20210408Avista to Staff 96-115.pdf

ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
RECEIVED
AVISTA CORpORATION 2021Aprit 8, AM 8:00
REspoNsE ro REQTJEST FoRrNFoRMArroN rrrui?i{3o'fil,ifro*
IDAHO DATE PREPARED: 0411012021
AW-E-21-01 / AVU-G-?L-Ol WTINESS: Mark ThiesIPUC RESPONDER: Lauren Pendergraft
Production Request DEPARTMENT: FinanceStaff-096 TELEPHONE: [phone]
REQUEST:
Please generally describe the Company's methodology for developing, managing, executing, and
completing Capital Projects in a least cost manner. Please provide a copy of all Company policies
and procedures documenting the process.
RESPONSE:
As discussed on page 7 of Avista's Infrastructure lnvestnent Plan (see Thies Exhibit No. 2,
Schedule 3), when Avista makes any capital investrnent there is an obligation to demonstrate that
the overall need, evaluations of alternatives, and the planned timing of implementation is prudent
and in the customer's best interests. Whether the investment touches the customer directly, such as
customer service or metering systems, or indirectly, such as improving the capability and
efficiency of employees and internal work processes, each dollar invested ultimately supports one
purpose: to provide customers with safe, reliable, and cost-effective energy services that meet their
expectations for quality of service and value. In Mr. Thies' testimony, he discusses the six drivers
of investment:1. To respond to customer requests for new service or service enhancements;2. To meet regulatory and other mandatory obligations;
3. To replace equipment that is damaged or fails, and support field operations;
4. To replace ffiastructure at the end of its useful life based on asset condition;
5. To meet our customers' expectations for quality and reliability of service; and
6. To address system performance and capacity issues.
When evaluating investrnents, Avista applies a four-part prudency standard:
l. Demonstrated proof of need for a project.
2. Evidence that reasonable alterratives were considered that allowed objectively
selectins the best. most cost effective alternative.
3. Company awareness of the need for and approval of the project, meaning that
affected employees have been made aware of and are in favor of the project and are
kept informed of any material changes.
4. Documentation is maintained during the course of the project that would allow a
person (sometimes years later) to reach the same conclusions about key decisions
based on what was known at the time, or should have been known by the project
manager.
Projects are developed through various means including planning studies, engineering and asset
management analyses, as scheduled upgrades or need for replacements are identified, or with
observations made by expert personnel. These projects undergo internal review by multiple
stakeholders within the business units themselves and through a formal review process at the
appropriate business area level, keeping the prudency standard referenced above in mind.
The capital projects are identified in the lower-left portion of lllustration No. I below labeled
"Business Unit Needs," and are then prioritized within each department. This prioritization occurs
with the knowledge of the continuing constraint on the capital spend level for the Company, while
at the same time the leadership of each department informs Senior Management of both the
near-term and longer-term needs that are being delayed. For the prioritized projects, Business
Casesr are developed for each of the Capital Requests that go to the Capital Planning Group (CPG)
(as illustrated in the diagram).
The Business Case for each prioritized project serves as the documentation of the justification of
the investment and specificallv addresses the proposed solution to the business nroblem and
whv it is the best and/or least cost alternative and whv the investment is considered a
prudent investment (see attached Business Case Justification Template, specifically Section 2,
provided as Staff PR_096 Attachment A). For the business cases provided in this case in support
of our pro forma capital additions (in addition to other provided support), please see:
o Thackston Exhibit 7, Schedule 4 - Pages 2 - 170o Rosentrater Exhibit 11, Schedule 9 -Pages 2 - 414o Kensok Exhibit 13, Schedule 1 - Pages 2 -248. Magalsky Exhibit 6, Schedule 1- Pages 2 - 40o Howell Exhibit 12, Schedule 6 - Pages 2 - llo Kinney Exhibit 8, Schedules 6 -7
With regards to management, execution, and completion of the capital projects, as part of the
standard business case templates, there is a section for each business case to identiff the "Monitor
and Control" of the business case, see StaflPR_096 Attachment A, Section 3. This section
provides an overview of the govemance processes and people that will provide oversight for each
business case; including how decision-making, prioritization, and change requests will be
documented and monitored.
Illustration No. 1 - Identification and Prioritization Process
I A Business Case is a summary document that defines the business problem addressed by a project or program, along
with a proposal and recommended solution. The Business Case explains why the work is necessary, and the risks
associated with not making the investment, as well as the alternatives considered, the selected alternative and the
timeline associated with the project.
Page 2 of3
Ir-rndedNot Fund.d
(t)cfctrsd)
The Company has also provided in this case lnvestnent Plans that provide additional information
as to why the Company is making invesfrnents in generation, transmission, substations, electric
and natural gas distribution, among others and how we are providing customers with safe, reliable,
and cost-effective energy services that meet their expectations for quality of service and value.
Those reports were provided as follows:
o Thackston Exhibit 7, Schedule 3, Avista's Generation lnfrastructure Plan for 2020o Rosentrater Exhibit I l, Schedule, Avista's Electric Distribution lnfrastructure Plan
for 2020
o Rosentrater Exhibit ll, Schedule 2, Avista's Substation Infrastructure Plan for
2020o Rosentrater Exhibit 11, Schedule 3, Avista's Electric Transmission Infrastructure
Plan for 2020o Rosentrater Exhibit 11, Schedule 4, Avista's Natural Gas Infrastructure Plan for
2020o Rosentrater Exhibit I l, Schedule 5, Avista's Priority Aldyl-A Protocol Reporto Rosentrater Exhibit 11, Schedule 6, Study of Aldyl-A Mainline Pipe Leaks - 2018
Updateo Rosentrater Exhibit I l, Schedule 7, Avista's Fleet Infrastructure Plan for 2020o Rosentrater Exhibit I l, Schedule 8, Avista's Facilities Infrastructure Plan for 2020
Additionally, the Company procures its materials and services in a disciplined manner, that is
designed to obtain the maximum value for each dollar of expenditure. See the Company's
Procurement Best Practices for Contracting Goods and Services attached as StaflPR_096
Attachment B. Specifically please see Section 7, "Competitive Bidding," and Section 9, "Awards
and Supplier Selection," which has . It
is important to remember, thought, that least cost might ultimately mean lowest life-cycle cost, not
necessarily lowest upfront cost. Lowest cost items, upfront, may ultimately lead to a higher life
cycle cost due to future O&M costs to keep an item or project operational. Key items from Section
7 and Section 9 include:
Section 7.3.1 - Bids are opened privately by Avista only after the deadline for receiving
proposals has passed. Supply Chain Management reviews the bids for responsiveness and
exceptions, and compares the bids, with an emphasis on pricing, terms, exceptions and/or
delivery, with the appropriate BU. Additional financial and risk analyses are performed as
required. Legal and/or Risk Management review exceptions and form, as necessary.
Section 9.1 - Suppliers should be selected on the basis of;o Ability to provide materials, equipment and/or services in accordance with the
specifications;
o Ability to meet standards for quality, service level, and long term benefit to Avista;
o Optimum value / lowest overall cost;o Financial and business stability, past performance and relevant experience; and
o Other pertinent factors as deemed necessary.
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<Project Name>
EXECUTIVESUMMARY
Ihis section is reserued to provide a blfi,description of the business case and high-level summary of the
projects or programs included. P/ease limit to no more than 2 paraqraphs. Components thaf should be
included: 1) a synopsis of the problem, 2) the seruice code and jurisdiction of customers impacted, 3) the
recommended solution, 4) the cost of the solution, 5) how the solutionwillbenefit customers identified, 6)the
significance of the timeline and 7)the risks of not approving fhls business case,
<< Both the Executive Summary and Version History shouldfit into onepage>>
VERSION HISTORY
Version Author Descriotion Date Notes
Draft DaisvDrafrer lnitial draff of oriornalbusine.qs ca.se 4/15/2020
1.0 PrudentPennv U o d ate d Ao n roval Sfafrl.s 6/1/2020 Fullamount aooroved
1.1 Debbie Downer Budoet chanoe 10/15/20 $50.000 deferrdto 2021
2.0
Business Case Justficalion Narrative Template Version: 0810412020 Page I of5
Page 1 of5Staff_PR_096 Attachment A
<Project Name>
Requested Spend Amount $
Requested Spend Time Period 1 year, 5 years, 10 years, etc.
Requesting Organization/Department
BusinessCaseOwner I Sponsor
S ponsor Organization/Depailment
Phase Choose an item
Category Choose an item
Driver Choose an item
1
GENERAL INFORMATION
BUSINESS PROBLEM
[This section must provide the overall buslness cxe information conveying the benefit to the customer, vthd
the project willdo and current problem stdementl
1.1 What is the current or potential problem that is being addressed?
1.2 Discuss the major drivers of the business case (CusfomerRequesfe4 Custunrs
Servrce Quality & Reliability, Mandatory & bmpliance, Performance & Capacity, Assei.
Condition, or Failed Plant & Operations) and the benefits to the customer
1.3 ldentify why this work is needed now and what risks there are if not
approved or is deferred
1.4 ldentify any measures that Gan be used to determine whether the
investment would successfully deliver on the objectives and address the
need listed above.
1.5 Supplemental lnformation
1.5.1 Please reference and summarize any studies that support the problem
[Listthe location of my supplementd information; do not attar,h]
1.5.2 For asset replacement, include graphical or narrative representation of metrics
associated with the current condition of the asset that is proposed for
replacement.
2. PROPOSAL AND RECOMMENDED SOLUTION
[Describethe proposed soltlion fo the buslness problem identified above and vlty fhis isfhe best and/or least
cost alternative (e.9., cost benefit analysis, aftach as supporting documentation)l
Business Case Justficaton Narrative Template Version: 0810412020 Page 2 of5
Staff_PR_096 Attachment A Page 2 of 5
<Project Name>
Option CapitalCost Start Gomplete
I Rec om me nded S ol ution]$M MM YYYY MM YYYY
[Alternative #1]$M MM YYYY MM YYYY
IAlternative #2]$M AIAI YYYY MM YYYY
2.1 Describe what metrics, data, analysis or information was considered when
preparing this capital request.
Examples include:
- Samp/es of savlngs, benefits or risk avoidance esflrnates- Description of how benefits to cusfomers are being measured
- Comparison of cosf ($)to benefit (value)
- Evidence of spend amount to anticipated return
Reference key points from external documentation, list any addendums, attachments etc.
2.2 Discuss howthe requested capita! cost amount will be spent in the current
year (or future years if a multi-year or ongoing initiative). (i,e. what are he
expected functions, processes or deliverableshat willresult fom he capital spend?). lnclude
any known or estimated reductions to O&M as a result of this investment.
How willthe odcome of this investment result in potential additional O&M cosfs, employee or staffing
reductions to O&M (offsets), etc.?
[Offsets to prqects will be more strongly scrutinized in general rate cases going lorward (ref. WUTC Docket No. U-190531 Policy
Statenent), therefore it is critical that these impacts are thought through in order to support rate recovery.l
2.3 Outline any business functions and processes that may be impacted (and
how) by the business case for it to be successfully implemented.
[For example, how willthe outcome of fhis business case impact other parls of the business?]
2.4 Discuss the alternatives that were considered and any tangible risks and
mitigation strategies for each alternative.
2.5 lnclude a timeline of when this work will be started and completed.
Describe when the investments become used and useful to the customer.
[Describe if it is a program or project and details abotl how often in a year, it becomes used-and-useful.
