/DUMPBODY 3/17/2012 AUCTION $7,500
R67696 2003 FORD F550 MED DUTY4X4 CAB & CHASSIS W/38 FOOT BKT 3/17/2012 AUCTION $12,000
R76480 1999 CATERPILLAR 416C 4X4 BKHOE LODR W/4-1 FRNT BKT 3/17/2012 AUCTION $28,075
R86243 1982 UTILITY TOOL 7163 TRAILER- CARGO 3/17/2012 AUCTION $250
R57068 1986 INTERNATIONAL S1954 33K CAB & CHASSIS 4X2 W/FIATBED 3/17/2012 AUCTION $2,250
R68341 1994 FORD L8000 33K CAB CHASSIS W/56 FOOT BUCKET 3/17/2012 AUCTION $9,000
R76458 1995 CATERPILLAR 416B 4X4 BKHOE LOADER 3/17/2012 AUCTION $20,000
R68662 2000 INTERNATIONAL 4900 33KCAB & CHASSIS W/50 FOOT BUCKET 3/17/2012 AUCTION $8,500
R47506 1999 CHEV CG21405 3/4 T CARGO VAN 3/17/2012 AUCTION $2,400
R86330 1992 GOODWIN FLATBED EQMTTLR 3/17/2012 AUCTION $500
R86331 1992 GOODWIN REEL TRAILER- REEL/SPOOL 3/17/2012 AUCTION $500
R86333 1992 GOODWIN REEL TRAILER- REEL/SPOOL 3/17/2012 AUCTION $500
R86334 1992 GOODWIN REEL TRAILER- REEL/SPOOL 3/17/2012 AUCTION $500
R86341 1992 HOMEMADE UTIUTY EQMTTLR 3/17/2012 AUCTION $500
R86197 1975 DERALD JOHNSON REEL TRAILER- REEL/SPOOL 3/17/2012 AUCTION $450
R86395 1992 WIND RIVER PIPE TRAILER- PIPE 4/21/2012 AUCTION $550
R46693 1998 FORD F150 1/2 T PICKUP 4X4 CNG 4/21/2012 AUCTION $4,750
R56463 1997 CHEV CC31003 MED DUTY4X2 CAB CHASSIS W/SERVICE BODY 4/21/2012 AUCTION $2,000
R67682 2003 FORD F550 MED DUTY4X4 CAB & CHASSIS W/38 FOOT BKT 4/21/2012 AUCTION $6,250
R67683 2003 FORD F550 MED DUTY4X4 CAB & CHASSIS W/38 FOOT BKT 4/21/2012 AUCTION $5,500
R85354 1994 GENIE S-40 GENIE S-40 MANLIFT 4/21/2012 AUCTION $9,000
Staff—PR-147 Attachment A.xlsx 2012 Page 4 016
RETIREMENTS
R67563 19991 FORD F450 SUPER DUTY IVIED DUTY4X4 CAB & CHASSIS W/32FOOT BKT 4/21/2012 AUCTION -
PRIcE
$7,250
R67684 2003 FORD F550 IVIED DUTY4X4 CAB & CHASSIS W/38 FOOT BKT 4/21/2012 AUCTION $6,250
R86414 1997 HAULMARK C56BS TRAILER-VAN BODY 4/21/2012 AUCTION $900
R66188 1992 INTERNATIONAL 4900 HD6X4 CAB CHASSIS W/5000 DIGGER DERRICK 4/21/2012 AUCTION $3,650
R66312 1993 INTERNATIONAL 4900 - HD6X4 CAB CHASSIS W/5052 DIGGER DERRICK 4/21/2012 AUCTION $5,750
R76418 1985 JOHN DEERE 310B BACKHOE 4X2 4/21/2012 AUCTION $6!500
R76475 1995 JOHN DEERE 310 4X4 BKHOE LOADER 4/21/2012 AUCTION $18,000
R76389N 1980 JOHN DEERE 310A 4X2 BACKHOE LOADER 4/21/2012 AUCTION $6,000
R47567 2000 CHEV G21405 3/41 CARGO VAN 4X2 6/2/2012 AUCTION $1,100
85552 2005 LINCOLN RANGER 305D RANGER 3050 WELDER ON 56552 6/2/2012 AUCTION $2,000
R56552 2000 FORD F450 IVIED DUTY4X2CAB CHAS W/SERV BODY WELDER 6/2/2012 AUCTION $3,500
R86393 1996 GOODWIN GOODWIN TRAILER- PLASTIC CONDUIT 6/2/2012 AUCTION $300
46579 2000 FORD F150 1/21 PICKUP 4X4 6/2/2012 AUCTION $1,900
58125 1991 WHITE/GMC WG42 33KCAB CHASSIS SERVICE BODY -WELDER 6/2/2012 AUCTION $5,500
85125 19901 LINCOLN 250 010 PRO LINCOLN 2500-10 WELDER ON 58125 6/2/2012 AUCTION $2,250
R85087 1989 LINCOLN 250 010 PRO LINCOLN 2500-10 WELDER ON 56012 7/14/2012 AUCTION $2,250
R45429 1997 FORD F250 3/41 PICKUP 4X2 7/14/2012 AUCTION $1,000
R85407 1995 MILLER BOBCAT MILLER WELDER ON 58407 7/14/2012 AUCTION $2,750
R68664 1999 INTERNATIONAL 4900 33K CAB CHASSIS W/55 FOOT BUCKET 7/14/2012 AUCTION $8,250
R66457 1997 FREIGHTLINER FL80 HD6X4 CAB CHAS W/D2050 DIGGER DERRICK 7/14/2012 AUCTION $10,000
R48610 2000 FORD F350 IVIED DUTY4X4CAB & CHAS SERV BODY 7/14/2012 AUCTION $9,250
R86523 1992 HOMEMADE TLR UTILITY TRAILER 7/14/2012 AUCTION $250
R86324 1991 KIEFER ILU 812 EQMTTLR 7/14/2012 AUCTION $1,200
R87325 1991 KIEFER ISU 12000 TRAILER- REEL 7/14/2012 AUCTION $1,200
R67606 2000 CHEV C7H042 IVIED DUTY4X2 CAB & CHASSIS W/40 FOOT BKT 8/25/2012 AUCTION $3,750
R56423 1996 GMC TC31403 IVIED DUTY4X2 CAB CHASSIS SERV BODY WELDER 8/25/2012 AUCTION $4,950
R86669 2013 ALUMA 8112 ATV TRAILER 8/25/2012 AUCTION $1,700
R66745 1982 INTERNATIONAL F1954 HD6X4 CAB CHASSIS W/DIGGER DERRICK 9/25/2012 AUCTION $3,250
R46496 1998 FORD F150 1/2 T PICKUP 4X4 9/25/2012 AUCTION $1,400
R56402 1995 CHEV CK31003 IVIED DUTY4X4 CAB CHASSIS W/FLATBED 11/3/2012 AUCTION $2,200
67475 1997 CHEV CC7H042 IVIED DUTY CAB CHASSIS W/40 FOOT BUCKET 11/3/2012 AUCTION $3,750
R85476 2000 INGERSOLL RAND VHP-400 COMPRESSOR 11/3/2012 AUCTION $9,000
R87233 1981 SKYLINE BT210K EQMTTLR 11/3/2012 AUCTION $1,300
R76464 1997 JOHN DEERE 310SE 4X4 BKHOE LOADER 1/10/2012 DONATION $11,000
R46398 1995 FORD F150 1/2 T PICKUP 4X4 EXT CAB 2/7/2012 DONATION $1,700
R46471 1997 CHEV CK20903 3/41 PICKUP 4X4 3/14/2012 DONATION $2,000
R56024 1986 CHEV CK31003 IVIED DUTY4X4 CAB CHASSIS FLATBED 4/4/2012 DONATION $800
R47470 2001 FORD F250 3/4 T4X2 CAB & CHASSIS SERV BODY CNG 4/12/2012 1 DONATION $2,200
Staff-PR-147 Attachment AxIsx 2012 . Page 5 of 6
RETIREMENTS
TK10703 i/2T PICKUP 4X4
ire
5/7/2012
sMiLoD
DONATION
ALUE.SARECE
$1,100 R46390 1995 GMC
R46638 20011 FORD F150 1/2 T PICKUP 4X4 CNG 5/29/2012 DONATION $2,000
R46588 2000 FORD F150 1/2 T PICKUP 4X4 EXT CAB CNG 6/5/2012 DONATION $1,300
R46640 2001 FORD F150 1/2 T PICKUP 4X4 CNG 6/12/2012 DONATION $2,000
R46743 2005 CHEV SILVERADO 3/4 TON 4X4 LONG BOX STANDARD CAB 6/12/2012 DONATION $4,590
R47449 2000 FORD F250 IVIED DUTY4X4CAB & CHAS SERV BODY W/CNG 8/15/2012 DONATION $6,000
R45406 1997 FORD F150 1/2 T PICKUP 4X2 8/22/2012 DONATION $5,000
R46646 2001 FORD F250 3/4 T PICKUP 4X4 CREW CAB 10/2/2012 DONATION $3,00
R47504 1999 CHEV CG21405 3/4TCARGO VAN 10/13/2012 DONATION $1,100
R45393 1995 FORD F250 3/4 T PICKUP 4X2 10/13/2012 DONATION $1,500
R46574 2000 FORD F150 1/2TPICKUP4X4 11/29/2012 DONATION $1,800
R46639 2001 FORD F150 1/2 T PICKUP 4X4 CNG 12/4/2012 DONATION $2,000
R46645 2001 FORD F250 EXT CAB 3/4 T PICKUP 4X4 EXT CAB 12/13/2012 DONATION $1,800
56560 1994 CHEV CC31403 IVIED DUTY4X2 CAB & CHASSIS W/FLATBED 8/1/2012 SCRAP $1,350
R46616 2000 CHEV K1500 1/2 T PICKUP 4X4 EXT CAB 2/10/2012 TRADE IN $1,500
R46673 I 2001 CHEV CK15753 1/2 T PICKUP 4X4 EXT CAB 2/10/2012 TRADE IN $2,500
Staff—PR-147 Attachment A.xlsx . . 2012 Page 6 of 6
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 01/07/13
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Dave DeFelice
REQUESTER: IPUC RESPONDER: K.Schuh/R.Bean
TYPE: Production Request DEPARTMENT: Rates and Tariffs
REQUEST NO.: Staff-150 TELEPHONE: [phone]
REQUEST:
Referencing the confidential memo provided at the onsite audit from Ryan Beam about the Post
Falls Headgate Project, please provide the economic analysis for performing all the other tasks at
this time as opposed to waiting.
RESPONSE:
Total costs for the Post Falls Headgate project were estimated to be $4.6 million and include the
following costs:
Avista Engineering 185,183
Contracted Engineering 376,576
Headgate Equipment Procurement 1,640,000
Headgate Construction Installation 1,219,000
Electrical Infrastructure Equipment Procurement 204,050
Electrical Infrastructure Construction Installation 103,284
Construction Contingency (10%) 372,839
Overheads 233,025
AFUDC 354,197
Total $4,688,154
The additional tasks that were completed at the time of the Headgate Project relate to the Electrical
Infrastructure upgrade and additional electrical components. The bulk of the electrical upgrades
were necessary to integrate the new headgate hoists into the existing plant power and control
scheme. The new hoists operate at a higher voltage than the existing system and require more
capacity than was available. This necessitated an overhaul of station service power and controls.
During the course of upgrading station service, additional incremental costs emerged as additional
electrical components such as new conductor, conduit, and disconnects in need of replacement
were addressed.
The Company does not have an economic analysis that pertains to the incremental cost increases
that emerged for the additional electrical components (conductor, conduit, and disconnects
mentioned above). These components are fairly immaterial to the overall cost of the project, as
they total a fraction of the Electrical Infrastructure costs listed above totaling $304,334, and would
have cost more to do as a separate project instead of upgrading at the time of the project.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 0-1/03/13
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Dave DéFelice
REQUESTER: IPUC RESPONDER: Karen Schuh
TYPE: Production Request DEPARTMENT: Rates and Tariffs
REQUEST NO.: Staff-154 TELEPHONE: [phone]
REQUEST:
Please explain the discrepancy in the allocation percentages used to allocate General Plant
Common System, Transportation Common System, and Software AN Common reflected in
Andrew's Capital Expense allocation workpapers and the 4-factor allocation percentages
contained in Andrew's workpapers Part 2 (August 2012).
RESPONSE:
The Company inadvertently used four factor allocation percentages related to prior years for the
General Plant Common System, Transportation Common System, and Software AN Common
reflected in Andrew's Capital Expense allocation. The impact of updating these factors for the
2012 Electric and Natural Gas Adjustment is an increase of approximately $132,000 to revenue
requirement. The impact of the change in factors to the 2013 Electric and Natural Gas Adjustment
is a decrease to revenue requirement of approximately ($10,000).
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 01/04/2013
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: IPUC - RESPONDER: Robert Cloward
TYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: Staff-155 TELEPHONE: [phone]
REQUEST:
Please provide a map of Avista's natural gas transportation and distribution system showing all
mains and laterals for Idaho, Washington, and Oregon.
RESPONSE:
Please see Avista's response 155C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
See Staff _PR_155C Confidential Attachment A for Idaho.
See Staff _PR_i 55C Confidential Attachment B for Oregon.
See Staff _PR-1 55C Confidential Attachment C for Washington.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATRPREPARED: 01/07/2013
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: S. Morris/E. Andrews
REQUESTER: IPUC RESPONDER: Paul Kimball
TYPE: Production Request DEPARTMENT: Rates & Tariff Admin.
REQUEST NO.: Staff-157 TELEPHONE: [phone]
REQUEST:
Please refer to the direct testimony of Mr. Morris, page 25 and 26, where he discusses the
Performance Excellence Initiative.
a.Provide the total cost to Avista of this initiative by year, to-date. Specifically include
the total dollar amount included in the test period on a total system and Idaho-only
basis.
b.Please explain whether any costs indentified in (a) have been removed and the total
dollar amount removed from this or previous rate cases.
c.Please quantify total cost savings from the initiative included in the test period (actual
results and/or pro formed into the case) and identify where these costs are accounted
for.
RESPONSE:
(a)See Avista's response to Staff_PR_035 for the total cost of the Performance Excellence
Initiative by year, to-date.
(b)As discussed in Company witness Ms. Andrews' testimony in Docket Nos.
AVU-E- 11-0 1/AVU-G- 11-01 the Company removed Idaho's portion of the consulting
services from the Company's 2010 test period totaling $769,549 (ID electric) and $194,073
(ID natural gas) in order to reduce the revenue requirement in that case and the impact on
customers of the Company's general rate request. However, in the Company's current general
rate request, the Company has not removed from the 12 months-ending 6/30/2012 test period
Idaho's portion of these consulting services. Due to the long-term benefits customers will
receive from avoided costs, etc. (see (c) below) the Company believes it is appropriate to
recover the costs of the Performance Excellence Initiative producing the benefits customers
will receive. Although the Company has not adjusted its test period expenses for this initiative,
the Company would not be opposed to amortizing these expenses over a period of time, i.e.
three-years.
(c)Performance Excellence has been based largely on building capabilities and process
efficiencies to generate value with a 3-5 year timeframe in mind. Value shows up in different
ways - short-term cost savings, long term lower costs relative to the expected trend for
customers (based on avoided costs), and better customer service. Wherever financial value is
being realized it is being re-deployed to off-set other costs and to fund projects that would
otherwise either not be done or would be additive to customer cost pressures (i.e. fleet
reduction and supply chain as referenced in Company Witness Kopczynski, Di, pgs. 13 - 15).
Page 1 of
Please see Staff PR 157 Attachment A "Performance Excellence Value Tracking." The value
represented in the attachment includes avoided costs, efficiencies with benefits redeployed in
the utility, net present value of-long-lived asset programs, re-invested sourcing benefits and
power supply cost reductions. Some examples in 3 of the categories are as follows:
• Efficiencies and better customer service
o First visit resolution - call ahead to customers, avoided unproductive trips etc.
• Long-term avoided cost savings based on leveraging asset management capabilities
to change how we manage assets and coordinate asset management programs.
• Asset management - gas meter program, plastic pipe replacement etc.
• Electric distribution feeder asset management program coordination - 1 trip to
the pole by using an integrated approach to manage asset management
programs.
• Identify items that resulted in direct cost savings where the savings was re-invested
to off-set other costs increases or to fund projects.
o Supply Chain Category Management strategy resulted in savings on
distribution transformers that was re-deployed for the Capital Budget
Committee to use on other projects. (There are a number of examples in this
category - including Fleet sourcing project.)
o Enterprise Technology (ET) rebalanced department labor resulting in a shift of
employees from contractors to Avista that resulted in a direct cost savings
spread across O&M and capital. This savings was re-deployed by the ET group
