20071101DeFelice direct.pdf

David.J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION, dba A VISTA
UTllJTIES, FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
CASE NO. A VU-07-
CASE NO. A VU-07-
DIRECT TESTIMONY OF
DAVE B. DEFELICE
FOR A VISTA CORPORATION
I. INTRODUCTION
Please state your name, employer and business address.
My name is Dave DeFelice. I am employed by Avista Corporation as a Senior
Business Analyst. My business address is 1411 East Mission, Spokane, Washington.
Please briefly describe your education background and professional
experience.
I graduated from Eastern Washington University in June of 1983 with a
Bachelor of Arts Degree in Business Administration majoring in Accounting. I have served in
various positions within the Company, including Analyst positions in the Finance Department
(Rates section and Plant Accounting) and in Marketing/Operations Departments , as well.
While employed in the Plant Accounting section of the Finance Department in 1988-1990, I
was involved in a depreciation study of the Company s Electric Plant facilities. I rejoined the
Rates section in December of 1997 as a Rate Analyst. Then in 1999 , I joined a group in the
Company as a Sr. Business Analyst that focuses on economic analysis of various project
proposals as well as evaluations and recommendations pertaining to business policies and
practices.
As a Senior Business Analyst, what are your responsibilities?
As a Senior Business Analyst I am involved in activities ranging from financial
analysis of numerous projects with various departments such as Engineering, Operations
Marketing/Sales and Finance. Also, a portion of my job tasks involve advisory and informal
training of employees (primarily new hires in Engineering) pertaining to regulatory finance
and ratemaking concepts.
DeFelice, Di
A vista Corporation
Page 1
What is the scope of your testimony?
My testimony and exhibits in this proceeding will cover the Company
proposed changes in depreciation rates pertaining to Electric Plant in Service for Generation
Transmission, Distribution and General Plant accounts. Similar information is provided for
Gas Plant in Service for Underground Storage, Distribution and General Plant in service.
Are you sponsoring any exhibits?
Yes. I am sponsoring Exhibit No. 101 (Depreciation Expense - Electric), No.
102 (Depreciation Expense - Gas), No.1 03 (Depreciation Parameters) and No.1 04 (Electric
Accounts with WUTC Proposed Rates), which were prepared under my direction.
II. SUMMARY OF CHANGES IN DEPRECIATION RATES
Why did Avista have a depreciation study performed?
Avista hired Gannett Fleming, Inc. to undertake a depreciation study of its
depreciable electric, gas and common plant in service as of December 31 , 2004.The
objective of this assignment was to recommend depreciation rates to be utilized by Avista for
accounting and ratemaking purposes. Workpapers, including the detailed Depreciation Study
prepared by Gannett Fleming, Inc., are included with this filing.
What is the main purpose of a depreciation study?
The primary outcome of a depreciation study is to calibrate annual depreciation
expense accruals and depreciation rates by utility plant families.Continued review and
periodic revisions are normally required to maintain continued use of appropriate annual
depreciation accrual rates with the goal of balancing the remaining plant investment on the
Company s balance sheet with the remaining life of the assets. An assumption that accrual
rates can remain unchanged over a long period of time implies a disregard for the inherent
DeFelice, Di
A vista Corporation
Page 2
variability in service lives and salvage and for the change of the composition of property in
service. The annual accrual rates proposed in this filing were calculated in accordance with
the straight-line remaining life method of depreciation using the average service life
procedures based on estimates which reflect considerations of historical evidence and
expected future conditions.
What are the definitions of key terms used in the depreciation study
report containing the basis for your depreciation rate recommendations for A vista?
The definitions are as follows:
Depreciation - As applied to depreciable utility plant, means the loss in service
value incurred through the consumption or prospective retirement of utility plant in the course
of service from causes which are known to be from current operation. Among the causes to
be given consideration are wear and tear, decay, action of the elements, inadequacy,
obsolescence, changes in demand and requirements of public authorities.
Service Value - The difference between original cost and net salvage of utility
plant.
Net Salvage - The salvage value of property retired less the cost of removal.
