20121231Avista to Staff 103-109,113,114,117,118etc..pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
December 28, 2012
iiVIS TA'
REC Ell \PED Corp.
DEC 31 AMD 06
PU
•
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83720-0074
Attn: Karl T. Klein
Weldon B. Stutzman
Deputy Attorney General
Re: Production Request of the Commission Staff in Case Nos. AVU-E-12-08 and
AVU-G- 1 2-07
Dear Mr. Klein and Mr. Stutzman,
Enclosed are an original and three copies of Avista's responses to IPUC Staffs production
requests in the above referenced docket. Included in this mailing are Avista' s responses to
production requests 103 -109,113,114,117,118,121,122,124,127— 131, and 137-144. The
electronic versions of the responses were emailed on 12/28/12 and are also being provided in
electronic format on the CD included in this mailing.
Also included are Avista's CONFIDENTIAL responses to PR 108C, 117C and 130C. These
responses contain TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and
is separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code,
and pursuant to the Protective Agreement between Avista and IPUC Staff dated October 16,
2012. It is being provided under a sealed separate envelope, marked CONFIDENTIAL.
If there are any questions regarding the enclosed information, please contact Paul Kimball at
[phone] or via e-mail at [e-mail]
Sincerely,
Paul Kimball
Regulatory Analyst
Enclosures
CC: all parties
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jeanne Pluth
TYPE: Production Request DEPARTMENT: State & Fed. Reg.
REQUEST NO.: Staff-103 TELEPHONE: [phone]
REQUEST:
Please provide a description and method of calculation for allocation basis/reference number 16 in
Report ID G-OTX- 1 2A in the Gas Results of Operations Report for the test year (12 months
ending 6/30/2012).
RESPONSE:
Factor 16 is no longer used by the Company. The reference to factor 16 should have been changed
to factor 1, which is identified on page G-OTX- 1 2A in the Gas Results of Operations Report.
Factor 1 is the system contract demand allocation factor that was used to allocate those costs on
that report.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jeanne Pluth
TYPE: Production Request DEPARTMENT: State & Fed. Reg.
REQUEST NO.: Staff-104 TELEPHONE: [phone]
L!1i1iJ
Please provide a description and method of calculation for allocation basis/reference "JP" in the
Gas Results of Operations Report for the test year (12 months ending 6/30/2012). Please verify the
date of the data used to develop the allocation versus the date published in the report.
RESPONSE:
The JP factor uses the net plant investment in the Jackson Prairie storage facility. The factor is
calculated using the December 31 balance for the upcoming year. For example, the balance at
December 31, 2011 was used for all months in 2012, including June 30, 2012 reports.
Please see Staff _PR-1 04-Attachment A for the calculation of the factor.
406,993.93 0.00 406,993.93
59,811.72 -20,211.58 39,600.14
841,323.45 -399,597.55 441,725.90
282,549.34 -182,682.33 99,867.01
52,850.07 -34,525.57 18,324.50
110,236.38 48,429.91 61,806.47
61,655.69 -40,278.17 21,377.52
12,567,367.22 -4,625,947.12 7,941,420.10
254,354.23 -239,177.12 15,177.11
203,330.47 -54,311.10 149,019.37
5,359,690.41 -3,522,557.31 - 1,837,133.10
1,044,477.12 -473,762.91 570,714.21
1 1,374,727.18 -1,893,028.64 9,481,698.54
173,783.82 420,842.09 594,625.91
407,617.44 -355,505.01 52,112.43
1,477,939.85 -676,959.15 800,980.70
34,678,708.32 -12,146,131.38 22,532,576.94
117.33 0.00 117.33
1,043.51 0.00 1,043.51
16,383.43 -372.24 16,011.19
903,208.25 -49,919.37 853,288.88
1,464,161.54 -24,589.35 1,439,572.19
450,620.15 -47,340.71 403,279.44
62,303.99 -4,720.96 57,583.03
2,846,545.24 -169,163.23 2,677,382.01
0.00 0.00 0.00
7,206.14 -229.39 6,976.75
5,751,589.58 -296,335.25 5,455,254.33
40,430,297.90 -12,442,466.63 27,987,831.27
80.5%
19.5%
Staff—PR-1 04-Attachment A.xls
2011 JP Balances at 12/31/2011 Page 1 of I
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12121/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jeanne Pluth
TYPE: Production Request DEPARTMENT: State & Fed. Reg.
REQUEST NO.: Staff-105 TELEPHONE: [phone]
REQUEST:
Please provide the Oregon Gas Results of Operation report for twelve months ending June 30,
2012.
RESPONSE:
Please see Staff _PR_i 05-Attachment A for the 12 Months Ended June 30, 2012 report prepared
using the average of monthly averages (AMA) basis, which is being provided electronically.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/19/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: IPUC RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-106 TELEPHONE: [phone]
REQUEST:
Given that Idaho has no RPS requirement, does Avista plan to use 100% of the RECs produced by
the Palouse Wind project to satisfy RPS requirements in Washington? Does Avista believe that
Idaho is entitled to a share of the Palouse Wind project RECs even though Idaho has no RPS
requirement? Does Avista plan to sell Idaho's share of the RECs and credit the revenue to Idaho,
or alternatively, to impute revenue to Idaho-equal to the value of Idaho's share of the RECs if it
chooses to use all of the project's RECs to satisfy Washington RPS requirements?
RESPONSE:
Avista plans to meet its Washington RPS requirements with qualified hydroelectric upgrades, The
Palouse Wind Project and the Kettle Falls generating station.
Avista believes that Idaho customers are entitled to their pro rata share of value from RECs
generated from all of Avista's electric generating resources. This value will accrue to Idaho
customers in a manner similar to other REC sales currently made for renewable projects, as is
detailed in Company witness Johnson's testimony. As RECs are sold, Idaho customers will
receive their pro rata share through base retail rates or the PCA. If any portion of RECs
attributable to Idaho customers are used to satisfy Washington RPS requirements, Idaho customers
will be credited market value for those RECs.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/19/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: IPUC RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-107 TELEPHONE: [phone]
REQUEST:
Given that Idaho has no RPS requirement and that Avista's 2011 IRP does not show a need for new
energy resources to meet load until 2018 (Lafferty, Direct, p. 15 and Exhibit 4, Schedule 1), please
explain how Idaho ratepayers specifically benefit from the Palouse Wind PPA. To the extent
possible, please quantify any identified benefits for Idaho ratepayers.
RESPONSE:
Avista's planning for future generation resource needs is based on the internal analytic work
completed in the integrated resource planning process, which results in a 20-year Preferred
Resource Strategy (PRS) that includes "... a mix of wind generation, energy efficiency, upgrades
at existing generation and distribution facilities and new gas-fired generation. The IRP process is
augmented by the public participation of"...customers, commission staff, the Northwest Power
and Conservation Council, consumer advocates, academics, utility peers, government agencies
and other interested parties" (2011 IRP, p. i), and other interested parties through the Technical
Advisory Committee (TAC). TAC members"... play a central role in guiding the development of
the PRS and IRP as a whole by providing significant input on modeling and planning assumptions,
and the general direction of the planning process" (2011 IRP, p. i). The IRP considers all current
and expected future state and federal rules and laws regarding generation needs during the 20-year
planning horizon for the Company's entire system. The IRP does not segment resource needs by
jurisdiction.
After determining the need through the IRP process, The Palouse Wind PPA was acquired through
a competitive RFP process to ensure that the best choice was made of the available renewable
generation resource types identified in the Preferred Resource Strategy. The 2009 and 2011 IRP
processes had both identified the need for a wind resource in 2012 to serve all customers.
The benefits to Idaho customers associated with the Palouse Wind Project fall into many
categories and include, but are not limited to:
• Substantial state and federal tax benefits for the completion of the project by December
31, 2012. These include the imputed savings for the expiring 30 percent federal
investment tax credit and the expiring Washington state sales tax exemption on wind
generation equipment.
• Significantly lower priced wind generation equipment and construction compared to
what was available in the 2009 RFP or with the development of the Reardan Wind Site.
• Locks in a wind site that meteorological reports identify as a higher wind capacity
factor than most wind sites in the region.
• A 30-year fixed priced resource, with an option to purchase the project after ten years.
Page 1 of
. Significantly lower priced than other approved utility scale Idaho PURPA wind
projects signed at the time of the Palouse Wind Project (see
Staff _PR_i 08 Confidential Attachment A).
