20170824AVU to Staff 46-53.pdf

AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/15/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok
REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery REQUEST NO.: Staff-046 TELEPHONE: [phone]
REQUEST: Please provide current electronic copies of technology lifecycle roadmaps for the Technology Refresh Business project. Kensok Direct at 20.
RESPONSE: Please see Avista's response Staff_PR_046C, 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. Avista’s Enterprise Architecture Office, under the Technology Department has a Domain Architect Working Group to develop and maintain a technology architecture framework for the
company. The group is responsible for technology asset lifecycle management, defining
technology roadmaps, and identifying dependencies through collaboration across the technology domains Staff_PR_046C Confidential Attachment A and Staff_PR_046C Confidential Attachment B
include the technology asset lifecycle roadmaps for application and infrastructure technology
assets, respectively, that help guide decisions under the Technology Refresh Business project.
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AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/16/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok
REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery REQUEST NO.: Staff-047 TELEPHONE: [phone]
REQUEST: Please explain how the Technology Refresh to Sustain Business Process project expenses of $21,191,000 in 2017, $16,957,000 in 2018 and $14,140,000 in 2019 benefits Idaho customers. Kensok Direct at 14. Please include all supporting workpapers and analysis.
RESPONSE: Avista’s need to meet our customers’ expectations for quality and reliability of service, address
system performance and capacity issues, and replace infrastructure at the end of its useful life is based on the following: asset condition, investments in cyber security protection, operational efficiency and effectiveness, and continuous customer service improvement.
Therefore, both Technology Refresh to Sustain Business Process and Technology Expansion to
Enable Business Process projects are critical to maintain existing systems, improve operational tools and customer facing technology, as well as automate business processes. Knowing this, and in an attempt to bring more transparency and visibility to the specific areas of technology investments, Avista has bifurcated these two large investment projects into 19 discrete technology
investments. The governance committees for each of these investments apply Avista’s multistep
process for making investments in technology, which consist of identifying, analyzing, assessing and decision-making. See Staff_PR_047 Attachment A for descriptions of the 19 new technology investments.
With over 100 active subprojects, within the 19 investments, in-flight each year on average, the
scope spans solutions for safety systems, energy operating and control systems, customer facing technology, and back office tools. Each of these technology domains provide Idaho customers with direct or indirect benefit.
For example, a new Idaho customer connection request entered into www.myavista.com will generate a new customer record in Avista’s Customer Care and Billing System, as well as a work order in Avista’s Work Management System, which will allow field staff to update the new geospatial location of the new service connection and enroll the new asset in Avista’s Asset Management System. This secure registration of both the customer’s information and the asset
will allow Avista’s customer service representatives and field staff the ability to respond to billing, outage or service questions and requests in person, on the phone, or over the web. These transactions are made possible by way of network transport backhaul using private utility fiber optic cable, microwave signals, and cellular carrier services, 24 hours a day, 7 days a week, and 365 days a year, as expected by our customers across our entire service territory, including Idaho.
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The Technology Refresh to Sustain Business Process supports and maintains the technology that
allows these type of requests to be fulfilled.
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AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/18/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok
REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery REQUEST NO.: Staff-048 TELEPHONE: [phone]
REQUEST: Please explain how the Technology Expansion to Enable Business Process project expenses of $13,941,000 in 2017, $14,350,000 in 2018 and $12,315,000 in 2019 benefits Idaho customers. Kensok Direct at 19. Please include all supporting workpapers and analysis.
RESPONSE: As also discussed in the Company’s response to Staff_PR_047, Avista’s need to meet our
customers’ expectations for quality and reliability of service, address system performance and capacity issues, and replace infrastructure at the end of its useful life is based on the following: asset condition, investments in cyber security protection, operational efficiency and effectiveness, and continuous customer service improvement.

Therefore, both Technology Refresh to Sustain Business Process and Technology Expansion to Enable Business Process projects are critical to maintain existing systems, improve operational tools and customer facing technology, as well as automate business processes. Knowing this, and in an attempt to bring more transparency and visibility to the specific areas of technology
investments, Avista has bifurcated these two large investment projects into 19 discrete technology
investments. The governance committees for each of these investments apply Avista’s multistep process for making investments in technology, which consist of identifying, analyzing, assessing and decision-making. The Company’s response to Staff_PR_047 includes an attachment with descriptions of the 19 new technology investments.