Salvage Value - The amount received for property that has been retired , less
any cost incurred in connection with the sale or in preparing the property for sale; or, if
retained, the amount at which the material recoverable is chargeable to materials and supplies
(inventory), or other appropriate account.
Cost of Removal - The cost of demolishing, dismantling, tearing down or
otherwise removing utility plant, including the cost of transportation and handling incidental
thereto.
DeFelice, Di
A vista Corporation
Page 3
Service Life - The time between the date utility plant is includible in utility
plant in service and the date of its retirement.
When was the last time the Company changed its depreciation rates in
Idaho?
The last time the Company changed its Idaho depreciation rates was September
2004.
Is the Company proposing different depreciation methodologies in this
case than what were used in 2004?
Yes.The change in depreciation rates is due to updated information
determined through analysis of historical retirement experience, salvage and cost of removal
experience, and determination of updated unit remaining lives and net salvage factors. The
Company proposes to utilize the straight-line methodology for hydro electric facilities
consistent to the methodology used on all other categories of plant in service within the scope
of this depreciation study. The sinking-fund methodology has been used on hydro generation
facilities up to this point in time.
Why is the Company proposing to use the straight-line depreciation
methodology on hydraulic electric generation facilities rather than the sinking-fund
method?
The straight-line method of depreciation will result in lower increases in
depreciation expense accruals and depreciation levels consistent with capital activity in future
years for hydro electric generation facilities as compared to the sinking-fund methodology.
(See Comparison of Depreciation Expense for Hydraulic Production Plant for projected
expenses between 2006 through 2010 in graph below.) Also , the sinking-fund methodology is
DeFelice, Di
A vista Corporation
Page 4
no longer recognized as a reasonable approach of depreciation for utility assets. It is not
consistent with other utilities or the other asset classes in this report. The conversion to
straight-line depreciation will result in a minor impact to ratepayers now (reduction in
depreciation expense of approximately $300 000 in 2008), but will also mitigate depreciation
accrual changes for future studies in comparison to the sinking-fund methodology.
Comparison of Depreciation Expense for Hydraulic
Production Plant
$8,000 000
I..
000,000
$6,000 000
$5,000 000 2006
$6,629 652
208,517
2007
626,847
$6,489,386
2008
$6,625,012
$6,927 965
Year
2009
625 012
136,426
2010
$6,625,012
634,574
What is the impact of the proposed changes in depreciation rates?
The proposed depreciation rates reflect a decrease of approximately $192 000
electric depreciation expense on a system-wide basis and an increase in depreciation
expense of approximately $128 000 for Idaho. This amount is calculated on Exhibit No.101
(Depreciation Expense - Electric). The proposed depreciation rates for natural gas plant
results in a decrease of approximately $466 000 in natural gas depreciation expense on a
system-wide basis and a decrease in Idaho depreciation expense of approximately $132 000.
This amount is calculated on of Exhibit No.102 (Depreciation Expense - Gas).
DeFelice, Di
A vista Corporation
Page 5
Are the changes in depreciation expense discussed above the result of the
depreciation rates proposed by Gannett Fleming, Inc.
The changes for natural gas depreciation expense are the result from using the
rates proposed by Gannett Fleming, Inc. The changes for electric depreciation expense are the
result from using the rates proposed by Gannett Fleming, Inc. for all but four plant accounts.
Which four electric plant accounts have depreciation rates that were not
proposed by the depreciation consultants and why?
On April 26, 2007, Avista filed with the Washington Utilities and
Transportation Commission (WUTC) a request for electric and natural gas rate increases in
Docket Nos, UE-070804 and UG-070805.The proposed depreciation rates from the
Depreciation Study were incorporated into those filings. A Partial Settlement Stipulation
between Avista, Commission Staff, and the other interveners was filed on October 15, 2007
in which the parties agreed to accept the depreciation rates proposed in the Depreciation
Study, including a WUTC Staff proposed reduction in the negative net salvage values the
Company used in determining new depreciation rates on four electric accounts, which results
in lower depreciation accrual rates on those accounts. These accounts include Account 311 -
Structures & Improvements, Account 312 - Boiler Plant Equipment, Account 356 - Overhead
Conductor & Devices , and Account 369 - Services. These WUTC Staff proposed negative
net salvage values were deemed reasonable by the Company. Exhibit No. 104 (Electric
Accounts with WUTC Staff Proposed Rates) provides detail on the original salvage values
and depreciation rates proposed in the Study, the WUTC Staff proposal, and the impact of the
changes on system and Idaho depreciation expense.