. Reduced power supply financial variability and risk as discussed in the 2009 and 2011
IRPs.
Increased fuel diversity and decreased fuel risk as discussed in the 2009 and 2011 IRPs.
Idaho's share of generated RECs sold into the marketplace will benefit Idaho
customers.
Page 2 of 2
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 12/19/2012
AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
IPUC RESPONDER: John Lyons, Ph.D.
Production Request DEPARTMENT: Energy Resources
Staff-108 TELEPHONE: [phone]
REQUEST:
Please compare on a monthly basis for 2013 the cost of purchases under the Palouse Wind PPA to
the expected cost of market alternatives as indicated by internal price forecasts, broker quotes or
forward-prices. If the cost of market alternatives is less than the cost of purchases under the
Palouse Wind PPA, does Avista believe that Idaho ratepayers should be responsible for the higher
cost of the Palouse Wind PPA? Please explain.
RESPONSE:
Please see Avista's response 108C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 3 1.0 1.0 1, Rule 067 and 233, and Section 9-340D, Idaho Code.
The Palouse Wind PPA is a long-term (30-year) firm resource that provides all of the benefits to
Idaho customers as described in detail in Staff Production Request 107. As such, a comparison of
a snapshot of a single year of forward market prices is not appropriate or comparable to the value
represented by a single year of costs from a 30-year firm resource. Many of Avista's resources or
long-term purchases have a higher cost than the current, low spot market power prices. That,
however, does not mean they were not prudent acquisitions or that customers should not pay the
full costs. Staff PR_lO8Confidential Attachment A provides the 2013 monthly forward market
data requested for two dates: 6/28/12 and 12/18/12.
To reflect a more appropriate long-term resource pricing comparison, also included in the
confidential attachment is a comparison of long-term annual PURPA prices effective in the state of
Idaho to the annual costs of the Palouse Wind Project. This annual price comparison does not
include the value of Renewable Energy Credits (RECs)-that Idaho customers will realize from the
Palouse Wind Project.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/19/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Robert J. Lafferty
REQUESTER: IPUC RESPONDER: John Lyons, Ph.D.
TYPE: Production Request DEPARTMENT: Energy Resources
REQUEST NO.: Staff-109 TELEPHONE: [phone]
REQUEST:
If the Idaho Commission ultimately decides not to allow recovery of above-market costs of the
Palouse Wind PPA until the Company can demonstrate a need by Idaho ratepayers, how will
Avista attempt to recover the costs of the PPA (e.g., assign all costs and benefits of the PPA-to
Washington, resell Idaho's share of the project output and associated RECs, something else)?
RESPONSE:
Avista has made no decisions concerning potential disallowance of costs associated with the
acquisition of the Palouse Wind PPA. The Company believes that it has demonstrated the Palouse
Wind PPA is a prudent, long-term, firm, system resource acquisition based upon the competitive
process through which it was acquired; the analysis and documentation provided in this case in
Company witness Lafferty's testimony; and its consistency with the Preferred Resource Strategy
as laid out in the Company's 2009 and 2011 Integrated Resource Plans. The Company's
generation resource acquisitions are guided by the integrated resource planning process as
described in detail in Staff Production Request 107.
Through base retail rates and the PCA, Idaho customers will receive their share of benefits from
Palouse Wind, including the value of the energy and any ancillary benefits, including REC sales
revenue, non-carbon premiums, and any other ancillary benefits derived from renewable
generation.
For further information and/or benefits see Avista's responses to PR 106-108.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 /AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jennifer Smith
TYPE: Production Request DEPARTMENT: State & Federal Reg
REQUEST NO.: Staff- i 13 TELEPHONE: [phone]
REQUEST:
Please provide a schedule of lobbying and/or political action committee expenses associated with
or allocated to Avista Gas and Electric Operations for the test period (the twelve months ending
June 30, 2012). Please describe the nature of the expenses, the payee, amounts paid, accounts
posted, transaction/voucher number, date paid, and cross-reference where the expense was
removed from the Company's filing.
RESPONSE:
The Company is not aware of any lobbying and/or political action committee expenses allocated to
Avista Gas and Electric Operations for the test period (the twelve months ending June 30, 2012).
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jennifer Smith
TYPE: Production Request DEPARTMENT: State & Federal Reg
REQUEST NO.: Staff- i 14 TELEPHONE: [phone]
REQUEST:
Please identify any extraordinary expenses, revenues, gains or losses for the years 2011 and 2012
to date that were directly assigned or allocated to Avista Gas and/or Electric Operations. Please
describe the circumstances, identify dates of relevant events, amounts, transaction/voucher
number, date of transaction, and accounts posted including how and where items were amortized.
If any of these costs were included in the Company's filing please identify where they were
included.
RESPONSE:
The Company does not believe there are any extraordinary expenses, revenues, gains or losses for
the test period, which is the twelve months ended June 30, 2012. Each month, as the Results of
Operations reports are prepared, the Company reviews unusual fluctuations in revenues and
expenses. All prior period costs are removed at that time. In addition, the Company prepares a
monthly summary of Unusual Journal Entries. When preparing the current rate case, the Company
reviewed these summaries. Based upon our review of the unusual journal reports for the test
period, there were no material extraordinary expenses, revenues, gains/loss, out-of-period
adjustments or extraordinary items.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Mark Thies
REQUESTER: IPUC RESPONDER: Rich Stevens
TYPE: Production Request DEPARTMENT: Risk Management
REQUEST NO.: Staff -i 17 TELEPHONE: [phone]
REQUEST:
Please provide a detailed schedule of any insurance settlements, refunds, legal settlements and the
like that occurred during 2011 and 2012 to date. Please include within your response the
nature/reason for the funds received or awarded, the date of the award, the account numbers
posted, transaction/voucher number, dollar amounts posted and how they were included in the
Company's filing. If they were not included in the Company's filing, please describe why not.
RESPONSE:
Please see Avista's response 117C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code.
Page 1 of!
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED: 12/21/2012
AVU-E-12-08 / AVU-G-12-07 WITNESS: Mark Thies
IPUC RESPONDER: Rich Stevens
Production Request DEPARTMENT: Risk Management
Staff-1 18 TELEPHONE: [phone]
REQUEST:
Please provide a detailed schedule of any insurance settlements, refunds, legal settlements and the
like that have not occurred but are pending or likely to occur. Please include within your response
the nature/reason for the funds to be received or awarded, the potential date of the award, the
account numbers to be posted, and approximate dollar amounts to be posted.
RESPONSE:
There are no current or pending matters that are expected to result in insurance settlements in favor
of Avista. The future outcomes of pending claims are uncertain and results could vary from our
current expectations.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 / AVU-G42-07 WITNESS: Dave DeFelice
REQUESTER: IPUC RESPONDER: Howard Grimsrud
TYPE: Production Request DEPARTMENT: Projects/FA Accounting
REQUEST NO.: Staff-121 TELEPHONE: [phone]
REQUEST:
Please describe the process by which costs associated with abandoned projects are recorded.
Please include within your response the total costs recorded in the test year (12 months ended June
30, 2012) by account and a detailed spreadsheet (in Excel format) identifying the project number,
project description, expenditure type, vendor description, transaction description, transaction
amount, date posted, document/transaction number, and total amount posted. If any of these costs
were included in the Company's filing please identify where they were included.
RESPONSE:
Capital investments are recorded in capital projects or suspense projects. For capital projects,
costs are recorded in FERC account 107 (Construction Work in Progress) during the planning and
construction of the project. For suspense projects, costs are recorded in either FERC account 183
(Preliminary Survey and Investigation Study Costs), or FERC account 186 (Miscellaneous
Deferred Debits).
For both types of projects (capital and suspense), when the project is approved, a project number is
assigned. During the active phase of a project, costs are processed through various systems and
interfaced to Oracle Projects. The systems of original cost entry include:
• UltiPro - payroll transactions
• Oracle Supply Chain - inventory
• Oracle AP - voucher transactions
• Financial Support System -project related journal entries
• Appropriate overhead allocations are processed and recorded in the project through an
Oracle Projects burdening process.
• AFUDC is calculated and posted through a capitalized interest process in Oracle Projects.
Once the capital project is deemed used and useful, the costs are transferred to plant in service.
Periodically, a capital project will be canceled. If a project is canceled the accumulated project
costs are generally handled through one of the following methods.
