20051220_1419.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:CECELIA A. GASSNER
DATE:DECEMBER 15, 2005
SUBJECT:CASE NOS. A VU-05-3 AND A VU-05-9; A VISTA CORPORATION'
APPLICATION FOR AN ACCOUNTING ORDER REGARDNG
TREATMENT OF CERTAIN ASSET REQUIREMENT OBLIGATIONS
RESULTING FROM IMPLEMENTATION OF SFAS 143
On November 30, 2005 , Avista Corporation ("Avista" or "Company ) filed an
Application with the Idaho Public Utilities Commission ("Commission ) seeking an accounting
order authorizing the Company to treat certain asset retirement obligations ("AROs ) for the
current and future fiscal years in accordance with Statement of Financial Accounting Standards
(SFAS) 143. Pursuant to Idaho Code ~ 61-524, the Commission is empowered to establish a
system of accounts to be kept by public utilities subject to its jurisdiction.
THE APPLI CA TI 0 N
In its Application, A vista has requested an accounting order authorizing the
Company to (1) record, as a regulatory asset or a regulatory liability, the cumulative financial
statement impacting resulting from the Company s implementation of SF AS 143; and (2) record
on an ongoing basis, as a regulatory asset or a regulatory liability, an amount equal to the
difference between the annual SFAS 143 accretion and depreciation expense and the annual
depreciation expense based on Commission-approved depreciation rates. Under SF AS 143
entities are required to recognize and account for certain asset retirement obligations in a manner
different from the way that A vista and other public utilities have traditionally recognized and
accounted for such costs. Specifically, if a legally enforceable ARO, as defined by SF AS 143, is
deemed to exist, an entity must measure and record the liability for the ARO on its books.
DECISION MEMORANDUM
The Application states that the Company has determined that it will be required to
record AROs under SFAS 143 for certain assets. The Company states that the proposed
accounting treatment will have no impact for ratemaking purposes. The Company further states
that nothing in the Application is intended to request any approval regarding future ratemaking
treatment. The accounting changes proposed in the Application are supported by a series of
exhibits identifying the accounting entries the Company believes are needed for compliance with
SF AS 143.
ST AFF RECOMMENDATION
Staff recommends that the Company s Application be processed by Modified
Procedure with a 21-day comment period. This should allow sufficient time for interested
parties to review the Company s Application and file their comments with the Commission.
Reference Commission Rules of Procedure, IDAPA 31.01.01.201-.204.
COMMISSION DECISION
Does the Commission preliminarily find that the public interest may not require
hearing to consider the issues presented in this case, and that this case is appropriate for
Modified Procedure pursuant to Commission Rules of Procedure 201 through 204?
Does the Commission approve of a comment period of 21 days?
Cecelia . Gassner
M:A VUE0503 _0509- cg
DECISION MEMORANDUM