With over 100 active subprojects, within the 19 investments, in-flight each year on average, the scope spans solutions for safety systems, energy operating and control systems, customer facing technology, and back office tools. Each of these technology domains provide Idaho customers with direct or indirect benefit.
The Technology Expansion to Enable Business Process supports: expansion of network coverage to improve information and data transport to and from the field; new or additional functionality to safety, control, customer facing, and back office platforms; server storage expansion to support data growth; and strengthening Avista’s security posture and disaster recovery efforts.
Our service territory is comprised of rural and mountainous terrain that consist of many pockets of low to no network transport coverage, including commercial cellular services. These pockets reduce the ability for (control, operational, customer, and back office) information and data to be transmitted to and from our facilities. Therefore, to maintain performance and capacity of
increasing information and data transmitted across Avista’s network to serve our customers,
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investment in additional coverage is necessary. Similarly, continuous improvement in our core
platform technologies: safety and control; operational; customer facing; and back office allow for our core systems to function as required. For example, enhancing our customer facing website (www.myavista.com) to form fit to all mobile device types, provides customers ease of use and a better overall experience when reaching us using any mobile device type. Additionally, server
computing and storage capacity continues to grow in parallel with data growth. This is not unique to Avista. Finally, continuous investment in adapting to evolving security threats is paramount to maintaining system reliability, which also includes investment in backup and restoration technologies. Together, these investments under the Technology Expansion to Enable Business Process supports new technology enhancements to deliver value to all our customers, including
those in Idaho.

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AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/15/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok
REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery REQUEST NO.: Staff-049 TELEPHONE: [phone]
REQUEST: Please describe and include examples of the “mandatory investment drivers” referenced in Mr. Kensok’s testimony. Direct at 27.
RESPONSE: As described in Mr. Morris, Schedule 2, at 20, “Avista’s capital investments originate from the
following six major ‘investment drivers’:
1. Respond to customer requests for new service or service enhancements; 2. Meet our customers’ expectations for quality and reliability of service; 3. Meet regulatory and other mandatory obligations;
4. Address system performance and capacity issues;
5. Replace infrastructure at the end of its useful life based on asset condition, and; 6. Replace equipment that is damaged or fails, and support field operations.” Of the six drivers, the following investment drivers are considered mandatory: (Customer
Requested Investment; Failed Plant and Operations Investment; and Mandatory & Compliance
Investment) as we are required to provide new service connections to customers, meet regulatory compliance with various laws, rules and contracts external to Avista, and repair failed plant to provide continuity and adequacy of service, as well as limited capital work performed by our operations staff.

Most technology projects are either addressing system performance and capacity or replacing assets beyond their useful life. However, there are two Business Cases within the Enterprise Technology department that are categorized under the Mandatory & Compliance investment driver, High Voltage Protection (HVP) for Substations and Next Generation Radio (NGR). All
projects that exist within these Business Cases support the goal of satisfying a law, rule, or
contractual obligation set forth by an external party to Avista. Specific compliance drivers are listed below. High Voltage Protection (HVP) for Substations
Under CenturyLink (formerly known as Qwest Communications), Tariff FCC Number 1, Section
13.7, Avista is required to provide high voltage protection for communication circuits in high voltage areas newer than September 12, 1994. In order to balance the need for communications from devices at substation locations with safety of personnel and equipment, high voltage protection and isolation standards have changed. If Avista does not meet the tariff requirements,
telecommunication companies have the ability to turn off communication circuits to substations
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until Avista electrically isolates the copper wire coming into a substation, thereby affecting phone,
modem, SCADA, and other metering and monitoring systems at substations. This business case was created to meet the needs of this tariff and to minimize risk regarding personal safety for all workers in and around these high voltage areas. This is a multi-year effort to reach all substations across our service territory, including those serving our customers in Idaho.

Next Generation Radio (NGR) Avista’s Land Mobile Radio (LMR) system is considered the most critical communication tool for field operations, from both a productivity view point and for personal and public safety. Currently, Avista’s LMR system operates on a collection of licensed wideband Very High Frequency (VHF)
25 KHz channels. In late 2004, the Federal Communications Commission (FCC) announced a mandate that all licensees operating on private VHF radio frequencies must narrowband channel bandwidth from 25 KHz to 12.5 KHz by January 1, 2013. Avista’s existing LMR system was not compatible with narrow-banding, and therefore needed replacement. This was a multi-year effort, as it required a significant upgrade to the entire LMR system, serving customers throughout our
service territory, including Idaho. Final project expenses, which included coverage enhancements, as well as equipment and circuit decommissioning transfered to plant in the 2017 period.
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AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/16/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery
REQUEST NO.: Staff-050 TELEPHONE: [phone] REQUEST:
Mr. Kensok states that “25% of [the Company’s] in-service [technology] assets are beyond [the] manufacturer lifecycle.” Please explain the risks associated with deferring technology upgrades in order to fund the Technology Refresh project at 2016 levels when a quarter of these assets are already beyond the manufacturer lifecycle. Kensok Exhibit 10, Schedule 1, at 12. Please include all supporting workpapers and analysis.
RESPONSE: At a fundamental level, Avista’s Technology Refresh Business Case is necessary to allow Avista
to effectively manage its technology portfolio. IT assets are foundational in providing utility services. However, IT components naturally become outdated or reach technological obsolescence over a period that is much shorter than the life of other utility assets, such as a natural gas pipe in the ground or wires and transformers on a pole.
As stated in Mr. Kensok Direct on page 20 “technology assets reach manufacturer-planned or real obsolescence, vendor support for these assets is reduced, or ceases altogether. As vendor support ends, the risk associated with Avista’s business systems that rely upon these technology products increases and the value provided by these business systems is jeopardized. These factors present a
risk to Avista in the form of increased failure rates, inefficient work practice, employee/public safety incidents due to system failures, and reduced customer satisfaction, among other areas of risk.” The rapid pace of technology change naturally causes technology assets to become dated relatively
soon after they are implemented, as manufacturers make newer technology available, also known as planned obsolescence. In any given year, depending on where Avista’s assets fall with regards to their respective manufacturer-supported lifecycles, Avista’s aged assets may be higher or lower than the referenced 25%. This challenge is faced by all industries. That is, to invest in enough
technology to manage aging systems at a reasonable pace without implementing new technology
as soon as it is released. Therefore, Avista takes a balanced approach, which considers interoperability and support of legacy systems, industry best practice, maturation of technology, manufacturer financial stability, investment and maintenance costs, available alternatives, and risks associated with running systems beyond the manufacturer lifecycle.