1. If the costs provide no benefit to other construction projects, the costs in the recording
project are written off to expense through transfer to an appropriate expense project. All
burdens and AFUDC are reversed. Once the project has a zero balance it is closed to
prevent further charging.
2. If any costs provide benefit to other construction projects, the appropriate charges are
transferred to the other capital projects and any remaining costs are transferred to an
appropriate expense project. As in 1 above, all burdens and AFUDC are reversed andthe
project is closed to prevent further charging.
Once a decision has been made regarding a suspense project, the costs are either transferred to a
capital project, so the costs of the construction project can be recorded in FERC account 107, or
the costs are transferred to the appropriate operating expense account for those -projects
abandoned. The appropriate operating expense account is determined for each project, based on
whether the costs of the preliminary investigations will provide benefit to other utility projects and
to customers.
In some instances the project may be part of a broader objective, where circumstances change and
another alternative becomes a more cost-effective solution to meet the objective. In that instance,
the Company may seek recovery of the investment in the abandoned project through a filing with
the commission. For example, in the past the Company began preliminary survey and
investigation toward construction of a new generating resource which was later abandoned,
because of a change in circumstances. In these instances the Commission has generally provided
recovery of the costs of the abandoned project through amortization and recovery of the costs over
a period of time.
Staff PR_1 21 Attachment A includes a listing of costs that were transferred during the test period
for all projects abandoned during the test year. Total system costs transferred were $117,086.
$96,835 was transferred to another capital project. The remaining $20,251 was transferred to
expense (O&M, A&G) which was included in the Company's test period. This equates to
approximately $4,500 Idaho electric and $1,300 Idaho natural gas that is included in the
Company's test period.
..of:.BURDEr&
107040
107110
107300
107400
107500
107610
107628
107632
108000
300100
587000
595000
870000
920000
921000
935670
________ is as li-mi4 •.•. ........
4,497 1,611 ¶ 6,108
4,453 ________ . . - 4,453
1,100• 1,100
638 1,412 2,050
4,181 1,125 166 5,472
2,560 . 2,560
(1,611) 379 . . (1,232)
5,906 5,888 21,108 3,841 36,267 2,488 825 76,323
190 ________ . ______ 190
2,268 2,268
283 _________ 283
6,742 6,742
42 42
10,726 . •• ...
1127O ' .................*I41,O22 .: 65 ,32,488 28 : zO94 0 111O86 ::
Staff—PR-121 Attachment A.xlsx Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Dave DeFelice
REQUESTER: IPUC RESPONDER: Howard Grimsrud
TYPE: Production Request DEPARTMENT: Projects/17A Accounting
REQUEST NO.: Staff-122 TELEPHONE: [phone]
REQUEST:
To the extent not provided in response to the previous request, please provide a detailed listing of
costs expensed during the test period (12 months ended June 30, 2012) for capital projects not
approved. Please separately identify within your response those costs included within the
Company's Idaho rate case filings for electric and natural gas rate increases.
RESPONSE:
Please see the Company's response to Staffs Production Request No. 121.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Jennifer Smith
TYPE: Production Request DEPARTMENT: State & Federal Reg
REQUEST NO.: Staff-124 TELEPHONE: [phone]
REQUEST:
Please identify the FERC account and subaccount to which any expenses were written off, the
transaction/voucher numbers, date posted, amount posted, transaction description and the
corresponding amounts allocated to Idaho contained within the Company's general rate case.
RESPONSE:
Please see the Company's response to Staff Production Request 114. After receiving clarification
from IPUC staff, during their onsite audit visit, it is the Company's position that any expenses
written off, other than "usual" or bad debt write-offs, would be included in the listing of unusual
journals recorded during the test period (twelve months ended June 30, 2012) which includes,
"out-of-period adjustments" and "extraordinary items".
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/'i8/2012
CASE NO: AVU-E-12-O8 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Ben McArthur
TYPE: Production Request DEPARTMENT: General Accounting
REQUEST NO.: Staff-127 TELEPHONE: [phone]
REQUEST:
Please provide a schedule of prepaid items as of December 31, 2011 and on a quarterly basis for
2012 showing amounts, vendors, explanations and accounts used.
RESPONSE:
Please see Staff PR 127 Attachment A.
001 165100 PREPAYMENTS-PREPAID INSURANCE
001 165150 PREPAYMENTS-PREPAID LICENSE FEES
001 165180 PREPAYMENTS-CUSTOMER BILLING SUPPLIES
001 165260 PREPAYMENTS-SPOKANE TRIBE
001 165270 PREPAYMENTS-REC & CCX
001 165280 PREPAYMENTS - PM&E
001 165312 GAS IMBALANCE - LANCASTER
001 165320 GAS IMBALANCE-AVISTA LDC
001 165320 GAS IMBALANCE-AVISTA LDC
001 165320 GAS IMBALANCE-AVISTA LDC
001 165340 GAS IMBALANCE-COYOTE SPRINGS 2
001 165350 GAS IMBALANCE-RATHDRUM
001 165360 GAS IMBALANCE-NORTHEAST CT
001 165370 GAS IMBALANCE-BOULDER PARK
001 165380 GAS IMBALANCE-KETTLE FALLS CT
001 165390 GAS IMBALANCE-KETTLE FALLS GS
001 165550 PREPAYMENTS-WILMINGTON TRUST
001 165681 PREPAYMENT LAKE CdA 4e CDR FUND
See enclosed schedule (165100 sheet) U ZZ DL 4,490,990.42 3,724,810.49 2,383,61653 1,308,920.93
See enclosed schedule (165150 sheet) U ZZ DL 1,314,849.55 1,996,986.46 2,464,168.91 2,024,422.82
Forms for customer service/supplies are
expected to turn over every nine months
therefore 1/9 of balance will be charged to the
expense each month. 09900710-903153-915-
H51 $XXX.XXX 165180-ZZ-ZZ-DL U U DL 99,643.62 50,029.32 44,400.64 65,201.51
Quarterly balance sheet restatement of
positions (n the monies/out of tie monies) in
account 134120, which is the Newedge
clearing/margin account. Refer to DJ473-
Newedge. U ZZ DL 7,156,422.50 - 8,656,351.00 8,156,002.56
United States Postal Service U ZZ DL 56,654.84 27,565.90 17,753.78 41,194.59
City oRathdrum U U DL - 119,997.00 79,998.00 39,999.00
Moscow Prepaid U ZZ DL - - - -
BPA—deposit payment for transmission
reservations U U DL 81,870.31 81,344.00 81,625.08 116,344.00
RLS Lime Contract—depletion rate of
$37,500/mo. U U DL 1,846,106.46 1,733,663.46 1,621,106.46 1,506.977.46
Annual amortization of the Spokane Tribe -
Little Falls Settlement. Annual payment is
determinate upon contract terms and prior
year generation etc. U ZZ DL - 609,28650 406,191.00 203,095.50
ZZ ZZ DL - - - 300,800.00
Spokane River Relicensing PM&E
prepayment U U DL - - - -
Various gas pipeline vendors ED AN DL 39,893.40 14,397.79 1,435.34 19,229.10
Various gas pipeline vendors GD ID DL 43,400.99 (31,222.73) (2,409.44) 5,639.08
Various gas pipeline vendors GD OR DL 100,358.82 99,971.65 136,766.46 110.45
Various gas pipeline vendors GD WA DL 94,941.01 (75,044.86) (5,319.15) 10,126.18
Various gas pipeline vendors ED AN DL 60,556.78 38,765.12 (47,707.12) (6,279.67)
Various gas pipeline vendors ED AN DL 948.14 12,466.58 4,306.06 4,593.16
Various gas pipeline vendors ED AN DL (6,310.04) (79.70) 891.28 (1,516.39)
Various gas pipeline vendors ED AN DL (7,222.21) (11,401.36) 745.31 11,831.94
Various gas pipeline vendors ED AN DL 170.01 (3,166.46) 1,729.49 (1,704.10)
Various gas pipeline vendors ED AN DL (4,443.19) (5,538.64) (247.70) 184.79
Monthly amortizations U U DL 167,753.15 145,721.90 123,690.65 101,659.40
Coeur d'Alene Reservation Fund U ZZ DL 999,999.98 499,999.97 (0.04) 1,499,999.99
Total 16,536,584.54 9,028,552.39 15,969,092.54 15,406,832.30
001 165190 RESOURCE DEFERRED OPT EXPENSE
001 165200 PREPAYMENTS-POSTAGE METERS
001 165210 PREPAYMENTS-RATHDRM MUN DVLPMT
001 165230 PREPAYMENTS-MOSCOW OFFICE SALE
001 165240 PREPAYMENTS-BPA TRANS RESERVATION
001 165250 COLSTRIP PREPAID ASSET
Staff—PR-127 Attachment A.xlsx Page lofi
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/18/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Mark Thies
REQUESTER: IPUC RESPONDER: Adam Munson
TYPE: Production Request DEPARTMENT: General Accounting
REQUEST NO.: Staff-128 TELEPHONE: [phone]
REQUEST:
Please provide the total amounts spent on the following activities during the test period (12 months
ending June 30, 2012) and show how the amounts were allocated between regulated and
non-regulated operations:
a.Internal auditing expenses (by employees and others);
b.Avista Corporation's annual report;
c.Avista's filings with the SEC;
d.External audits and consulting;
e.Overhead items including utilities, property taxes, security services, and other
corporate headquarters' expenses.