(i.e. if transfer to plant occurs monthly, quafterly or upon project completion).1
2.6 Discuss how the proposed investment aligns with strategic vision, goals,
objectives and mission statement of the organization.
fif thisisaprogramorcompilatiottof discreteprojects,explaintheimpoftanceof thebody of work]
Business Case Juslificalion Narrative Template Version: 0810412020 Page 3 of5
Staff_PR_096 Attachment A Page 3 of 5
<Project Name>
2.7 lnclude why the requested amount above is considered a prudent
investment, providing or attaching any supporting documentation. ln
addition, please explain how the investment prudency will be reviewed
and re-evaluated throughout the project
2.8 Supplemental lnformation
2.8.1 Identify customers and stakeholders that interfacewith the business cce
2.8.2 ldentifyany related Business Gases
lncluding any busrnesscases that mayhave been replaced bythlsbusiness case/
3. MONITORAND CONTROL
3.1 Steering Commiftee or Advisory Group lnformation
[Plexe identify and dxcribethe steering committeeor advisorygroup fu initialand ongcing vdbng, as a
paft of your depatmentd prioritizdionprocess.J
3.2 Provide and discuss the governanoe processes and people that will
provide oversight
3.3 How will decision-making, prioritization, and change requests be
documented and monitored
4. APPROVAL AND AUTHORIZATION
The undersigned acknowledge they have reviewed the <Business Case Name> and agree
with the approach it presents. Significant changes to this will be coordinated with and
approved by the undersigned or their designated representatives.
Signature:
Print Name
Title:
Role:
Date:
Business Case Owner
Business Case Juslificalion Narrative Template Version: 0810412020 Page 4 of5
Staff_PR_096 Attachment A Page 4 of 5
<Project Name>
Signature:
Print Name:
Title:
Role:
Signature:
Print Name:
Title:
Role:
Business Case Sponsor
Date:
Date:
Steering/Advisory Committee Review
Business Case Juslificalion Narrative Template Version: 0810412020 Page 5 of5
Staff_PR_096 Attachment A Page 5 of 5
AEutsrt Procurement Best Practices for
Contracting Goods & Services
Avista strives to conduct the procurement of goods and/or services in a disciplined manner, consistent
with good business and internal control practices as well as Avista's Code of Conduct and Ethics.
Supply Chain Management (Buyers/Contract Managers) acts as the authorized agent and primary contact for
Avista, unless otherwise delegated, for the procurement of goods and services to protect the financial and
commercial interests of Avista and to obtain the maximum value for each dollar of expenditure. This is
done by:
o Acquiring goods and/or serttices to meet Avista's quality, quantity, financial and time requirements.
. Negotiatingfor optimum volue in terms of lowest overall cost
o Establishing and maintaining competeng dependable and competitive supply sources.
c Developing and maintaining effective,fair and ethical relationships with suppliers.
o Reviewing this documentwith new Supply Chain employees.
o Reviewing this document with all Supply Chain employees on an annual basis.
To achieve the goals set forth above, Supply Chain Managanent has developed the following "best practices"
that should be followed when procuring goods and services.
I. SCOPF" AND OVF"RVIT'.W OE' PROCT]REMRNT:
Ll All expenditure requests for the purchase of goods and/or contracts for services must be
reviewed, approved and signed by the Business Unit (BU) manager having overall accountability for
the results of the particular contract, in accordance with established corporate sigrrature authority (a
Sigrature Authority Log is managed by Accounts Payable).
1.2 The Signature Authority Log has certain individuals listed multiple times with different levels of
signature authority, depending on the organization code. Supply Chain personnel should ensure that
signature on the "Contract Document" (defined as agreements, amendments, work authorizations and
change orders) is obtained for the proper individual under the applicable organization code.
1.3 Revenue and expense contracts must be sigrred by the authorized level of management responsible for
committing Avista resources. Contracts with no financial impact should be signed by the BU manager
having overall accountability for the results of the particular contact.
1.4 When individuals sigr above their established signature authority, written delegation of sigrature
authority must be obtained from the appropriate signature authority and retained in the applicable
database of record (ValueMation/Oracle).
1.5 All fully executed Contract Documents must be saved in the applicable database of record
(ValueMation/Oracle). (The Contract Manager, Contract Tech or Buyer who saves the Document is
responsible for ensuring that the scanned Document is complete and legible prior to saving it in the
database of record.)
1.6 Exceptions to the processes described in Sections 1.1 through 1.5 include: (i) legal services, (ii) electric
and natural gas power supply, and transmission contracts involving purchasing and selling power, (iii)
executive professional services, and (iv) emergency-related situations (See Section 8.2 below).
The following is a basic categorization of typical transactions associated with the purchase of goods and services.
2.
2.1 A written contract is required for all services including construction, professional, general, and
field services, regardless of value. Excluding contracts with electric and natural gas service customers
("M"contracts)theuseofopen-ended(evergreen)and/or time and materials service contracts with
no set not- to- exceed amount (*NTE') is discouraged.
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Aivtsrr Procurement Best Practices for
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2.2 All contracts must meet corporate financial, tax, insurance, legal and risk management standards.
Supply Chain Management is responsible for identiffing and evaluating any liabilities as well as
negotiating terms that result in a well-balanced and fair contract. Legal and/or Risk Management must
be consulted, as needed.
2.3 Avista's standard contractterms and conditions govern all contracted activities. Significant deviations
from Avista's standard terms and/or use of terms and conditions provided by the counterparty must
be approved by Legal.
2.4 Work under an evergreen/master contract is administered under a work authorization ('WA"), and
additional work under a project-specific contract is administered via a change order ("CO"). Changes
to an executed contract that change contractual terms are administered via an amendment, or by a CO
if the change involves the work or compensation. Finally, additional work and/or changes to an
executed WA are administered via a CO. Supply Chain Management will work with the requestors
to execute the appropriate Contract Document.
2.4.1 Each WA should represent a specific element of work under a master agreement. Combining
WA's which represent similar or related work is at the discretion of the stake holder/requestor
and Supply Chain Managonent. However, Supply Chain Management should work with the
BU to ensure that WA's are not split into multiple documents as a means of circumventing the
proper review and approval process.
2.4.2 A CO should speciff the reason for the change, the impact on the schedule (if any) and the
impact to the compensation (if any). A CO should reflect the compensation applicable under
the Contract Document and the additional compensation added by the CO (if any). Signature
authority of the CO should be determined by comparing the total new dollar amount created
by the CO to the sigrratory of the original Contract Document (for example, if a CO increases
the total compensation applicable under the Contract Document over $100K, then the Director
of the BU is not authorized to sign the CO - the CO must now be sigrred by the Vice President
responsible for the activity associated with the BU).
2.4.2.1 If a Contract Document exceeds $50,000 and it was not subject to Avista's Request
for Proposal (*RFP") process, a Sourcing Approval Form ggg! be generated and
routed for signature.
2.4.2.2 Once a Sourcing Approval Form is signed and formalized, it is not necessary to
execute another Sourcing Approval Form if the compensation under the CO Contract
Document increases, unless the incremental compensation applicable under the CO
Contract Document increases above fifty thousand dollars ($50,000).
2.4.2.3 Completed Sourcing Approval Forms must be saved in the applicable database of
record (ValueMation/Oracle). (The Contract Manager, Contract Tech or Buyer who
saves the Document is responsiblefor ensuring that the scanned Document is cotnplete
and legible prior to saving it in the database of record.)
2.4.3 An Avista Representative, authorized to act on Avista's behalf, should be identified for all
confacts. The Avista Representative acts as the primary point of contact with the contractor
during the performance and administration of the contract.
2.4.4 The Contract Review and Approval Form is used to document review and approval of
arrangements for goods and services by authorized representatives of Supply Chain, Legal, BU
Management, and Risk Management.
2.4.4.1 Non-standard terms and conditions require Legal and BU approval.
2.4.4.2 Waivers or adjustment to standard insurance requiranents require Legal and Risk
Management approval.
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lYivtsrt Procurement Best Practices for
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3. PT]RCHASF"S OT' GOONS
A Purchase Order is required for the purchase of goods in excess of $1,000. Requisitions are submitted
via the iProcurement System utilizing established sigrrature authority to ensure proper review and
approval of expenditures. Material requirements lqtpg be split into multiple purchases as a means of
circumventing the proper review and approval process.
4.@
Equipment leases must be reviewed and facilitated by Supply Chain Management. Equipment lease
agreements that potentially could exceed $50,000 require additional review by the Corporate Accounting
Deparfrnent.
5. BEAT.EBQEEBI]T
The Real Estate Deparfinent manages all real Foperty (permits, franchises, deeds and easernents) and
maintains all original real estate documents, and requests for copies of real estate documents should be
directed to that Department.
6. MASTER AGREF',MENTS
Master Agreements are negotiated when a particular supplier may be utilized for multiple projects and/or
there are opportunities to leverage company-wide purchases/services to achieve the greatest corporate value.
7. COMPT'.TITT\IERIDDTNG
The following guidelines outline Avista's competitive bidding philosophy and processes:
7.1. OVERVIEW:
7.1.1. Avista is committed to contracting via competitive bidding processes to the maximum extent
practical, and strives to invite a sufficient number of suppliers, including qualified diversity
and/or local suppliers where possible, to assure sound competitive offerings. Bids are by
invitation only.
7.1.2. Supply Chain Management is responsible for administering Avista's competitive bid
processes, serves as the Single Point ofcontact ("SPC") throughout the bid process, and works
closely with the relevant BU throughout the process. The SPC is responsible for managing all
communications, including clarifications or modifications to the RFP documents, and ensuring
that any modifications to the RFP are issued simultaneously to all potential bidders.
7.1.3. Competitive bids should be solicited through a fonnal, confidential RFP when the potential
value of the contract is $100,000 or more. RFP's of lesser value are evaluated for opporlunity
and subject to competitive bidding or written quotations as advised by Supply Chain
Managernent.
CONTRACTED VALTIE BIDDING GUIDELINES
Over $100,000 Formal Request for Proposal from
Qualified Bidders
$50,000 - $99,999 Written Quotations from Qualified
Suppliers
Less than $50,000 As Advised by Supply Chain
Management
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^#vrsrr Procurement Best Practices for
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7.2. INITIATINGANRFP:
7.2.1. T\e requestor is responsible for providing the Statement of Work ("SOW") including any
technical specifications, drawings, tasks, deliverables, and/or special considerations.
Requestors should strive to make the SOW and all attachments clear and precise, yet'Aanilla"
enough to invite competition whenever possible.
7.2.2. Bidders should be encouraged to present their products and services at prices that reflect the
current competitive markets, and ensure that any exceptions are clearly noted by the bidders.
7.3. EVALUATION:
7.3.1. Bids are opened privately by Avista only after the deadline for receiving proposals has passed.
Supply Chain Management reviews the bids for responsiveness and exceptions, and compares
the bids, with an emphasis on pricing, terms, exceptions and/or delivery, with the appropriate
BU. Additional financial and risk analyses are performed as required. Legal and/or Risk
Management review exceptions and form, as necessary.
7.3.2. Supply Chain Managanent will assist the BU in: (i) validating pricing and commercial terms
to ensure the integrity of the bids when the RFP is unusual or complex, or interpretation or
comparison is diflicult; (ii) determining if the bid contains an apparent error (or errors), and
(iii) deciding if a re-bid is warranted.