DeFelice, Di
A vista Corporation
Page 6
Why are new depreciation rates being proposed in this filing?
Accounting theory requires matching of expenses with either consumption or
revenues to ensure that financial statements reflect results of operations as accurately as
possible. The matching principle of financial accounting is often referred to as the "cause and
effect" principle. Because utility revenues are determined through regulation, changes in asset
consumption are not automatically reflected in revenues until regulated revenues are adjusted
to reflect the changes in asset consumption. Consumption of utility assets must be measured
directly by conducting a book depreciation study to accurately determine mortality
characteristics.Matching is an element of regulatory philosophy that addresses
intergenerationa1 equity. Intergenerationa1 equity means costs are borne by the generation of
customers that caused them to be incurred, not by a later generation. This matching concept is
one principle that can be used to ensure that charges to customers reflect the actual costs of
providing service. Also, proper matching of costs and revenues related to group (mass) asset
consumption will provide for not only sufficient recovery of existing assets in service, but also
provide for a mechanism to fund replacements of retired assets on a timely basis, thus
reducing rate impacts by way of limiting "catch-up" adjustments in future depreciation
studies.
Please summarize the analysis methods used in the depreciation study?
The study consisted of the following processes:
Step One was a Life Analysis consisting of statistical historical retirement experience
and an evaluation of the applicability of that experience to surviving property. For Production
Plant, this step also entailed the establishment of the generating unit probable retirement dates
suitable for rate calculation.
DeFelice, Di
A vista Corporation
Page 7
Step Two was a Net Salvage Analysis consisting of a study of salvage value and cost
of removal experience and an evaluation of the applicability of that experience to surviving
property.
Step Three consisted of the determination of the generating unit remaining lives, the
average service lives, the interim retirement dispersion identified by pending construction
additions and interim retirement ratios for Production Plant and retirement dispersion by
Iowa-type curves for Transmission, Distribution and General Plant, and the net salvage factors
applicable to surviving property for all categories of plant.
Step Four was the determination of the depreciation accrual rates applicable to each
plant group, recognizing the results of Steps One through Three, and a comparison with the
existing rates.
Can you elaborate on the two different methods used for plant retirement
dispersions?
For Electric Transmission, Distribution and General Plant, and Gas Plant in
Service Account, historical retirements were used as a basis for the actuarial method of Life
Analysis. This statistical analysis can be performed since the vintage of retired and surviving
property is known. Generally, retirement data for the years 1989-2004 were used in the
actuarial life computations. From this, original survivor curves were visually and statistically
fitted to Iowa-type survivor curves (defined below).
The actuarial method of Life Analysis for Production Plant will provide only an
indication of interim average service life and retirement dispersion without consideration of
terminal retirement experience. Thus, a two step analysis was utilized. Step One was the
estimation of the retirement date for each generating unit and Step Two was the calculation of
DeFelice, Di
A vista Corporation
Page 8
past interim addition and retirement ratios. Interim additions and retirements were determined
from the Company s actual recorded history by plant and account for the entire history of each
plant. These amounts then determined interim retirement ratios (interim retirements as a
percentage of past depreciable balances) that is the depreciation rate that would have
recovered an amount equal to the total interim retirements.
What would be the impact if interim retirement ratios were not used in
Production Plant depreciation analysis?
Due to the nature of the mortality characteristics of generating plants, using
only historical retirements in the same way that is done for other plant categories would result
in artificially low depreciation rates for generating plants during the early years of asset life.