to off-set other new expenditures.
Page 2 of 2
2011 O&M Capital Cost to Net
Target (3) Embedded Deployable Embedded Deployable Maintain (1) Value
1,400 40 1,360
1,178 32 1,146
1,100 1,100
2,000 1,400 - 2,278 - 72 3,606
300 1,845 900 2,745
300 1,845 - 900 - - 2,745
250 -
ion -
250 - - - - - -
168 168
466 466
386 323 710
18 18
104 104
198 198
5 5
gram 132 132
541 485 1,239 312 1,953
597 2,996 3,593
4,016 1,896 - 4,420 1,344 312 7,348
29 44 7 52
100 191 50 241
140 88 139 227
100 34 43 77
369 358 - 239 - - 597
6,935 5,498 - 7,837 1,344 384 14,295
Workstream
Asset Management (2)
Aldyl A Pipe Replace
DFMP Work Integration
Gas Mtr Changes AC 1000
x Total AM
Enterprise Technology
Demand Management
Sourcing
x Total ET
Energy Resources
Gas costs through PGA
Hydro/Generation Optimizal
LTSA Renegotiation
x Total Energy Resources
Supply Chain
Fleet Boom Inspections
Fleet Vehicles
Gas Construction
Gas PE Pipe
Meter Set Assemblies
Phone Services
Repetitive Material
Transformer Change Out Pr'
Transformers
Value Opportunity
x Total SC
Work & Resource Mgmt
Extended Shift
First Visit Resolution
Fleet Utilization
Prompt Start
x Total W&RM
Total PE Initiatives
Value represented above includes avoided costs, efficiencies with benefits redeployed in the utility, net present value of long-lived asset programs, re-invested
sourcing benefits and power supply cost reductions
(1)Represents incremental new costs (i.e. new employees, software, etc.)
(2)Represents the NPV and avoided cost which will occur beyond three years V
(3)Total for 2011 - $6.91M is gross amount; does not include cost to maintain
Staff _PR157 Attachment A.xlsx 2011 Page 19f 3
O&M (4) Capital (4) cost to C 2012 '
Target (3) Embedded Deployable Embedded Deployable Maintain (I)
- - 2,268 - *
1,500 - - 2,256 - -
1,400 560 - 828 1,020 -
2,000 626 - 417 - -
- 3,400 1,176 - 1,245 1,020
500 169 - - - -
750 - - - 515 -
- 1,322 - -
- 905 - - -
1.253 - 69 - - -
- 2,603 169 2,296 - 515
132 - - - -
- - 400 - -
492 - 504 - -
- - 26 - -
- - 351 -
- - - 125
255 - - - -
1,316 - -
216 - - - -
395 - 406 1,051 287
680 - 4,255 83 -
164 - 55 - -
22 - 32 - -
11 - 172 - -
nt 141 - - - -
- - 40 - 4
18 - - - -
290 2,527 - 7,558 1,258
(1.162) - (2.157) (691)
6,300 1,376 - 5,401 667 290
29 (27) - (80) - -
60 411 - 1-60 - -
368 195 - 209 - -
75 175 - 323 - -
- 632 754 - 602 -
in 000's
Workstream
Asset Management (2)
WPM Inventory
ERT Replacement Planning
x Total AM
Enterprise Technology
Demand Management
Sourcing
x Total ET
Energy Resources (4)
Hydro/Generation Optimization
LTSA Renegotiation
AGC Optimization
Gas Storage - Fortis
NOVA Transport Contracts
Other
x Total Energy Resources
Supply Chain
Fleet Boom Inspections
Fleet Vehicles
Gas Construction
Gas PE Pipe
IT HW
Meter Set Assemblies
Phone Services
Project Compass
Repetitive Material
Transformers
Value Opportunity
Vag Management
Wood Poles
Tax Value
BPI - Small Tools Process lmprovem
BPI - Contracting (Quarterly)
BPI - P0 Processing (Quarterly)
Supply Chain subtotal
Supply Chain run rate offset (5)
.xt Total Supply Chain (5)
Work & Resource Mgmt
Extended Shift
First Visit Resolution
Fleet Utilization
Prompt Start
• TotalW&RM
Other
E Bill Participation
Project Compass - SW Licenses
Project Compass
X
3,474 2,296 9 ,504 2,102 290 , Total PE Initiatives 14,234
Incentive - Achieve 90% 12,811
Value represented above Includes avoided costs, efficiencies with benefits redeployed in the utility, net present value of long-lived asset
programs, re-invested sourcing benefits and power supply cost reductions
lie. Represents incremental new costs e. new employees, software, etc.)
(2)Represents the NPV and avoided cost which will occur beyond three years
(3)Total for 2012- $14.1M is gross amount does not Include cost to maintain
(4)Energy Resources - value goes through the ERM or PGA
(5)Supply Chain must achieve a run rate of $10.3M ($4.OM from 2011 • $6.3M from 2012) to achieve 201 Zs target.
For 2012, Supply Chain value is not reflected until $4M to attained.
Staff—PR-157 Attachment A.xtsx 2012 Page 2 of 3
Workstream
Asset Management (2)
Total PE Initiatives
2013 O&M Capital Cost to Net
Target (3) Embedded Deployable Embedded Deployable Maintain (1) Value
1,500 - - - - - -
1,000
800
1,800 - - - - - -
1,500 -
1,500
541
3,541 - - - - - -
gram -
4,938 - - - - - -
40 -
147 -
70 -
257 - - - - - -
155
12,191 - - - - - -
x Total AM
Enterprise Technology
Demand Management
Sourcing
x Total ET
Energy Resources
Hydro/Generation Optimizal
LTSA Renegotiation
Other
x Total Energy Resources
Supply Chain
Fleet Boom Inspections
Fleet Vehicles
Gas Construction
• Gas PE Pipe
Meter Set Assemblies
Phone Services
Repetitive Material
Transformer Change Out Pr(
Transformers
Value Opportunity
x Total Sc
Work & Resource Mgmt
Extended Shift
First Visit Resolution
Fleet Utilization
Prompt Start
x Total W&RM
Other
x Customer Service
Value represented above includes avoided costs, efficiencies with benefits redeployed in the utility, net present value of long-lived asset programs, re-invested
sourcing benefits and power supply cost reductions
(1)Represents incremental new costs (i.e. new employees, software, etc.)
(2)Represents the NPV and avoided cost which will occur beyond three years
(3)Total for 2013- $12.2M is gross amount; does not include cost to maintain
Staff—PR-157 Attachment A.xlsx 2013 Page 3 of 3
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 01/04/2013
AVU-E-12-08 / AVU-G-12-07 WITNESS: Don Kopczynski
IPUC RESPONDER: Paul Kimball
Production Request DEPARTMENT: Rates & Tariff Admin.
Staff-158 TELEPHONE: [phone]
REQUEST:
Please provide all documents/reports prepared by Avista and Booz & Co. related to the
Performance Excellence Initiative.
RESPONSE:
Please see Avista's response 1 58C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 3 1.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
The work was a collaboration between Booz & Co. and Avista. Please see Staff _PR_158C
Confidential Attachment A (Project charter), Staff _PR_i 58C Confidential Attachment B
(Performance Excellence July 2010 presentation), Staff_PR_158C Confidential Attachment C
(Performance Excellence November 2010 presentation) and Staff _PR_158C Confidential
Attachment D (Performance Excellence November 2010 presentation). Please also see the
documents representative of the Phase 1 & 2 work provided in Staff_PR_158C Confidential
Attachment E and Staff _PR-1 58C Confidential Attachment F.
Due to the voluminous nature of the data in attachments C & D, it is being provided in electronic
format only.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 01/04/2013
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Don Kopczynski
REQUESTER: IPUC RESPONDER: Paul Kimball
TYPE: Production Request DEPARTMENT: Rates & Tariff Admin.
REQUEST NO.: Staff€ 159 TELEPHONE: [phone]
REQUEST:
To the extent not previously provided, please provide the following regarding the consultant
retained to independently look at opportunities for Avista to work more efficiently:
• Engagement letter regarding all work performed from inception of engagement to date;
• Contract(s) for all services performed from inception of engagement to date;
• All draft and final reports/studies produced by the consultant;
• A listing of all efforts and process changes undertaken as a result of any
recommendations made, stating with specificity what was undertaken and when
implementation occurred. Please include within your response the cost and/or savings
associated with these changes by FERC account;
• Any follow up studies or reports prepared that analyze or describe/summarize the
results of changes/process improvements undertaken;
F. Total cost for the consultant charged to electric operations, gas operations, and
non-utility operations by month by FERC account for the period since inception of the
engagement to date; and
Rate treatment currently, or previously, being requested or previously afforded such
consultant costs.
a.Please see Staff _PR_ 159 Attachment A
b.Please see Staff _PR_i 59 Attachment B.
c.Please see Avista' s response to Staff_PR_i 58
d.Please see Staff _PR_i 59 Attachment C. Please note: the requested information
of cost and/or savings associated with process changes were not separately
tracked and/or are not available by FERC account.
e.Please see Staff_PR_i 59 Attachment D
f.Please see Avista's response to Staff_PR_035
g.Please see Avista's response to Staff_PR_i 57 (b).
Avitfl Corp. 47vIIsT Ean 1411 .1n Ave.
Spokane, WA 99202
CONSULTING SERVICES AGREEMENT
This Consulting, Services Agreement ("Agreement") is entered into between Avista Corporation, a
Washington corporation (Avista) and Boos & Company (N.A.) Inc a Delaware Corporation ("Consultant"), individual ly a 'Party and collectively the "Parties"
PURPOSE AND BACKGROUND
.Avista desires to engage, Consultant to fUrnish management consulting services in connection with
Avista's Performance Excellence Program (the "Services!*). Consultant desires to provide the requested
Services in return for equitable compensation, subject to the terms Of this Agreement.
ACCORDINGLY THE PARTIES AGREE TO THE FOLLOWING:
1.0 Statement of Werk The Parties will mutually discuss and agree, in writing, to specific projects
and initiatives where Consultant shall fiiriiish the services.
2.0 Standard of Performance. Consultant shall provide the Services in a timely, good and
professional manner in accordance with the standard of care and skill ordinarily recognized under similar
circumstances to be used by a provider of like services at the time the Services are provided Consultant
shall, at Its e.xpen promptly and properly correct any Services found not In compliance with the
requirements of this Agreement or the applicable Statement of Work Consultant represents that it is
properly licensed, equipped, organized and financed to perform the Services in accordance with this
Agreement.
3,0 Term of Agreement. This Agreement will become effective when executed by both Parties and
remain in effect until December 31 • 2011.
4.0 Termination.
(:r) Iitlicr, Part) may terminate this Agreement at any time upon 30 days" prior written. 11011cc. Upon
receipt of a notice of termination. Consultant will, except as otherwise directed by A ista. immediately
slop performing the Ser ices IC) the extent specified in such notice.
(b) In the e cut A isia terminates this Agreement. Avis will compensate Consultant for Services
properly performed up to the dale of ternimalion. In no event will Consultant he entitled to anticipated
profits or payments on Services not performed because of such termination.
5.0 Compensation. Consultant shall be compensated for each project as agreed to by the Parties in
writing. Consultant shall submit to A ista. within 20 days after the end of each calendar month.
Consultant's invoice for the compensation payable under this Agreement for the Services actually
performed during each month. Each ol'Consultant's invoices shall set forth in a detailed and clear manner
a complete zdescription of the Services provided, the number of employee-hours invoiced for such
Services and the dates on which such. Services were performed for any Services billed on a time and
materials basis and any costs or expenses which are to be reimbursed by Avista.
6.0 Avista's Business Rcpi'eseiil*tiiu. Avista's Business RcprcSCn:tMive has the authority to hind
Av in all twitters in ennecUon v dt the ( on%Iltlant p&rformdnce under this Agreement requiring
B'OVI riii or poth. Avisth ltsinc ReprescUtivc for the purpoe
of hi A xesnneln is Rrin (vs
(tisuiting e ims Agrtrnvnt t'ge 104 REV 4131112011
R W43 Page 1 of 4
Avista Corp.
East 1411 Mission Ave. tIVISTA
Spokane WA 99202
1.0 Confidentiality. Avista deems all information provided by Avista to Consultant, and developed or
gathered by Consultant in connection with the Services, as Avista confidential infonnation. Consultant
shall not disclose such confidential information to third parties unless authorized to do so by Avista in
writing or unless required by law.
7.1 Confidential information expressly includes proprietary information about Avista's
financial position, pricing policy, business policies and practices, staffing policies, technical
information, and vendor contract terms and pricing infbrmation that Avista is obligated to treat as
confidential. Confidential Information disclosed to or accessed by any employee, agent or
representative of Consultant will be deemed to have been disclosed to the Consultant.
7.2 The foregoing confidentiality obligations do not apply to information: (I) known to
Consultant prior to receiving the same directly or indirectly from Avista. in connection With the
Services; (ii) that is in the public domain at the time of disclosure by Consultant or (iii) the
information is received by Consultant from a third Party 'who did not receive the same directly or
indirectly from Avista.
7.3 Avista undierstands that in performing the Services Consultant will be using publicly
available information and information in reports and other material provided by others, including
information provided by Avista; Consultant does not assume responsibility for and may rely,
without independent verification, on the accuracy and completeness of such information.
Consultant shall retain all rights to concepts, approaches, methodologies, models, tools, generic
industry information, knowledge and experience possessed by Consultant prior to or acquired by
it during the performance of the Services. Avista shall have a royalty-free, perpetual right to use
for its internal business purposes all work products delivered to Avisla under the Agreement.
Avista understands and agrees that all reports, analyses or other material provided by Consultant
are solely for Avista's information and use in connection with the assignment and that no third
party may rely on Our work product
8.0 Background Check Requirements. Consultant employees assigned to perform setVicOs under
