20181015Avista to Staff 50-59.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 800-727-9170
October 12,2018
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Corp,
Idaho Public Utilities Commission
472W. Washington St.
Boise, ID 83720-0074
Attn: Brandon Karpen
Deputy Attorney General
Re: Production Request of Commission Staff in Case No. AVU-E-18-03/AVU-G-18-02
Dear Mr. Karpen,
Enclosed is Avista's response to IPUC Staffs production request in the above referenced
dockets. Included in this mailing are the original and two paper copies of Avista's response to
production request: Staff 50 - 59. Also enclosed on three separate CD's are copies of Avista's
response to the production request. The electronic version of the response was emailed on
t0lt2t18.
If there are any questions regarding the enclosed information, please contact Paul Kimball at
[phone] or via e-mail at [e-mail]
Sincerely
Mgr. Compliance & Discovery
Enclosures
CC (Email)
CC (Paper):
Sierra Club (Boyd)
IPUC (Hanian)
Clearwater (Richardson, Reading, Lewallen, Haugen)
Idaho Conservation League (Otto)
Idaho Forest Group (Miller, Williams, Crowley)
Clearwater (Richardson)
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- I 8-03/AVU-G- 1 8-02
Staff
Production Request
Staff-50
DATE PREPARED: l0l2l20l8WITNESS: N/A
RESPONDER: James Gall
DEPARTMENT: Energy Resources
TELEPHONE: (s09) 49s-2189
REQUEST:
In the Company's 2017IRP filing, information was provided to Staff about planned base capital
expenses at Colstrip Units 3 and 4. (Avista's Confidential Response to StafPs Production Request
No. 3 in Case No. AVU-E-17-08). Staff observes that the level of base capital expenses increases
significantly in2019,2020,2022, and2023. Other notable increases occur in2025,2026,2028,
and2029. Please explain the increased expenses in these years.
RESPONSE:
To clarify this response, Production Request No. 3 in Case No. AVU-E-17-08 contains the
Colstrip ownership and operating agreement. Avista assumes this request is referring to
Production Request No. 4 in Case No. AVU-E-17-08.
The 2017 IRP assumes both units 3 and 4 will be overhauled every three years. 2018 was a
non-overhaul year, whereas 2019 and 2020 both have increased capital expenditures as they are
assumed overhaul years. 2021 does not include any overhaul capital expenditures based on this
plan. The IRP assumes this overhaul schedule will continue throughout the plan, therefore every
three years will have lower capital expenditures. Beyond this every three year overhaul schedule,
overall capital expenditures increase annually for associated inflation.
Please also see the Company's response to Sta[PR_027 for details on the budgeting process for
Colstrip.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-03/AVU-G- I 8-02
Staff
Production Request
Staff-5 I
DATE PREPARED: t0ll2l20l8WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: (509) 49s-2293
REQUEST:
ln reference to the Kettle Falls Station plant, the depreciation study proposes aNet Salvage of -4%o
for Account 315.0 (Accessory Electric Equipment) instead of the currently approved Net Salvage
of 0o/o. The analysis provided on pages VIII-I3 and VIII-l4 of the Gannett Fleming study
indicates an historical 30-year average Net Salvage of -lYo, and a five-year average Net Salvage of
-3%. Please provide justification for using a Net Salvage of -4%o.
RESPONSE:
As described in Part IV of the Depreciation Study, the net salvage percent for production facilities
are determined by a weighting of terminal and interim net salvage. The currently approved net
salvage for Account 315 was based only on interim net salvage and informed judgment. The
individual production plant weighted net salvage is set forth on pages VIII-2 through VIII-5. The
weighted net salvage for Kettle Falls is negative 4 percent.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-o3/AVU-G- 1 8-02
Staff
Production Request
Staff-52
DATE PREPARED: l0ll2l20l8WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: ((509) 49s-2293
REQUEST:
In reference to Colstrip Unit 3, the depreciation study proposes a Net Salvage of -6% for Account
315.0 (Accessory Electric Equipment) instead of the currently approved Net Salvage of 0%. The
analysis provided on pages VIII-l3 and VIII-l4 of the Gannett Fleming study indicates an
historical 30-year average Net Salvage of -lo/o, and a five-year average Net Salvage of -3%o. Please
provide justification for using a Net Salvage of -6%o.
RESPONSE:
Please see the response to Request No. 51. The weighted net salvage for Colstrip Unit 3 is
negative 6 percent with the calculation on page VIII-2 of the Depreciation Study.
Page I of I
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-03/AVU-G- 1 8-02
Staff
Production Request
Staff-53
DATE PREPARED
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
t0lt2l20t8
N/A
John Spanos
Consultant
((s0e) 4e5-22e3
REQUEST:
In reference to Colstrip Unit 4, the depreciation study proposes a Net Salvage of -7o/o for Account
315.0 (Accessory Electric Equipment) instead of the currently approved Net Salvage of 0%. The
analysis provided on pages VIII-I3 and VIII-I4 of the Gannett Fleming study indicates an
historical 30-year average Net Salvage of -loh, and a five-year average Net Salvage of -3Yo. Please
provide justification for using a Net Salvage of -7o/o.
RESPONSE:
Please see the response to Request No. 51. The weighted net salvage for Colstrip Unit 4 is
negative 7 percent with the calculation on page VIII-2 of the Depreciation Study.