7.3.3. Supply Chain Management will work with the requestor (who has the primary responsibility
of performing the technical evaluation to ensure that the bid conforms to the technical
specifications, standards, quality and/or other physical or operational concerns required under
the RFP) in evaluating the proposals received, as appropriate.
7.3.4. Following reviewing the proposals, Avista has the option to: (i) enter into negotiations with the
preferred supplier, or (ii) invite a "short list" of qualified Bidders whose proposals are deemed
most responsive to the RFP to participate in a second, "Best and Final Offer" evaluation round.
8. EXCEPTIONS TO THE" COMPF'.TITTVT" RTD PROCF',SS:
8.1. ln cases where Avista would benefit by using a specific supplier rather than conducting an RFP due
to the long-term value of the business relationship, a completed Sourcing Approval Form must be
submitted to Supply Chain Management for review/follow-up prior to commencing any purchasing or
contracting activity.
8.2. When situations arise that require immediate procurernent of materials or services to avoid placing
Avista in a position that may affect its ability to conduct operations in a safe, efficient and cost-
effective manner, a Sourcing Approval Form is required within 48 hours of the transaction, if the
expense is greater than $50,000 and traditional approval processes were not followed. Requestors
should work with Supply Chain Management to execute the transaction whenever possible.
8.3. The Sourcing Approval Form is used to document appropriate Supply Chain, Legal, BU Management,
and Risk Management review where there are exceptions to the standard procurement processes for
goods and services. This Sourcing Approval Form requires approval by the corporate manager with
signature authority equal to the estimated value of the transaction when:
8.3.1. "Sole source" (no bid) agreements with a value of $50,000 or more are created.
8.3.2. A new agreement replaces an expired or outdated agreement with an existing contractor /
supplier. The "Justification" in the Sourcing Approval Form should be explained (i.e. that the
agreement is being updated for Avista best interest in continuing its relationship with the
contractor/supplier). In this specific case only, the Supply Chain Manager's signature is
required on the Sourcing Approval Form.
8.3.3. Contract is awarded to other than the lowest evaluated bidder if the value is in excess of
$50,000.
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Aiivtsrfr Procurement Best Practices for
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9. AWARITS & SUPPI,fi'R SF',I,F,CTTON:
9.1 Suppliers should be selected on the basis of:
. Ability to provide materials, equipment and/or services in accordance with the specifications;
o Ability to meet standards for quality, service level, and long term benefit to Avista;
o Optimum value / lowest overall cost;
o Financial and business stability, past performance and relevant experience; and
o Other pertinent factors as deemed necessary.
9.2 Employees should avoid doing anything that could imply selection of a supplier on any basis other
than the best interests of Avista or which could give an improper advantage to one supplier over
another.
9.3 Additional consideration may be given to local suppliers having manufacturing or major stocking
facilities located within Avista's service area if all conditions are equal.
9.4 Foreign suppliers may be considered when qualified domestic suppliers are non-competitive, unable
to meet delivery requirements, or the foreign product has design and performance characteristics
desired by Avista that may not be available domestically.
10.@
10.1. Employees are expected to maintain impartial, objective, and fairbusiness dealings with suppliers
while promoting positive supplier relationships in all phases of the contracting and procurement cycle.
(Refer to Avista's Code of Conduct & Ethics for additional information.)
10.2. Special emphasis should be placed on ernployees who are responsible for, or in a position to influence,
the procurement of goods or services including employees with the responsibility to:
o Establish criteria or specifications forprocurernent ofgoods or services;
o Qualiff, evaluate, recommend or select suppliers or contractors;
o Receive, inspect, or accept goods or services on behalf of Avista;
o Manage projects and/or review supplier performance; and/or
o Price, sell, or negotiate the sale ofAvista goods or services.
10.3. Employees must avoid solicitation or acceptance of any gifts or personal favors that may create or
appear to create an obligation by the employee or Avista to provide preferential treatment. To avoid
the appearance of impropriety, Avista pays employee expenses for trips associated with factory or
business visits to supplier sites, etc.
10.4. Passage of one supplier's pricing information to a competitor is not only unethical but can be a
violation of antitrust laws. It is never appropriate to discuss a supplier's products or services with
competitors. Likewise, Avista pricing must not be shared with other suppliers and/or customers of
such other suppliers.
10.5. When on Avista property, suppliers must be escorted by an Avista representative, unless suppliers
have obtained appropriate background checls.
10.6. Concerns with supplier performance (delivery, quality, or conduct) should be brought to Supply Chain
Management for resolution. (Supply Chain Management will involve Lega| as needed.
11.
I 1.1. WLL CALL ORDERS. Employees must present identification at the time of pick-up for any "will
call" purchases. Employees must legibly print their name, department, and./or phone number on
the sales order.
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^#vrsrr Procurement Best Practices for
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11.2. INVENTORYMATERI.AL. Material stocked in an Avista storeroom should be utilized to ensure
compliance with material standards and minimize additional spending on alternative products as
a result of supplemental purchases.
11.3. CREDIT CARDS. For a complete list of acceptable uses of Credit Cards, please refer to Avista's
Credit Card Policies and Procedures.
12.
12.I. FORMS:
The following forms are utilized as part of the procurement practices and must be retained in
accordance with Section 12.2:
o Contract Request Forms.
o Sourcing Approval Forms: Used for Sole source, Awarding Bid to non-lowest bidder, new
agreement replacing an existing agreernent.
o Contract Review and Approval Records: Used to document review and approval of arrangements
for goods and services by authorized representatives of Supply Chain, Legal, BU Managernent, and
Risk Management.
I2.2. RETENTION
l2.2.l.Appropriate documentation, including pre- and post-award records, must be maintained
throughout the life ofthe contract according to corporate policies, procedures, guidelines and
legal/regulatory requirements. These documents include:
. Agreements
. Exhibits/Attachments
. Amendments
. Work Authorizations
. Change Orders
l2.2.2.Doaxrrentation must be saved to the Contracts Network Shared Drive and into the electronic
system of records (i.e. ValueMation).
l2.2.3.Prior to uploading documentation (including Contract Documents, approval forms, etc.) into
the electronic systan of record (i.e. OracleA/alueMation). The Contract Manager, Conhact
Tech or Buyer who scans and saves such documents is responsible for ensuring that the
documentation is complete (i.e. with signature page, no missing pages, attachments, etc.) and
legible prior to scanning, and once scanned, are responsible for confirming that the scanned
documents are complete and legible prior to disposing of the hard copies of such
documentation.
Page 6 of6
Stafi_P R_096 Attachment B
Revised 3/2016
Page 6 ofo
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 041021202r
AW-E-21-01 / AW-c-21-01 WITNESS: David JamesIPUC RESPONDER: David James
Production Request DEPARTMENT: Wildfire ResiliencyStaff-107 TELEPHONE: [phone]
REQUEST:
Please provide a list of all Operation and Maintenance expEnses incurred for the Wildfire
Resiliency Plan for 2019 and 2020. In your response, please provide vendor name, amount, date,
FERC account ntunber, and a brief description of the expense.
RESPONSE:
Please see Staff PR 107 Attachment A.
AVISTA CORPORATION
RESPONSE TO REQITEST FOR INF'ORMATION
ruRISDICTION: IDAHO DATE PREPARED: 0410212021
CASE NO: AW-E-21-01 / AVU-G-21-01 WITNESS: David James
REQUESTER: IPUC RESPONDER: David JamesTYPE: Production Request DEPARTMENT: Wildfire Resiliency
REQUEST NO.: Staff-108 TELEPHONE: [phone]s
REQUEST:
Please provide a detailed listing of the proforma Wildfire Resiliency Plan O&M Expenses for
2021 and2022.
RESPONSE:
Please see Sta{_PR_108 Attachment A. Please note that Avista does not have a 2022 detail O&M
budget as O&M is done year-to-year. See l0-YR Wildfire Resiliency Plan expense discussion in
Mr. Howell testimony forplanned 2022 O&M expenses.
SCADA - SOO and BUCC
EXECUTIVE SUMMARY
This business case provides for replacement of existing technology, as well as for deployment
of new applications and technology as required to address expanding regulatory and business
requirements. This program (Supervisory Control and Data Acquisition - System Operations
Office and Backup Control Center) replaces and upgrades existing electric and gas control
center telecommunications and computing systems as they reach the end of their useful lives,
require increased capacity, or cannot accommodate necessary equipment upgrades due to
existing constraints. Some system upgrades may be necessitated by other requirements,
including NERC reliability standards, federal gas standards, system growth, and external
projects (e.9. Smart Grid). The customers who benefit are all electric and gas residential,
com mercial, and industrial customers (CD.AA).
The estimated costs for the upcoming five years are $4M. The amount requested is based
partially upon historical spending needs, and partially on known upcoming major projects. Within
the program's yearly authorized spend amount, specific budgetary items to be implemented are
determined based on asset condition, life-cycle management, technology enhancements, and
requests by affected stakeholders including System Operations, Distribution Operations, and
Power Supply.
There are multiple risks if this program is not adequately funded. The clearest risk would be to
public and personnel safety. The control systems supported by this business case provide real-
time visibility, situational awareness, and control of Avista's electric and gas systems.
Degradation of these capabilities due to lack of capacity, capability, or aging systems would
present increased safety risk. Additionally there is significant compliance risk. These control
systems provide the capabilities required to achieve compliance with numerous reliability
standards and requirements. For the electrical system these include the NERC standards BAL,
COM, ClP, EOP, lNT, PER, PRC, TOP, and VAR. Forthe gas system these include the PHMSA
"Pipeline Safety: Control Room ManagemenUHuman Factors" rule (49 CFR Parts 192 and 195.)
The expenditure of these funds is necessary to operate Avista's electric and gas systems in a
safe, reliable, and compliant manner.
VERSION HISTORY
Version Author Descriotion Date Notes
Draft Craio Fioart lnitial draft of orioinal business case 07.1.2020
0.2 Craio N Fiqart Draff version of 2020 business case 07.17.2020 Uodated Executive Summarv
1.0 Craio N Fiqart Final version ol 2020 business case 09.21.2020 Based on Maoruder inout.
2.0 Jeremiah Webster
formafting to keep the fonts consistent,
removed some of the blue help text, and
deleted the comments
12.15.2020
Staff_PR_1 09 Attachment A Page 1 of7
Business Case Justification Narrative v1 .0 Page 1 of7
Requested Spend Amount $4M
Requested Spend Time Period 5 years
Req uesting Organization/Department T&D - SCADA/EMS/DMS - System Operations
Business Case Owner I Sponsor Craig N Figart I Mike Magruder
Sponsor Organization/Department Energy Delivery
Phase Execution
Category Program
Driver Asset Condition
SCADA 'SOO and BUCC
GENERAL INFORMATION
1. BUSINESS PROBLEM
1.1 What is the current or potential problem that is being addressed?
ln order to effectively operate the Transmission & Distribution (T&D) Systems, sufficient
business and computing hardware and software is necessary. This business case
provides for replacement of existing technology in alignment with manufacturer product
roadmaps for application and technology lifecycles, as well as for deployment of new
applications and technology as required to address expanding regulatory and business
requirements. Technology continues to change and T&D Systems continue to incorporate
improved technology.