this Agreement requiring unescOrted access to Avista's premises (collectively, "Assjgned Employees")
shall have cleared a background check compiled by a third-party service provider acceptable to Avista
Such check shall include a social security number verification and provide confirmation that the
Employee has not been convicted of a felony within the past seven years. Consultant shall provide written
certification of Consultant's compliance with this background check requirement by submitting such
certification for each Assigned Employee to Avista via a form specified by Avista. Assigned Employees
shall obtain an identification badge from Avista's Facilities Management office prior to performing any
on-site Services under this Agreement ldentifieatin badges must be displayed at all times during the
performance of the Services and must be returned to Avista upon the departure of the Employee from
Avista's.facility or site.
9.0 insurance R 4uireinents Consultant warrants and represents that it has adequate insurance for
the protection of itself, its employees and agents while carrying out its respomibilities. under the
provisions of this Agreement.
10,0 Independent Contractor. The Parties intend that an independent contractor relationship will be
cre1cd beiwecn them by this Agreement. Conctltant personnel performing serices under this Agreement
''. It no h contyntd to tti p1yC etI' Avita: Consultant shill be '•olclv responsthk flw payment of'
r">it> hr •h vtnnt f tiiifl
,Or ', it
Cuusulting Servke irercnt Pe 2 ot'4 lUV I20I20 I
Page 2 of 4
Avuta Corp. 4IA7VIST 10 1411 Mission Ave.
Spokane, WA 99202
on behalf of Consultant's personnel in connection with the performance of the Services; such payments
are the responsibility of Consultant. Consultant shall be free of any control by .Avista in selecting the
means, methods, techniques and procedures of work and safety precautions applicable to the Services
furnished. This Agreement will not render Consultant a partner or joint venturer with Avista. Consultant
has no authority to represent: Avista in any capacity or assume or create any obligation in The name of or
on behalf of Avista, except as expressly authorized in this Agreement.
11.0 Mutual Indemnification; Limitation of Liability. Subject to applicable law, each Party shall
indemnify, and defend if requested, the other Party, their directors, officers, employees, and agents
(collectively, the 'lndemnitied Party") from all third party claims, demands, suits, losses, costs, and
damages of every kind (collectively, "Lose') and description, including attonieys fees, brought or made
against or incurred by the Indemnified Party resulting from, arising out o1 or in any way connected with
any act, omission, fault, or negligence of the indemnifying Party, its employees, agents, representatives,
or subcontractors in the performance or nonperformance of such Party's obligations under this
Agreement. in the event that any such Loss is caused by the negligence of both Parties, including their
employees, agents, suppliers and subcontractors, the Loss will be borne by the Parties in the proportion
that their, respective negligence bears to the total negligence causing the Loss. Neither party shall have
any liability with respect to its obligations under this Agreement or otherwise for consequential,
incidental or punitive damages even if it has been advised of the possibility of such damages. in any
event, the liability of either party to the other for any reason and upon any cause of action shall be limited
to the amount paid to Consultant by Avista hereunder for the Statement of Work giving rise to the claim.
This limitation applies to all causes of action in the aggregate, including without limitation to breach of
contract, breach of warranty, negligence, strict liability, misrepresentations, and other torts.
12.0 Assignment or Subcontracting. Consultant shall not (by contract, operation of law or
otherwise) assign or subcontract this Agreement or any right or interest in this Agreement.
13.0 Severability. The invalidity or imenrorceability of any provisIon of this Agreement will not
affect the other provisions, and this Agreement will be construed in all respects as if such invalid or
unenforceable provisions were omitted.
14.0 No Waiver. The failure of Avita to insist upon or enforce Strict performance by Consultant of
any of the provisions of this Agreement or to exercise any rights under this Agreement will not be
construed as a waiver or relinquishment to any extent of Avista's right to assert or rely upon any such
Provisions or rights in that or any other instance; rather,. the same will be and remain in lll force and
effect.
15.0 Entire Agreement. This Agreement contains the entire understanding between the Parties on its
subject matter and supersedes any prior agreements between the Parties. Any representation, promise,
modification, or amendment to this Agreement will not be binding upon either Party unless reduced to
writing and signed on behalf of Avista and the Consultant by their duly authorized representatives.
16.0 Counterparts. This Agreement and any ether related documents, when executed and delivered,
will be. an original, but all such counterparts will constitute one and the same instrument. As used in this
Section, the term counterparts" includes full copies of such instruments signed and delivered by w-mail
or facsimile transmission, as well as photocopies of such facsimile transmissions.
O it vviU hc i t'r,rcmt,d, ennsirtied nnd enl'rcd in all repc1s in
; t.....
('*nuina I.Srroces Agrcvqncnm Page 3 of 4 fllw 4/20/2011
Page 3 of 4
AstaCerp. Ainsma EaaI4t I MüskMI Age,
Sókne,WA992O2
ThLs Agreement has been executed by each Party's authorized representative on the dates set forth
below.
Avista Corporation
BY: (2iL
(Signature)
Dennis Vermi i<ni. President
(Printed Vame, Title)
(Date Signed)
Booz & Company (N.A.) Inc.
BY:
(Signature)
Earl Simpkins, Vice President
(Printed Nanie Title)
42O1l
(Date Signed)
Consulting ServIcesAgreement Page 4or4 REV 4120/2011
AvIsta Cntrat NO. R-M243
Staff—PR-1 59 Attachment B Page 4 of 4
Mr. Scott Morris April 23,2810
Ch4innari4 President
and Chief Executive Officer
Avista Corp.
1.411 E. Mission
Spokane, WA 99220
Re: Performance Excellence
Thank you for the opportunity to assist Avista Utilities (the Company) with its
Performance Excellence program We have prepared this engagement letter to
reflect the scope of our support per conversations with you and other members of
your team regarding the nature of this effort. This proposal contains three
sections:
• Avista's Objectives
• Proposed Approach
• Staffing, Timing,and Fees
AVISTA'S OBJECTIVES
Company (N.A.)
Based on our conversations and information exchanged around the need to 901 Main Sirnet
demonstrate Avista is doing everything it can to contain costs and improve Suite 6500
performance, we understand the Company wishes to engage in a process to Dallas, TX 7
enhance performance across all elements of the business We understand that Trt 1214 746 65M
Avista has communicated six primary foundational elements that are key Fax [phone]
cornerstones of this performance enhancement program.. www,b oaz.cnni
1.The External and Internal Environment
2.Our Approach to Performance
3.Our Commitment to Integrity
4.Our Desire to Leverage Thni8
5.Our Focus on Employee Engagement
6.Our History of innovation
External and Internal Environment - Externally, the utilities industry is shifting
in several ways policies, regulatory mandates, and compliance requirements are
Staff—PR-1 59 Attachment A Page 1 of 77
2 of 12
all influencing customer expectations, customer behaviors, and regulatory
scrutiny. Additionally, more new entrants have been exploring ways to enter the
market (e.g., Google) and could potentially influence the future regulatory,
competitive, and customer environment. Against this backdrop of external
factors internally, the Company's capabilities must align with and adapt to the
changing external environment. Finally, decisions concerning investments and
the magnitude of potential capital programs in today's market environment
(higher cost of debt, higher commodity prices, etc.) will continue to put pressure
on rates.
Approach to Performance - As a result of operating in a dynamic and changing
market, it is necessary to review existing strategies, processes, operating models,
organization structures and capabilities to ensure they are appropriately adapted
and flexible enough to fit the current and future operating environments. This
type of reinvention covers many facets of the business (employees, processes,
investment decisions, goals, and strategies)
Commitment to Integrity - As part of its values, the Company is committed to
real and transparent communication within the enterprise and in events where
transitions are required. In addition, the Company is committed to providing
effective transitions for employees.
Leverage Timing - Multiple factors contribute to the opportunity for the
Company to take advantage of the industry situation. For example, the Company
has many upcoming retirements that will cause Avista to think about filling
positions differently and reinvent its business. Additionally, this situation will
create an opportunity for the Company to evaluate how and why work is
performed as it considers backfilling and replacing retiring employees.
Employee Engagement - Avista received high scores from employees as result
of a recent culture survey, however, the Company remains committed to
continuous improvement and is committed to improving these results. In
particular, the Company is investigating approaches to link individual and
business performance in ways that are most meaningful to its employees.
Additionally, the Company plans to leverage the knowledge, experience and
input of front line employees as it enhances performance since they are "closest to
how the work gets done!' and haveinvaluable insights.
History of Innovation The Company acknowledges a historical strength in its
focus on improvement and innovation. AVista plans to draw on its history of
innovation to help the Company face the new challenges brought on by the
external environment and move it forward through the performance enhancement
program.
Accordingly, the Company is thus faced with addressing a number of key
questions to support this challenge:
• Is our operating model responsive to our current business needs?
• Are we effectively structured to execute within this operating model?
• Have we identified the future challenges to our business?
• What changes to our business are required to respond to these challenges?
Staff—PR-1 59 Attachment A Page 2 of 77
3of 12
• Do we understand and emphasize productivity in the business?
• Are our business processes efficient and effective?
• How do these business processes compare to leading practices?
• Is our technology architecture fully integrated and aligned?
• Have we defined our workforce requirements for the future?
• Are we realizing the full value of the capital being deployed in the
business?
• Do we capture the available value from our vendor relationships?
Succinctly stated, the above questions are focused on whether Avista can further
improve its performance and future positioning. These elements form, the context
under which we have defined the scope of this project and our approach to
executing this assignment
PROPOSED APPROACH
The Company wishes to conduct a comprehensive review of the overall corporate
functions and utility operations to evaluate the effectiveness of current
performance and identify those areas which present opportunities for future
improvement. Our approach will help validate those areas in which the
Company is performing well and identify those priority areas where tangible
benefits are available related to the operating model core function execution
support services value and the deployment of resources (e.g. capital, labor,
contractors). ThEs focus of this assignment will be on identifying where and how
current operations can be enhanced and particularly how future operating
requirements upon the business will need to be reflected. Our approach will
capitalize on the previously completed A&G Cost Assessment (2007), accelerating
our ramp-up speed and reducing the total professional fees associated with our
engagement. While we will leverage this prior work, certain elements will need to
be updated to support the current effort.
Our proposed approach is broken into two phases and incorporates several steps
in each phase as presented below-
Staff-PR-1 59 Attachment A Page 3 of 77
4 of 12
Project Approach
Pwpoa. Estabb pedonnaCap" y and_ 1sn èed pacew *uwS and tecbnOlo
IiasøiWia sad idy sad pdodiiie asWdHpSr Wow*mnis to owooft" I090JnA%1SI5
we xden and h ni5on in Raw 2 in pio.tIy business sownwft denlihed In
• Estabifshmenl of basefinos • Designs for lmpnived effectiveness
• Definition of perfoimanca Position • Ousnifficaflon of cçipotlunhty poienflsi
• Assessment of capabilities hnplementat$on plans and sequence
• idanifficatfon of hicih priority areas • Change leedersh plan -1- —]
ProU
Phase 1 will consist of a 10-12 week diagnostic to be performed by Ilooz &
Company and supported by selected Avista resources focused on analyzing all
segments of the business and prioritizing potential opportunity areas for deeper
dives In phase 2. The Business Units/Processes are examples and will be more
definitively identified in Phase I.
Phase 1 consists of three steps as described below,
Phase b Overall Assessment
•
Oblectives
• s
Ai 1silSS 77— • o_o bwWar
els*si.& •••41_.l•I _____ _____ • -
• r501 •SIctWd
• A Idlpaturnaee DSe *m5na1Y coai.i*nslti • . ati
Key •&AIMIS OW VWWQ nCde • SWIeinSIM •
Deiveabla. y. aiuri si5 5 - t5 d fld - - Caussi sed
nu buctwe, - co . -
sdflfl en. - cup.s n.s1e*ct5an - kspi =0 aIldi qiaae
- typtesErMiI$.n.g StigUyflI tarik - Pre$enódoaddate
ti5iitiMkt*it vaIUeiS* --Vwme
• • teóa,iuItstW.ga -
---I - -Fad. -