Page I of 1
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO
CASE NO: AVU-E-I8-03/AVU-G-18-02
REQUESTER: StaffTYPE: Production Request
REQUEST NO.: Staff-54
DATE PREPARED: l0ll2l20l8WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: ([phone]
REQUEST:
In reference to the calculation of the Net Salvage for Account 331 (Structures and Improvements)
on pages VIII-17 and VIII-18 of the Gannett Fleming study, please provide a detailed description
of the retirements that occurred in 2014 and 2015. Please also describe the removal costs incurred
associated with these retirements that totaled 106% and343% of the retirements, respectively.
RESPONSE:
The retirements in 2014 and 2015 for Account 33 l, Structures and Improvements, relate to various
assets at numerous locations. None of the retirements are major, with the largest entry of 53,000 at
Noxon Rapids in 2015.
The cost of removal and gross salvage are not always recorded in the same year as the retirement.
Therefore, averages are necessary for determining the interim net salvage. Some of the cost of
removal in2014 and 2015 relate to prior year retirements.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR TNFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- l 8-03/AVU-G- l 8-02
Staff
Production Request
Staff-55
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
1011212018
N/A
John Spanos
Consultant
((s0e) 4es-22e3
REQUEST:
In reference to the calculation of the Net Salvage for Account 332 (Reservoirs, Dams and
Waterways) on pages VIII-20 and VIII-2l of the Gannett Fleming study, please provide a detailed
description of the retirements that occurred in 2014. Please also describe the removal costs
incurred associated with these retirements that totaled 213% of the retirement.
RESPONSE:
The retirements in 2014 relate to assets at Upper Falls and Nine Mile. The cost of removal and
gross salvage are not always recorded in the same yeur as the retirements, so it is necessary to
review rolling averages or total account averages as compa.red to specific yearly averages. The
cost of removal in 2014 relates primarily to the large retirement in 2010.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-O3/AVU-G- 1 8-02
Staff
Production Request
Staff-56
DATE PREPARED: l0ll2l20l8WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: ConsultantTELEPHONE: ((s09) 49s-2293
REQUEST:
In reference to the calculation of the Net Salvage for Account 335 (Miscellaneous Power Plant
Equipment) on pages VIII-26 and VIII-27 of the Gannett Fleming study, please provide a
description of the $111,920 removal costs incurred in 2016.
RESPONSE:
The $1 11,920 of cost of removal in 2016 relates primarily to the $421,000 in retirements. There
were many assets retired at various locations. The majority of the cost of removal was related to
retirements at Noxon Rapids and Cabinet Gorge.
Page I of I
AYISTA CORPORATION
RESPONSE TO REQI]EST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- I 8-03/AVU-G- I 8-02
Staff
Production Request
Staff-57
DATE PREPARED: l0ll2l20rgWITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: ((s09) 495-2293
REQUEST:
Given that the removal costs for 2016 referenced in the previous question make up 87.24% of the
removal costs incurred in the previous 30 years combined, and that the 30-year average of Net
Salvage for Account 335 is -tUyo, please explain why the proposed Net Salvage of -16% for
Account 335 for the Cabinet Gorge plant is appropriate.
RESPONSE:
Please see the response to Request No. 51. The net salvage percent is based on a combination of
terminal and interim net salvage. The weighted net salvage for Cabinet Gorge in Account 335.00
is negative l6 percent.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-03/AVU-G- 1 8-02
Staff
Production Request
Staff-58
DATE PREPARED: 1012312018WITNESS: N/A
RESPONDER: Karen Schuh
DEPARTMENT: Regulatory Affairs
TELEPHONE: (s09) 49s-2293
REQUEST:
The settlement stipulation filed with the Oregon Public Utilities Commission identifies an increase
in Net Salvage for common plant in Accounts 392 and 396. Please provide the impact to Idaho
natural gas depreciation rates and depreciation expense if the Net Salvage in those accounts were
changed to match the agreement in Oregon.
RESPONSE:
The impact to the change in Idaho natural gas depreciation expense as of December 31, 2016, is a
decrease of approximately $370.
Page I ofl
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATTON
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- I 8-03/AVU-G- I 8-02
Staff
Production Request
Staff-59
DATE PREPARED: 1011212018WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: [phone]
REQUEST:
Referring to the Northeast Turbine plant, please provide a narrative explaining in detail the
rationale for increasing the depreciation rate from I .64%o to 30.18%. Please provide any
documentation supporting this increase.
RESPONSE:
A depreciation accrual rate is based on the survivor curve, net salvage percent, plant to reserve
ratio, age of surviving plant in service at the time of the calculation, and for generating plant, the
probable retirement date.
Thecurrentandproposedrates of 1.64%and30.78%relatetoAccount34l forNortheastTurbine
plant only. The 1.64 percent was based on 8 years remaining life for $365,279.55 in plant and
$3 17,307 of book reserye. Therefore, $47 ,973 to be recovered over 8 years produces a l.64oh rate.
Page I ofl
ln the 2016 Depreciation Study, the plant to reserve ratio, surviving plant balance, and net salvage
percent change with only 2 years to recover the remaining service value. Therefore, a 30.78%
ratio is needed.