RESPONSE:
Avista directly assigns all costs to Avista Utilities/Corp. and to its subsidiaries; therefore, there is
no allocation of costs between the entities.
On a regular basis, general office employees of Avista Corporation spend time on corporate
service support, such as accounting, federal income tax filing, planning, graphic services, etc. for
subsidiaries. Their time is charged to suspense accounts (Deferred Debit 186), loaded for benefits
and then established as a receivable (Account 146) when billed to the subsidiary. If other
resources are expended during the course of this work such as travel or consulting services, these
costs are also charged to suspense accounts and billed to the subsidiary.
All corporate services provided, and costs incurred, are direct billed to subsidiaries at cost. No
additional margin or profit is included and no assets are allocated. Suspense and capture of Avista
Corporation employee costs, which are then billed back to the subsidiary at cost, serve to reduce
the utility expenses.
Information regarding specific costs follows:
a.Please see Staff _PR_l28 Attachment A.
b.Total fees incurred for the preparation of Avista's Corp.'s annual report for the 12 months
ended June 30, 2012 were $147,203. The total spend only includes amounts paid to third
parties who were directly associated with the preparation of the annual report and there is
no employee time related to the preparation included in this amount.
All costs related to the annual report are recorded to a common jurisdiction and common
service account which is then allocated between each jurisdiction and service line (natural
Page 1 of
gas and electric) using the four factor allocation method. Since 100 percent of the costs are
allocated using the four factor allocator, all the costs are included in regulated operations
and none are allocated to non-regulated operations.
c.Total fees incurred-for filing all of Avista Corp.'s reports with the SEC for the 12 months
ended June 30, 2012 were $72,371. The total spend only includes amounts paid to third
parties who were directly associated with filing the reports with the SEC and there is no
employee time related to the preparation and filing of the reports included in this amount.
In addition to the fees above, we also incur legal fees related to the review of our filings and
these fees are described in detail in Avista's Response to Staff Production Request (PR)
125 and are excluded here. Please refer to PR 125 for further information on these fees.
All costs related to the annual report are recorded to a common jurisdiction and common
service account which is then allocated between each jurisdiction and service line (natural
gas and electric) using the four factor allocation method. Since 100 percent of the costs are
allocated using the four factor allocator, all the costs are included in regulated operations
and none are allocated to non-regulated operations.
d.Please see Staff_PR_128 Attachment A.
e.None of the corporate headquarters overhead is allocated to our non-regulated operations.
ECOVA, our primary operating subsidiary, maintains its own headquarters and associated
overhead.
Utilities: $123,508.68
Property Taxes: $5,464,787.78
Security: $276,531.26
Misc HQ Overhead Charges $782,110.34
It should be noted that during the preparation of this rate case, the Company reviewed all
Utility employees that charged hours to subsidiaries, to compute the amount of
indirect/overhead-type costs that could be related to this work. The Company estimated
these costs to be under $3,000 for Idaho electric service and under $1,000 for Idaho natural
gas service, therefore, no adjustment was made in the case due to the immateriality of the
amounts.
Page 2 of 2
WUC Data Request 128
Internal Audit Expenses
12 months ended June 30, 2012
Utility Expenses (Operating)
Loaded Labor
External Audit & Consulting Services
Other Expenses
Total
Non-Utility Expenses (Non-Operating)
Loaded Labor
External Audit & Consulting Services
Other Expenses
Total
Total Expenses
Loaded Labor
External Audit & Consulting Services
Other Expenses
Total
$ 877,565
1,433,600
29,917
2,341,082
22,505
832
23,336
900,070
1,433,600
30,749
$ 2,364,419
Staff—PR-1 28 Attachment A.xlsx Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/28/2012
CASE NO: AVUE12:08 / AVU-G-12-07 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Don Falkner
TYPE: Production Request DEPARTMENT: Finance
REQUEST NO.: Staff-129 TELEPHONE: [phone]
REQUEST
Please identify all instances in which the Company successfully appealed a property tax
assessment in which refunds were received during the years 2011-2012. Please provide within
your response the amounts of the refunds for each year and how they were incorporated into the
Company's filing.
RESPONSE:
There were no property tax appeals that resulted in refunds received during the years 2011-2012.
Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12t1-812&12 -
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Mark Thies
REQUESTER: IPUC RESPONDER: Paul Kimball
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-130 TELEPHONE: [phone]
REQUEST:
Please list all pending legal cases and describe their status including the issue, estimates of liability
and possible ramifications to the Company.
RESPONSE:
Please see Avista's response 130C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01 .01, Rule 067 and 233, and Section 9-340D, Idaho Code.
Please see Staff PR 130 Attachment A and Staff_PR_130C Confidential Attachment A.
Page 1 of!
NOTE 11. COMMITMENTS AND CONTINGENCIES
In the course of its business, the Company becomes involved in various claims, controversies,
disputes and other contingent matters, including the items described in this Note. Some of these
claims, controversies, disputes and other contingent matters involve litigation or other contested
proceedings. For all such matters, the Company intends to vigorously protect and defend its
interests and pursue its rights. However, no assurance can be given as to the ultimate outcome of
any particular matter because litigation and other contested proceedings are inherently subject to
numerous uncertainties. For matters that affect Avista Utilities' operations, the Company intends
to seek, to the extent appropriate, recovery of incurred costs through the ratemaking process.
With respect to matters discussed in this Note relating to Avista Energy, any potential liabilities
or refunds by Avista Energy remain the responsibility of Avista Corp. and/or its subsidiaries and
were not assumed by the purchaser of Avista Energy's contracts and operations in 2007.
Federal Energy Regulatory Commission Inquiry
In April 2004, the Federal Energy Regulatory Commission (FERC) approved the contested
Agreement in Resolution of Section 206 Proceeding (Agreement in Resolution) between Avista
Corp. doing business as Avista Utilities, Avista Energy and the FERC's Trial Staff which stated
that there was: (1) no evidence that any executives or employees of Avista Utilities or Avista
Energy knowingly engaged in or facilitated any improper trading strategy during 2000 and 2001;
(2) no evidence that Avista Utilities or Avista Energy engaged in any efforts to manipulate the
western energy markets during 2000 and 2001; and (3) no finding that Avista Utilities or Avista
Energy withheld relevant information from the FERC's inquiry into the western energy markets
for 2000 and 2001 (Trading Investigation). The Attorney General of the State of California
(California AG), the California Electricity Oversight Board, and the City of Tacoma,
Washington (City of Tacoma) challenged the FERC's decisions approving the Agreement in
Resolution, which are now pending before the United States Court of Appeals for the Ninth
Circuit (Ninth Circuit).
In May 2004, the FERC provided notice that Avista Energy was no longer subject to an
investigation reviewing certain bids above $250 per MW in the short-term energy markets
operated by the California Independent System Operator (CalISO) and the California Power
Exchange (Ca1PX) from May 1, 2000 to October 2, 2000 (Bidding Investigation). That matter is
also pending before the Ninth Circuit, after the California AG, Pacific Gas & Electric (PG&E),
Southern California Edison Company (SCE) and the California Public Utilities Commission
(CPUC) filed petitions for review in 2005.
Based on the FERC's order approving the Agreement in Resolution in the Trading Investigation
and order denying rehearing requests, the Company does not expect that this proceeding will
have any material effect on its financial condition, results of operations or cash flows.
Furthermore, based on information currently known to the Company regarding the Bidding
Investigation and the fact that the FERC Staff did not find any evidence of manipulative
behavior, the Company does not expect that this matter will have a material effect on its financial
condition, results of operations or cash flows.
