20181120Avista to Clearwater 5-6.pdf

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E- I 8-03/AVU-G- I 8-02
Clearwater Paper
Production Request
Clearwater-05
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
l:flIl\,'ED
tUr2l20t8N/A :'-',' 20 .t,11 9: 5l
Karen Schuh/Justin B.
Regulatory Affairs - ,l!,, y. . l_rl ;(s0e) 4es-22e3
REQUEST:
Avista's Application in this Docket states, "Consistent with Order No. 29962 in Case Nos.
AVU-E-05-09 and AVU-G-05-03 (consolidated), Avista shall recover costs associated with asset
retirement obligations ("AROs") through depreciation expense based on Commission-approved
depreciation rates." [Application, AVU-18-03, p. 8.]
In Response to Clearwater's First Request for Production, PR02, the Company provided a
Workpaper spreadsheet titled; 'Clearwater_PR02 - Attachment 9 Workpapers - Depreciation
Study Summary - Attachment A, B I -2,and Summary WPs. On tabs,'Att BI123116 Depr_Chgex
trans', and'Wkpr-stdy Bal (ex. Tmsptn)'in column L Row 38 is the value So/o,that is the 'Proposed
Study Rate' for Colstrip Units 3 8.4 ARO 1317.1Asset Retirement Obligationl.
A.) Please provide all documents, reports, studies, electronic copies of the workpapers and
spreadsheets used in support of the 50% Proposed Study Rate.
B) Has the Commission approved the 5o/o ARO Proposed Study Rate in any past
depreciation Dockets? If so please provide the Case Number and the Commission's
Final Order Number in the Docket.
RESPONSE:
A.) The Company is requesting to account for the ARO related to Colstrip Units 3 & 4 and
to match up the amortization of the ARO with the remaining life in this depreciation
study. In order to do this, the Company calculated a straight-line depreciation rate for
the remaining life from 2016 to 20361 (20 years) to compute a 5Yo rate. Therefore, there
are no workpapers available with regards to this 5Yo rate. The Company is currently in
the process of reviewing this rate, due to the pending settlement agreement in Avista's
merger dockets in Washington, which would accelerate the depreciable life of Colstrip
3&4 to 2027, and accelerate the amortization of the ARO. When the Company has
finished its review, the Company will provide an update to this production request.
B.) The Commission has not approved a 5Yo proposed study rate in a past Avista Docket, as
this is the first time the Company is requesting recovery of the Colstrip 3&4 ARO.
I A remaining life of 2036 for Colstrip Unit 4 is provided by the Company's third party depreciation study consultant
as the remaining life. For simplification purposes, the Company chose to have the proposed rate reflect the longer
lived assets of the two units.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
AVU-E- I 8-03/AVU-G- I 8-02
Clearwater Paper
Production Request
Clearwater-06
DATE PREPARED: llll2l20l8
WITNESS: N/A
RESPONDER: Adam Munson
DEPARTMENT: Corporate Accounting
TELEPHONE: [phone]
REQUEST:
Avista's 2Al7 lO-K states,
"ln addition to an increase to our ARO, it is expected that there will be significant compliance costs ot
Colstrip in the Juture, both operating and capital costs, clue to a series of incremental infrastructure
improvemenls which are separale,from the ARO. We cannot reasonably estimate the future compliance
cosls; however, we v,ill update or.r ARO and compliance cosl e.ctimates a.y data becomes
availahle.fAvista 2017 10-K, p. 75]
Even though the final compliance costs are known at this time, please provide a list the items that these
expected significant compliance cost wor"rld irrclude and provide an explanation of each.
RESPONSE:
Avista is not certain that legal requirements will be consistent with current law prior to the final closure
and remediation of the Colstrip facility. As future compliance legislation is not known, the company is
not in a position to reasonably estimate the final capital cost to comply, nor to speculate on what the
potential operating activities will be.
However. the anticipated costs to comply with the EPA's Final Rule for the regulation of coal
combustion residuals (CCRs) under Subtitle D of the Resource Conservation and Recovery Act
(RCRA) (refbrred to as the CCR rule) were used in deterrnining the net present value of the ARO.
'fhese ad.iusted costs amounted to -$14.8 M for the design, construction, closure and rnonitoring of the
required evaporation ash ponds as follows:
Design costs
Construction Costs
Closure Costs
Post Close Monitoring
Total
: $0.4 M
: $4.7 M
:$5.7 M
: $4.0 M
$14.8M
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REQUESTER:
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