1.2 Discuss the maior drivers of the business case (Cusfomer Requested, Customer
Serwbe Quality & Reliability, Mandatory & Compliance, Pertormance & Capacity, Asset
Condition, or Failed Plant & Operations) and the benefits to the customer
Asset Condition is the major driver of the business case. Other drivers are Customer
Service Quality & Reliability and Performance & Capacity. This business case is crucial in
a key aspect of Our Vision; "Delivering reliable energy service... " lt is essential in providing
sufficient control center technology tools, situational awareness, and monitor/control
capabilities to achieve reliable energy service.
1.3 ldentify why this work is needed now and what risks there are if not
approved or is deferred.
There are multiple risks if this program is not adequately funded. The clearest risk would
be to public and personnel safety. The control systems supported by this business case
provide real-time visibility, situational awareness, and control of Avista's electric and gas
systems. Degradation of these capabilities due to lack of capacity, capability, or aging
systems would present increased safety risk. Additionally there is significant compliance
risk.
These control systems provide the capabilities required to achieve compliance with
numerous reliability standards and requirements. For the electrical system these include
the NERC standards BAL, COM, ClP, EOP, lNT, PER, PRC, TOP, and VAR. For the gas
system these include the PHMSA "Pipeline Safety: Control Room ManagemenUHuman
Factors" rule (49 CFR Parts 192 and 195.)
Business Case Justification Nanative v1 .0 Page 2 ol 7
Stafi_PR_1 09 Attachment A Page2 of7
SCADA - SOO and BUCC
The expenditure of these funds is necessary to operate Avista's electric and gas systems
in a safe, reliable, and compliant manner.
ln addition to the risks related to public and personnel safety, compliance risk would be
increased without this investment. Non-compliant operational capabilities and practices
would result in negative audit findings, significant financial penalties, and litigation
expenses. Obsolete equipment would remain in service until failure. Additional capacity
for growth may or may not be suitable for required expansions to meet other needs (e.9.
Regulatory, Smart Grid.)
1.4 ldentify any measures that can be used to determine whether the
investment would successfully deliver on the objectives and address the
need listed above.
1.5 Supplemental lnformation
1.5.1 Please reference and summarize any studies that support the problem
Not applicable
1.5.2 For asset replacement, include graphical or narrative representation of metrics
associated with the current condition of the asset that is proposed for
replacement.
Not applicable
2.1 Describe what metrics, data, analysis or information was considered when
preparing this capital request.
The below SCADA Capital Spend History chart provides a visualfor past expenditures.
On average, SCADA spends around $700,000 per year. This five year capital request
was prepared using this $700,000 average number for the last three years. The first two
years include significantly larger requests, however, most notably due to the EMS
Upgrade project that we will be wrapped up in 2021. The last EMS Upgrade occurred in
2014 as can be seen in the chart below.
Business Case Justification Nanative v1 .0 Page 3 of 7
Option CapitalCost Start Complots
Do nothing $o
Fully Funded'SCADA - SOO and BuCC' business
case
$1M 01t2021 1212021
Staff PR l09AttachmentA Page 3 of 7
SCADA - SOO and BUCC
SCADA Capital Spend History
r.,400,000.
1,200,000.
1,000,000.
800,000.
600,000.
400,000.
200,000.
0.ln lrln l
2010 2011 2012 20t3 201.4 20t5 20L6 20t7 20L8 20L9
2.2 Discuss howthe requested capital cost amountwill be spent in the current
year (or future years if a multi-year or ongoing initiative). (i.e. what are the
expected functions, processes or deliverables that will result from the capital spend?). lnclude
any known or estimated reductions to O&M as a result of this investment.
This five year capital request of $4M is comprised of $1 M in 2021. The most significant
project driving SCADA's typical capital project expenses above the average $700,000
is the estimated $300,000 additional capital required to complete the EMS Upgrade
project.
The completion of this EMS Upgrade project will eliminate $11k annually in O&M costs
associated with extended operating system support.
2.3 Outline any business functions and processes that may be impacted (and
how) by the business case for it to be successfully implemented.
The EMS upgrade project is required to be completed in order to upgrade hardware
and software that is no longer supported. The EMS upgrade project will also better
accommodate operation under the Energy lmbalance Market.
2.4 Discuss the alternatives that were considered and any tangible risks and
mitigation strategies for each alternative.
Not applicable
2.5 lnclude a timeline of when this work will be started and completed.
Describe when the investments become used and useful to the customer.
spend, and transfers to plant by year.
This is a continuous program. Work is started and completed throughout each year, and in
some cases, such as major upgrades, spans multiple years. Technology continues to
change and T&D Systems continue to incorporate improved technology.
2.6 Discuss how the proposed investment aligns with strategic vision, goals,
objectives and mission statement of the organization.
This business case is crucial in a key aspect of Our Vision; "Delivering reliable energy
service..." lt is essential in providing sufficient control center technology tools, situational
awareness, and monitor/control capabilities to achieve reliable energy service.
Business Case Justification Narrative vl .0 Page 4 ol 7
Stafi_PR_1 09 Attachrnent A Page 4 ot 7
SCADA - SOO and BUCC
This business case is key in accomplishing the Our Focus item of "Safe & Reliable
lnfrastructure.' Providing remote monitor and contro! capabilities to operators is essentia!
in achieving "optimum life-cycle performance - safely, reliably, and at a fair price."
2.7 Include why the requested amount above is considered a prudent
investment, providing or aftaching any supporting documentation. ln
addition, please explain how the investment prudency will be reviewed
and re-evaluated throughout the project
Further justification of the need of this business case is listed below.
o There are numerous mandates in effect which compel these expenditures,
numerous NERC Standards, and PHMSA's Control Room Management rule,
in particular (49 CFR Parts 192 and 195).
o There is no practical risk mitigation should we failto meet these requirements.
o This is a continuous program. Work is started and completed throughout each
year, and in some cases, such as major upgrades, spans multiple years.
o This business case is crucial in a key aspect of Our Vision; "Delivering reliable
energy service..." lt is essential in providing sufficient control center
technology tools, situational awareness, and monitor/control capabilities to
achieve reliable energy service.
o This business case is key in accomplishing the Our Focus item of "Safe &
Reliable lnfrastructure." Providing remote monitor and control capabilities to
operators is essential in achieving "optimum life-cycle performance - safely,
reliably, and at a fair price."
o The amount requested is based partially upon historical spending needs, and
partially on known upcoming major projects.
2.8 Supplemental lnformation
2.8.1 ldentify customers and stakeholders that interface with the business case
o Our Stakeholders include:'i'i#i:r::x
. DistributionOperators
. Gas Controllers
: :ff*ffil,fi'"H:l#::emen'[
. RC West Reliability Coordinator
o Technicians
: ;:'J::':ff"::l", JI;::il?#
n c a ns
o Engineering
Business Case Justification Narrative v1 .0 Page 5 of 7
Staff_PR_1 09 Attachment A Page 5 of 7
SCADA - SOO and BUCC
. Protection/lntegration Engineering
. SubstationEngineering
. Generation Engineering
. Distribution System Operations
o EnterpriseTechnology
. Oracle Database Administrators
. Security Engineering
. Network Engineering
. Network Operations
2.8.2 ldentify any related Business Gases
Not applicable
3.1 Steering Committee or Advisory Group lnformation
The steering committee for this business case is made of the following:
- Director of System Operations and Planning
- Manager of Energy Management Systems (EMS/DMS)
- Senior System Operations Project Manager
3.2 Provide and discuss the governance processes and people that will
provide oversight
The steering commiftee provides governance and oversight of this business case. The
Manager of EMS/DMS has monthly meetings scheduled within the Energy Management
Systems group to track progress of the various capital projects that comprise the total
business case.
3.3 How will decision-making, prioritization, and change requests be
documented and monitored
Decision-making, prioritization, and change requests at the individual capital project level
are taken care of within the Energy Management Systems group under manager
supervision. Any need for substantial change requests to capital projects that would deviate
from the original Capital Project Request (CPR) are documented and submitted to Project
Accounting as a revised CPR. lf the sum total of all SCADA capital projects is expected to
exceed the approved Business Case funding, then a Business Case Change Request must
be approved by the Steering Committee and submitted to Project Accounting.
The undersigned acknowledge they have reviewed the Business Case Justification
Narrative - SCADA -SOO and BuCC - 2020 and agree with the approach it
Business Case Justification Nanative vl .0 Page 6 of 7
Stafi_PR_l 09 Attachment A Page 6 of 7
SCADA - SOO and BUCC
presents. Significant changes to this will be coordinated with and approved by the
u ndersig ned or thei r desi g nated representiatives.
Signature:
Print Name:
Title:
Role:
Signature:
Print Name:
Title:
Role:
Signature:
Print Name:
Title:
Role:
//
Craig N Figart
Date: Dec 16,2020
Date: Dec 16,2020
Date:
Template Version : 05 I 2812020
Manager of SCADA/EMS
Business Case Owner
%a./zn/ 4
Mike Magruder
Energy Delivery Director, System
Operations & Planning
Business Case Sponsor
Steering/Advisory Committee Review
Business Case Justification Nanative vl .0 PageT o17
Staff_PR_1 09 Attachment A Page 7 of 7
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 0410612021
AVU-E-2I-01 / AVU-G-21-01 WITNESS: JeffSchlectIPUC RESPONDER: Jeff Schlect/CraigFigart
Production Request DEPARTMENT: TransmissionStaff-109 TELEPHONE: [phone]
REQUEST:
Regarding NERC CIP security regulatory obligations in JeffSchlect Direct Testimony, pages 3-5,
please provide business case documentation or project selection analysis documents for all
projects that were utilized and the requirements they satisfu.
RESPONSE:
Please see Staff PR_109 Attachment A - the Company's 2020 business case justification narrative
covering supervisory control and data acquisition (SCADA) systems for the Company's System
Operations Office (SOO) and Backup Control Center (BuCC).
Referencing the third paragraph of the Executive Summary in this business case, the Company
describes in general how systems for these two control centers
...provide the capabilities required to achieve compliance with numerous
reliability standards and requiranents. For the electrical system these include the
NERC standards BAL, COM, CIP, EOP, INT, PER, PRC, TOP, and VAR... The
expenditure of these funds is necessary to operate Avista's electric and gas systems
in a safe, reliable, and compliant manner.
The Company has no individual project selection analysis documents since the Company must
comply with each and every mandatory NERC CIP standard. The Company is providing a
sunmary of the NERC CIP systems managed under this business case by vendor along with a
reference to at least one of the associated mandatory NERC CIP standard requirements that the
system fulfills:
l) Alstom Grid - Operating system security update validation service
NERC CIP-007 Table R2 - Security Patch Management
This service is part of the "patch management process" required as part of NERC
CIP-007-6 R2 that requires, for examplo, o'A patch management process for tracking,
evaluating, and installing cyber security patches for applicable Cyber Assets..." GE
provides this service for the security updates provided for the Company's main SCADA
systern software.
2) Fortinet - Licensing and support for security updates to SCADA firewalls
NERC CIP-007 R2 - Security Patch Management
Fortinet provides security updates for the Company's System Operations control center
firewalls that define the boundaries of the control center "Electronic Security Perimeters."
This service is part of the "patch management process" required in compliance with NERC
CIP-007-6 R2 that requires, for examplo, 'oA patch management process for tracking,
evaluating, and installing cyber security patches for applicable Cyber Assets..."
Page 1 of3
3) Tenable/Security Center - Licensing and support for Systern Operations control center
wlnerability scanning syston
NERC CIP-010-3 R3 - Vulnerability Assessments
Tenable is a vulnerability scanner used to ensure that systems are fully patched and have no
insecure configurations or passwords. This system enables the performance of
vulnerability assessments as required by NERC CIP-010-3 R3 which states, for example,
"Prior to adding a new applicable Cyber Asset to a production environment, perform an
active vulnerability assessment of the new Cyber Asset..."