Additional risks include inoperability of disparate, unsupported, unpatched or outdated technologies resulting in higher costs to operate, as well as extended unplanned outages to upgrade a system upon failure. Also, unpatched or obsolete and unsupported technology may result in a
data breach or cyber-crime due to known software vulnerabilities that may be exploited.
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AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/15/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: James Kensok
REQUESTER: IPUC RESPONDER: Andy Leija TYPE: Production Request DEPARTMENT: IT Project Delivery REQUEST NO.: Staff-051 TELEPHONE: [phone]
REQUEST: Please describe how the High Voltage Protection Refresh project aligns with and supports current and expected reliability and critical infrastructure regulations, requirements and initiatives. Kensok Exhibit 10, Schedule 1, at 24. Please include all supporting workpapers and analysis.
RESPONSE: The High Voltage Protection (HVP) Refresh initiative aligns with Avista’s commitment to invest
in its infrastructure to achieve optimal lifecycle performance – safely, reliably, and at a fair price. Data communications that monitor and control Avista substations are critical in the support of the bulk electric system. The implementation of HVP technology will continue to enable and support these critical communications, but in a manner that is much safer to all workers in and around the
substation location.
The HVP project work directly supports the CenturyLink (formerly known as Qwest Communications), Tariff FCC Number 1, Section 13.7, which states that Avista is required to provide high voltage protection for communication circuits in high voltage areas newer than
September 12, 1994.
Avista facilities providing service to electric power generating, switching, or distribution station may require the use of special HVP apparatuses such as isolation or neutralization devices or mutual drainage transformers. These devices are located at the Point of Termination (Avista side)
to protect against the effects of Ground Potential Rise (GPR) and induction caused by faults in a
customer's electric power system. These special protection precautions are intended to:
• Minimize electrical hazards to personnel
• Prevent electrical damage to telecommunications equipment and facilities
• Provide the required continuity of telecommunications transmission at times of power system faults The risk of not replacing the High Voltage Protection with a system that meets the CenturyLink’s
requirements would result in termination of communication services by the carrier. This would
impact Avista’s ability to safely and reliably control and monitor our substation and transmission facilities.
AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/16/2017 CASE NO.: AVU-E-17-01 & AVU-G-17-01 WITNESS: Elizabeth Andrews
REQUESTER: IPUC RESPONDER: Annette Brandon TYPE: Production Request DEPARTMENT: State & Federal Regulation REQUEST NO.: Staff – 052 TELEPHONE: [phone]
REQUEST: Please describe the storage software referenced in testimony. Morehouse Direct at 7.
a.) Did the Company purchase the software or develop it internally?
b.) How will the software be used?
RESPONSE:
The storage model utilized for storage optimization was built in-house and is referred to as the “Storage Optimization Model”. The implementation of this model has provided the Company a method to identify opportunities to purchase lower cost natural gas in the immediate term for a sale in a future time period. For each storage transaction, a corresponding forward sale is also made,
locking in the benefit for our customers. Additional purchases and sales are made continuously as market conditions move into favorable conditions for each transaction. It is important to note that Jackson Prairie will still be utilized to meet peak day needs, as well as mitigate daily price volatility. Benefits associated with locking in time-period spreads flow through the Company’s
Purchase Gas Adjustment annual filings.
The implementation of this model was communicated with Staff in June 2015 and a presentation followed in the September 30, 2015 Natural Gas Update meeting. Please see Staff_PR_052 Attachment A and B for this documentation.

AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO DATE PREPARED: 08/16/2017 CASE NO: AVU-E-17-01/AVU-G-17-01 WITNESS: Heather Rosentrater
REQUESTER: IPUC RESPONDER: Larry La Bolle TYPE: Production Request DEPARTMENT: State & Federal Regulation REQUEST NO.: Staff-053 TELEPHONE: [phone]
REQUEST: Please provide the supporting analysis and workpapers used to determine the approximately $20 million yearly Gas Facilities Replacement Program values listed in Morris Exhibit No. 1, Schedule 2, at 28 Table 11.
RESPONSE: Please find the business case for this program provided in Rosentrater, Exhibit No. 8, Schedule 5,
on pages 184 – 190. The replacement program is planned for completion over a 20-year time horizon, which means we have to replace enough miles of pipe each year to complete the work on schedule. The program cost each year reflects the number of miles of pipe planned for replacement in that year.