DOWP NO

- Enatàg e,. tadnobgy
- cIatwna reqnitenents - Tewatdg'1uøiPv5 Cere ad eeleaSp(Cea$ees
--I - -
As part of this analysis, we will undertake a variety of focused analyses on the
existing operations of the business. These analyses will address: the current
ft
Staff—PR-1 59 Attachment A Page 4 of 77
Outfineof "Btueprtnr Deøverabes
• - -
Key flnCtpl55I elements
Key busà*Ss ptttGs - Key ps*wmance oulcomes - D.r55d pedDrmaaGe levels • Oae og Model - Ei y model
* C*P5I*I prccs.sMadlen - /
C.bIpvredelIon(diivefy model)
-
5o1 12
operating model; the current organization design; existing process design and
execution; future changes to the business; relative positioning to leading practices
available within the industry; opportunities for business improvement;
requirements for implementing. business changes, and; expected benefits from
operational enhancement. Our approach is designed to develop an operating
"blueprint" for the Company. This "blueprint" will address roles, processes
standards and priorities as they relate to positioning the Company to improve
current and improve future operations.
The purpose of establishing this "blueprint" is to define the requirements that
Avista will need to address as it seeks to improve operating performance and to
position the Company for continuing performance success in the future. This
-blueprint- structure Is presented below and is intended to provide a general
roadmap for the Company in pursuing next stage business changes and
improvement.
Operating Model "Blueprint'
As we baseline the organiza&n, ailess capabilities and define the future
blueprint in Phase 1, we will utM= mveral workshops to engage Avista
employees in the development of Phase 1 recommendations, validation of
opportunities and prioritization of opportunities to pursue in Phase 2,
Staff_PR_i 59 Attachment A Page 5 of 77
6 of 12
Phase 2 Design and Implementation
ME • 5b C"IM Pha*o I setfcm,nte • S mk5on bmd on
LeonL WOWOMind aad dWnimeron
In eeptfonnncø • ktte2rtIte • De iiØvsl kIatIOn
• Den i k" puT-dWOrv.,AM aw Own"$an mkMp
#M w,etoan nerai Esubko rr4dwW, tD ene oe*ec s,.. oc
r0a and VOGpOr#A$&s w4
• M pycowd •
•
3uk $wtebors • • nef ffialiix
Opsnittg Mod 4 • •DYWVIBW • •
The second phase will be a 12-14 week design and implementation phase where
we will work jointly with more highly staffed Avista teams to focus on detailed
design solidifying the business case and identifying implementation options The
primary output of the design phase will be the implementation roadmaps and
detailed initiative implementation plans to position the Company to execute
against the identified improvement opportunities.
Our workshop approach begins to describe our collaboration model. In an effort
to position Avista for long-term success, we intend to utilize a collaboration model
that will effectively engage Avista employees and position them for
implementation success. By involving Avista employees throughout each of the
two primary project phases (assessment and design and implementation), there is
less risk of inertia after the initial analyses and designs are completed and the
Company moves into the implementation phase. We expect to conduct a variety
of workshops for each functional area In Phase 1, culminating with a design and
implementation planning workshop at the end of the first liweek&
Staff—PR-1 59 Attachment A Page 6 of 77
7 of 12
Agenda
WV
-v1rLwTi
,I&AdMONObL. lift
qW
The primary purpose of the first workshop is to ensure the appropriate
foundation is established for the conduct of the assignment, the role of Avista
management in Phase I and 2 execution is affirmed and that management's
aspirations are defined We will also discuss the merits of a potential on-line
survey that could be utilized to obtain additional employee perspective.
After Obtaining input around the conduct of the assignment, our work in Phase 1
will continue through the second and third workshops which are Intended to
review the current state, assess survey and analyses results, validate process
performance findings, discuss and validate business challenges, confirm
capabilities and identify opportunities.
The final workshop will review the Phase 1 blueprint, confirm operating model
and organizational changes and prioritize opportunities for the Phase 2 deep dive.
Each workshop is intended to engage the relevant Avista functional team and
ensure they are participating in the development of the initial Phase I
opportunities The workshops will also be used to help shape the direction of the
effort heading into the detailed design that commences In Phase 2 of the effort.
The workshops are also a forum to ensure the Company's priorities are aligned
across the business and can help identify cross-functional issues that need to be
addressed as part of Phase 2.
Collaboration Model
Our overall collaboration model is built upon a joint team approach between Boor
& Company and Avista. This collaboration model leverages consultants to
challenge the organization based on our previous experiences and access to best
practices, while simultaneously leveraging the Avista team (where and when
appropriate) who possess deep institutional knowledge and operating
perspectives. When leveraged properly, this approach yields tremendous results
by combining the bet of external and institutional knowledge. Our collaboration
approach is illustrated below.
Joint Team Approach
Staff—PR-1 59 Attachment A Page 7 of 77
S of 12
Joint Town
I . 8*4afl for onnaiia cl a11 atcau
FmQLWtdkWUPW6R Iop*onnl
Pa.lictparits m
PeoflflG3 10
Eititêve lcmd WO AWdOly of tr*edxumenaIlon hata
vmI d#ces
............
Qmu wduulonmegs
-
Based on our large transformation program experience, we suggest a project
structure that provides the right level of oversight and involvement while not
overburdening the organization with unnecessary meetings and bureaucracy. We
strongly suggest having an Executive Steering Committee as a forum for the
senior officers to engage in the performance enhancement program. We also
suggest identifying a project manager for Phase 1 who can dedicate at least 2 days
per week to managing the day-to-day details of the project (this time is likely to be
spread out over multiple days in the week). Finally, in our experience we have
worked with a responsible officer Lead for each of the focus areas described in the
project structure below. This officer may identify an analysis lead The analysis
lead will help with. datagathexing, data interpretation and validate preliminary
results prior to the end-of-phase workshop.
Proposed Protect Structure
Staff—PR-1 59 Attachment A Page 8 of 77
90112
STAFFING, TIMING AND FEES
The work will be under the overall direction of Mr. Thomas J. Flaherty, a Senior
Partner and leader of our North American Utilities practice. He will be supported
by Mr. Earl Simpkins and Mt Matk Hoffman, Principals in our Utilities practice.
Additionally, 4 to staff and a number of senior and experienced subject matter
experts will be utilized to support the assignment along the suggested
preliminary focus areas Shown above in the proposed project structure.
As shown in thehigh-level timeline below, we propose two phases for the project
an initial diagnostic phase lasting approximately 1042 weeks, followed by a
more detailed design phase (lasting approximately I2-14 weeks). We anticipate a
early May start date and can streamline our on-boarding by sending out a data
request prior to the Official start date. This timeline reflects our prior experience
in the conduct of similar assignments and a quick assessment / diagnostic of
operations in Phase 1. This timeline is dependent upon timely response with
respect to the receipt of required data, access to necessary personnel, and decision
turnaround.
Staff—PR-1 59 Attachment A Page 9 of 77
10o112
Project Schedule Phase i
Additional details around Phase 2 will be developed as we hone in on the specific
opportunity areas to be pursued as part of the Phase 2 effort; however, we expect
the high-level activities to be timed and sequenced similar to what is shown
below.
Preliminary High-Level Project Schedule - Phase 2
- -.
I==INRIuIII.
• __
T - - - - — -
Staff—PR-1 59 Attachment A Page 10 of 77
It of 12
Professional fees for this effort are estimated to average approximately $250,000-
$275,000 per four week period, with certain periods potentially above or below
this average, depending on the stage of the project and the associated level of
intensity required. These fees reflect our standard weekly fee arrangements and
are based upon a 40 hour work week; however, in practice, our team typically
work'; approximately 55-60 hours per week which results in an effective —40%
discount to Avista. To acknowledge your desire for more certainty in our
estimate, we agree that our Phase 1 fees will not exceed $775,000 in any event and,
if less time input is required than this level, you will only be billed for this
amount. Phase 2 fees will be determined once the scope and redesign priorities are
finalized.
This estimate is based on the planned schedule above which reflects and assumes
timely response to our data, and access to personnel and timely decision making
related to the specific needs of the engagement If delays in these items are
experienced that are beyond our control, it could potentially impact our fee
estimate. If they occur, we will advise you of any potential fee impacts to jointly
determine the best mitigation options or solutions.
Reasonable out-of-pocket expenses for travel, lodging, graphics support, etc., are
billed at cost, and are expected to approximate 17- 20% percent of actual
professional fees incurred at our defined fee cap, before discounts.
To ensure the success of this effort and reduce the costs of execution, we request
that atleast one Avista resource dedicate a substantial amount of time to
supporting the team by facilitating interactions with the rest of the organization
supporting data collection, and reviewing emerging findings. We understand that
you are in the process of updating your internal benchmarkmg and that this will
be an activity conducted by Avista in support of Boz & Company.
As mentioned earlier, we recommend identifying internal resource leads
(responsible officer) for each of the primary transformation teams (e.g..,
transmission, customer service and marketing, corporate services, and workforce)
to interface with our team periodically throughout the assessment. We also
recommend that I additional internal resource be available, per team, on an as
needed basis for additional support and expertise, particularly in Phase 2 of the
transformation where the teams will go through the detailed design and
implementation activities working closely with an Avista team.
ooz & Company will devote its best professional efforts to this assignment All
findings, conclusions, and recommendations, will represent our best judgment
based on the information available at the time
We will submit our invoice monthly for our fees and reasonable expenses
incurred. Invoices are payable via electronic funds transfer to the following bank
account within .30 days of receipt by the appropriate contact at the Company to:
JP Morgan Chase Bank
ABA: 021-000-021
Account Number. 530-955-997
Staff—PR-1 59 Attachment A Page 11 of 77
12o112
We appreciate the opportunity to assist in this important undertaking, and look
forward to supporting you in this effort. Should you have any questions, please
do not hesitate to call me at (214) 7466553
Sincerely,
Booz & Company
Thomas J. Flaherty III
Senior Partner
MI
Avista Corp.
Name
Title :JIJ4VI 9 i225
Staff _PR_I 59 Attachment A Page 12 of 77
Performance Excellence
Additional Scope Elements Discussion
June 10, 2010
Staff—PR-1 59 Attachment A Page 13 of 77
The workshop schedule now reflects two workshops for all
teams, with most dates confirmed - some open items remain
], mom
•
0
6/21 180
•(uI
---------------------------------------6---— Adjustments
-
• _______
to workshops
made to
W21 -------- •
accommodate accommodate
desire to have
• • • • • 0 2workshops
• ------
each team; - timing relative • • . I • 0 to anticipated
6122 7/7 workstrearn
------------------------ timing evident
i••••i 1 0 0-6/10 --6/29 -
01 0 0 - Change 8/24 718 • ------------------- - •• ---------- --RfaIness------- ---------------- -------------------------- • Survey Sent fl -i • Org DNA 0 DNA Workplace Survey T&D Activity T&D Activity Worlplace Survey
Committee Survey Survey Survey Survey Cie Sent Complete 7113
Staff—PR-1 59 Attachment A Page 14 of 77
• Smaller scope
• Smaller scale (resources and budget)
Once segmented, the identified potential additional analysis
areas can be addressed during Phase I
• Strategic importance
• Focused analysis and interviews
• Integrate with Operations and Supply Chain hypotheses
• Quick analysis on footprint and potential consolidation options
• Risk considerations
• Analysis and interviews to support business objectives
• Covered in Energy Resources analysis
Staff_PR_i 59 Attachment A Page 15 of 77
The assessment can be done quickly by focusing on a few
critical activities to assess opportunities and identify impacts
Area Activity
Conduct direct report interviews
Review department business priorities
Review department performance metrics
Identify key risks
Identify process gaps
Identify potential opportunities
Review facilities data
Request additional data (if needed)
Conduct facilities analysis (locations)
Review facilities analysis with stakeholders
Modify analysis (if needed)
Quantify opportunity
Review financial impacts with stakeholders
Staff—PR-1 59 Attachment A Page 16 of 77
Workshop extensions and new scope areas will have small
incremental project budget impact
Team Description Fee Impact
. ,, • 2 workshop not scheduled $11-13k JLtihL... • I week impact
Finance & • 2nd workshop 7/7
I' $11-13k
(s.1IIiH1ie • 2 /2 week impact
Hum an 2 workshop 6/29 $5-6k Resources • 2 week impact
Information • 2nd workshop 7/8 $11-1 3k
Technology • 2 1,4week impact
Rates, Facilities • New scope elements $27-30k
_ • Cursory analysis to be completed
$65-751k
Staff _PR_i 59 Attachment A Page 17 of 77
Mr. Scott Morris
Chairman, President
and Chief Executive Officer
Avista Corp.
1411 E. Mission
Spokane, WA 99220
August 10, 2010
Re: Performance Excellence Phase 2
Dear Scott
Thank you for the opportunity to continue to assist Avista Utilities (the Company)
with Phase 2 of its Performance Excellence Initiative. We have prepared this
engagement letter to reflect the scope of our support per conversations with you
and other members of your team regarding the nature of this effort. This proposal
contains three sections:
• Avista's Objectives
• Proposed Approach
• Staffing, Timing, and Fees
AVISTA'S OBJECTIVES
Booz & Company (N.A.) Inc.
Based on our conversations and information exchanged after the Phase 1 report- 901 Main StreetSuite
out, we understand Avista's Phase 2 objectives to center around a few discrete 6500Dallas, DC 75202
areas of support. We understand the Company's objectives for Booz & Company Tel [phone]
in Phase 2 are to assist Avista Phase 2 teams with the design and implementation Fax [phone]
of a discrete set of opportunities identified in Phase 1 www.booz.com
1.Asset Management
2.Work and Resource Management
3.Supply Chain
4.Enterprise Technology Business Alignment
Additional Phase 2 elements to be contemplated for 2011 will be covered in a
separate letter after Phase 2a is completed in 2010. These would include
Integrated Planning, Capital Management and Performance Management and the
Phase 2a letter would similarly define the scope, approach and liming of
execution.
Staff—PR-1 59 Attachment A Page 18 of 77
2 of 8
The plans for these scope elements are included in Attachment A to this letter.
Each plan contains a high-level approach and workplan as well as specific
activities and objectives required to support the execution of the workstream in
Phase 2.
PROPOSED APPROACH
Following the comprehensive review performed in Phase 1, the Company wishes
to proceed into the detailed design and implementation phase of the effort. Our
focus in this phase will be to pursue the opportunity in the identified areas, design
the relevant operating model for performance, develop detailed designs for new
processes and enhancements to existing processes, and develop the
implementation roadmap required to successfully execute against the opportunity
starting in 2010 and 2011.
The focus of this phase of the assignment will be on identifying the specific details
to implement and understanding how current operations can be enhanced,
particularly how future operating requirements upon the business will need to be
reflected.
Our proposed approach is a continuation of our two-phase approach described in
the previous letter regarding Phase 1. It is broken into two phases and
incorporates several steps in each phase as presented below:
Project Approach
Purpose Establish performance, capability and operational Design required process, structure and technology
baseline and identify and prioritize areas for deeper Improvements to competitively position Avista
dive for design and implementation in Phase 2 in priority business segments identified in Phase I
Key
Outcomes
Scope
Elements
Business
Units! Processes
• Establishment of baselines
• Definition of performance position
• Assessment of capabilities
• Identification of high priority areas
• Designs for improved effectiveness
• Quantification of opportunity potential
• Implementation plans and sequence
• Change leadership plan
Ooeratina Model
Governance j
Organization )
Caprbiitles ]
Workplace I
Technology
Enemy Supply and Fuels Planning and Performance
Transmission & Distribution Asset Management and Sourcing
Customer Service and Marketing Stakeholder Management
Operating Functions uuppon 1-uncrions
Phase 2 will consist of a number of steps that seek to prepare Avista for
implementation of the initiatives, primarily focused on strategic alignment,
detailed design and implementation planning.
Staff—PR-1 59 Attachment A Page 19 of 77
3 of 8
Phase 2: Key Activities - Design and Implementation
Phase 2 Detailed Approach
• Implementation
program design
and management
Detail and Align the Organization with the Business and • implementation GovernanceModel priorities and
— Decision Rights Implementation - Organization and Interfaces resource - Leadership Leadership Alignment Assess management
Perforr • Develop or Refine Market and Operating Strategies, as requked • Performance Caiaabilities_A• Conduct Selective Root Cause Analytics, e.g., tracking - Transaction Analysis Change - Demand DnverAnalyas managementand Develop Detailed Process Profiles and Performance Baselines communications
• Define Detailed Process, Technical and Organizational Requirements
• Develop Supporting Materiel and Targeted Performance Outcomes
Th.i...r nee IEnable iimgiju Definition and ID esign _
As part of the design phase, we will evaluate the details of the organizational
governance and operating model changes required to successfully implement
opportunities identified during Phase 1. We will also help the teams conduct
more detailed analysis (where necessary) to adequately design new processes
during Phase 2. Finally, we will advise the teams so they can develop an
implementation roadmap that provides adequate detail from which Avista team
members can further pursue performance enhancement in Phase 3.
We expect to conduct the second phase between August and October, 2010. We
also anticipate continuing our joint working team arrangement that was used
during Phase 1. We anticipate having more dedicated Avista resources during
Phase 2 to focus on the detailed design and to help us manage our scope of work
and associated professional fees.
Avista team members will have primary responsibility for developing Phase 2
deliverables, with preparation support from Booz & Company. We will, of
course, outline the expected contents for the specific deliverables and provide the
necessary templates for discussion scope, presentation format, information
capture, etc. As any individual team requires additional assistance with
deliverable preparation we will, of course, support them as required.
The primary output of the design phase will be the implementation roadmaps and
detailed initiative implementation plans to position the Company to execute
against the identified improvement opportunities in 2010 and 2011. In addition,