4) Tripwire - Monitoring system licensing and support
NERC CIP-010-3 Rl and R2 - Configuration Change Management
Tripwire provides system monitoring of Cyber Assets to determine if any unauthorized
changes have taken place. This enables compliance with NERC CIP-010-3 Rl and R2
which states that entities must develop a o'baseline configuration" for each system or group
of systerns and monitor for changes that deviate from that baseline.
5) Kaseya - Backup and recovery system licensing and support
NERC CIP-009-6 - Cyber Security - Recovery Plans for BES Cyber Systems
Kaseya provides a computer backup system that is part of meeting Requirement 1.3, which
mandates "One or more processes for the backup and storage of information required to
recover BES Cyber Systan functionality."
6) ManageEngine/Desktop Central - Security patch deployment system licensing and support
NERC CIP-007-6 R2 - Security Patch Management
Desktop Central is part of the "patch management process" in compliance with NERC
CIP-007-6 R2 that requires, for example, "A patch management process for tracking,
evaluating, and installing cyber security patches for applicable Cyber Assets..." Desktop
Central provides for the deployment of security patches for applicable Cyber Assets.
7) ManageEngine/OpManager - Electronic Access Control and Monitoring software licensing
and support
NERC CIP-007-6 R4 - Security Event Monitoring
OpManager is used to manage access control and monitoring of network devices. In
compliance with NERC CIP-007-6 R4, Requirement 4.1, for example, the Company must
"Log events at the BES Cyber System level (per BES Cyber Systern capability) or at the
Cyber Asset level (per Cyber Asset capability) for identification of and after-the-fact
investigations of, Cyber Security Incidents..." OpManager provides for the monitoring of
activity on network devices to meet this requironent.
8) ManageEngine/Password Mgr Pro - Password management system licensing and support
NERC CIP-007-6 R5 - System Access Control
ManageEngine provides licensing and support for Password Manager Pro that enables the
management of passwords within the control center. This system facilitates the
Company's automated ability to meet Requirement R5 that requires password changes at
least once every 15 calendar months.
9) Server Hardware Vendor - hardware and software maintenance on-site support agreement
NERC CIP-007-6 Table R2 - Security Patch Management
This service is part of the "patch management process" required in compliance with NERC
CIP-007-6 R2 that requires, for example, "A patch management process for tracking,
Page 2 of3
evaluating, and installing cyber security patches for applicable Cyber Assets..." This
server hardware vendor provides hardware maintenance and software support for the
Company's System Operations control center computer systems.
l0) VanDyke SecureFX/VShell - Licensing and support for secure file transfer software
NERC CIP-011-2 Table Rl - Information Protection
NERC CIP-011-2 Rl requires "Procedure(s) for protecting and securely handling BES
Cyber System Information, including storage, transit, and use." The NERC guidelines and
technical basis for this requirement call out information protection as pertaining to both
digital and hardcopy information. Secure file transfer software is required in the
Company's SCADA control center environment to protect and secure any "BES Cyber
System Information" that traverses the networks and boundaries within the control center.
I l) Extended Legacy Operating System Support - security update subscription
NERC CIP-007-6 Table R2 - Security Patch Managernent
This service is part of the "patch management process" required in compliance with NERC
CIP-007-6 R2 that requires, for examplo, "A patch management process for tracking,
evaluating, and installing cyber security patches for applicable Cyber Assets..." Microsoft
provides this extended support service for the security updates they supply for the
Company's SCADA system operating system software.
Page 3 of3
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR TNFORMATTON
IDAHO DATE PREPARED: 0410612021
AVU-E-21-01 / AW-G-21-01 WITNESS: JeffSchlectIPUC RESPONDER: JeffSchlect/Craig Figart
Production Request DEPARTMENT: Transmission
Staff-l l0 TELEPHONE: [phone]
REQUEST:
Regarding NERC CIP security regulatory obligations in JeffSchlect Direct Testimony, pages 3-5,
please describe how the projects and investments included in the NERC CIP hansmission
expenses are different from other IS/IT business cases, to include NERC CIP Compliance
enterprise security.
RESPONSE:
The projects and investments associated with the Company's "SCADA - SOO and BUCC"
business case and included in its NERC CIP transmission expenses are separate and distinct from
other IS/IT business cases because the Company's System Operations control center systems are
distinct systems, separate from the Company's broader enterprise security systems. Unlike the
Company's broader enterprise security systems under the IS/IT organization, except for its
physical security systems, the Company's system operations systems must meet the full breadth of
mandatory NERC CIP standards, including regular audit certifications under WECC oversight.
The Company manages these critical information and conhol systems separately and distinctly
from the Company's broader IS/IT security systerns.
For example, the Company's supervisory confrol and data acquisition (SCADA) system, a critical
systan necessary for the reliable operation of the Company's high-voltage transmission grid, must
meet a wide array of NERC CIP standards, such as CIP-007 - System Security Management and
CP-010 - Configuration Change Management and Vulnerability Assessments. While it is just as
important for the Company's non-system operations systems (i.e. its customer information
system) to be secure, these broader IS/IT enterprise systems do not fall under mandatory NERC
CIP standards.
AYISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 0410712021
CASE NO: AW-E-21-01 / AW-G-21-01 WITNESS: J. Kensok / L. Andrews
REQUESTER: IPUC RESPONDER: David PlutTYPE: Production Request DEPARTMENT: IS/IT
REQUEST NO.: Staff-ll l TELEPHONE: [phone]
REQUEST:
Regarding Elizabeth M. Andrews Workpapers - t) PF 3.04 ID ISIT Adj 2020, please describe the
categoization of IS/IT costs and why they differentiate from enterprise technology identification.
Please include a detailed list of costs associated with each system type.
RESPONSE:
For the detailed list of costs associated with each system type please refer to StaflPR_lll
Attachment A - 1) PF 3.04 ID ISIT Adj 2020 w 2022. See tab "Original Submission Pivof' for a
detailed list of the original submission data. As part of the response we have also provided 2020
actuals. See tab "ISIT - 2- Non-Labor Actual" which replaces 2020 pro-forma with 2020 actuals,
see tab *2020 Update List Pivot" for the detailed list of costs with 2020 actuals associated with
each system type.
ln reference to the request "please describe the categoization of IS/IT costs and why they
differentiate from enterprise technology identification", we interpret the request to be a question of
why systerns names used in StaflPR_l11 Attachment A - 1) PF 3.04 ID ISIT Adj 2020 w 2022
tab "ISIT - 2 - Non-Labor" called "Central Systems, Communication Systems, Distributed
Systems and Network Systems" as in the screenshot here:
Svstems
Communic€fii]ns Systems
Disffih.iled Sysfierns
l,letuvort Sy$erns
Business Application Systems,
are not present in the categories used to describe general functional areas of enterprise technology
referenced in "Kensok Testimony ID 2021- ISIT testimony, page 31, Table No. 2 - Non-Labor
lncremental System Expense (System) as in the screenshot here:
TableNo.2-Non-Labor fncremental S
Security Systems
Enabling Technology
Business & Operati ngApplicatl on tems
The general functional area of technology we call "Enabling Technolory" as referenced in Table
No. 2 above encompasses more granular areas of technology infrastructure we call 'oCentral
Systons, Communication Systems, Distributed Systems and Network Systems." Here is a general
description of each:o Cenhal Systems include expense associated with the Company's data centers, such as
servers, storage, computer processing, and disaster recovery planning.
Communications Systems include expense associated with the Company's enterprise voice
communications, such as inbound and outbound calling, call centers, two-way radio crew
communications, and cellular communications.
Distributed Systems include expense associated with employee productivity tools, such as
tablets, desktops, laptops, printers, and Microsoft Office products.
Network Systems include expense associated with products, services, and leases that
provide network and telecommunication solutions for the delivery of energy, safety
systans, customer contact channels, and back office productivity.
A more detailed and thorough description of the categories Enabling Technology, Business &
Operating Application Systems and Security Systems can be found in 'oKensok Testimony ID
2021" ISIT testimony, page 5 line 3 through pageT line 9 which is copied here:
a. How is Avista's technolory investments structured to support business
processes?
A. Avista's technology investments fall into two major areas: enabling technology and
business and operating application systems. Additionally, we take an enterprise-wide
approach to security and disaster recovery (resiliency) that envelopes our technology
investment efforts to protect our people, our assets, and our facilities. Our business
continuity/resiliency plan was tested this year during our COVID-19 pandemic response,
exacerbated by windstorms and wildfires that resulted in wide-spread outages throughout
our service territory. Our enabling technology (e.9., datalvoice networks, customer and
electric/gas asset managernent databases) along with the business and operating
applications such as our Website, SCADA applications, and Outage Management Systern
performed very well.
Specifically, enabling technology, consists of the technology infrastructure (such as data,
endpoint compute and storage that includes hardware such as Personal Computers (PC)
Laptops, Smartphones and Digital Storage. Enabling technology also includes operating
systems, network transport connectivity which include devices like routers and switches.
Additionally, enabling technology includes databases and data schemas, integrations,
business intelligence tools, communication and collaboration platforms, etc. necessary to
enable business capabilities through business application systems. It is the foundation on
which we deliver energy safely and reliably, meet business objectives, and create value
for our customers.
Illustration No. I below shows the relationship between Enabling Technologies, I
Business & Operating Application Systems and Enterprise Security and how those fit into
the 2 difterent capital business cases discussed later in my testimony.
a
Illustration No. 1- Business Technolosv Structure:
Enterprise Security
[e-9. ,hyrrcal, Cyber, Bulmst Contnum
. rnd &srit6 Rsmry)
EnablingTechnologY
-i"r,ffi ,"'"1$;*m,"*t'm;I:l'
Business & Operating
Application Systems
Business and operating application systems are represented above as customer at the
center (as discussed by Company witnesses Mr. Vermillion and Mr. Magalsky), shared
business systems and energy resources enable business capabilities. Some of the
capabilities within these areas include: providing customers with near real-time
information on outages and estimated restoration times or automated bill-pay options,
electric and natural gas service design in the field for prompt installation of new electric
or natural gas service, storm damage assessment for quicker restoration efforts, fleet
vehicle use and driving data to plan vehicle maintenance and increase driver safety,
real-time vibration monitoring for large generators to optimize performance and avoid
maintenance outages, track training courses for employees to meet compliance
requirements, and many more. Business application systems enable business capabilities
by automating business processes to optimize efficiencies and add functionality that
cannot be duplicated manually at scale. Some examples of this include a
three-dimensional imaging of system planning, geographic spatial positioning of assets
in the field, near real-time information on system performance, or storage of volumes of
compliance data to meet annual requirements from various agencies. Together, both
platforms (enabling technology and business and operating application systems) work
symbiotically to enable business capabilities. Enabling technology does not exist just to
exist, just as business application and operating systems cannot exist without enabling
technology. And just as importantly, neither of the two can co-exist without proper
security to protect the information that is used to make business decisions and deliver
energy to our customers.
