20150729AVU to Staff 29.doc

3.03 and 3.05 (electric andAVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/23/2015
CASE NO.: AVU-E-15-05/AVU-G-15-01 WITNESS: M. Thies / E. Andrews
REQUESTER: IPUC RESPONDER: Annette Brandon
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff - 029 TELEPHONE: [phone]

REQUEST:
Please provide the quantifiable savings from any cost/workforce reduction programs during the past five years. Are any additional workforce reduction programs planned for 2015-2016?

RESPONSE:
Please see Avista's response 029C, 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, and pursuant to the Protective Agreement between Avista and IPUC Staff dated June 4, 2015.

Please see Staff_PR_029C Confidential Attachment A for the net benefits/cost reductions associated with the Company’s 2012 Voluntary Severance Incentive Plan (VSIP).
No additional workforce reduction programs are planned for 2015-2016. However, to mitigate the annual growth in operating expenses, Avista has ongoing hiring restrictions, which requires approval by the Chairman/President/CEO, the President of the Utility, the Chief Financial Officer, and the Sr. VP for Human Resources for all replacement or new hire positions.

In addition to that noted above, Company witness Mr. Morris starting at page 21 of his direct testimony, explains that effective January 1, 2014 the Company has made changes to its retirement income (pension) and post-retirement medical plans offered to non-union employees, as follows:
For non-union employees, Avista no longer offers a pension plan for new hires beginning January 1, 2014. Avista will make a contribution to a 401(K) fund established for the employee, but no longer offers a defined benefit pension plan that provides an annual annuity upon retirement. This reduces future utility operating costs associated with employee benefits. Changes to plans offered to the bargaining unit employees will be subject to future negotiations.
Also beginning January 1, 2014, Avista no longer provides funding for post-retirement medical for non-union new hires. In addition, for both existing and new hire non-union employees, when the retiree reaches age 65, Avista will no longer provide an Avista-sponsored medical plan. Through these changes Avista is transitioning out of funding medical coverage for retirees.
In 2015 and 2016, savings related to the Company’s changes in its pension and post retirement medical plans on a system basis are estimated to be approximately $2.6 million and $3 million, respectively, with increasing annual savings expected going forward.

These savings are reflected in the Company’s Pro Forma Studies, as the reduced level of labor from the VSIP is already reflected in the Company’s twelve-months ended December 2014 results of operations for Idaho, and the 2016 level of pension and post retirement medical expenses have been reflected in the Pro Forma Employee Benefit adjustments (see Andrews Adjustments 3.03 & 3.05 (electric) and 3.01 & 3.03 (natural gas)). Also see Avista’s response to Staff_PR_005.

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