specific areas of value capture will be pursued during Phase 2, with the intent to
affirm and begin to realize this value in selected areas, particularly supply chain
and enterprise technology.
Staff_PR_i 59 Attachment A Page 20 of 77
4 of 8
Phase 2- Approach Details
Phase 2— Preliminary Program Approach
July Atigust September i October
A A Steering A A Steering
Committee
• Teem Workshops Committee
Workshop Team htmrkshops I Workshop #6 _________________ (#3) (#4) • -Integrate commitments to
:strategic ens
• Establish mechanism to
ensure benefits altalnm at
p,ias. 2 Deliverables • ModIfy operating odet • Integrated process II • Developclarttya undroles model design
and responsibilih s Operatingmodeldeslps • Desigegoverna rmodels • Integrated
FilSOl DesIgn Implementation plan
• Revisions Organization _________ ___________ architecture with • Fncusedana lcsand • Final edeslgnofiltfor staffing allocation and process asse smenls purr se processes benefds targets • Preliminary" process/ • Fine eprocess Businesscose operating dc gna taco mendatiorm Performance • Issuesdiscus ion/resolution • Fins
man
eperfonnaume
gement model managementmoctsl
Develop detailed in
plans for each initial
High level roadmap
Workshops
We will utilize the same workshop approach we used in Phase 1 to inform Avista
employees and management of the Performance Excellence Initiative's progress.
Given the nature of this Phase of the project, we expect dialogs to happen much
more frequently between the Phase 2 teams and the responsible officers. As a
result, we anticipate having workshops during Phase 2 to help integrate content,
and provide feedback, guidance, and direction for the implementation teams.
The primary purpose of the workshops in Phase 2 is to ensure the appropriate
progress is being made by each of the teams and, following that workshop, to
allow the Steering Committee to review the interim analysis and output.
Workshops will also be used to provide adequate guidance around the specific
implementation actions and allow for the Steering Committee to provide any
additional input.
Collaboration Model
Our Phase 2 collaboration model is built upon the same foundation as our Phase 1
model, with the understanding that more Avista employees will beparticipating
in Phase 2. This collaboration model leverages our consultants to challenge the
organization based on our previous experiences and access to best practices, while
simultaneously leveraging the Avista -team who possess deep institutional
knowledge and operating perspectives. When executed properly, this approach
yields combines the best of external and institutional knowledge. Our
collaboration approach is illustrated below.
Staff—PR-1 59 Attachment A Page 21 of 77
5 of 8
Joint Team Approach
Joint Team
I Support for information collection and access • Frequent client updates to personnel • Structured and inclusive :.. • Availability of required personnel for Participants project methodology . ii interviews • Extensive formal and • Availability of required documentation from
informal interfaces the business • Open information sharing
• Consideration of milestone meetings
• Review and buy-in concurrent with
development process
Process
P
r-------------------------------------------- egrid iiveru IiIWork -Produc-
•.ii.irnuiitTiuiEl-1 j I
Product
Over 300 opportunities were identified in Phase 1, of which more than 250 were
categorized into Tier 1, Tier 2, or Tier 3. Based on our prior transformation
experiences, to effectively manage the program and not lose momentum, we
strongly suggest an enhanced project management structure to that used during
Phase 1. A larger, more robust, project office is required over the next 12-24
months to track the hundreds of initiatives identified during Phase 1. This
enhanced project structure will provide comprehensive oversight and
involvement, while not overburdening the organization with unnecessary
meetings or controls.
As in Phase 1, we suggest retaining the frequent Executive Steering Committee
meetings as a forum for the senior officers to engage in the Performance
Excellence Initiative.
In addition to a project manager who can dedicate the time required to manage
the day-to-day details of theproject, we believe it is necessary to involve
additional resources who can help with project administration,
opportunity/initiative tracking, change management, communications, project
integration and developing the process to institutionalize performance excellence
within Avista's culture over the long-term. (This could require 3-5 additional
resources as shown in the project structure below).
Staff—PR-1 59 Attachment A Page 22 of 77
Proposed Project Structure
Project Structure
6 of 8
Project
Leads
Wodstream I
Wo,tatream
Leads
STAFFING, TIMING AND FEES
The work will be under the overall direction of Mr. Thomas J. Flaherty, a Senior
Partner and leader of our North American Utilities practice. He will be supported
by Mr. Earl Simpkins, a Principal in our Utilities practice. Additionally, a number
of staff and senior and experienced subject matter experts will be utilized to
support the assignment for the suggested preliminary focus areas shown above in
the proposed project structure.
As shown in the high-level timeline below, we propose that Phase 2 last
approximately 8-11 weeks (depending on the workstream). We anticipate an
August start date (8/16), and a Phase 2 conclusion by the end of October, with the
exception of Supply Chain which may end the first week of November.
Anticipated end dates are shown below:
• Energy Delivery: October 8th
• Enterprise Technology: October 29th
• Supply Chain: October 29th
This timeline reflects the need to fit the Phase 2 activities within the fee cap
described later in this section and is dependent upon a greater level of Avista
participation on the Phase 2 teams, timely response with respect to the receipt of
required data, access to necessary personnel and quick decision turnarounds.
Staff—PR-1 59 Attachment A Page 23 of 77
7 of 8
High-Level Phase 2 Project Schedule
Proposed Timeline
Professional fees for this effort are estimated to be approximately $1.6 million.
These fees reflect our standard weekly fee arrangements and are based upon a 40
hour work week; however, in practice, our team typically works approximately 55
-60 hours per week which results in an effective —40% discount to Avista.
Professional fees will be capped at a total of $1.6 million over the period through
October. Additional services required beyond October will be covered in a
separate letter.
This estimate is based on the planned schedule above which reflects and assumes
greater participation on Phase 2 teams by Avista resources, timely response to our
data, and access to personnel and timely decision making related to the specific
needs of the engagement. If changes to these assumptions or other delays are
experienced, it could potentially impact our fee estimate. If they occur, we will
advise you of any potential fee impacts to jointly determine the best mitigation
options / solutions.
Out-of-pocket expenses for travel, lodging, graphics support, and computer
charges, etc., are billed at cost, and are expected to be approximately 17- 20%
percent of actual professional fees before discounts.
Booz & Company will devote its best professional efforts to this assignment. All
findings, conclusions, and recommendations will represent our best judgment
based on the information available at the time.
Staff—PR-1 59 Attachment A Page 24 of 77
8 of 8
We will submit our invoice monthly for our fees and for expenses incurred.
Invoices are payable via electronic funds transfer to the following bank account
within 15 days of receipt by the appropriate contact at the Company to:
JP Morgan Chase Bank
ABA: 021-000-021
Account Number: 530-955-997
We appreciate the opportunity to assist in this important undertaking, and look
forward to supporting you in this effort. Should you have any questions, please
do not hesitate to call me at [phone].
Sincerely,
7: 4 Booz&C2: pany
Thomas J. Flaherty III
Senior Vice President
ACCEPTED AND AGREED TO:
Avista Corp.
Name:
Title:
Staff—PR-1 59 Attachment A Page 25 of 77
Mr. Scott Morris August 10, 2010
Chairman. President
and Chief Executive Officer
Avista Corp.
1411 E. Mission
Spokane, WA 99220
Re: Performance Excellence Phase 2
Dear Scott-
Thank you for the opportunity to continue to assist Avista Utilities (the Company)
with Phase 2 of its Performance Excellence Initiative. We have prepared this
engagement letter to reflect the scope of out support per conversations with you
and other members of your team regarding the nature of this effort. This proposal
contains three sections.
• Avistas Objectives
• Proposed Approach
• Staffing, Timing, and Fees
AVISTA'S OBJECTIVES
Dom & cny (N.A) th
Based on our conversations and information exchanged after the Phase I report 'tn Wn StreetSulie
out, we understand Avista's Phase 2 objectives to center around a few discrete 011Oalt,TX 75202
areas of support We understand the Company's objectives for Booz & Company T4 I 214 746 6(IO
in Phase 2 are to assist Avista Phase 2 teams with the design and implementation Fax [phone]
of a discrete set of opportunities Identified in Phase TI
TI. Asset Management
2.Work and Resource Management
3.Supply Chain
4.Enterprise Technology Business Alignment
Additional Phase 2 elements to be contemplated for 2011 will be covered in a
separate letter after Phase 2a is completed in 2010. These would include
Integrated Planning, Capital Management and Performance Management and the
Phase 2a letter would similarly define the scope, approach and timing of
execution.
Staff—PR-1 59 Attachment A Page 26 of 77
2018
The plans for these scope elements are included in Attachment A to this kiter.
Each plan contains a high-level approach and workplan as well as specific
activities and -objectives required to support the execution of the workstream in
Phase 2.
PROPOSED APPROACH
Following the comprehensive review performed in Phase 1, the Company wishes
to proceed into the detailed design and implementation phase of the effort. Our
focus in this phase will be to pursue the opportunity in the identified areas, design
the relevant operating model for performance develop detailed designs for new
processes and enhancements to existing processes, and develop the
implementation roadmap required to successfully execute against the opportunity
starting in2OlOand 2011.
The focus of this phase of the assignment will be on identifying the specific details
to implement and understanding how current operations can be enhanced,
particularly hew future operating requirements upon the business will need to be
reflected.
Our proposed approach is a continuation of our two-phase approach described in
the previous letter regarding Phase 1. It is broken into two phases and
incorporates several steps in each phase as presented below
Pp
IW
L p
-:
Phase 2 will consist of a number of steps that seek to prepare Avista for
implementation of the initiatives, primarily focused on strategic alignment,
detailed design and implementation planning-
Staff-PR-1 59 Attachment A Page 27 of 77
3 of 8
Phase 2: Key Activities - Design and Implementation
PI.ss 2 OsteiId Approach
n1
O*Hka W5a • I -
O*
OOP&T1 *ad Ok
Ot5 *i
As part of the design phase, we will evaluate the details of the organizational
governance and operating model changes required to successfully implement
oppitiesidentified during Phase 1. We will also help the teams conduct
more detailed analysis (where necessary) to adequately design new processes
during Phase 2. Finally, we will advise the teams so they can develop an
implementation roadmap that provides adequate detail from which Avista team
members can further pursue performance enhancement in Phase 3.
We expect to conduct the second phase between August and October, 201.0. We
also anticipate continuing our joint working team arrangertent that was used
during Phase I We anticipate having more dedicated Avista resources during
Phase 2 to focus on the detailed design and to help us manage our scope of work
and associated professional fees.
Avista team members will have primary responsibility for developing Phase 2
deliverables, with preparation support from Bone & Company. We will of
course, outline the expected contents for the specific deliverables and provide the
necessary templates for discussion scope, presentation format, information
capture, etc As any individual team requires additional assistance with
deliverable preparation we will, of course, support them as required.
The primary output of the design phase Will be the implementation readmaps and
detailed initiative implementation plans to position the Company to execute
against the identified improvement opportunities in 2010 and 2011. In addition,
specific areas of value capture will be pursued during Phase 2, with the intent to
affirm and begin to realize•this value in selected areas, particularly supply chain
and enterprise technology.
Staff—PR-1 59 Attachment A Page 28 of 77
4 of
Phase 2- Approach Details
A A. A.L,
T wà*
-p-v. M31 ift)
- ,1_, 4WP
!
Workshops
We will utilize the some workshop approach we used in Phase Ito inform Avista
employees and management of the Performance Excellence Initiative's progress.
Given the nature of this Phase of the project, we expect dialogs to happen much
more frequently between the Phase 2 teams and the responsible officers. As a
result, we anticipate having workshops during Phase 2 to help integrate content,
and provide feedback, guidance, and direction for the implementation teams.
The primary purpose of the workshops in Phase 2 is to ensure the appropriate
progress is being made by each of the teams and, following that workshop, to
allow the Steering Committee to review the interim analysis and output.
Workshops will also be used to provide adequate guidance around the specific
implementation actions and allow for the Steering Committee to provide any
additional input
Collaboration Model
Our Phase 2 collaboration model is built upon the same foundation as our Phase I
model, with the understanding that more Avista employees will be participating
in Phase 2. This collaboration model leverages our consultants to challenge the
organization based on our previous experiences and access to best practices, while
simultaneously leveraging the Avista team who possess deep institutional
knowledge and operating perspectives. When executed properly, this approach
yields combines the best of external and institutional knowledge. Our
collaboration approach is illustrated below.
Staff—PR-1 59 Attachment A Page 29 of 77
5 of 8
Joint Team Approach
np
I
F p -
Over 300 opportunities were identified in Phase 1, of which more than 250 were
categorized into Tier 1, Tier 2. or Tier 3 Based on our prior transformation
experiences, to effectively manage the program and not lose momentum, we
strongly suggest an enhanced project management structure to that used during
Phase 1. A larger, more robust, project office is required over the next 12-24
months to track the hundreds of initiatives identified during Phase 1. This
enhanced project structure will provide comprehensive oversight and
involvement, while not overburdening the organization with unnecessary
meetings or controls.
As in Phase 1, we suggest retaining the frequent Executive Steering Committee
meetings as a forum for the senior officers to engage In the Performance
Excellence Initiative,
In addition to project manager who can dedicate the time required to manage
the day-to-day details of the project we believe its necessary to involve
additional resources who can help with project administration,
opportunity/initiative tracking, change management, communications, project
integration and developing the process to institutionalize performance excellence
within Avisla's culture over the long-term. (This could require 3-5 additional
resources as shown in the project structure below).
Staff—PR-1 59 Attachment A Page 30 of 77
Proposed Project Structure
6ofS
STAFFING, TIMING AND FEES
The work Will be under the overall direction of Mr. Thomas J. Flaherty, a Senior
Partner and leader of our North American Utilities practice He will be supported
by Mr. Earl Simpkins, a Principal in our Utilities practice. Additionally, a number
of staff and senior and experienced subject matter experts will be utilized to
support the assignment for the suggested preliminary focus areas shown above in
the proposed project structure.
As shown in the high-level timeline below, we propose that Phase 2 last
approximately 841 weeks (depending on the workstream). We anticipate an
August start date (8/16), and a Phase 2 conclusion by the end of October, with the
exception of Supply Chain which may end the first week of November.
Anticipated end dates are shown below:
• Energy Delivery: October 8th
• Enterprise Technology: October 29th
• Supply Chain: October 29th
This timeline reflects the need to fit the Phase 2 activities within the lee cap
described later in this section and is dependent upon a greater level of Avista
participation on the Phase 2 teams, timely response with respect to the receipt of
required data, access to necessary personnel and quick decision turnarounds.
Staff—PR-1 59 Attachment A Page 31 of 77
7of8
High-Level Phase 2 Project Schedule
Professional lees for this effort are estimated to be approximately $1.6 million.
These fees reflect our standard weekly fee arrangements and are based upon a 40
hour work week, however, in practice, our team typically works approximately 55
60 hours per week which results in an effective —40% discount to Avista
Professional fees will be capped at a total of $16 million over the period through
October. Additional services required beyond October will be covered in a
separate letter.
This estimate is based on the planned schedule above which reflects and assumes
greater participation on Phase 2 teams by Mists resources, timely response to our
data, and access to personnel and timely decision making related to the specific
needs of the engagement. If changes to these assumptions or other delays are
experienced, it could potentially impact our fee estimate. if they occur, we will
advise you of any potential fee impacts to jointly determine the best mitigation
options I solutions.
Out-of-pocket expenses for travel lodging, graphics support, and computer
charges, etc are billed at cost, and are expected to be approximately 17 20%
percent of actual professional fees before discounts.
Boos & Company will devote its best professional efforts to this assignment. All
findings, coxclusIOns,and recommendations will represent our best judgment
based on the information available at the time.
Staff—PR-1 59 Attachment A Page 32 of 77
Sofa
We will submit our invoice monthly for our fees and for expenses incurred.
Invoices are payable via electronic funds transfer to the following bank account
within 15 days of receipt by the appropriate contact at the Company to:
JP Morgan Chase Bank
ABA: 021-000-021
Account Number: 530-955-997
* ** ** * *
We appreciate the opportunity to assist in this important undertaking, and look
forward to supporting you in this effort. Should you have any questions, please
do not hesitate to call meat [phone].
Sincerely,
f3ooz & Cpany
Thomas J. Flaherty ill
Senior Vice President
ACCFFft1) AND AGREED M.
Avista Corp.
NameJ '.?T
Tffle;Ljjf41àLij]4 C /i
Staff _PR_i 59 Attachment A Page 33 of 77
Performance Excellence
Phase 2 Commercial Discussion
July 26, 2010
Staff_PR_I 59 Attachment A Page 34 of 77
Today's discussion focuses on further defining the nature and
level of the commercial arrangements for Phase 2
• Define the workstream objectives underlying Phase 2
• Describe the benefits attainment timing from Phase 2
• Discuss a proposed staffing and commercial model for Phase 2
• Determine how to finalize the commercial arrangements
Staff_PR_i 59 Attachment A Page 35 of 77
The objective is to rapidly capture available business benefits
from the workstreams to build credibility and momentum
Key Phase II Objectives Principal Focus
• Position the business to successfully execute on the
strategy and its implications
• Leverage organizational configuration to enhance
process execution and benefits attainment
• Elevate the effectiveness of process design and
execution within the business
Improve the Performance Implement an enhanced performance management
model that integrates enterprise objectives
--a