BusinessShared 5y1.,Iegalsy( ,RctoulctHrmm srr14ggul|lingFin&
andBesourcegEnergY Ot,l.Be9C^DA.sYs.Asra MgnrtlcE.r l.ntlSnlnlGeDgraPh{s!a.MBrlil
CertertheatCugtomergitlln6,I({r€customlr\ilcb.l€TcchlCenlrr(3ll516,
Wildfire Resiliency Plan Business Case, April 2020
1 GENERAL INFORMATION
Requested Spend Amount $268, 965, 00 O (2020 -2029) CAPX
$ 59, 586, 000 (2020 -2029 OP X)
Requesting Organization/Department Electric Operations
Business Case Owner David Howell
Business Case Sponsor Heather Rosentrater
S ponsor Organ ization/Depailm ent Electric Operations
Category Program
Driver Custo mer Service Quality & Relidility
1.1 Steering Committee orAdvisory Group lnformation
The effort to construc't a comprehensive Wildfirc Resilhncy Plan has been gukjed by steering
commiftee mernbers:
David Howell, Direc'tor, Elecfric Operations
B ruce Howard, Sen ior D iredor, E nvi ronnental Affu i rs
Elizabeth Andrews, Senbr Manager, Regulatory Affairs
Greg Hesler, Vice Presiderl, Legal
Bob Brandkamp, Senior RiskProgram Manager, Finarrce
Alicia Gibbs, Manager, Asset Maintenance
Casey Fiel d, M anager, Corporate Com mu nications
Annie Ganno n, Manag€r, Corporate Com munications
2 BUSINESS PROBLEM
Avista has a long hisbryof
responding to adverse
environmental conditions
including wildfire events. Since
1 970, the frcquency and sire of
wildf ires has increased
throughout the Western UniEd
States and is related to a warmirg
climate, persistrent drought, and
forest health conditions. At the
same time, more and more
people are choosing to live near
forested areas orthe Wildland-
Urban lnterface (WUl). This
combination of more frequent ard
largerf ires combined with an
increasing population, has
resulted in wildfire becoming a
more significant business risktM
needs to be mitigated.
Number of llrcs larger tha 1.000 acrer per year oo U.S. Forest Servlce land
Large Wildfires lncreasing Across the West
8il 20r
ts
to
60
0
E'O
Staff_PR_1 1 2 Attachment A
Business Case Justfi cation
2m
Rev: March 26,2021 Page 1 of16
Page 1 of16
Wildfire Resiliency Plan Busrness Casq April 2020
ln 2017, a record number of wildfires burned across Washington State with the Department of
Natural Resources (DNR) responding to over 1,850 individual fires. ln 2018, the Crescent Mountdn
Fire near Twisp, Washington, cost more than $40 million to srppress. DNR recently announced a
plan to raise $63 million in annual revenues to improve forest health and combatwildfires. To
reduce operating risk electric utilities are developing wildfire mitigation plans with emphasis in three
key areas:
'1. Risk-Based Vegetation Management-to align vegetation strategieswith riskassessments
and s up pl emert traditional, cycle-based vegetatbn m ai ntenance.
2. lnfrastructure Hardening - to upgrade and proted infrastructure and prevent spark-ignition
events (e. g. eq uipment failure).
3. Emergency Response and Monitoring Systems - to transition from reliability peformance
paradigms to risk-infsmed planning and operating structures. Emerging systems include
d igital data inspections (LIDAR & photogramrnetry), artificial intelligence fire behavior systems,
and system protection.
ln April of 2019, a Wildfire Resiliency Plan charter was published
describing three plan objectives:
Emergency Operatims Readiness -to train, prepare, and
posture Avista personnel and fire agency partrers to respmd to
the threat of wildfire.
Public Safety -to conduct community oufeach and promote fire
adapted communities. To partnerwith fire protection agencies
including the ldaho Department of Lands and the Washirgton
Department of Natural Resoures.
T&D Asset Gondition Programs - to reduce the likelihood of
spark-ignitbn events related to T&D operatbns by replairg agirg
inf rastructure in fire prore areas.
Rev: March 26,2021 Page 2 of16
Stafi_PR_1 1 2 Attachment A
Business Case Juslifi cation
Page 2 of 16
Wildfire Resiliency Plan Busrness Case, April 2020
This business case reflects proposed actiors associated with T&D opaations, asset replaement
programs, and engineering design & construdion. Though business cases are generally related to
capital investmenb, thb business case includes cost projections for both capital investmenb and
operating expense to reflect the scope of the program. Rather than assign components of Wildfire
Resiliency to exbting projects and programs, the Wildfire Steering Committee recommerds a
holistic approach, treatirg Wildfire Resiliency as an unified system rather than discrete
comporents.
Transmission - thotgh the likdihood of fhe ignition is relatively low, the impacts associated with
transmission involved wildfires can be significant. Between 2014 and 2018 the electric
transmission system experienced 625 sustdned outages. The vast majority of fansmission
outages were related to winter storms and summer lightnirg activity. Transmission line faufts resrJt
in approximately 3-5 ground fires peryear.
Distribution - between 2014 and 2018 there were 6,200 unplamed outiages per year resulting in
approximatelyl00spark-ignitioneventsandanoher90polefires. lngeneral,thedisfibution
system is 50 times more likely than transmission to produce a spark-induced fire.
.ProbaHy of spark ignition is low (3-5 times per year)
oTra ns miss'ron related wi ldfires tend to be remote a nd I a rger (e.g. na ti onal
forest) butfa ll outside Wildland Urban lnterface a reas.
rDi rect i mpact to i nfrastructure i s Moderate to Hi gh
.Low Proba bility x Moderate-High lmpact = Low-Moderate Risk Exposure
Tra nsmission
Risk
.Probatility of spark ignitim is Moderateto High (- 100 per year,90
confi rmed pole fi res)
.The liabilityexposure of a utility induced fire can ra qge from millions to
billiorsofdollars. DistributionrelatedwildfirestendtofallirsideWUlareas.
.Di rect i mpact to i nfrastrucure is Low to Moderate
o(High Probability)x (Moderate-High lmpact)= High Risk Exposure
Distribution
Risk
Rev: March 26,2021 Page 3 of16
Stafi_PR_1 12 Attachment A
Business Case J uslifi cation
Page 3 of 16
Wildfire Resiliency Plan Busfness Case, April 2020
2.1 BUILDING A RISK.BASED WILDFIRE STRATEGY
The Wildfire RiskAnalvsis Summarv identifies the inherent risk (curent state) and mitigated risk
(future state) associated with Plan elements. Risk is defined as the probability or likelil"pod of an
event combined with the impact or @nsequence of that event.
To illustrate, considerthe inherentriskof a house fire. ln 2010, there were 362,100 residenthl
house firesoutof ll4million U.S. householdsresultinginaneffectiverateof 0.317%o. 1n2010,
insurance claimstotaled $6.65 bill'an or $18,365 per unit. The annual risk oostassociated with a
single home is:
2010 U.S. Home Fire Risk = ProbabilityX Consequene = 0.317%oX $18,365= $58.22.
As noted, the risk of transmission sourced wildfie is relatively low, though the impact to
transmission infrastructure can be significant. Transmissbn lines are vulnerable to wildfkes with
many of them routed through forested areas and away from cities and roadways. ln 2019, the
Walla Walla-Wanapum 230 kV line was impacted by wildfire on two separate omasions, resulting
in costs exceeding two-million dollars.
The inherent risk of wildfire is much more than the cost to replace damaged infrasfucture. Unlike
other storm events, the carce and origin of a wildfire can result in civil and criminal liability. To
quantif y these risks, a series of wildfire workshops were convened in May-June of 2019. Six
workshops were held to identify the design, operational, and maintenance related risks associated
with transmission and disfibution facilities. The workshops were f acilitated by the Business
Process lmprovencnt group (Bryan Powers, Cetena Mock)with guiJance from Avists's risk
management expert Bob Brandkamp. The groups identified over one hundred and sixty potential
mitigatirg strategies and approximately thirty of those elements have been promoted intc Avista's
Wildf ire Resiliency Plan (draft document pending BOD/exeative approval, May 2020).
lncluded in the Wildfire Resiliency Plan are estimates of the inherent risk (current state), together
with projections of the mitigated risk (future state), and capital & operating costs. Values shown in
the table indicate monetized risks and costsfrom 20201o2029.
lnherent Risk or
Gurrent State ($)
Mitigated Risk or
Future State ($)
Cost Estimate ($)
BenefiUCost
8.058 18.24B,
l
l
29B.2.M2
49
5
i
I
I
i
:
I
59,586,000
2020-2029
Wildfire
Resiliency
Optimistic Pessimistic Capital
Investment
Operating
Expense
Staff PR 112 Attachment A
23
Busi ness Case J uslification
268,965,000
Page 4 of 16
Rev: March 26,2021 Page 4 of16
Wildfire Resiliency Plan Business Case, April 2020
The Wildf ire Resiliency Plan costforecasts are shown below.
Avista Wildfire Resiliency
Plan Cost Forecast
ElCapital EOperating
l I
2027 2022 2023 2024 202s 2026 2027 2028 2029
s16,98s s27,0ss s31,38o s31,380 s31,380 s31,380 s31,380 $31,380 s31,380
ss,1s4 s6,800 s7,31e 57,337 s6,7ss Se,sza 56,042 ss,611 5s,079
S3s,om
530,om
S 2s,ooo
3 s20,ooo
oo 515,000
sm,0m
5s,o0o
5o
E capital
EOperating
In
2020
ss,26s
52,e66
ln total, the c4ital investmentforthe 10-year perird from 202G2029 is $268,965,000 with a
co nes p ond ing o perati ng expense of $59, 586, 0@.
3 PROPOSALAND RECOMMENDEDSOLUTION
The Wildf ire Steering Commitee supports the following twenty eighty plan elemenb to mitpate the
riskofwildfire. lnordertodbtingubhtransmissionanddistributionelements,anumberingscheme
was developed. For instance ST-12 is transmission grid hardening which involves convertirg
wood poles to steel in elevated fire risk areas. Similarly, D-l6/17 is grid hardening for the
distributbn slatem and involves replacing wood crossarms, removirB small copperwire, and
converting critical structures from wood to steel.
Rev: March 26,2021 Page 5 of '16
Stafi PR l12AttachmentA
Business Case Justfi catbn
Page 5 of 16
Wildfire Resiliency Plan Business Case, April 2020
Wildf ire Plan elemenb are grouped into four categories:
a Grid Hardening and Dry Land Mode
Enhanced Vegetation Management
a SituationalAwareness
a Operations and Emergency Response
3.1 GRID HARDENING AND DRY LAI\D MODE
Grid hardening makes infrasfirchrre less likely to ignite
a f ire and more resilient to he impact from fire. T&D
g rid hard ening from 2020 thro ugh 2029 represenb a
$246 million dollar investment.
The Wildland Urban lnterface map (see inset) indicates
the risk of wildfire associated withAvbh'sT&D
system. Areas shown in orange and red highlQht are
the mo st f ire prone and represe nt 40o/o of Avisf a's
distribution and 20o/o of the transmbsion system.
Transmission - ln 2006, Avista fully inorporated
'steel poles'into despn standards. This decision
f ollowed the 2005{6 fire seasons in which the Bentorr
Othello I ine was s ignificanty fire d amaged. Although
Avista has mde stedy progress toaards conversion,
most circuits are predominartly comprised of wood
poles. The strategy to protect transmission sfuctures
from wildfire is two{old:
Fire Reistant Mesh Wrap on wood poles
located in grassland areas
Conversion from wood poles to steel in
heavilyforested areas
a
lntrrfrcr l
o
a
a
rlt
-ia^,
d1
I
/'
-a
?