This is due to the fact that plant retirements for generating plants typically are not as prevalent
in the early years of plant life, as compared to the later years in the remaining life of a facility.
Thus, cost recovery through depreciation rates would be disproportional (higher) in the later
years of the plant life, which violates the attempt to achieve intergenerational equity.
What are Iowa Curves?
Iowa Curves represent frequency dispersion of retirements identified by a
simple nomenclature. The nomenclature is a combination of a letter and a number, the letter
refers to the shape of the retirement dispersion, whereas, the number represents the
concentration of retirements near the average service life.
For example, an "L" curve has the majority of retirements occurring prior to the
average service life or to the left of the mean. An "R" curve has the majority of retirements
occurring after the average service life or to the right of the mean.An "s" curve
symmetrical to the mean or average service life.
DeFelice, Di
A vista Corporation
Page 9
Could you discuss the analysis supporting the salvage and cost of removal
ratios that are proposed by the Company?
Yes.The analysis was based upon actual salvage and cost of removal
experience from 1983 through 2004. Salvage and cost of removal factors were developed for
each property group by dividing salvage and cost of removal amounts by the original cost of
the retired property. Since the average dollar age of retirements of plant is young relative to
the expected age of surviving property at retirement, this results in overstating salvage factors
and understating the cost of removal factors applicable to surviving property, if history serves
as the sole basis for net salvage determination. From this, salvage factors would be overstated
because young property retirements are more likely to have a salvage value than older reused
items. In addition, cost of removal factors are understated because the amount of inflation
reflected in the cost to remove young property is much less than the amount that will be
reflected in the cost to remove the surviving property when it is retired. The average age of
original installations at retirement is equal to the average service life, meaning that the average
age of surviving property at retirement will be higher than the average service life and much
higher than the age of current retirements. Reaction to this situation resulted in an inflation
adjustment to historical cost of removal ratios.
What were the changes in electric depreciation rates that were
recommended as a result of the study and modifications proposed by WUTC Staff?
The table on the following page shows the existing rates and the recommended
rates:
DeFelice, Di
A vista Corporation
Page 10
Existing %
Depreciation Rates
Recommended %
Functional Electric Group
Steam Production Plant
Hydraulic Production Plant
Other Production Plant
Transmission Plant
Distribution Plant
General Plant
1.89
2.45
8.44
3.23
What does that represent in terms of a percentage increase in depreciation
expense?
By utilizing the modified rates recommended in the study and applying them to
system electric plant monthly average balances for the twelve months ended December 31
2006, depreciation expense decreased by approximately 0.3%.
Would you summarize the findings and recommendations of the
depreciation study using the functional groups listed above?
Yes. The composite rate for electric property under the study changed from
644% to 2.640%. As a group, average service life changes were mostly increases. Net
salvage changes were mostly more negative due to decreased salvage and increased cost of
removal. The relationship of increased average service life and more negative net salvage is
expected due to the fact that cost of removal is sensitive to price level changes that reflect
labor costs, while the salvage value of an asset will inherently decrease as its age increases.
Steam Production plant depreciation expense decreased due to increased service lives.
Hydraulic Production plant expense increased due primarily to the switch from sinking-fund
method of depreciation to straight-line method. Other Production plant expense decreased
due to increased service lives. Transmission plant expense decreased due to increased service
lives. Distribution plant expense significantly increased due mainly to three accounts
DeFelice, Di
Avista Corporation
Page 11
including Poles, Overhead Conductor and Underground Conductor. For Poles and Overhead
Conductor, the salvage values changed from net positive to net negative. For Underground
Conductor, the service lives were shortened. General plant expense decreased primarily due
to Communication Equipment lives being increased from 12 to 15 years to better reflect the
type of asset being installed.
What were the changes in gas depreciation rates that were recommended
as a result of the study?
Following is a table that shows the existing rates and the recommended rates:
Depreciation RatesExisting % Recommended %
Functional Gas Group
Underground Storage Plant
Distribution Plant
General Plant
2.43
1.86
What does that represent in terms of a percentage decrease in
depreciation expense?