California Refund Proceeding
Staff _PR_i 30 Attachment A Page 1 of 8
In July 2001, the FERC ordered an evidentiary hearing to determine the amount of refunds due
to California energy buyers for purchases made in the spot markets operated by the Ca1ISO and
the Ca1PX during the period from October 2, 2000 to June 20, 2001 (Refund Period). Proposed
refunds are based on the calculation of mitigated market clearing prices for each hour. The FERC
ruled that if the refunds required by the formula would cause a seller to recover less than its
actual costs for the Refund Period, sellers may document these costs and limit their refund
liability commensurately. In September 2005, Avista Energy submitted its cost filing claim
pursuant to the FERC's August 2005 order. The filing was initially accepted by the FERC, but in
March 2011, the FERC ordered Avista Energy to remove any return on equity in a compliance
filing with the Ca1ISO, which Avista Energy did in April 2011. A challenge to Avista Energy's
cost filing by the California AG, the CPUC, PG&E and SCE was denied in July 2011 as a
collateral attack on the FERC's prior orders accepting Avista Energy's cost filing. In July 2011,
the California AG, the CPUC, PG&E and SCE filed a petition for review of the FERC's orders
regarding Avista Energy's cost filing with the Ninth Circuit.
The 2001 bankruptcy of PG&E resulted in a default on its payment obligations to the Ca1PX. As
a result, Avista Energy has not been paid for all of its energy sales during the Refund Period.
Those funds are now in escrow accounts and will not be released until the FERC issues an order
directing such release in the California refund proceeding. The Ca1ISO continues to work on its
compliance filing for the Refund Period, which will show "who owes what to whom." In July
2011, the FERC accepted the preparatory rerun compliance filings by the Ca1PX and CallS 0,
and responded to the Ca1PX request for guidance on issues related to completing the final
determination of "who owes what to whom." The FERC directed both the CallS 0 and the Ca1PX
to prepare and submit to the FERC their final refund rerun compliance filings. The FERC's order
also directs the Ca1PX to pay past due principal amounts to governmental entities. In February
2012, the FERC denied the challenges made to the July 2011 order by the California AG, the
CPUC, PG&E and SCE. As of September 30, 2012, Avista Energy's accounts receivable
outstanding related to defaulting parties in California were fully offset by reserves for
uncollected amounts and funds collected from the defaulting parties.
Many of the orders that the FERC has issued in the California refund proceedings were appealed
to the Ninth Circuit. In October 2004, the Ninth Circuit ordered that briefing proceed intwo
rounds. The first round was limited to three issues: (1) which parties are subject to the FERC' 5
refund jurisdiction in light of the exemption for government-owned utilities in section 201(f) of
the FPA; (2) the temporal scope of refunds under section 206 of the FPA; and (3) which
categories of transactions are subject to refunds. The second round of issues and their
corresponding briefing schedules have not yet been set by the Ninth Circuit.
In September 2005, the Ninth Circuit held that the FERC did not have the authority to order
refunds for sales made by municipal utilities in the California refund proceeding. In August
2006, the Ninth Circuit upheld October 2, 2000 as the refund effective date for the FPA section
206 refund proceeding, but remanded to the FERC its decision not to consider an FPA section
309 remedy for tariff violations prior to that date. In an order issued in May 2011, the FERC
clarified the issues set for hearing for the period May 1, 2000 - October 1, 2000 (Summer
Period): (1) which market practices and behaviors constitute a violation of the then-current
Ca1ISO, Ca1PX, and individual seller's tariffs and FERC orders; (2) whether any of the sellers
named as respondents in this proceeding engaged in those tariff violations; and (3) whether any
Staff_PR_i 30 Attachment A Page 2 of 8
such tariff violations affected the market clearing price. The FERC reiterated that the California
Parties are expected to be very specific when presenting their arguments and evidence, and that
general claims would not suffice. The FERC also gave the California Parties an opportunity to
show that exchange transactions with the Ca1ISO during the Refund Period were not just and
reasonable. Avista Energy has one exchange transaction with the Ca1ISO. The California AG, the
CPUC, PG&E and SCE filed for rehearing of the FERC's May 2011 order, arguing that it
improperly denies them a market-wide remedy for the pre-refund period. That request for
rehearing was denied in an order issued by FERC on November 2, 2012. The California AG, the
CPUC, PG&E and SCE also filed a petition for review of the May 2011 order with the Ninth
Circuit. A FERC hearing commenced on April 11, 2012 and concluded on July 19, 2012. Post-
hearing briefs were filed September 28, 2012, and reply briefs are due December 4, 2012. The
initial decision is to be issued no later than February 15, 2013. On August 27, 2012, the
Presiding Administrative Law Judge issued a partial initial decision granting Avista Utilities'
motion for summary disposition, based on the stipulation by the California Parties that there are
no allegations of tariff violations made against Avista Utilities in this proceeding and therefore
no tariff violations by Avista Utilities that affected the market clearing price in any hour during
the Summer Period. The California Parties filed a brief on exceptions on September 26, 2012,
and Avista Utilities filed a brief opposing exceptions on October 16, 2012. On November 2,
2012, FERC issued an order affirming the partial initial decision and dismissing Avista Utilities
from the proceeding, thereby terminating all claims against Avista Utilities for the Summer
Period. In the same order, FERC also held that a market-wide remedy would not be appropriate
with regard to any respondent during the Summer Period. FERC stated that it is clear that the
Ninth Circuit did not mandate a specific remedy on remand and, instead, left it to the FERC's
discretion to determine which remedy would be appropriate.
Because the resolution of the California refund proceeding remains uncertain, legal counsel
cannot express an opinion on the extent of the Company's liability, if any. However, based on
information currently known, the Company does not expect that the refunds ultimately ordered
for the Refund Period would result in a material loss. This is primarily due to the fact that the
FERC orders have stated that any refunds will be netted against unpaid amounts owed to the
respective parties and the Company does not believe that refunds would exceed unpaid amounts
owed to the Company.
Pacific Northwest Refund Proceeding
In July 2001, the FERC initiated a preliminary evidentiary hearing to develop a factual-record as
to whether prices for spot market sales of wholesale energy in the Pacific Northwest between
December 25, 2000 and June 20, 2001 were just and reasonable. In June 2003, the FERC
terminated the Pacific Northwest refund proceedings, after finding that the equities do not justify
the imposition of refunds. In August 2007, the Ninth Circuit found that the FERC, in denying the
request for refunds, had failed to take into account new evidence of market manipulation in the
California energy market and its potential ties to the Pacific Northwest energy market and that
such failure was arbitrary and capricious and, accordingly, remanded the case to the FERC,
stating that the FERC's findings must be reevaluated in light of the evidence. In addition, the
Ninth Circuit concluded that the FERC abused its discretion in denying potential relief for
transactions involving energy that was purchased by the California Energy Resources Scheduling
(CERS) in the Pacific Northwest and ultimately consumed in California. The Ninth Circuit
Staff _PR_I 30 Attachment A Page 3 of 8
expressly declined to direct the FERC to grant refunds. The Ninth Circuit denied petitions for
rehearing by various parties, and remanded the case to the FERC in April 2009.
On October 3, 2011, the FERC issued an Order on Remand, finding that, in light of the Ninth
Circuit's remand order, additional procedures are needed to address possible unlawful activity
that may have influenced prices in the Pacific Northwest spot market during the period from
December 25, 2000 through June 20, 2001. The Order establishes an evidentiary, trial-type
hearing before an Administrative Law Judge (AU), and reopens the record to permit parties to
present evidence of unlawful market activity during the relevant period. The Order also allows
participants to supplement the record with additional evidence on CERS transactions in the
Pacific Northwest spot market from January 18, 2001 to June 20, 2001. The Order states that
parties seeking refunds must submit evidence demonstrating that specific unlawful market
activity occurred, and must demonstrate that such activity directly affected negotiations with
respect to the specific contract rate about which they complain. Simply alleging a general link
between the dysfunctional spot market in California and the Pacific Northwest spot market will
not be sufficient to establish a causal connection between a particular seller's alleged unlawful
activities and the specific contract negotiations at issue. Claimants filed notice of their claims on
August 17, 2012, and they filed their direct testimony on September 21, 2012. Respondents'
answering testimony is due November 28, 2012; staffs answering testimony is due January 15,
2013; and respondents' cross-answering testimony is due February 13, 2013. Claimants' rebuttal
testimony is due March 8, 2013. The hearing is scheduled to begin on April 15, 2013. On
July 11, 2012, Avista Energy and Avista Utilities filed settlements of all issues in this docket
with regard to the claims made by the City of Tacoma. On September 21, 2012, and
September 26, 2012, the FERC issued orders approving the settlements between the City of
Tacoma and Avista Utilities and Avista Energy, respectively, thus terminating those claims. The
two remaining direct claimants against Avista Utilities and Avista Energy in this proceeding are
the City of Seattle, Washington, and the California Attorney General (on behalf of CERS).