, j'l;i'
| ""
..'f.
;tF-o.
i
a
,r.a
f ,1d a
os \I*t ao'
aI oG)Itjr { 3
Stafi_PR_1 12 Attachment A
Business Case Justfi cationRev: March 26,2021 Page 6 of '16
Page 6 of 16
Wildfire Resiliency Plan Busrness Case, April 2020
ln grassland areas such as the Big Bend area, low intensity grass
f ires are common and can have sigrificant impactto unprotected
wood poles. ln 2019, two separate fires impaded the Walla
Walla-Wanapum 230 kV line. Wood poles had been treated with
Osmose fire retardant paint and thoughfire bumed through 17
miles of line, only4 sfuctures were desfoyed byfire. However,
collateral damage caused by dowred structJres impacted another
21 structures. ln total, 25 strucfures were replaoed at a cost of
over 2 million dollars. Fire retardant paint provkles good
protection but requires re-application every 3-5 years.
Transmission engineering plans to substitute FR pole painting
with a Fire-Mesh product by Genics Corpordion. This will be a
more permanent solution.
ln March of 2020, Iransmission Enginering conductd a fied ted
of the Genic's Fire-Mesh product. Wad poles ttrcre subjected to
30 minutes of continual fire exposure with only minor damage.
The product is a slee/ screen coated wih a graphite material that
chemically reactswhen expo*d to high ternperature. The
mateial expands andessntially sealsthe pole.
Though Fire-Mesh is an exciting new produd, its useis limited
to grassland areas and is not generally suitablefortraditional
f orest fires. ln these areas, wood poles will be converted to
steel in order to protect against crown type fires. As slrcun on
the previous p4e, AvisE infrastrudure is most at risk in the
Colville and ldaho Panhandle forestareas. This represenb
areas with high concenfations of fueland moderate
residential development. lt is these areas where transmission
grid hardening efforts will convert wood poles to steel.
Transmission Steel Pole near
Ninth & Central Substation
Rev: March 26,2021 Page 7 of16
Staff PR 112 Attachment A
Business Case J uslification
Page 7 of 16
Wildfire Resiliency Plan Business Case, April 2020
Distribution - From 2014lo 2018, there were over 460 poles fires with 270 of those fires ocarning
betweenMayandSeptember(fireseason). Additionally,therewere3,225equipmentfailuresand2,STS
animal related events during that S-year tine span. Each of these events represenb a potential spark-
ignition source 4gl related to external forces such as wind, weather, or lighhing.
D istribution grid hardening efforts will focr.rs in the elevated fire risk areas (WUl Tier 213) and include:
Replace all wood crossarms with fiberglass (the primary source of pole fires)
Replace small copperwire with aluminum (obsolete material)
Gonvert open wire secondary districts to covered wirc seryices
lnstall wildlife guards
Convertwood poles to steel at'high value' structres
(heavily guyed poles, equipment poles)
a
a
a
a
a
Since the early 2000s, Avish has deployed a summeroperating
strategy known as Dry Land Mode (DLM). During Dry Land Mode, a
portion of the distribution system is operated with auto reclosing
disabled. This limib he energy transmitted to a circult fauft location
and thereby, reduces the likelihood of starting a f ie. As part of
Wildf ire Resiliency, DLM will be modemized and include the
installation of additional circuit reclosers. By stategically locating
circuit reclosers at WiHland lnterface bourdaries, protection of fire
prone areas can be adapted to match conditbns on the ground.
This is a significant improvement over the cunent configuratbn. A
diagram is included to illushate the process.
DRY LAND MODE (Current and Proposed Future State)
162of345 Distdbution .
Orcuib in DLM program
determlned by Arca Engineers
Distribution Forced
Outages (2014-2018)
Annual Rate
OH Equipment - 645
Tree-387
Animal - 557
Pole Fire - 92
All Weather -2,424
System Total- 6,157
DLM Persistr in single mode
throughout fire season
(typ'rcalV late July to early
October)
Historically, DLM declaration
atthe discretion ofthe Chief
System Operator
DLM 86.. Fuse Bhi/ing sdranrq
Non Rcclosint (samc as cungrt ,
prognm)
Dt"tl Y.llow - Two lnstiltaneo6
trlps vr,lth slnde reclose
Dl"ill R.d- Hot lJnc Hdd (slrEle
lntantaneous tlip)
DIM declaration based from
USFS F ire Threat Conditions
(implemented June 2019)
,Current
State lnclusion based on Wildland
Urban lnGrface Map
Tler 2-3 YES
Tler l Maybe
Non-WUl NO
Future
State
Rev: March 26,2021 Page 8 of16
Staff_PR_l 12 Attachment A
Business Case Justifi cation
Page 8 of 16
Wildfire Resiliency Plan Busrness Gase, April 2020
A summary of T&D grid hardening progmms is shown below:
The associated monetized risks and costs are sumrnarized below
lnherent Risk or
Current State ($)
r'aiiigrt"o nisi or
Future State ($)
GostEstimate($)
BenefiUcost
1.388
0.228
3.37B
0.918
13.1
245,600,000 4,0005,01
5.4
Wldfirc T&D Grid Hardening
ST.6 TransmissionWood Pole FR Fire Mesh
Wrapping Program
To protectthe ground lineareaof transmission
wood poles subjectto grass fires. Genics Fire-Mesh
orod uct to reolace fi re retardanl oaint.
ST-10 Transmissio n Fire lnspectio n
Additional inspection and follow-up activities of
transmission lines located in elevated firethreat
areas.
s-12 Transmission Grid Hard ening Converting wood poles to steel in elevated fire
threat areas-
D-6 DLM'eng i neeri ng review/study'
Repo rt and reco mmend atio nsfro m DLM
subcommittee to align DLMwith WUI map and
provide for dynamic alig nmentof DLM with
o revailino fi re-weather co nditio ns
D-8 DLM trigger'
Using USFS fire threat cond itionsto declare the
base level DLM program (implemented in June
2019)
D-13 DLM mid line circuit reclosers lnstallation of new circuit reclosers near boundary
location of WulTiers 2lSfrom Non WlJl areas-
D-16 WA Distribution Grid Hardening
WA co mponent of work to replace wood crossarms,
smal I co pper wire, and to i nstall wild I ife g uard s i n
WtIl Tier areas 2 and 3 /elevaterl fire th real)
o-17 lD Distribution Grid Hardening Same as above. ldaho portion
2020-2029
T&D Grid Hardening
Optimistic Pessimistic Capital
lnvestment
Operating
Expense
Rev: March 26,2021 Page 9 of16
Stafi PR ll2AtlachmentA
Business Case Juslification
Page 9 of 16
Wildfire Resiliency Plan Business Case, April 2020
The 10-year cost forecast for grid hardening capital investment and operating expense is indicated below.
Grid Hardening & Dry Land Mode Operations
Plan Cost Forecast
ECapital EOperating
oO
3s,000
30,000
2 5,000
20,000
15,000
10,000
5,000
0
El Capital
Eoperating
n_
202L
r5,200
461
-7025
2 8,800
501
2020
4, 500
455
2022
24,300
411
i 6.248
2023
2 8,8 0C)
481.
2024
2 8,800
49.1
12.92B
-2026
2 8,8 00
561
-2027
2 8,800
521
-2028 2029
28,800 28,800
3.2 ENHANCEDVEGETATION MANAGEMENT
Trees contact Avista powerlines approximately 400 tincs per year and represent a significant risk of fire
ignition. The objective of enhanoed vegetation managernent is to transitbn from solely reliability-based
to risk-based methods, especially in the elevated fire threat areas. Though primarily an operating
expense category, Avista does plan to widen transmission rightsof-ways in fire prone areas which would
include capihl ouflays. The 10-year risk and cost evaluatbns are shown below.
531 541
5,100,000 51,175,000
lnherent Risk or
Gurrent State ($)
'-1
I
Mitigated Risk or
Future State ($)
Cost Estimate ($)
BenefiUCost
412M 1.87B
19604I
I
2020-2029
Enhanced Vegetation
Management
Capital
lnvestment
Operating
Expense
Optimistic Pessimistic
Rev: March 26,2021 Page 10 of 16
Staff_PR_l 12 Attachment A
Business Case Juslifi cation
Page '10 of 16
Wildfire Resiliency Plan Business Gase, April 2020
lndividual plan elements include:
ST-5 and D-l4 Digital Data Collection - to conduct aerial and ground based LIDAR surveys
togetherwith high resolution photography, and infrared imaging. Machineleaming algorithms will
be used to idertify threats from vegetation both from a proximity (grow-in) and tree health (fall-in)
perspective and used to identify sfucture defects such as fracfured crossarms, damaged
insulators, and leaky transformers.
ST-7 Fuel Reduc'tion Pailnerships - tree thinnirg and presoibed burns conducted in conjunction
with local fire and state agercy partners.
ST-9 Transmissim Right-of-Way - to widen conidors in elevated fire risk areas.
D.4 Vegetation Management in GPG Designs - to incorporate initial vegetation clearing in
d istributbn d esign packages.
D-l0 Distribution Risk Tre - to conduct annual risk tree assessment on the d istibution system.
Cunently, risk tree work is performed every 5 years.
D-l1 Public Outreach 'Right Tree-Right Place' - to work with custrcmers in elevated fire risk
areas to remove tall growing trees undemeah powerlines and replace them with line-compatible
species.
As noted, the bulkof this effort involves operating expense elements, however, widenirg
transmission conidors and incorporating initialvegetatbn clearing into distibutbn designs are
capitalprojects. Anannualcaoitalinvestmentof$5l0.000isforecasilfrom2020to2029fora
totalof $5.100.000.
Enha nced Vegetation M a nagement
Plan Cost Forecast
ElCapital EOperating
OOc@
7,000
6,000
5,000
4,00t)
3,000
2,m0
1,000
0
El Capi tal
El Ope r ati ng
,ll
2 07t)
510
2,27 5
n
2A) 1
510
4,400
n
2023
5i0
6,500
l/l))
5i0
6,000
2024
510
6,500
2026
510
5,6tJ0
)o),1
5i0
5,150
n
2028
510
4 700
)02 9
510
4 150
n n
2025
510
5 ,900
Rev: March 26,2021 Page 11 of 16
Staff PR ll2AttachmentA
Business Case Juslifi cation
Page 11 of 16
Wildfire Resiliency Plan Busfness Case, April 2020
3.3 SITUATIONALAWARENESS
This category includes constructing a fire-weather dashboard to combine short term weather forecast
elements such as tempeature, wind speed, and relative humklity with longer term fire threat conditions
such as drouglt and forest health metrics. lt includes substatbn and distribution line communication
elements to allow monitorirB and control of equipment in f ire prone areas.
The associated monetized risks and costs are summarized below
lnherent Risk or
Gurrent State ($)
Mitigated Risk or
Future State ($)
GostEstimate($)
BenefiUCost 8 31
lndividual plan elements include:
ST-2 Fire-Weather Dashboard - to develop a f ire risk
displayfor transmbsion and distribution operatirB stdf. This
supports alignment of field tactics with prevailirB fire
conditions.
D-I2 Midline Recloser Communication -to retrofit modem
d istri butbn circuit rcdosers wih communication equi pment.
This is part of an overall strategy to enhance Avistas Dry
Land Mode system (see inset).
D-I5 100% Substation SGADA-to extend substatbn
monitoring and control capabilities into rural, f[.e prone areas
such as Colvlle, Kellogg, and Grangwille.
