20150812AVU to Staff 49.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 08/05/2015
CASE NO.: AVU-E-15-05/AVU-G-15-01 WITNESS: Bryan Cox
REQUESTER: IPUC RESPONDER: Rodney Pickett
TYPE: Production Request DEPARTMENT: Asset Management
REQUEST NO.: Staff - 049 TELEPHONE: [phone]

REQUEST:

Regarding the transmission capital projects described in Cox DI, pg. 28, line 11 and pg. 30 through pg. 37, please provide the following:
The 2012 and 2013 budgeted amounts as compared to the amounts actually booked and included in test year revenue requirement;
a description of the method(s) used to develop individual program budgets;
the differences in program costs and priorities over the past 5 years;
an explanation on whether any of the capital investments address contingency requirements and, if so, which ones;
an explanation of whether the Company is pursuing any joint-ownership agreements that may result in reliability improvements and/or reduced capital expenses;
a description of how the Company analyzes project costs and benefits;
results of transmission system project costs and benefits analysis;
the specific locations of the proposed investments in the transmission system;
a description of the Company’s SCADA system;
copies of the supporting studies that document the necessity for the capital investments;
a description of the Company’s efforts to increase reliability and transmission capacity through operation enhancements or controls (e.g., frequency response, etc.); and
a description of the Company’s optimized Transmission Asset Management Program.

RESPONSE:

Please see Staff_PR_049 Attachment C for a tabular presentation of the budgeted and actual capital expenditures for 2012 and 2013 for the aforementioned projects. The budgeted balances are based upon the data used in preparation of Avista’s 2012 general rate case filing (AVU-E-12-08 and AVU-G-12-07). Additionally, Table No. 3 included in Cox DI, pg. 30, presents capital projects on the basis of Avista’s business cases; however, in the 2012 general rate case, the equivalent table was presented on a more disaggregated level, as the business case format was implemented during 2012. Therefore, there will not be a one-to-one relationship between the table provided at Staff_PR_049 and the 2012 testimony.

Throughout the year and in subsequent years the capital expenditures authorized by the Capital Planning Group for a given business case may change to reflect updated prioritization of projects, the release of funds identified by projects as no longer being needed during the given period (as a result of the achievement of cost efficiencies in project completion, project delays, or other similar reasons), or the allocation of previously unavailable funds released to a different project. Therefore, the actual capital additions (transfers to plant) experienced in 2012 and 2013 may not perfectly correspond to the originally budgeted balances.

The Company will supplement this response with the requested information at a later date as this information is gathered.

The Company will supplement this response with the requested information at a later date as this information is gathered.

The majority of Transmission level Capital projects are related to load growth, system reliability and operational flexibility, all of which have contingency requirement components. Investments that do not fall into the contingency requirement category include Transmission’s Asset Management Business Case (ER’s 2057 and 2254 at approximately $1.25mil/year) and Substation’s Asset Capital Maintenance Business Case (Multiple ER’s totalling approximately $4.1million/year)

The Company is not pursuing any additional transmission-related joint-ownership agreements at this time. Pursuant to the Company’s coordinated regional transmission planning efforts (as outlined in part, in responses to Staff #39, #40 and #41), from time to time the Company may participate in a joint transmission project where the coordinating parties agree upon a plan of service that outlines their respective construction and ownership responsibilities. Of late, these types of projects have not resulted in any proposal for joint-ownership of any transmission assets.

The Asset Management Group’s project analysis and studies establish prudency and prerequisites for prioritization. Many of these studies are undertaken to comply with NERC Reliability Standards and the Asset Management studies are undertaken with a goal of optimizing life-cycle costs. The Company will supplement documents supporting this response at a later date as information is gathered.

The Company will supplement this response with the requested information at a later date as information is gathered.

See Staff_PR_049 Attachment B. The maps are being provided electronically only due to the electronic nature of the files.

The Company will supplement this response with the requested information at a later date as information is gathered.

The Company will supplement this response with the requested information at a later date as information is gathered.

As mentioned in answer to question #4, the majority of Transmission projects have contingency requirement components and do this by either upgrading conductors or providing increased clearances for higher temperature operation (present and future).

The Asset Management Group maximizes the life cycle value of Avista's physical assets. This team researches and collaborates to integrate knowledge, discover insight, and lead with intelligence in order to achieve Avista's strategic objectives. The detailed process used to develop and optimize the project costs and benefits based on an Asset Management model may best be illustrated by the Company’s response to Staff_PR_050 Attachment B as an example of how Avista develops Asset Management Plans. Please see Staff_PR_049 Attachment A - 2015 AM Transmission System Asset Management Plan for more specifics about the Transmission Asset Management program.

Page 2 of 3

Page 1 of 3