By utilizing the new rates recommended in the study and applying them to
system gas plant monthly average balances for the twelve months ended December 31 , 1996
depreciation expense decreased by approximately 4.9%.
Would you summarize the findings and recommendations of the
depreciation study using the functional groups listed above?
Yes. The composite rate for gas property under the study changed from 2.50%
to 2.37%. As a group, life changes were mostly increases. Net salvage changes were mostly
decreases due to decreased salvage and increased cost of removal.The relationship of
increased asset life and net salvage decreases is expected due to the fact that cost of removal is
DeFelice, Di
A vista Corporation
Page 12
sensitive to price level changes that reflect labor costs, while the salvage value of an asset will
inherently decrease as its age increases.
Please summarize the effect the change in depreciation rates would have
on the Idaho electric depreciation expense?
The change in depreciation rates would mcrease Idaho annual electric
depreciation expense by approximately $128 000.
Please summarize the effect the change in depreciation rates would have
on the Idaho natural gas depreciation expense?
The change in depreciation rates would decrease Idaho annual natural gas
depreciation expense by approximately $132 000.
Is the Company requesting a change in its current customer rates as a
result of this filing?
No. The Company asks that the Commission approve the proposed depreciation
rates for accounting purposes only and will include the impact from the change in depreciation
rates in a future general rate proceeding.
Does this conclude your pre-filed direct testimony?
Yes, it does.
DeFelice, Di
A vista Corporation
Page 13
Fl E CF:,
David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION, dba A VISTA
UTILITIES, FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
CASE NO. A VU-07- I (
CASE NO. AVU-07-
EXHIBIT NO. 101
DAVE B. DEFELICE
FOR A VISTA CORPORATION
AVISTA UTILITIES
Depreciation Expense - Electric
For the Year Ended December 31 , 2006
2006 Deprec. at 2006 Deprec. at
Existing Rate Proposed Rate Change Allocation Allocation
Production Plant:
Steam Production Plant 388 515 10,174 951 213 564)(798 889)(414 675)
Hydraulic Production Plant 208,522 629,652 421 130 277,230 143,900
Other Production Plant 625 177 796 613 828 564)(1,203,743)(624 820)
Total Production Plant 222 214 25,601 216 (2,620 998)725,402)(895,595)
PIT Ratio 65.830%34.170%
Transmission Plant 049,748 614 061 (1,435,687)(945,113)(490,574)
PIT Ratio 65.830%34.170%
Distribution Plant 17,457,435 22,484 950 027 515 120,428 907 087
Depreciable Plant-ADP-12A 62.067%37.933%
General Plant-See Allocation WS 693,473 530,438 163,035)(770,045)(392 990)
Depreciable Plant-ADP-12A 66.210%33.790%
TOTAL ELECTRIC PLANT 61,422 870 230 665 (192 205)(320 132)127 928
DEFERRED TAX IMPACT ~ 35%(112 046)44,775
10 Accumulated Depreciation/Deferred Tax Impact:
Accumulated
eciation BalanceDe~05
Jan-06 10 661
Feb-06 21 321
Mar-06 31 982
Apr-06 42 643
May-06 53 303
Jun-06 63,964
Jul-06 74 625
Aug-06 85,285
Sep-06 95,946
Oct-06 106 607
Nov-06 117 267
Dec-06 127 928
Avefage of Monthly Average 63,964
Deferred FIT
Balance
731
7,462
194
925
656
387
26,119
850
581
312
043
775
387
Exhibit No.1 01
Case Nos. AVU-07-- AVU-07-
DeFelice, Avista Corporation
Page 1 of 1
David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone] , Fax: [phone]
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION, dba AVISTA
UTILITIES, FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
CASE NO. AVU-07-
CASE NO. A VU-07-
EXHIBIT NO. 102
DAVE B. DEFELICE
FOR A VISTA CORPORATION
AVISTA UTILITIES
Depreciation Expense - Gas
For the Year Ended December 31 , 2006
2006 Depree, at 2006 Depree. at
Existing Rate Proposed Rate Change Allocation Allocation
Underground Storage Plant 425,988 344 112 (81 876)(60 056)(21 820)
System Contract Demand Ratio 73.350%26.650%
Distribution Plant 862 876 561 878 (300,998)(214 542)(86,456)
Actual Therms Purchased 71.277%28.723%
Genefal Plant - Difect 177,423 152 821 (24 602)(18,046)557)
System Contfact Demand Ratio 73.350%26.650%
Transportation Plant - Difect 99,447 85,072 (14 375)(10,544)(3,831)
System Contract Demand Ratio 73.350%26.650%
Genefal Plant-See Allocation WS 968,561 924 547 (44 014)(30 394)(13,620)
Depreciable Plant-ADP-12A 69.055%30.945%
TOTAL GAS PLANT 534 295 068,430 (465 865)(333,582)(132 284)
DEFERRED TAX IMPACT ~ 35%(116 754)(46,299)
10 Accumulated DepfeciationlDeferred Tax Impact:
Accumulated
Depeciation BalanceDe~05
Jan-06 (11 024)
Feb-06 (22 047)
Mar-06 (33,071 )
Apr-06 (44 095)
May-06 (55,118)
Jun-06 (66 142)
Jul-06 (77 166)
Aug-06 (88,189)
Sep-06 (99,213)
Oct-06 (110 237)
Nov-06 (121 260)
Dec-06 132,284Avefage of Monthly Average (66 142)
Deferred FIT
Balance
(3,858)
716)
(11 575)
(15,433)
(19,291)
(23 150)
(27 008)
(30 866)
(34 725)
(38,583)
(42,441)
(46 299)
(23 150)
Exhibit No.1 02
Case Nos. AVU-07-- AVU-07-
DeFelice. Avista Corporation
Page 1 of 1
RECE1
David 1. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone] , Fax: [phone]
ZDf
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Q. " r~..J'
UT!L 8tg'd~~J~11~s!o
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION, dba A VISTA
UTILITIES, FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
CASE NO. A VU-07-
CASE NO. AVU-07-
EXHIBIT NO. 103
DA VE B. DEFELICE
FOR A VISTA CORPORATION
AVISTA UTILITIES
Depreciation Parameters
For the Year Ended December 31 , 2006
Current Parameters Proposed Parameters
Average Average
Account Service Net Service Net
Number Description Life Curve Salvage Life Curve Salvage
Steam Production Plant
311.0 Structures & Improvements Note 1 S1.
312.0 Boiler Plant Equipment
314.0 Turbogenerator Units
315.0 Accessory Electric Equipment S1.
316.0 Misc. Power Plant Equipment
Hydraulic Production Plant (N/A - Sinking Fund Method)
