20181025Avista to Staff 60-62.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 800-727-9170
October 24,2018
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Corp.
Idaho Public Utilities Commission
472W. Washington St.
Boise, ID 83720-0074
Attn: Brandon Karpen
Deputy Attomey 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 60 - 62. 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
t0l24lt8.
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
Mgr. Compliance & Discovery
Enclosures
CC (Email):Sierra Club (Boyd)
IPUC (Hanian)
Clearwater (Richardson, Reading, Lewallen, Haugen)
Idaho Conservation League (Otto)
Idaho Forest Group (Miller, Williams, Crowley)
CC (Paper):Clearwater (Richardson)
AVISTA CORPORATION
RESPONSE TO REQUEST FOR TNFORMATTON
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- 1 8-03/AVU-G- 1 8-02
Staff
Production Request
Staff-60
DATE PREPARED: l0ll7l20l8WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: (s09) 495-2293
REQUEST:
Please provide the detailed information and assumptions used in determining the survivor curves
for the following accounts:o Electric Plant 356.00 - Overhead Conductors and Devices
o Electric Plant 365.00 - Overhead Conductors and Devices
o Gas Plant 352.00 - Storage Wells
o Gas Plant 352.20 - Reservoirs
o Gas Plant 352.30 - Non-Recoverable Gas
o Gas Plant 376.00 - Mains
o Gas Plant 385.00 - Industrial Measuring and Regulating Station Equipment
o Gas Plant 390.10 - Structures & Improvements
For each account please include information used in the determination of the survivor curves, such
as: informed judgements, Company policies and outlook, survivor curve estimates from previous
studies of the Company and other comparable utility companies and any other information that
was used in their determination.
RESPONSE:
In Part III of the Depreciation Study, the Service Life characteristics for each account are
based on historical indications as well as informed judgment, which consists of Company plans
and outlook for assets, estimates used by others in the industry, and the previous estimate for the
Company.
For Account 356, Overhead Conductor and Devices and Account 365, Overhead
Conductor and Devices, the proposed estimates are either the same or longer than the current
estimate. The proposed estimate of 65-R3 for Account 356 and 60-R3 for Account 365 are at the
upper end of the industry range for these assets. The Company plans anticipate increased
retirements of the older, lower voltage conductor in the next few years which has already occurred
for Account 365.
For Account 352, Storage Wells, Account 352.2, Reservoirs, and Account 352.3,
Non-Recoverable Gas, there is limited historical data to indicate life characteristics. The estimates
for others is generally in the 50-55 year average life with a high-moded curve. The proposed lives
are either the same or slightly longer than the current estimate and reflects the plans of the
Company that these assets have not had major changes in life characteristics.
The historical life characteristics for Account 376, Mains, are a reasonable life
characteristic for distribution gas mains. The proposed 55-R3 survivor curve is similar to the
current estimate of 55-R2.5.
Page I of2
The 55-R2.5 survivor curve for Account 385, Industrial Measuring and Regulating Station
Equipment is at the upper end of the industry range. The current estimate is a 50-R2 survivor
curye. Although the 55-year average life is beyond the industry norrn, this is expected due to the
lack of growth and change in the industrial customers in the region. However, due to wear and
tear, there is an expectation of higher retirement levels for assets older than 60-years in the future.
The proposed estimate for Account 390.1, Structures and Improvements for gas plant is a
30-R3 survivor curve and the current estimate is a 30-Sl. The statistical data is a reasonable
estimate of the life characteristics for this account. The majority of the assets in the account for gas
plant are garages and warehouses, which do not have as long a life as major service centers.
Page2 of2
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
TDAHO
AVU-E- I 8-03/AVU-G- I 8-02
Staff
Production Request
Staff-61
DATE PREPARED: 1011712018WITNESS: N/A
RESPONDER: John Spanos
DEPARTMENT: Consultant
TELEPHONE: (s09) 495-2293
REQUEST:
In reference to the Transmission account 356.0, OH Conductor & Fixtures, the proposed Net
Salvage is -30Yo, in lieu of the current -10%. Pages VlIl-47 and VIII-48 of the Gannett Fleming
study, show a historical 34-year average Net Salvage of -4o/o and a five year moving average Net
Salvage of -40oh. Please explain the cause of the increases in the Net Salvage over the last five
years that would justify using a Net salvage of -30%o.
RESPONSE:
This cost of removal and gross salvage are not always recorded in the same year as the
retirement. The Company's last study was conducted as of 2010 and the trend in recent years is
much more negative.
Also, the net salvage percentage in the depreciation study is based on informed judgment
which includes historical indications, Company plans, estimates of others in the industry and the
current estimate of the Company. Therefore, the proposed net salvage percent should reflect what
the future net salvage should be, not a reflection ofjust historical net salvage.
Given the practices that have been in place for the last few years for recording cost of
removal and gross salvage, a focus on recent activity justifies at least the negative 30% level.
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- l 8-02
Staff
Production Request
Staff-62
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
t0l17l20t8
N/A
John Spanos
Consultant
(s09) 49s-2293
REQUEST:
In reference to removal costs for account367.0, UG Conductor & Devices, page VIII-59 of the
Gannett Fleming study indicates that removal costs increased by 524% in 2015 relative to 2014,
and 487% in 2016. Please provide an explanation for this increase in removal costs in these two
years.
RESPONSE:
Pages VIII-58 and VIII-59 represents the combined analyses of Account 366, Underground
Conduit, and Account 367, Underground Conductors and Devices.
Also, the cost of removal and gross salvage are not always recorded in the same year as the
retirement. The majority of retirements in 2015 and2016 occurred in urban areas which require
higher removal costs. The extremely high cost of removal levels are not expected to continue into
the future which was considered with the negative 30 percent estimate.
Page I of I