Both Avista Utilities and Avista Energy were buyers and sellers of energy in the Pacific
Northwest energy market during the period between December 25, 2000 and June 20, 2001 and,
are subject to potential claims in this proceeding, and if refunds are ordered by the FERC with
regard to any particular contract, could be liable to make payments. The Company cannot predict
the outcome of this proceeding or the amount of any refunds that Avista Utilities or Avista
Energy could be ordered to make. Therefore, the Company cannot predict the potential impact
the outcome of this matter could ultimately have on the Company's results of operations,
financial condition or cash flows.
California Attorney General Complaint (the "Lockyer Complaint")
In May 2002, the FERC conditionally dismissed a complaint filed in March 2002 by the
California AG that alleged violations of the FPA by the FERC and all sellers (including Avista
Corp. and its subsidiaries) of electric power and energy into California. The complaint alleged
that the FERC's adoption and implementation of market-based rate authority was flawed and, as
a result, individual sellers should refund the difference between the rate charged and a just and
reasonable rate. In May 2002, the FERC issued an order dismissing the complaint. In September
2004, the Ninth Circuit upheld the FERC's market-based rate authority, but held that the FERC
erred in ruling that it lacked authority to order refunds for violations of its reporting requirement.
Staff _PRJ 30 Attachment A Page 4 of 8
The court remanded the -case-for further proceedings.
In March 2008, the FERC issued an order establishing a trial-type hearing to address "whether
any individual public utility seller's violation of the FERC's market-based rate quarterly
reporting requirement led to an unjust and unreasonable rate for that particular seller in
California during the 2000-2001 period." Purchasers in the California markets were given the
opportunity to present evidence that "any seller that violated the quarterly reporting requirement
failed to disclose an increased market share sufficient to give it the ability to exercise market
power and thus cause its market-based rates to be unjust and unreasonable." In March 2010, the
Presiding ALJ granted the motions for summary disposition and found that a hearing was
"unnecessary" because the California AG, CPUC, PG&E and SCE "failed to apply the
appropriate test to determine market power during the relevant time period." The judge
determined that "[w]ithout a proper showing of market power, the California Partiesfailed to
establish a prima facie case." In May 2011, the FERC affirmed "in all respects" the AL's
decision. In June 2011, the California AG, CPUC, PG&E and SCE filed for rehearing of that
order. Those rehearing requests were denied by the FERC on June 13, 2012. On June 20, 2012,
the California AG, CPUC, PG&E and SCE filed a petition for review of the FERC's order with
the Ninth Circuit.
Based on information currently known to the Company's management, the Company does not
expect that this matter will have a material effect on its financial condition, results of operations
or cash flows.
Coistrip Generating Project Complaint
In March 2007, two families that own property near the holding ponds from Units 3 & 4 of the
Coistrip Generating Project (Coistrip) filed a complaint against the owners of Colstrip and
Hydrometrics, Inc. in Montana District Court. Avista Corp. owns a 15 percent interest in Units 3
& 4 of Coistrip. The plaintiffs allege that the holding ponds and remediation activities have
adversely impacted their property. They allege contamination, decrease in water tables, reduced
flow of streams on their property and other similar impacts to their property. They also seek
punitive damages, attorney's fees, an order by the court to remove certain ponds, and the
forfeiture of profits earned from the generation of Colstrip. In September 2010, the owners of
Coistrip filed a motion with the court to enforce a settlement agreement that would resolve all
issues between the parties. In October -201 1, the court issued an order, which enforces the
settlement agreement. The plaintiffs have subsequently appealed the court's decision and in
September 2012 the Montana Supreme Court heard arguments on the appeal, and a decision is
pending. Under the settlement, Avista Corp.'s portion of payment (which was accrued in 2010)
to the plaintiffs was not material to its financial condition, results of operations or cash flows.
Although the final resolution of this complaint remains uncertain, based on information currently
known to the Company's management, the Company does not expect this complaint will have a
material effect on its financial condition, results of operations or cash flows.
Sierra Club and Montana Environmental Information Center Notice
On July 30, 2012, Avista Corp. received a Notice of Intent to Sue for violations of the Clean Air
Act at Coistrip Steam Electric Station (Notice) from counsel on behalf of the Sierra Club and the
Montana Environmental Information Center (MEIC), an Amended Notice was received on
Staff PR_130 Attachment A Page 5 of 8
September 4, 2012, and a Second Amended Notice was received on October 1, 2012. The
Notice, Amended Notice, and Second Amended Notice were all addressed to the Owner or
Managing Agent of Coistrip, and to the other Coistrip co-owners: PPL Montana, Puget Sound
Energy, Portland General Electric Company, NorthWestern Energy and PacifiCorp. The Notice
alleges certain violations of the Clean Air Act, including the New Source Review, Title V and
opacity requirements. The Amended -Notice alleges additional opacity violations at Colstrip, and
the Second- Amended Notice alleges additional Title V allegations. All three notices state that
Sierra Club and MEIC will request a United States District Court to impose injunctive relief and
civil penalties, require a beneficial environmental project in the areas affected by the alleged air
pollution and require reimbursement of Sierra Club's and MEIC's costs of litigation and
attorney's fees. Under the Clean Air Act, lawsuits cannot be filed until 60 days after the
applicable notice date. Avista Corp. is evaluating the allegations set forth in the Notice,
Amended Notice and Second Amended Notice, and cannot at this time predict the outcome of
this matter.
Harbor Oil Inc. Site
Avista Corp. used Harbor Oil Inc. (Harbor Oil) for the recycling of waste oil and non-PCB
transformer oil in the late 1980s and early 1990s. In June 2005, the Environmental Protection
Agency (EPA) Region 10 provided notification to Avista Corp. and several other parties, as
customers of Harbor Oil, that the EPA had determined that hazardous substances were released
at the Harbor Oil site in Portland, Oregon and that Avista Corp. and several other parties may be
liable for investigation and cleanup of the site under the Comprehensive Environmental
Response, Compensation, and Liability Act, commonly referred to as the federal "Superfund"
law, which provides for joint and several liability. The initial indication from the EPA is that the
site may be contaminated with PCBs, petroleum hydrocarbons, chlorinated solvents and heavy
metals. Six potentially responsible parties, including Avista Corp., signed an Administrative
Order on Consent with the EPA on May 31, 2007 to conduct a remedial investigation and
feasibility study (RI/FS). The draft final RI/FS was submitted to the EPA in December 2011 and
was accepted as pre-final in March 2012. The EPA indicated in their approval letter that they
intend to recommend a finding of No Further Action later in 2012. The actual cleanup, if any,
will not occur until the RI/FS is finalized and approved by the EPA. Based on the review of its
records related to Harbor Oil, the Company does not believe it is a major contributor to this
potential environmental contamination based on the small volume of waste oil it delivered to the
Harbor Oil site. As such, the Company does not expect that this matter will have a material effect
on its financial condition, results of operations or cash flows. The Company has expensed its
share of the RI/FS ($0.5 million) for this matter.
Spokane River Licensing
The Company owns and operates six hydroelectric plants on the Spokane River. Five of these
(Long Lake, Nine Mile, Upper Falls, Monroe Street, and Post Falls) are regulated under one 50-
year FERC license issued in June 2009 and are referred to as the Spokane River Project. The
sixth, Little Falls, is operated under separate Congressional authority and is not licensed by the
FERC. The license incorporated the 4(e) conditions that were included in the December 2008
Settlement Agreement with the United States Department of Interior and the Coeur d'Alene
Tribe, as well as the mandatory conditions that were agreed to in the Idaho 401 Water Quality
Staff _PR_I 30 Attachment A Page 6 of 8
Certifications and in the amended Washington 401 Water Quality Certification.