The 1O-year cost forecast is shown on the subsequent p4e.
The bulk of the investment relates to adding substation
SCADA equipment. Av ista cunently operated thrty-three
substation without SCADA. When f ire crews respond to an
incident, they often requestthat powerlines be de-energlzed.
Without SCADAcontrol, line personnel must be dispatched to
perform switching which is not onlytime consuming butalso
exposes Avbta personnelto fire sdety hazards.
Dry Land Mode
Since the earll 2000's, Avista has
reconliguretl a portion of the
distribution system to operate as'lton-reclosing' during fire seasolt.
In addition, a stancling order (SOP)
requires that all transmission line.
be patrolled ;rrior lo re-
energization. The Wildlire Plarr
calls 1'or a rer,'iew of this pruceduui:.
Elements iclentit'ied in Situational
Arvareness gr()up supporl this
e flir rt.
151M 585M
7M5M
17,965,000 1,019,000
2020-2029
Situational
Awareness
Optimistic Pessimistic Capital
lnvestment
Operating
Expense
Rev: March 26,2021 Page 12 of 16
Staff_PR_l 1 2 Attachment A
Business Case J uslification
Page 12 of 16
Wildfire Resiliency Plan Busrness Case, April 2020
SituationalAwareness
Plan Cost Forecast
ECapital Eloperating
ooo
2,500
2,000
1,500
1,000
500
0 [:
2020
220
2
202r
1,190
57
2022
2,735
97
2023
2,060
99
7024
2,MO
t07
2025
2,060
116
2426
2,060
724
2021
2,060
133
2028
2,060
147
2029
2,060
749
E Capital
E ope rating
3.4 OPERATIONS AI\ID EMERGENCY RESPONSE
Though the invesfnents in this grouping are relatively low, the risk reductbn is s(;nifbant with efforts
focused on partnering with fie professionab, sdety training, condition-based risk assessment, and
co llecti ng paformance metics.
The assocbted risks and costs are summarized below.
269M
73M
GostEstimate($)2,378,000
BenefiUCost 73 390
lnherent Risk or
Current State ($)
Mitigated Risk or
Future State ($)
1.368
319M
300,000
2020-2029
Operations &
Emergency Response
Capital
lnvestment
Operating
Expense
Optimistic Pessimistic
Staff_PR_1 1 2 Attachment A
Business Case Juslifi catbnRev: March 26,2021 Page 13 of 16
Page 13 of 16
Wildfire Resiliencv Plan Business Ca se, April 2020
lndividual Plan Element include:
Operations and mergency
The 10-year cost forecast for c4ital investment and operating expense is ind bated below
Operations & Emergency Response
Eialrital ElOperating
EOP & FirelCS Representation
Transmission Design Reviewof Major Events
Wi ldfi re Perfo rmance Metrics
Emerg ency Respo nd er Train in g
Expedited Fire Response
Fuse Coord ination Study
Recloser Event Reporting
Fire lg n ition Tracking System
Fire Sup p ressio n \uetti n g' agent
WUI layer in GIS
Arcos Wildfi re Notifi cation
To i n co rporale wild fi re resil iency p lanning i nto
Avista's EOP documentation. To commitAvista
resources at Fire lncid ent Co mmand.
After a major event, allowa 24-48 hourengineering
assessment p rio r to reco nstructio n.
To establish leading and lagging indicators
associated with wildfire resiliency (e.9. fire ignition
events, # red flag days, tree fall-in, etc.)
To p rovid e an n ual fi re safety and electrical h azard
trai n i n g fo r Avista I i n e p erso nnel and fi refig hti ng
personnel, respectively.
Partner wilh fire agencies to investigatethefire
potential fo llowing transmbsbn linefault events.
To conductannual distributionfuse system analysis
en suri n g p ro per d own stream co o rdi nation between
circuit reclosers and fuses.
To analyze all d istri butio n circuit recloser events
simi lar to what currently o ccurs fo r transmissio n
circuit breakers.
To develop afield tracking systemto identify spark-
ignition events related to T&D operations
Chemical add itives such as'cold fi re' can be used to
extend the effectiveness ofwater as a fire inhibitor.
To maintain Avista's wildland urban interface (WUl)
dataset within theAFM/GlS system
To maintain an ARCOS notification systemin the
event of a wildfire.
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Rev: March 26,2021 Page 14 of '16
Stafi_PR_1 1 2 Attachment A
Business Case J uslifi cation
Page 14 of 16
Wildfire Resiliency Plan Business Case, April 2020
Summary
The eff ort to mitigate the impact of wildfires is a top-tier risk for Avbh and for utilities throughout the
westem United States. The cumulative impac'ts associated with declining forest health and increasing
populations have combined to make wildfhe a significant threat to communities and our economy.
Avista's approah to nitpating his risk includes engagement wih key shkeholders includirg fire agency
professionals, building on Avista's 130 year history, and adheren@ to cost prudency standards.
The Wildf ire Resiliency prognam reflects a year-long effort to identify opportunities to reducefire risk. Ttis
effort is described in four doaments:
March 2019-Wildfire Resiliercy Plan Charter
Septem ber 201 I - Wi ! dfi re Ri sk Analysi s Sumrn*y (proposed acti ms)
January 2020 - Wi ldfi re Resi I iercy Gost Forecast
Apri I 2020 - Wi ldfi re Resi I iency Plan (drffi pendi ng acceptance)
These documenb are available from the Wildfire Resilieney Plan Manager
Arilrr t,lilaues
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Rev: March 26,2021 Page 15 of 16
Staff PR l12AttadmentA
Business Case Justifi cation
Page 15 of 16
Wildfire Resiliency Plan Business Case, April 2020
4 APPROVAL AND AUTHORIZATION
The undersigned acknowledge they have reviewed the Wildfire Resiliency Plan business case
and agree with the approach it presents. Significant changes to this will be coordinated with and
approved by the undersigned or their designated representiatives.
Signature:
Print Name
Title:
Role:
Signature:
Print Name:
Title:
Role:
Signature
Print Name:
Title:
Role:
David Howell
D irecto r, Electric Operations
Date
Date:
Date:
Business Case Owner
Heather Rosentrater
Sr. VP, Energy Delivery and Shared
Services
Business Case Sponsor
Alicia Gibbs, Greg Hesler, Bob
Brand kamp, Bruce Howard, Liz Andrews,
David Howell, Casey Field, Annie
Gannon
vanous
Steering/Advisory Committee Review
5 VERSION HISTORY
Template Version: 03107 12017
Version lmplemented
By
Revision
Date
Approved
By
Approval
Date
Rmon
1.0 David James 3/30/20 lnitial Submissbn
Rev: March 26,2021 Page 16 of 16
Stafi_PR_1 1 2 Attachmenl A
Business Case J ustfi cation
Page 16 of 16
ruRISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 0410212021
AW-E-21-01 / AW-c-21-01 WITNESS: David JamesIPUC RESPONDER: David James
Production Request DEPARTMENT: Wildfire ResiliencyIPUC-112 TELEPHONE: (s09) 49s-418s
REQUEST:
Regarding the Wildfire Resiliency Plan in Heather L. Rosentrater Direct Testimony, pages 19-20,
please provide all business case documentation or project selection analysis documents for all
projects that are in the Wildfire Resiliency Plan. Please describe how wildfire resiliency project
costs are differentiated from other project costs.
RESPONSE:
Please see Staff PR_l12 Attachment A for the Wildfire Resiliency Plan Business Case previously
provided with Company witress Mr. Howell testimony Exhibit 12. Exhibit 12 included all
Wildfire Resiliency Plan supporting documents.
Wildfire Resiliency Project costs have been assigned their own Master Activity Code (MAC) for
O&M expenditures and Expenditure Request (ER) number for Capital expenditures, so all
Wildfire costs roll up to these categories. Most costs are charged directly to each appropriate state
via an organization number e,mbedded into the project number.
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED
AVU-E.2I.01 / AW-G.2I-01 WITNESS:IPUC RESPONDER:
Production Request DEPARTMENT:Staft-114 TELEPHONE:
041021202t
Clint Kalich
Annette Brandon
Power Supply
(s09) 49s-4324
REQUEST:
Please provide workpapers that derive the following2019 actuals and the pro forma net power
costs from Mr. Kalich's Exhibit 9.
Item 2019 Actuals
(Thousand Dollars)
Pro Forma
(Thousand Dollars)
Chelan PUD 15,277 14,680
Douglas PUD 2,629 3,615
Grant PUD 9,438 11,273
Lancaster PPA 28,141 28,467
Lancaster Combined
Cycle Combustion
Turbine
27,247 29,254
BPA Point-to-Point for
Colstrip, Coyote Springs 2
& Lancaster
12,322 14,350
WNP-3 under Account
555
7,911
WA WNP3 - reconciling
items (not in ERM/PCA)
88
WNP-3 under Account
565
472
RESPONSE:
Please see Avista's response ll4c, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and233, and Section 9-340D, Idaho Code.
Please see the table below for the information requested. Please note the final three items in the
table below were for reconciliation pumoses only to the general ledger (system numbers) and are
not included in the Idaho Authorized Power Supply Adjustment.
Item 2019 Actuals (fhousand
Dollars)
Pro Forma
(fhousand Dollars)
Chelan PUD Staff PR 114 Attachment A Kalich Workpapers - Conf
Aurora Portfolio Output
Douglas PUD Staff PR I 14 Attachment A Kalich Workpapers - Conf
Aurora Portfolio Output
Grant PUD Staff PR 114 Attachment A Kalich Workpapers - Conf
Aurora Portfolio Output
Lancaster PPA Staff PR 114 Attachment A Kalich Workpapers - Conf
Aurora Portfolio Output
Lancaster Combined
Cycle Combustion
Turbine
Staff PR 114 Attachment C Kalich Workpapers - Conf Fuel
Costs
BPA Point-to-Point for
Colstrip, Coyote Springs 2
& Lancaster
Staff PR 114 Attachment B BPA Borderline - proforma uses
5 year average
WNP-3 underAccount
555
Staff PR 114 Attachment A Washington Only
WA WNP3 - reconciling
items (not in ERMIPCA)
This item was mislabeled and
should represent Solar Select
StaflR_l 1 4C Confi dential
Attachment D
Washington Only
WNP-3 under Account
565
Staff PR 114 Attachment B Washington Only
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
ruRISDICTION: IDAHO DATE PREPARED
CASE NO: AW-E-21-01 / AW-G-21-01 WITNESS:
REQUESTER: IPUC RESPONDER:TYPE: Production Request DEPARTMENT:
REQUEST NO.: Staffi115 TELEPHONE:
04/02t2021
Clint Kalich
Annette Brandon
Power Supply
(s0e) 49s-4324
REQTJEST:
Please provide a copy of each of the following confracts:
a. Chelan PUD contract
b. Douglas PUD contract
c. Grant PUD contract
d. The Lancaster PPA
RBSPONSE:
Please see Avista's response 115C, 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, ard Section 9-340D, Idaho Code.
Please see the following attachments:
e. Chelan PUD contract- Staff PR I 15C Confidential Attachment A
f. Douglas PUD contract - Sta[PR_l15C Confidential Attachment B and Staff PR I l5C
Confidential Attachment C
g. Grant PUD confract- Sta{_PR_l15C Confidential Attachment D
h. The Lancaster PPA - Staff PR I l5C Confidential Attachment E