20080201Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
CO MMISSI 0 NER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
JOE LECKIE
DATE:FEBRUARY 1,2008
SUBJECT:VISTA CORPORATION DBA A VISTA UTILITIES' APPLICATION
FOR AN ORDER TO CHANGE DEPRECIATION RATES
CASE NOS. AVU-07-11 and AVU-07-
On November 1 2007, Avista filed an Application requesting an Order authorizing a
change in depreciation rates for electric and gas properties. The Company requested the
depreciation rate change be effective as of January 1 , 2008. The Company s last depreciation
rate change was effective September 9, 2004 in accordance with Order No. 29602.
On November 26 2007, the Commission issued a Notice of Application and Notice of
Intervention Deadline. No persons moved to intervene so the Commission Secretary issued a
Notice of Parties on December 17, 2007. The Company and Staff are the only parties in this
case.
THE APPLICATION
The Company retained a depreciation consultant and prepared a depreciation study,
which resulted in the current Application. Customer rates will not change as a result of this
Application but the new deprecation rates will be incorporated in the next rate case. Based on
plant-in-service at December 31 , 2006, the study proposed an increase of $127 928 for the Idaho
operations to reflect the proposed depreciation rates for the Company s electric utility plant. The
study also proposed a decrease of $132 284 for the Idaho operations to reflect the proposed
depreciation rates for the Company s gas utility plant.
DECISION MEMORANDUM FEBRUARY 1 2008
THE SETTLEMENT
On February 2008 the Company and Staff filed a Stipulation on Avista s Application
to change depreciation rates. The Stipulation sets forth new depreciation rates for Avista
depreciable electric and gas plant. The proposed depreciation rates applied to plant balances as
of December 31 , 2006, result in a decrease of approximately $668 000 in A vista s annual electric
depreciation expense and a decrease of approximately $132 000 in Avista s annual gas
depreciation expense for its Idaho jurisdiction operations. The Stipulation provides that if
approved by the Commission the depreciation rates set forth in the Stipulation should become
effective as of January 1 , 2008.
Commission Rule 274 states that "the Commission may summarily accept settlement of
an essentially private dispute that has no significant implications for regulatory law or policy or
for other utilities or customers upon the written request of the affected parties." The Staff and
the Company were the only parties in this case. The stipulated depreciation rates for Avista
electric and gas plant decrease expenses and represent a benefit to ratepayers. Accordingly, the
Stipulation asks that the Commission simply issue an Order approving the Stipulation and adopt
the terms and conditions of the Stipulation without further procedure.
Staff recommends that the Commission issue an Order approving the Stipulation on
Avista s Application to decrease electric and gas depreciation rates, and direct that the new
depreciation rates in the Stipulation are effective as of January 1 , 2008.
COMMISSION DECISION
Should the Commission issue an Order approving the Stipulation on A vista s Application
to change electric and gas depreciation rates, making the new depreciation rates effective as of
January 1 , 2008?
;y-:..__
Joe bZ'tkie
I:A VUEO711 A VUGO73 Depreciation TC1312008
DECISION MEMORANDUM FEBRUARY 2008