Set a tone within the business for attainment of

Monetize the Opportunities W tangible outcomes
Position the business to capture sustainable benefits
I in 2010 and beyond I Accelerate_______________ I
a Focus on targeted areas for rapid realization of
I available benefits I
I I

Self-Fund _the __Effort _______ a Identify sufficient benefits to support 2011-2012
I opportunity pursuit and avoid earnings erosion
L --------------------------------------------------------------------------I
Staff-PR-1 59 Attachment A Page 36 of 77
Phase 2 will thus focus on delivering select, measurable
benefits and reaching equilibrium within 12-18 months
U.
1
PEP Benefits Framework •Integrated Planning -
Sustainable Process Asset
Management
Integrated Planning —: Supply Chain -

Capital Allocation *Wave 2
Work an1 I
Resource
Managemnt
.
-------------
- Supply Chain -
Wave •:

Performance Enterprise

- Management Technology

Near Term Intermediate Term Longer Term
<5 Months (2010) 6-12 Months >12 Months
Equilibrium Outcome
Relative Size of Opportunity
• Benefits include both:
- Long-term capability building
- Tangible performance outcome
improvement
• Strategic initiatives will enhance /
support Avista's near-term strategy
and ramp-up to steady state
business benefits in the second half
of 2010
Operating excellence initiatives are
intended to yield benefits in two
waves
- Initial benefits in 2010 that serve
to fund capability building efforts
- Parallel capability building, e.g.,
strategic sourcing to drive
second wave performance
improvement during 2011
Staff_PR_i 59 Attachment A Page 37 of 77
The Phase 2 workstreams focus on creating distinct and
sustainable business improvement
Business Benefits Discussion
rni • Strategy benefits will accrue from the
sharpening of existing plans and the
Integrated Planning and development of new, focused plans
Capital Allocation for top-line growth
Performance Management I a Process benefits will inure from the
redesign of existing activities and
Work and Resource interfaces and the adoption of an
enhanced performance focus Management -
Asset Management
a Performance benefits will be realized
from improved execution and
incorporation of invigorated
Supply Chain measurement priorities
Enterprise Technology
_"] ---------------------------------- a The range of benefits will include
direct, near-term cash impacts and
extended operational enhancements
across the workstreams
Benefits
Focus Primary ] Secondary
Staff—PR-1 59 Attachment A Page 38 of 77
Workstream analyses will be jointly delivered through a tightly
aligned Avista and Booz & Company
Approximate Resource Mx
Role Focus Program Team Composition Avista Booz & Company
• Interface with the business
• Provide content insight and leadership Program Executives 1.0 1.0
• Maintain program focus on objectives and outcomes
• Manage day-to-day execution 1.0 0.25 Project Managers a Resolve program issues
• Coordinate support requirements
• Plan and execute the work Integrated Planning and 7-12 2-3
a Interface with business leaders Capital Allocation
a Develop design models Performance Management 8-9 1-2 • Redesign processes
a Reconfigure interfaces and hand-offs W6rk and Resource 47 • Develop business cases Management 2-3 • Attain benefits Asset Management 5-8 • Define implementation plans

7-15 3-4

7-15 2-3
Staff—PR-1 59 Attachment A Page 39 of 77
The Booz & Company senior leadership team for the
identified work streams will split workstream responsibility
Booz & Company Senior Resources (Primary Alignment)
Role I Work Stream Flaherty McKenna Dawson Simpkins Hoffman Corrigan
Program Leadership I I F [ 1 1 1
Integrated Planning and
Capital Allocation OWN
Asset Management
Supply Chain
vnzlI.
Primary Secondary
Staff—PR-1 59 Attachment A
Page 40 of 77
Preliminary commercial arrangements reflect execution
complexity and anticipated benefits levels
Steady-State Phase 2 Staffing Preliminary
Benefits Booz & Fees General Parameters

Level Avista Company
Integrated $.5 $350-

Planning and 7-12 2-3
Capital Allocation .8M 400K

•Vi$:iJliITh1I NA 6-9 1-2 $200-
_________ 250K
4-7
1.4- 2-3 $400-
1.7M $500K
5-8
16.4- $800K-
23.2M 7-15 3-4 $1.OM
4.3- 7-15 $300- 2-3 7.6M $400K
Staff-PR-1 59 Attachment A Page 41 of 77
Defined
Sources
"Kings Tax
Expected
Benefits
Deferred
Billing
Scope
Limitation
vill
At-Risk
DRAFT Discussion Document :ItSTA 8
Commiercial Araigernents Discussion.
Performance Excellence
Phase 2 Commercial Discussion - Revised
August 3, 2010
Staff—PR-1 59 Attachment A Page 43 of 77
Today's discussion focuses on further defining the nature and
level of the commercial arrangements for Phase 2
• Define the workstream objectives underlying Phase 2
• Describe the benefits attainment timing from Phase 2
• Discuss a proposed staffing and commercial model for Phase 2
• Determine how to finalize the commercial arrangements
Staff _PR_I 59 Attachment A Page 44 of 77
The objective is to rapidly capture available business benefits
from the workstreams to build credibility and momentum
Key Phase II Objectives Principal Focus
Position the business to successfully execute on the
Enable the Strategy strategy and its implications
• Leverage organizational configuration to enhance
Align Business *____________ process execution and benefits attainment ±ITIT:Tiari
• Elevate the effectiveness of process design and
execution within the business
mprove the Performance E • Implement an enhanced performance management
model that integrates enterprise objectives
-. -Setatonewfthinthebunessforattainrnentof
Monetize tangible outcomes
Position the business to capture sustainable benefits
in 2010 and beyond
Accelerate the Benefits • Focus on targeted areas for rapid realization of
available benefits
Self-Fund __ Effort _______ • Identify sufficient benefits to support 2011-2012
opportunity pursuit and avoid earnings erosion
I ---------------------------------------------------------------------
Staff_PR_i 59 Attachment A Page 45 of 77
Phase 2 will thus focus on delivering select, measurable
benefits and reaching equilibrium within 12-18 months
CL 0 U.
I
PEP Benefits Framework
• Integrated Planning -
Sustainable Procss Asset . Management
Integrated Planning Supply Chain -
Capital Allocation Wave 2
Work an'
Resource
Managemnt
Supply Chain —
St
Wave l
Performance Enterprise
Management Technology
I I
Near Term Intermediate Term Longer Term
<5 Months (2010) 6-12 Months >12 Months
Equilibrium Outcome
Relative Size of Opportunity
• Benefits include both:
- Long-term capability building
- Tangible performance outcome
improvement
• Strategic initiatives will enhance I
support Avista's near-term strategy
and ramp-up to steady state
business benefits in the second half
of 2010
• Operating excellence initiatives are
intended to yield benefits in two
waves
- Initial benefits in 2010 that serve
to fund capability building efforts
- Parallel capability building, e.g.,
strategic sourcing to drive
second wave performance
improvement during 2011
Staff _PR_i 59 Attachment A Page 46 of 77
The Phase 2 workstreams focus on creating distinct and
sustainable business improvement
Business Benefits Discussion
Integrated Planning and
Capital Allocation
Performance Management
Work and Resource
Management
Asset Management
Supply Chain
Enterprise Technology
Strategy benefits will accrue from the
sharpening of existing plans and the
development of new, focused plans
for top-line growth
• Process benefits will inure from the
redesign of existing activities and
interfaces and the adoption of an
enhanced performance focus
• Performance benefits will be realized
from improved execution and
incorporation of invigorated
measurement priorities
• The range of benefits will include
direct, near-term cash impacts and
extended operational enhancements
across the workstreams
I Benefits =primary Irn Secondary Focus
Staff .PR_1 59 Attachment A Page 47 of 77
Workstream analyses will be jointly delivered through a tightly
aligned Avista and Booz & Company
Approximate Resource Mix
Role Focus Program Team Composition Avista Booz & Company
• Interface with the business
• Provide content insight and leadership Program Executives 1.0 1.0
• Maintain program focus on objectives and outcomes
• Manage day-to-day execution
• Resolve program issues Project Managers 1.0 0.25
• Coordinate support requirements
• Plan and execute the work Integrated Planning and
• Interface with business leaders 7-12 2-3
• Develop design models Performance Management • 69 1-2 Redesign processes
• Reconfigure interfaces and hand-offs Work and Resource
• Develop business cases Management 4-7
• Attain benefits i 2-3
Asset Management • Define implementation plans 5-8
Supply Chain 7-15 3-4

Enterprise Technology 7-15 2-3
Staff_PR_i 59 Attachment A Page 48 of 77
The Booz & Company senior leadership team for the
identified work streams will split workstream responsibility
Booz & Company Senior Resources (Primary Alignment)
Role I Work Stream Flaherty McKenna Dawson Simpkins Hoffman Corrigan
Program Leadership
0 0 I I I T I
Integrated Planning and
Cacital Allocation I V01000.
Asset Management I i
Supply Chain
L; a
OFZZ Primary L. Secondary
Staff—PR-1 59 Attachment A Page 49 of 77
Preliminary commercial arrangements reflect execution
complexity and anticipated benefits levels
Steady-State Phase 2 Staffing Preliminary
Benefits Booz & Fees (1) General Parameters
Level Avista Company -
$54K Integrated
andPlanning $.5- 7-12 2-3 and then
Capital Allocation .8M 2011
Performance NA 6-9 1-2 2011
:1:
2-3 $414K
16.4-
23.2M 7-15
4.3- 7-15 7.6M
(1) does not Include 42181< for project management
Staff—PR-1 59 Attachment A Page 50 of 77

3-4 $752K

2-3

$346K
7
A number of alternatives exist to establish the Phase 2
commercial arrangement beyond direct funding
Available Mechanisms
Mr. Scott Morris
Chairman, President
and Chief Executive Officer
Avista Corp.
1411 F. Mission
Spokane, WA 99220
February 7,2011
Re: Performance Excellence Phase 2h
Dear Scott
Thank you for the opportunity to continue to assist Avista Utilities (the Company)
with the next phase (Phase 2b) of its Performance Excellence Initiative. We have
prepared this engagement letter to reflect the scope of our support per
conversations with you and other members of your team regarding the nature of
this effort over the last several months. This letter contains three sections:
• Avista's Objectives
• Proposed Approach
• Staffing, Timing, and Fees
AVISTA'S OBJECTIVES
Booz .5 C ipmy (NA) Inc.
Based on our conversations and information exchanged after the Phase 2 report sm mainStreel
out ,we understand Avista's next phase of work around Performance Excellence Suitt 65(r)
center around a few discrete areas of support We understand the Company's l)afl,s 1X 75202
objective is to obtain support in Phase 2 to assist Avista teams with the design and TO 12347466.900
implementation of a discrete set of opportunities identified in Phase I but Fax [phone]W
deferred until 2011fór various reasons, as well as continuing support for Supply WWW.b(W.COn'
Chain and providing "flash" support for Change Management. The specific scope
areas for Phase 2b are as follows:
1.Integrated Pliuming
2.Performance Management
3.Supply Chain
4.Change Management
Staff—PR-1 59 Attachment A Page 52 of 77
245
The plans for these scope elements have been discussed in various discussion
documents, to date, Including, but not limited to the discussion with you and
Dennis on December 21. 2010, and the related follow-up discussions extending the
scope of services over a longu period of time Specific proposed wôrkplans are
shown in Attachment A of this letter.
Given the limited Booz resources deployed against Phase 2b, Avista team
members will have primary responsibility for developing Phase 2b deliverables,
with preparation support and guidance provided by l3ooz & Company. We will,
of course, outline the expected contents for the specific deliverables and provide
the necessary templates for discussion scope, presentation format, information
capture, etc.
PROPOSED APPROACH
Following the comprehensive review performed in Phase 1., the Company wishes
to proceed into the detailed design and implementation phase of the effort Our
approach will develop detailed designs for new processes and enhancements to
existing processes, and develop the implementation roadmap required to
successfully execute against the opportunity starting in 2011 and 2012 (as
required).
Our proposed approach is a continuation of our two-phase approached described
in the previous letter regarding Phase 1. Pháse2b activities will be focused on
similar activities as shown in Phase 2 of the overall project approach below.
Pe
Key
Outeamee
eiem5nt*
amimlss
p,ucesae.
Design required pro. *ctureileobnoloy
baseline and fdenWy and ptiorfitae class tot deeper lmpçovemenie to con.Iy po*pri AuletS
dot for design am lnIensntation In Phase I in prionly la ass segmtas Identilted In Phase I
• Establishment of baselines
Definition of performance position • Assessment of capabilities • Identification of high pdoilty areas -
• Designs for Improved effeetiveness
Quantification of opportunity potential
• imptementabon plans and sequence
Change leadership plan -- -
TTEEIT:iH"_I
I __ En 5"lifl!y?fl4 Fusts T anipnance______
- m Aim iS,ethbubon AssetMpfjem5Daml8amOn5_ * 1
WW Stekehstder Manasene't 3
Phase 2 will consist of a number of steps that seek to prepare Avista for
implementation, primarily focused on strategic alignment, detailed design and
implementation planning.
Estab1lehpórrnsh*:cbltft end.operEiat