As part of the Settlement Agreement with the Washington Department of Ecology (DOE), the
Company has participated in the Total Maximum Daily Load {TMDL) process for the Spokane
River and Lake Spokane, the reservoir created by Long Lake Dam. On May 20, 2010, the EPA
approved the TMDL and on May 27, 2010, the DOE filed an amended 401 Water Quality
Certification with the FERC for inclusion into the license. The amended 401 Water Quality
Certification includes the Company's level of responsibility, as defined in the TMDL, for low
dissolved oxygen levels in Lake Spokane. The Company submitted a draft Water Quality
Attainment Plan for Dissolved Oxygen to the DOE in May 2012 and this was approved by the
DOE in September 2012. This has now been submitted to the FERC for their approval. It is not
possible to provide cost estimates at this time because the mitigation measures have not been
fully approved by the FERC. However, management believes any potential costs would not be
material. On July 16, 2010, the City of Post Falls and the Hayden Area Regional Sewer Board
filed an appeal with the United States District Court for the District of Idaho with respect to the
EPA's approval of the TMDL. The Company, the City of Coeur d'Alene, Kaiser Aluminum and
the Spokane River Keeper subsequently moved to intervene in the appeal. In September 2011,
the EPA issued a stay to the litigation that will be in effect until either the permits are issued and
all appeals and challenges are complete or the court lifts the stay. The EPA and the Idaho
Department of Environmental Quality (Idaho DEQ) are preparing draft National Pollutant
Discharge Elimination System permits and the 401 Water Quality Certifications for the Idaho
dischargers, respectively, which once issued will be released for a 30-day public comment
period.
The IPUC and the WUTC approved the recovery of licensing costs through the general rate case
settlements in 2009. The Company will continue to seek recovery, through the ratemaking
process, of all operating and capitalized costs related to implementing the license for the
Spokane River Project.
Cabinet Gorge Total Dissolved Gas Abatement Plan
-Dissolved atmospheric gas levels in the Clark Fork River exceed state of Idaho and federal water
quality standards downstream of the Cabinet Gorge Hydroelectric Generating Project (Cabinet
Gorge) during periods when excess river flows must be diverted over the spillway. In 2002, the
Company submitted a -Gas Supersaturation Control Program (GSCP) to the Idaho DEQ and U.S.
Fish and Wildlife Service (USFWS). This submission was part of the Clark Fork Settlement
Agreement for licensing the use of Cabinet Gorge. The GSCP provided for the possible opening
and modification of two diversion tunnels around Cabinet Gorge to allow streamfiow to be
diverted when flows are in excess of powerhouse capacity. In 2007, engineering studies
determined that the tunnels would not sufficiently reduce Total Dissolved Gas (TDG). In
consultation with the Idaho DEQ and the USFWS, the Company developed an addendum to the
GSCP. The GSCP addendum abandons the concept to reopen the two diversion tunnels and
requires the Company to evaluate a variety of different options to abate TDG. In March 2010, the
FERC approved the GSCP addendum of preliminary design for alternative abatement measures.
In the second quarter of 2011, the Company completed preliminary feasibility assessments for
several alternative abatement measures and determined that two alternatives will be considered
for continued development. Further analysis and review of these alternatives is expected to be
completed through 2012. The Company will continue to seek recovery, through the ratemaking
Staff_PRJ 30 Attachment A Page 7 of 8
process, of all operating and capitalized costs related to this issue.
Fish Passage at Cabinet Gorge and Noxon Rapids
In 1999, the USFWS listed bull trout as threatened under the Endangered Species Act. The Clark
Fork Settlement Agreement describes programs intended to help restore bull trout populations in
the project area. Using the concept of adaptive management and working closely with the
USFWS, the Company is evaluating the feasibility of fish passage at Cabinet Gorge and Noxon
Rapids. The results of -these studies led, in part, to-the decision to move forward with
development of permanent facilities, among other bull trout enhancement efforts. In 2009, the
Company selected a contractor to design a permanent upstream passage facility at Cabinet
Gorge. The Company anticipates that the design and cost estimates will be completed by the end
of 2012 with construction taking place in 2013 and 2014.
In January 2010, the USFWS revised its 2005 designation of critical habitat for the bull trout to
include the lower Clark Fork River as critical habitat. The Company believes its ongoing efforts
through the Clark Fork Settlement Agreement continue to effectively address issues related to
bull trout. The Company will continue to seek recovery, through the ratemaking process, of all
operating and capitalized costs related to fish passage at Cabinet Gorge and Noxon Rapids.
Aluminum Recycling Site
In October 2009, the Company (through its subsidiary Pentzer Venture Holdings II, Inc.
(Pentzer)) received notice from the DOE proposing to find Pentzer liable for a release of
hazardous substances under the Model Toxics Control Act, under Washington state law. Pentzer
owns property that adjoins land owned by the Union Pacific Railroad (UPR). UPR leased their
property to operators of a facility designated by the DOE as "Aluminum Recycling -
Trentwood." Operators of the UPR property maintained piles of aluminum "black dross," which
can be designated as a state-only dangerous waste in Washington State. In the course of its
business, the operators placed a portion of the aluminum dross pile on the property owned by
Pentzer. Pentzer does not believe it is a contributor to any environmental contamination
associated with the dross pile, and submitted a response to the DOE's proposed findings in
November 2009. In December 2009, Pentzer received notice from the DOE that it had been
designated as a potentially liable party for any hazardous substances located on this site. UPR
completed a RI/FS Work Plan in June 2010. At that time, UPR requested a contribution from
Pentzer towards the cost of performing the RI/FS and also an access agreement to investigate the
material deposited on the Pentzer property. Pentzer concluded an access agreement with UPR in
October 2010. UPR completed the RI/FS during 2011. Based on information currently known to
the Company's management, the Company does not expect this issue will have a material effect
on its financial condition, results of operations or cash flows.
Other Contingencies
In the normal course of business, the Company has various other legal claims and contingent
matters outstanding. The Company believes that any ultimate liability arising from these actions
will not have a material impact on its financial condition, results of operations or cash flows. It is
possible that a change could occur in the Company's estimates of the probability or amount of a
liability being incurred. Such a change, should it occur, could be significant.
Staff _PR_I 30 Attachment A Page 8 of 8
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/19/2012
CASE NO: AVLJ-E-12-08 / AVU-G-12-07 WITNESS: Don Kopczynski
REQUESTER: IPUC RESPONDER: Amanda Reinhardt
TYPE: Production Request DEPARTMENT: Customer Service
REQUEST NO.: Staff-131 TELEPHONE: [phone]
REQUEST:
Please provide a copy of the policy for bad debt write-offs and collection of past due amounts.
RESPONSE:
The following is the procedure the customer service system (CS S) or representative takes related
to bad debt write-offs and collection of past due amounts:
After the closing bill due date, accounts with an outstanding balance are reviewed to determine
appropriate action. A typical closing bill process includes: closing bill reminder, outbound call,
and a follow up letter to inform the customer of their outstanding balance. If the customer has
opened a new account, then the Company would follow the process to transfer the balance to the
open account. If the customer does not have an open account, or does not contact the Company
with satisfactory payment or payment arrangements, the balance is written off (between 40 to 90
days after the close of the account) and assigned with a third party collection agency.
AYISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Patrick Ehrbar
REQUESTER: IPUC RESPONDER: Patrick Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-137 TELEPHONE: [phone]
REQUEST:
For the following electric rate schedules, please explain why the Company is proposing the
revenue increase be spread on a uniform percentage basis to the energy billing components, rather
than applying the revenue increase uniformly to all billing components:
a.General Service Schedule 11/12
b.Large General Service Schedule 21/22
c.Extra Large General Service 25
d.Clearwater Paper Schedule 25P
e.Pumping Service Schedule 31/32
RESPONSE:
In recent general rate cases, the Company has received approval to increase the demand charge,
and certain basic charges, by a percentage typically higher than the increase in the energy rates for
Schedules 11, 21, 25 and 25P.
For example, Schedule 25 received a energy rate decrease of 0.5% while the minimum monthly
demand charge increased by 4.2% and the demand charge increased by 12.5% in Case
AVU-E-1 1-01.
The Company chose to apply the increase to the energy charges in this case, after taking into
account the prior increases in the demand charges and basic charges.
Page 1 of I
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 /AVU-G-12-07 WITNESS: Patrick Ehrbar
REQUESTER: IPUC RESPONDER: Patrick Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-138 TELEPHONE: [phone]
REQUEST:
On page 21 of Pat Ehrbar's Testimony, Table 6 shows the Company serves one interruptible sales
service customer on Schedules 131 or 132. Please provide the number of times this customer has
been curtailed over the last four years. As part of your response, please compare the revenue from
this customer during the test period to what would have been collected had this customer been on a
firm service schedule.