330.3 Removing Property of Others 100
330.31 Removing Property of Others-Conservation
330.4 land Easements
330.41 land Easements-Conservation
331.0 Structures & Improvements 110 RO.
331.1 Structures & Improvements-Fish & Wildlife R2.
331.2 Structures & Improvements-Recreation
331.26 Structures & Improvements-Rec Info
332.0 Reservoirs, Dams & Waterways 100 R1.
332.1 Reservoirs , Dams & Waterways-Fish & Wildlife
332.15 Reservoirs, Dams & Waterways-Fish & Wildlife
332.2 Reservoirs, Dams & Waterways-Recreation
333.0 Waterwheels, Turbines & Generators R1.
334.0 Accessory Electric Equipment R2.
335.0 Misc. Power Plant Equipment
335.1 Misc. Power Plant Equipment-Fish & Wildlife
335.2 Misc. Power Plant Equipment-Recreation
336.0 Roads, Railroads & Bridges S2.
Other Production Plant
341.0 Structures & Improvements 29.Note 1
342.0 Fuel Holders , Producers & Access.29.
343.0 Prime Movers 29.S2.
344.0 Generators 29.
345.0 Accessory Electric Equipment 16.S1.
346.0 Miscellaneous Equipment 29.
Electric Transmission Plant
352.0 Structures & Improvements
353.0 Station Equipment
354.0 Towers & Fixtures
355.0 Poles & Fixtures
356.0 OH Conductor & Devices
357.0 UG Conduit
358.0 UG Conductor & Devices
359.0 Roads & Trails
Exhibit No.1 03
Case Nos. AVU-07-AVU-07-
DeFelice, Avista Corporation
Page 1 of 2
AVISTA UTILITIES
Depreciation Parameters
For the Year Ended December 31 2006
Current Parameters Proposed Parameters
Average Average
Account Service Net Service Net
Number Description Life Curve Salvage Life Curve Salvage
Electric Distribution Plant
361.0 Structures & Improvements
362.0 Station Equipment R1.R1.
364.0 Poles, Towers & Fixtures R2.
365.0 OH Conductor & Devices R2.
366.0 UG Conduit
367.0 UG Conductor & Devices L 1
368.0 Line Transformers
369.0 Services
370.0 Meters
373.0 Street Lighting & Signal System R2.
373.4 High Pressure Sodium Vapor Lights R2.
Electric General Plant
390.1 Structures & Improvements LO.
391.1 Computer Equipment S1.
392.0 Transportation Equipment
393.0 Stores Equipment
394.0 Tools, Shop & Garage Equipment
395.0 Laboratory Equipment L 1
396.0 Power Operated Equipment
397.0 Communication Equipment
398.0 Miscellaneous Equipment
Gas Underground Storage
350.2 Rights of Way
351.0 Structures & Improvements S2.
352.0 Storage Wells
352.1 Wells
352.2 Reservoirs
352.3 Cushion Natural Gas
353.0 Lines S2.
354.0 Compressor Station Equipment
355.0 Measuring & Regulating Equipment
356.0 Purification Equipment
357.0 Other Equipment S2.
Gas Distribution Plant
375.0 Structures & Improvements R2.
376.0 Mains
378.0 Measuring/Regulating Station Equipment L 1.R1.
379.0 Measuring/Regulating City Gate Equipment
380.0 Services
381.0 Meters S2.
385.0 Measuring/Regulating Industrial Equipment
Gas General Plant
390.1 Structures & Improvements SO.
393.0 Stores Equipment
394.0 Tools, Shop & Garage Equipment
395.0 Laboratory Equipment R2.
397.0 Communication Equipment
398.0 Miscellaneous Equipment
Note 1 - Previous Depreciation Study Reports prepared by consultants do not have data included.
Exhibit No.1 03
Case Nos. AVU-07-AVU-07-
DeFelice, Avista Corporation
Page 2 of 2
David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
REG;:
2007 NaV
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION, dba A VISTA
UTILITIES, FOR AN ORDER
AUTHORIZING A CHANGE IN DEPRECIATION RATES
CASE NO. A VU-07-
CASE NO. A VU-07-,Q3
EXHIBIT NO.1 04
DA VE B. DEFELICE
FOR A VISTA CORPORATION
312.KeUie Falls Boiler Plant Equipment
312.Coltrip Unit 3 Boiler Plant Equipment
312.Coltrip Unit 4 Boiler Plant Equipment
356.N/A OH Conductor & Devices
369.N/A OH Services
369.N/A UG Services - Spokane
369.N/A UG Services - Other
AVISTA UTILITIES
Depreciation Study
Electric Accounts with WUTC Proposed Rates
For the Year Ended December 31 , 2006
ID Allocation - 311 312 356
ID Allocation - 369
3417
37933
WUTC Staff Pro osed
Net
Salva e
88%554 240
24%2,414 744
32%549,449
39%738 155
94%803,414
83%22,507
81%979,541
Depreciation
Rate
34%
28%
35%
31%325,911 (228,329)(78,020)
70%012,287 (402,457)(137 520)
83%320,766 (228,683)(78,141)
93%1,403,615 (334 540)(114 312)
69%699,881 (103,533)(39,273)
59%19,556 951)119)
59%860,480 (119 061)(45,163)
$ (2 042 184) $(706,302)
Exhibit No.1 04
Case Nos. AVU-07-- AVU-07-
DeFelice, Avista Corporation
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