We expect to complete Phase 2b within 26 weeks of the start date (which is
expected to be mid-February 2011), providing support through: August, 2011
Staff—PR-1 59 Attachment A Page 53 of 77
3 of 5
depending on the start dates. To date, Supply Chain started mid-February, with
Integrated Planning and Performance Management to start at the end of February
/ beginning of March. The integrated Planning and Performance Management
workstreams are anticipated to last approximately 1048 weeks.
We also anticipate continuing our joint working team arrangement from Phase i,
engaging with the Avista team and stakeholders throughout Phase 2b. In order to
extend the period of time Boor resources will support Phase 2b activities, we have
ramped down our level of support (in FTEs) and etended the timing of our
support for each of the worlstreams to better accommodate Avista s objectives.
We intrcipatt. having dedicated Avita team resources during Phase 2b to focus
on the detailed design and help its manage the scope of work and associated
professional fees given the reduced number of Fills and fixed fee arrangement (to
be described below).
Avista team members will have primary responsibility for developing Phase 2b
deliverables, with preparation support from Benz & Company. We will, of
course, outline the expected contents for the specific deliverables and provide the
necessary templates for discussion scope, presentation Format, information
capture, etc.
The primary output Of the design phase will be the implementation road maps and
detailed Initiative implementation plans to position the Company to execute
against the identified improvement opportunities in 2011 and 2012.
Workshops
As needed, we will utilize; the same workshop approach we used in Phase I and
Phase 2 to inform Avista employees and management of the Initiatives progress.
Given the nature of this Phase of the project, we expect dialogs to happen much
more frequently between the Phase 2b teams, the responsible officers, and other
affected stakeholders. As a result, we anticipate working closely with various
stakeholders during Phase 2b (including workshops) to help integrate content,
and provide feedback, guidance, and direction for the implementation teams.
The primary purpose of the workshops in Phase 2b are designed to ensure the
appropriate progress is being made by each of the teams and, following that
workshop allow the Steering Committee to review the interim analysis: and
output prior to detailed design and implementation Workshops will also be used
to provide adequate guidance around the specific implementation actions and
allow for the Steering Committee to provide any additional input.
Collaboration Model
Our collaboration model is built upon the same foundation of our Phase 1 and
Phase 2 model, with the understanding that more Avista employees will be
participating in Phase 2b. This collaboration model leverages consultants to
challenge the organization based on our previous experiences, allow the Avista
team access to best practices through those experiences, while simultaneously
leveraging the Avista team (who possess deep Institutional knowledge and
operating perspectives) When leveraged properly, this approach yields
Staff—PR-1 59 Attachment A Page 54 of 77
4 01 .)
tremendous results by combining the best of external and internal / institutional
knowledge. Our collaboration approach is illustrated below.
Joint Team Approach
Joint Team
- I. - • Suppon to tnlormationcoIieion and acooss
FunMCJantt Udatan to RWSOMW
Stmciussd and 5dusv Pntictpants 40 • Avadabati of reared peaannat tor
project aodok4y ifltafYI*s
Exweftskve said • Avadabibty of ió54utfd docuinentabon barn
inforthat in as tha business Otban ithab
Coldsslan of mfai a nsstihnSs
Rss4, and bupai caltausreni enth
dapasani psocass
Product
Project Management and Steering Committee Interfaces
Similar to our Phase 2 letter, we suggest retaining a strong project management
Structure in Phase 2b,, with specific communications, deliverable and performance
reporting We also strongly suggest retaining the frequent Executive Steering
Committee meetings as a forum for the senior officers to engage in the
Performance Excellence Initiative in which we will participate
STAFFING, TIMING AND FEES
The work will be under the overall direction of Mr. Thomas J. Haherty. a Senior
Partner and leader of our North America Utilities practice. lie will be supported
by Mr. Earl Simpkins, a Partner in our Utilities practice. Additionally, a number
of staff and / or experienced subject matter experts will be utilized to support the
assignment along the suggested preliminary focus areas described earlier in this
letter.
As previously discussed, we propose Phase 2b last up to 26 wcek& We anticipate
a February 14th start date (for Supply Chain) and a February 28th Start date for
Integrated Planning and a March 711% start date for Performance ManagemenL, with
a conclusion around August (26 weeks after the Supply Chain workatream start
date, and approximately 1820 weeks for Integrated Planning and Performance
Management). This timeline reflects the desire to extend Phase 2b support over a
longer period of time, providing guidance and coaching closer to implementation.
Our support has bee. n adjusted to adhere to a fee estimate described in the next
paragraph, and is dependent upon a greater level of Avista participation on the
Staff—PR-1 59 Attachment A Page 55 of 77
5 of 5
Phase 2b teams, timely response with respect to the receipt of required data,
access to necessary personnel, and quick decision turnarounds.
Professional fees and expenses for this effort. are fixed at $2.2 million. This
estimate reflects Avistas desire to keep the total project cost to a stated cap. If
needed, additional services required beyond the planned periods for each
workstream will be discussed with you and Dennis and covered in a separate
letter.
This estimate is based on the planned schedule above which reflects and assumes
greater participation on Phase 2b teams by Avista resources, timely response to
our data, and access to personnel and timely decision making related In the
specific needs of the engagement. if delays in these items are experienced, it
could potential impact our fee estimate. If they xcur, we will advise you of any
potential fee impacts to jointly determine the best mitigation options / solutions.
Benz & Company will devote its best professional efforts to this assignment. All
findings, conclusions, and recommendations will represent our best judgment
based on the information available at the time.
We will submit our invoice monthly, pro-rating the total fixed fee amount over
the course of the engagement. Invoices are payable via electronic funds transfer
to the following bank account within 15 days of receipt by the appropriate contact
at the Company to:
JP Morgan Chase Bank
AM 0-ffl
Account Number: 530-955-997
We appreciate the opportunity to assist In this important undertaking, and took
forward to supporting you in this effort. Should you have any questions, please
do not hesitate to call meat [phone] or Earl at [phone],
Sincerely,
Booz & Company
Thomas J. Flaherty UI Earl Simpkins
Senior Partner Partner
Narne'_Z1.
Staff _PR_i 59 Attachment A Page 56 of 77
7AL, A,
Mr. Scott Morris
Chairman, President
and Chief Executive Officer
Avista Corp.
1411 E. Mission
Spokane, WA 99220
February 7, 2011
Re: Performance Excellence Phase 2b
Dear Scott:
Thank you for the opportunity to continue to assist Avista Utilities (the Company)
with the next phase (Phase 2b) of its Performance Excellence Initiative. We have
prepared this engagement letter to reflect the scope of our support per
conversations with you and other members of your team regarding the nature of
this effort over the last several months. This letter contains three sections:
• Avista's Objectives
• Proposed Approach
• Staffing, Timing, and Fees
AVISTA'S OBJECTIVES
Booz & Company (N.A.) Inc.
Based on our conversations and information exchanged after the Phase 2 report- 901 Main Street
out, we understand Avista's next phase of work around Performance Excellence Suite 6500
center around a few discrete areas of support. We understand the Company's Dallas, D( 75202
objective is to obtain support in Phase 2 to assist Avista teams with the design and Tel [phone]
implementation of a discrete set of opportunities identified in Phase 1, but Fax [phone]
deferred until 2011 for various reasons, as well as continuing support for Supply www.booz.com
Chain and providing "flash" support for Change Management The specific scope ..
areas for Phase 2b are as follows:
1.Integrated Planning
2.Performance Management
3.Supply Chain
4.Change Management
Staff—PR-1 59 Attachment A Page 57 of 77
2 of 5
The plans for these scope elements have been discussed in various discussion
documents to date, including, but not limited to the discussion with you and
Dennis on December 21, 2010, and the related follow-up discussions extending The
scope of services over a longer period of time. Specific proposed workplans are
shown in Attachment A of this letter.
Given the limited Booz resources deployed against Phase 2b, Avista team
members will have primary responsibility for developing Phase 2b deliverables,
with preparation support and guidance provided by Booz & Company. We will,
of course, outline the expected contents for the specific deliverables and provide
the necessary templates for discussion scope, presentation format, information
capture, etc.
PROPOSED APPROACH
Following the comprehensive review performed in Phase 1, the Company wishes
to proceed into the detailed design and implementation phase of the effort. Our
approach will develop detailed designs for new processes and enhancements to
existing processes, and develop the implementation roadmap required to
successfully execute against the opportunity starting in 2011 and 2012 (as
required).
Our proposed approach is a continuation of our two-phase approached described
in the previous letter regarding Phase 1. Phase 2b activities will be focused on
similar activities as shown in Phase 2 of the overall project approach below.
Project Approach
Purpose Establish performance, capability and operational Design required process, structure and technology
baseline and identify and prioritize areas for deeper improvements to competitively position Avista
dive for design and implementation In Phase 2 in priority business segments identified in Phase 1
Business
Units!
Processes
• Establishment of baselines • Definition of performance position
• Assessment of capabilities
• Identification of high priority areas
e Designs for improved effectiveness
• Quantification of opportunity potential
• Implementation plans and sequence
• Change leadership plan
Cperatnj Model
Govrinance
Organization
Capabilities
Workplace
Technology I
Enemy Supply and Fuels I Planning and Performance
Transmission & Distribution I Asset Management and Sourcing
Customer Service and Marketin I Stakeholder Management
Operating Functions Support FuflCtlOflS
Key
Outcomes
Scope
Elements
Phase 2 will consist of a number of steps that seek to prepare Avista for
implementation, primarily focused on strategic alignment, detailed design and
implementation planning.
We expect to complete Phase 2b within 26 weeks of the start date (which is
expected to be mid-February 2011), providing support through August, 2011
StaffPR_159 Attachment A Page 58 of 77
3 of 5
depending on the start dates. To date, Supply Chain started mid-February, with
Integrated Planning and Performance Management to start at the end of February
/ beginning of March. The Integrated Planning and Performance Management
workstreams are anticipated to last approximately 16-18 weeks.
We also anticipate continuing our joint working team arrangement from Phase 1,
engaging with the Avista team and stakeholders throughout Phase 2b. In order to
extend the period of time Booz resources will support Phase 2b activities, we have
ramped down our level of support (in FTEs) and extended the timing of our
support for each of the workstreams to better accommodate Avista's objectives.
We anticipate having dedicated Avista team resources during Phase 2b to focus
on the detailed design and help us manage the scope of work and associated
professional fees given the reduced number of FTEs and fixed fee arrangement (to
be described below).
Avista team members will have primary responsibility for developing Phase 2b
deliverables, with preparation support from Booz & Company. We will, of
course, outline the expected contents for the specific deliverables and provide the
necessary templates for discussion scope, presentation format, information
capture, etc.
The primary output of the design phase will be the implementation roadmaps and
detailed initiative implementation plans to position the Company to execute
against the identified improvement opportunities in 2011 and 2012.
Workshops
As needed, we will utilize the same workshop approach we used in Phase 1 and
Phase 2 to inform Avista employees and management of the Initiative's progress.
Given the nature of this Phase of the project, we expect dialogs to happen much
more frequently between the Phase 2b teams, the responsible officers, and other
affected stakeholders. As a result, we anticipate working closely with various
stakeholders during Phase 2b (including workshops) to help integrate content,
and provide feedback, guidance, and direction for the implementation teams.
The primary purpose of the workshops in Phase 2b are designed to ensure the
appropriate progress is being made by each of the teams and, following that
workshop, allow the Steering Committee to review the interim analysis and
output prior to detailed design and implementation. Workshops will also be used
to provide adequate-guidance around the specific implementation actions and
allow for the Steering Committee to provide any additional input.
Collaboration Model
Our collaboration model is built upon the same foundation of our Phase 1 and
Phase 2 model, with the understanding that more Avista employees will be
participating in Phase 2b. This collaboration model leverages consultants to
challenge the organization based on our previous experiences, allow the Avista
team access to best practices through those experiences, while simultaneously
leveraging the Avista team (who possess deep institutional knowledge and
operating perspectives). When leveraged properly, this approach yields
Staff—PR-1 59 Attachment A Page 59 of 77
4 of 5
tremendous results by combining the best of external and internal / institutional
knowledge. Our collaboration approach is illustrated below.
Joint Team Approach
Joint Team
.1. Support for information collection and access
• Frequent client updates to personnel
• Structured and inclusive Participants • Availability of required personnel for
project methodology • interviews
• Extensive formal and • Availability of required documentation from
informal interfaces the business
• Open information sharing
• Consideration of milestone meetings
Review and buy-In concurrent with
development process
Process
Integrated Deliverables I Work Product
NslirnIisIItrqojtrej s riism
Product
,
I I
L-------------------------------
Management and Steering Committee Interfaces
Similar to our Phase 2 letter, we suggest retaining a strong project management
structure in Phase 2b, with specific communications, deliverable and performance
reporting. We also strongly suggest retaining the frequent Executive Steering
Committee meetings as a forum for the senior officers to engage in the
Performance Excellence Initiative in which we will participate.
STAFFING, TIMING AND FEES
The work will be under the overall direction of Mr. Thomas J. Flaherty, a Senior
Partner and leader of our North America Utilities practice. He will be supported
by Mr. Earl Simpkins, a Partner in our Utilities practice. Additionally, a number
of staff and / or experienced subject matter experts will be utilized to support the
assignment along the suggested preliminary focus areas described earlier in this
letter.
As previously discussed, we propose Phase 2b last up to 26 weeks. We anticipate
a February 14th start date (for Supply Chain) and a February 28th start date for
Integrated Planning and a March 7th start date for Performance Management, with
a conclusion around August (26 weeks after the Supply Chain workstream start
date, and approximately 18-20 weeks for Integrated Planning and Performance
Management). This timeline reflects the desire to extend Phase 2b support over a
longer period of time, providing guidance and coaching closer to implementation.
Our support has been adjusted to adhere to a fee estimate described in the next
paragraph, and is dependent upon a greater level of Avista participation on the
Staff—PR-1 59 Attachment A Page 60 of 77
5 of 5
Phase 2b teams, timely response with respect to the receipt of required data,
access to necessary personnel, and quick decision turnarounds.
Professional fees and expenses for this effort are fixed at $2.2 million. This
estimate reflects Avista's desire to keep the total project cost to a stated cap. If
needed, additional services required beyond the planned periods for each
workstream will be discussed with you and Dennis and covered in a separate
letter.
This estimate is based on the planned schedule above which reflects and assumes
greater participation on Phase 2b teams by Avista resources, timely response to
our data, and access to personnel and timely decision making related to the
specific needs of the engagement. If delays in these items are experienced, it
could potential impact our fee estimate. if they occur, we will advise you of any
potential fee impacts to jointly determine the best mitigation options / solutions.
Booz & Company will devote its best professional efforts to this assignment All
findings, conclusions, and recommendations Will represent our best judgment
based on the information available at the time.
We will submit our invoice monthly, pro-rating the total fixed fee amount over
the course of the engagement. Invoices are payable via electronic funds transfer
to the following bank account within 15 days of receipt by the appropriate contact
at the Company to:
JP Morgan Chase Bank
ABA: 021-000-021
Account Number: 530-955-997
We appreciate the opportunity to assist in this important undertaking, and look
forward to supporting you in this effort Should you have any questions, please
do not hesitate to call me at [phone] or Earl at [phone].
Sincerely,
Booz & Company
Thomas J. Flaherty III Earl Simpkins
Senior Partner Partner
ACCEPTED AND AGREED TO:
Avista Corp.
Staff—PR-1 59 Attachment A Page 61 of 77
Performance Excellence Phase 2b
Engagement Letter
Attachment A
March 4, 2011
Staff_PR_i 59 Attachment A Page 62 of 77
Both the Avista team and the Booz team will be responsible
for driving the work throughout the engagement
Avista - Dennis Vermillion
Avista - Kathy Nitteberg
Provide Avista expertise to all work tasks
• Share experiences, lessons learned, and ideas throughout
process design and sourcing activities.
• Work side-by-side with Booz to execute work plans to achieve
maximum knowledge transfer
• Supply appropriate data for analysis; Identify business partners
• Communicate progress to internal work teams and raise issues
to Avista management as needed
• Co-own the development and review of all documentation
(specifically, workshop and steering committee reports, weekly
reporting and final deliverables)
Provide timely feedback to materials and decisions
Coordinate meetings and workshops
Booz -Tom Flaherty / Earl Simpkins
Booz - Seema Mehta
• Provide leadership to drive Avista beyond internal limitations
Develop project plans and meeting schedules
• Bring subject matter expertise to process design; share best
practices and lessons learned
• Guide work execution while working side-by-side with Avista
to transfer knowledge
• Augment Avista resources required for transformational
change
• Provide templates and co-own the development and review of