RESPONSE:
The one customer on Schedule 132 has not been curtailed in the last four years.
The base revenue from the customer in the test period was $69,620.23, and would have been
$66,538.44 had the customer been served on Schedule 112. The customer is paying more in terms
of base revenues on Schedule 132 versus the alternative schedule.
The billing revenue (which includes the cost of natural gas, demand costs, etc.) from the customer
in the test period was $201,091.32, and would have been $238,799.73 had the customer been
served on Schedule 112. The customer is paying less in terms of billing revenues, which is entirely
related to the avoidance of demand/transportation costs as discussed in the Company's response to
Staff-139.
Page 1 of I
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Patrick Ebrbar
REQUESTER: IPUC RESPONDER: Patrick Ehrbar
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-l39 TELEPHONE: [phone]
REQUEST:
Please explain how the Company determines the cost of providing service to interruptible
customers, particularly given the number, magnitude and duration of interruptions may vary.
RESPONSE:
The cost of service study provided by the Company as Exhibit 12, Schedule 6 is based on the
twelve months ended June 2012 test year pro forma results of operations. For the single Schedule
132 customer, that customer is allocated its share of distribution plant, based on the allocation
factors included in Company witness Ms. Knox's cost of service study, in addition to any
identified directly assigned plant (such as the meter).
The primary difference between customers served on an interruptible schedule versus a
non-interruptible schedule is that the customer served on Schedule 132 does not pay for fixed
pipeline transportation - i.e., demand costs. This can be seen by looking at natural gas Schedule
150 where Schedules 131 and 132 do not pay a demand charge. Below is a copy of the table from
Schedule 150 which demonstrates this:
Demand Commodity Total
Schedules 101 10.327 33.2850 43.612
Schedules 111 and 112 10.3270 33.2850 43.6120
Schedules 131 and 132 .0000 33.2850 33.285
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: IPUC RESPONDER: Joe Miller/Jeff Webb
TYPE: Production Request DEPARTMENT: Rates/Gas Engineering
REQUEST NO.: Staff-140 TELEPHONE: [phone]
[phone]
REQUEST:
Please explain how the Company allocates the costs of gas distribution mains to the various rate
schedules when the installation or expansion is necessary to enhance system reliability or capacity.
As part of your response, explain how the costs of distribution mains used for looping are treated
differently than other distribution mains of the same diameter.
RESPONSE:
The Company allocates all distribution mains using the peak and average ratio for the distribution
system. Schedule 131/132 and 146 customers that are identified as solely utilizing a portion of
distribution main in the GIS mapping system receive a direct allocation of that distribution main.
The Company does not attempt to differentiate the allocation of distribution main based on system
reliability, capacity or looping.
In addition, the Company does not separately track projects related to looping and therefore is
unable to provide any further detail as to the length or diameter of pipe. The Company treats the
costs of distribution main used for looping the same as other distribution mains of the same
diameter.
Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: IPUC RESPONDER: Jeff Webb
TYPE: Production Request DEPARTMENT: Gas Engineering
REQUEST NO.: Staff-141 TELEPHONE: [phone]
REQUEST:
Please explain how gas distribution mains less than four inches in diameter contribute to the
overall reliability and capacity of the system. As part of your response, please explain how
Schedule 146 customers might benefit from improved reliability and additional capacity on the
distribution system.
Gas distribution mains deliver or distribute gas from one or more sources (city gate stations and
regulator stations) to customers. Gas distribution mains are sized using a mathematical analysis to
ensure that customer demands can be met. Specifically, the diameter must be able to supply
customer demand based on the distance from the existing source or nearest main to the customer's
point of service. Thus, longer distances and larger loads will require larger diameters.
As customer needs increase or additional customers are added, reinforcement projects are required
to increase capacity. Such projects are sized to incorporate anticipated growth and to mitigate the
need for additional projects in the future. These reinforcement projects may include upsizing
existing mains or installation of mains that loop the distribution system. Loop feeds are added to
increase capacity for meeting customer demand(s); they may also have the inherent benefit of
additional reliability.
All gas distribution mains (less than and greater than four inches) contribute to the overall capacity
of the system to some extent. While larger diameter mains have greater capacity, they are only
added to the system when necessitated by customer demands. All customers, including Schedule
146, benefit from the entire makeup of their respective distribution system. Any existing main
(regardless of size) removed or taken out of service will lessen capacity and reliability to that
distribution system.
Currently, all five Schedule 146 customers are connected to distribution main that is four inches or
larger due to their large loads.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: IPUC RESPONDER: Jeff Webb/Joe Miller
TYPE: Production Request DEPARTMENT: Gas Engineering/Rates
REQUEST NO.: Staff-142 TELEPHONE: [phone]
[phone]
REQUEST:
The Company's gas Cost-of-Service study classifies distribution mains into two categories: those
less than four inches and those four inches or greater. Please provide the number of distribution
mains four inches or greater serving fewer than five customers. As part of your response, please
provide the change in revenue requirement for each schedule if the cost of the large distribution
mains serving fewer than five customers were directly assigned to the customers served from these
mains.
RESPONSE:
The Company has not performed such analysis and without manually going through the mapping
of the entire distribution system would be unable to perform such analysis. In general, only in rare
circumstances, such as serving a large transportation load, would the Company expect to serve
fewer than five customers on a distribution main greater than four inches.
Page 1 of!
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNES& Tara Knox
REQUESTER: IPUC RESPONDER: Joe Miller
TYPE: Production Request DEPARTMENT: State & Federal Reg.
REQUEST NO.: Staff-143 TELEPHONE: [phone]
REQUEST:
Page 20 of Pat Ehrbar's testimony describes the purpose of having Schedules 112 and 132. Please
provide the number of customers who switched between Schedule 146 and Schedules 112 or 132
during the test period. As part of your response, please provide a detailed explanation of how fixed
costs were annualized for the test period to account for customers switching between schedules.
RESPONSE:
The Company experienced one customer who switched from Schedule 146 to Schedule 112 during
the test year. The Company incorporated this customers annual therm usage, billings, peak therms
and meter type as if the customer had been on Schedule 112 for the entire twelve month test period
to ensure both revenues and expenses were annualized properly.
Page 1 of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 12/21/2012
CASE NO: AVU-E-12-08 / AVU-G-12-07 WITNESS: Tara Knox
REQUESTER: IPUC RESPONDER: Joe Miller
TYPE: Production Request DEPARTMENT: State & Federal Reg.
REQUEST NO.: Staff-144 TELEPHONE: [phone]
REQUEST:
If the Special Contract revenues and costs are not shown separately in Cost-of-Service, please
provide the revenues and costs from providing service to Special Contract customers. If the
Special Contract revenues and costs are shown separately, please explain where they can be found.
RESPONSE:
The pro forma value in "Account 495.xx Other Gas Rev - Misc & Spec Cont Rev" of $143,000 is
assigned to rate schedules in the cost of service model at row 418 of the Detail tab of "Idaho Gas
COS.xls" (hardcopy print GCOS-86). Of the $143,000 shown as Other Gas Rev - Misc & Spec
Cont Rev, $97,227 is derived from the two Special Contracts currently in place (hardcopy print
PDE-G-3). As notated in the classification basis column, the Other Revenue value has been
assigned to classes "as Rate Base" which is on row 123. Related disaggregation into function is
shown in rows 431 through 434 of the same page.
The following infonnation addresses incremental costs associated with the two contracts. In Order
No. 26559 approving the Schedule 147 special contract, the Commission found "that the 20 per
therm contract rate for distribution service is competitive, reasonable and necessary to retain the
IMSAMET load. Avista has found that the cost of the incremental facilities installed to serve
IMSAMET were recovered by the Company in the prior contract term. Based on the information
presented, the Company finds that the proposed contract service charges exceed the Company's
variable cost of providing service." In Order No. 30307 approving the current Schedule 159
special contract, the Commission found "that the provisions of the Agreement are reasonable.
Considering the surrounding circumstances, the company has negotiated an acceptable net
-contribution to fixed costs."
The net contribution to fixed costs from these special contract customers is flowing back to all
other customers as a reduction to the required return on rate base because the allocated "Other
Revenue" reduces the amount of revenue otherwise necessary to be recovered through base rates.
Page 1 of I