all documentation (specifically, workshop and steering
committee reports, weekly reporting and final deliverables)
Staff—PR-1 59 Attachment A Page 63 of 77
Design Team Roadmap - Supply Chain
PRELIMINARY
Implementation Work Plan
Operating
Model I Org
Design
Workstream
Strategic
Sourcing
Workstream 0
Process Workstream
inventory
Management
Woritream
• Energy Resources (Gen): Project planning process development integration,
future requirements for sourcing efforts
Energy Delivery: Project planning process development integration, future
requirements for sourcing efforts
• Asset Management: Risk assessments and short / long-term plans
• BUS I Functions: Strategic sourcing participation (dependent on category being
sourced)
- Integrated Planning: Capital and operating budgeting process interface
Legal: Contracting interface and support (Templates, T&Cs)
• Enterprise Technology: Data management and system functionality support
identification (from process work stream)
• Finance: Transactional process interfaces (i.e., AP process, P-Card)
Operating Model / Org Design: Identify pilot categories and processes as proof
of concept for broader rollout; ensure pilot activities demonstrate integrity of to-
be state and supply chains role in the organization.
Process Definition: Develop processes that represent organizational needs while
providing overall guidance and direction that will achieve buy-in across
organization
Strategic Sourcing: Understanding of requirements and flexibility within end user
constituents and supplier community
• Inventory Management: Understanding of detailed forecasted demand I use I
replenishment profiles at a detailed level
Change Management Sponsor assistance to inform internal Partners with
respect to revised role, decision rights, and processes
Staff _PR_i 59 Attachment A Page 64 of 77
The Integrated Planning team is cross-functional, as a result
of the interdependencies of the workstream
• Avista - Mark Thies Booz Support - Tom Flaherty I Earl Simpkins
a Avista - Margie Stevens Booz Support - John Corrigan I Emmanuel Choquette
Avista Core Delivery Team Avista Stakeholders Advisory
• Bill Abrahamse - El/Portfolio Management • Jon Powell/Bruce Folsom - Energy • Rick Vermeers - Energy Delivery I
• Dave Defelice - Finance/Project Analysis Solutions/DSM Engineering
• Mike Magruder - Energy Delivery/Enging, Substations • Kathy Nitteberg - Energy Delivery! • Bryan Cox - Energy Delivery/Gas
• Rodney Pickett - Energy Delivery/Asset Management Supply Chain • Steve Maasch - HR
• Steve Wenke - Energy Resources /Generation • Neil Thorson/Laura Vickers -
Finance/Op's Analyst
• James McDougall - Legal /
Compliance • Mike Daniels - Energy Delivery/Operations, Fleet Scott Waples - Energy Delivery I • Jim Corder - El
• Rosemary Coulson - Finance/Fbancial Analysis System Planning • Pat Gorton - Finance
• Mike Faulkenberry - Energy Delivery/Gas • Al Fisher - Energy Delivery! • Jody Gentemann - Finance / Risk
• Jeanne Pluth - Rates Operations, Fleet Tim Carlberg - Energy Resources /
• Vicki Weber— Energy Delivery/Customer Service • Heather Cummins - Energy Delivery Generation
• Jason Thackston* - Finance/Strategic Planning / Asset Management • Bill Johnson - Energy Resouces! (* as required) • Steve Plewman ED / Project
Management I Power
• Bruce Howard - Energy Resources / Booz Support Team I Envt I • John Corrigan (subject-matter expert, part-time) I a Emmanuel Choquette (full-time)
• Eric Adamson (ramp-up support)
Staff—PR-11 59 Attachment A Page 65 of 77
The integrated planning model increases linkages between
the strategy, planning, and performance management
Integrated Planning Framework
_J •
Legend: W Integrated Planning Workstream • Performance Management Workstream Out of Scope
Staff—PR-1 59 Attachment A Page 66 of 77
We anticipate completing design and implementation
planning over a period of -18 weeks
Proposed High Level
Plan & Launch
IP Stream
Workshops
Core Team Meetings + j + + +
Sub-team Meetings (TBD —As determined by each
PRELIMINARY
Staff—PR-1 59 Attachment A Page 67 of 77
The charter provides an overview of the workstream's scope
and key activities PRELIMINARY
Workstream Objectives Scope
Name • Enhance existing planning processes and define detailed • Processes: strategic, operating and financial planning, capital
• Integrated Planning design for new processes and integrated model management, budgeting, performance mngt. (timing)
Executive Sponsor • Develop the implementation eoadmap required to • Deliverables: swimlane process design, roles &
• Mark Thies successfully execute the new designs responsibilities, process governance, interfaces, calendar,
Team Lead • Complete designs and pilots for the 2012 planning cycle supporting tools/models, skills & staffing requirements and
• Margie Stevens starting during the summer of 2011 training plan, roadmap development and communications
Team Members •IpIi1iflfl1kiM I1E1IrnL.
Avista (Core Team) • Improve effectiveness of planning process by anchoring • Training and transition to revised planning process
-Bill Abrahamse ties to strategy • Expertise in planning group and resources to facilitate
• Dave Defelice • Improve understanding of longer-term operations, process in first cycle
• Mike Magruder resource, and capital needs to drive business decisions • Evaluative data availability I quality
• Rodney Pickett • Improve efficiency of budgeting process by focusing on • Risk data and application
• Steve Wenke strategy, then tactics, and finally financial implications a Chart of accounts alignment with regulated environment
• Rosemary Coulson a Drive rigorous capital allocation process • Comparability in capital decisions across a diverse business
a Ensure preparedness ahead of rate base filings and portfolio and set of projects
-Margie Stevens reduce regulatory leakage • Jeanne Pluth Is Enable procurement lead time and inventory savings
-Mike Daniels ___________________________________________________ Team _Working • Mike Faulkenberry
• Vicki Weber a Primary responsibility to Avista team members for leading a Regular detailed design workshops
• Jason Thackston* and developing deliverables • Weekly update meetings and sub-team working meetings
a Booz support on subject-matter expertise, coordination, • "Fatal flaw' veto from stakeholder group
Booz & Company template preparation, facilitation a Frequent reports to the steering committee
a Earl Simpkins a Remote support from Booz on every 4th week
-John Corrigan Interfacos BoundaryIIFUI
• Emmanuel V- a Finance a Performance Management • Asset Management
Choquette • Business Areas a Supply Chain a Performance Management a Eric Adamson a Work & Resource Management
Staff—PR-1 59 Attachment A Page 68 of 77
The team covers the various functions within the
organization, with a stakeholder group to be defined
Staff _PR_i 59 Attachment A Page 69 of 77
The performance framework organizes activities to
enhancing Avista's performance management model
Performance Framework
Formalize performance recognition
and link to compensation and career
progression
Determine what Information on
performance, key business
drivers, and major initiatives
should be provided to
stakeholders
Set requirements to manage the
process and interactions with various
Establish clear decision
rights and roles and
responsibilities for those
involved in collaboration
and interaction
Establish leading and lagging Identify groups involved in
success measures to determine performance management
achievement of performance process execution
management objectives
Create clear role delineation and accountabilities required to
successfully execute performance management program
Staff—PR-1 59 Attachment A Page 70 of 77
-
An effective performance management model cascades
metrics all the way from corporate strategy to the front lines
ILLUSTRATIVE
Metric Framework Illustrative Metric Views
Departmental
View
Manager
View
Supervisor I
Field View
Metric Hierarchy
Focus on value
outcomes
Focus on operating
execution at the
business level
Focus on
execution and the
departmental level
Focus on "fit-
for-purpose"
Focus on
productivity
• $/MWh Adjusted for Market Pricing
• Unplanned Outages (UOR)
• Gross Margin Contribution
• Safety (OSHA incident rate)
• O&M & Capital Spend
• Capital investment impact on O&M
• CapEx yield
• Total return
• O&M/Capital spend targets
• Commitments met
• Workforce productivity
• Estimate/Actual performance
• Cycle times
• Forecasts I Work balancing
• Asset Utilization
• Safety
• Crew productivity
Staff _PR_i 59 Attachment A Page 71 of 77
We anticipate completing design and implementation
planning over a period of -18 weeks
Proposed High Level Approach
A Kck.off I Steering A Steering Steering
______ Committee Committee Committee A
r
Core Team Meetings X X X X X X X X X X X X X X
Key Integration Points I Dependencies
• Integration with all PEI efforts I teams: Receive performance • Requires significant amount of client support to build data dictionaries
• Support across entire organization required and identify where gaps in existing data collection exist
• Linkages of KPIs to personal performance reviews may require lengthy
implementation time and close coordination with Human Resources
• Union negotiations may be required to implement within craft
organizations
Staff-PR-1 59 Attachment A
Page 72 of 77
The charter provides an overview of the workstream's scope
and key activities
Workstreain Objectives Scope
Name • Create overarching performance management model • Enterprise performance management model, governance
• Performance • Strengthen, clarify and/or create enterprise wide structure, processes and PM structure across org. performance
Management performance management structures and processes metrics, reporting requirements, incentive recommendations
Executive Sponsor • Define performance measures and link to all levels within • Detailed process design, roles & responsibilities, process
• Dennis Vermillion the organization governance, interfaces, review / refinement schedule, metric
Team Lead • Complete plans and prepare for implementation starting dictionary, skills & staffing requirements and training plan,
I n Marc Schaffner I during the summer of 2011 implementation planning & communications
Team Members •JTiJiPfflkri. Challenges
Avista (Core Team) • Improve effectiveness of planning process by enabling • Requires significant amount of client support to build data
• T Carlberg strategy discussions to help direct planning process dictionaries and identify where gaps in existing data collection
• J Corder • Improve understanding of longer-term operations, resource, exist
• H Cummins and capital needs to drive business decisions • Linkages of KPls to personal performance reviews may require
• A Fisher • Improve efficiency of forecasting / budgeting process by lengthy implementation time and close coordination with Human
• Li Jones focusing on strategy, then tactics, and finally financial Resources
implications • Union negotiations may be required to implement within craft • S Kinney y
•
•
aasc • Drive rigorous capital allocation process based on risks and organizations
returns of strategies
• PGorton :!Tm!FIii Interfaces • V Weber Issues____
• P Wood • Primary responsibility to Avista team members for leading • TBD • Integration with all PEI efforts /
• 0 Burgess and developing deliverables teams - primarily IP
- Support from Booz on coordination and preparation of • Receive performance support
templates, input on best practices across entire organization
Booz & Company • Remote support from Booz on every 3rd or 4th week required
• Earl Simpkins • Weekly update team meetings
• Paula Morawski • Weekly sub-team working meetings
• Eric Adamson • Detailed design workshops
• Input from stakeholder group when necessary
• Frequent reports to the steering committee
Staff—PR-1 59 Attachment A Page 73 of 77
Mr. Dennis Vermilion
President and COO
Mr. Bryan Cox
Director, Strategic Projects
Avista Corporation
1411 E. Mission Avenue
Spokane, WA 99252
February 13, 2012
Dear Dennis and Bryan:
This letter follows up on our conversations about supporting the next phase of
work within the Avista Corporation ("Avista" or "the Company") Integrated
Planning framework from last year, during which Avista expressed an interest in
obtaining support in developing the activity planning framework and approach
for implementation prior to the 2013 budgeting cycle which begins this summer.
This letter describes Booz & Company's assistance, and proposes how Booz &
Company can help. This letter covers three areas:
I.Background! Context
II.Approach
III.Working Together
IV.Commercial Arrangement
I. BACKGROUND! CONTEXT Booz & Company
(N.A.) Inc.
As part of its "Performance Excellence" program, Avista continues to implement 8283 Greensboro Drive
and execute against a plan of work established during our initial phase of work at Hamilton Building
Avista. Last year, around March, Avista started the Integrated Planning McLean, Virginia 22102
worksfream. The Integrated Planning workstream -included several components Tel [phone]
F 1703 3899 including strategic planning, corporate budgeting, capital allocation and planning, www.booz.com
business unit / activity planning, and business performance management to name
a few. Avista executed against "Integrated Planning" and "Integrated
Measurement" (business performance management) Last year, Avista obtained
Booz & Company assistance with the development and implementation of a
capital management process that was successfully tested and launched in 2011.
As part of the ongoing implementation of Integrated Planning at Avista, the next
step is developing the "Activity Planning" framework and process related to the
Integrated Planning model.
Staff_PR_i 59 Attachment A Page 74 of 77
2 of 4
II. APPROACH
Booz & Company's approach to developing the Activity Planning process is based
on a number of elements, including, but not limited to, the following steps:
• Identifying the overall activity planning framework principles
• Establishing key design parameters
• Identifying the implementation / execution approach
• Providing examples from our experience with various forms of activity
planning
• Providing thoughts on activity drivers for key functional areas
• Outlining benefits associated with full implementation of activity planning
• Developing materials to support Avista Officer engagement around
activity planning
Our approach will rely upon our experience and judgment to develop the best
activity planning framework / model for Avista given Avista's unique business
requirements. We have organized our approach into three basic stages for the
short design thneframe, with Change Leadership happening throughout the
process. High level activities are covered below, with additional activities being
developed as previously discussed with Avista.
Primary Project Steps (not exhaustive)
1. Baseline / Project Planning
a.Gather data (internal and external) on activity planning
b.Understand Avista's requirements
c.Define / establish workshop approach and workshop schedule
d.Develop initial design principles
2. Design
a.Design Avista's activity planning framework
b.Pilot / test activity planning concepts in a targeted functional area
3. Implementation Planning
a.Develop implementation roadmap / staged high-level
implementation plan by functional area
b.Identify risks and risk mitigation strategies to consider during
implementation
4. Change Leadership
a.Assist in development of communication related to activity
planning
b.Advise Avista on ongoing change leadership and communication
elements as the work is completed
The analysis will be conducted in a manner which allows for a relatively quick
assessment and design. We fully anticipate collaborating and discussing options
for detailed design with you and your team throughout the process, much like we
did in prior phases of work at Avista.
Staff-PR-159 Attachment A Page 75 of 77
3 of 4
The timing of completion is heavily dependent on the speed, accuracy, quality,
and completeness of the data collected, the availability of and access to internal
team members to support the analysis and recommendations, and the speed of
which that alignment is obtained within the team.
We will conduct a weekly check-in with you to ensure the project is progressing
as expected. These short check-ins will allow us to discuss and resolve any
potential roadblocks, increasing the speed of execution and overall efficiency of
the project. We plan to complete the initial assessment by the end of April. A
more detailed plan will follow.
II.WORKING TOGETHER
We propose to conduct this work with a joint Avista / Booz team, led / sponsored
by Avista executives, similar to other phases of our Performance Excellence.
Earl Simpkins, a Vice President in our Energy & Utilities practice will lead the
work on behalf of Booz & Company, providing executive direction and guidance
for the work. John Corrigan, a Vice President in the Energy & Utilities practice,
will provide subject matter expertise and also support the project team in the
development of the work. Faisal Yousuf, a Principal in the Organization and
Change Leadership practice with extensive shared services experience will
support the team on a part-time basis as the project ramps up. Earl, John and
Faisal will be supported by a couple of resources, who will lead the day-to-day
effort on the ground at Avista on a full-time basis. We anticipate one of these
resources will be Josh Stillman, based on prior discussions with Avista.
We anticipate that the Avista leadership / management team will make available
resources to work with our team on a full-time or near full-time basis during the
10 week period in order to focus on the design, testing and execution of the work
in a relatively short period of time.
III.COMMERCIAL ARRANGEMENT
Booz invoices it clients monthly at stipulated rates for services performed. Based
on our understanding of Avista's requirements, professional fees for this
engagement are capped at a discounted rate of $285,000. Expenses for travel,
lodging, meals, research, and report production will be billed at cost. Out-of-
pocket expenses and administrative charges typically range from 15-18% of non-
discounted professional fees. Per our discussions with Avista management, we
will do everything we can to manage travel costs, including "flexible work
arrangements" as we experienced during Phase 2b of the work in 2011.
If additional project support scope is defined during the engagement, or the
project timeframe is extended due to reasons beyond the control of Booz, we will
address these conditions with the Company and cover any revisions under a
separate engagement letter.
Staff-PR-159 Attachment A Page 76 of 77
4 of 4
Booz & Company will devote its best professional efforts to this assignment. All
findings, conclusions, and recommendations will represent our best professional
judgment based on the information available to us at the time. We look forward
to working with you on this engagement and helping you with your strategic and
operational agenda.
Please confirm your agreement to the terms of this proposal and the attached
terms and conditions by signing this letter and returning the signed letter to us.
We will execute this work under the previously established Terms and
Conditions.
Sincerely,
Booz & Company
Earl Simpkins
Vice President
WE9IW4
(Signature)
NAME:
(Printed)
TITLE:
DATE:
Staff—PR-1 59 Attachment A Page 77 of 77
.
Performance Excellence
Staff—PR-159 Attachment C.xlsx Page 1 of 1
AIfISm Thru December 2011
Value represented above includes avoided costs, efficiencies with benefits redeployed in the utility, net present
value of long-lived asset programs, re-invested sourcing benefits & power supply cost reductions
(1)Represents incremental new costs (i.e. new employees, software etc)
(2)Represents the NPV & avoided cost which will occur outside of three years
(3)Total for 2011 - $6.9M is gross amount; does not include cost to maintain
(4)Enterprise Technology values are updated quarterly
Staff—PR-1 59 Attachment D Page 1 of 1