20080725Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL
DATE:JUL Y 22, 2008
SUBJECT:CASE NO. A VU-08-
VISTA CORPORATION'S APPLICATON FOR WIND GENERATION
COSTS TO BE CONSTRUCTION WORK IN PROGRESS
On June 4, 2008 , A vista Corporation filed an Application requesting an order
allowing for costs associated with wind generation site land, land rights , reservation costs, and
other incremental costs associated with site evaluation, selection and acquisition to be accounted
for as construction work in progress (CWIP), and allowing for the accrual of allowance for funds
used during construction (AFUDC)." Avista s Integrated Resource Plan calls for the acquisition
of 300 MW of wind generation capacity.
The Application states that in May the Company purchased permits, studies, lease
assignments and wind data for the development of a wind generation site near Reardan
Washington. The Company is requesting to have all reservation payments and other costs
associated with development of the site accounted for as CWIP. According to the Application
Commission authorization is required to account for wind generation site costs in FERC Account
107-CWIP, because normally this account is used when plant is in the process of construction.
Construction at the site is not expected to begin until 20 II. Given the lead time between the
expenditures for site costs, the ordering of equipment and start of construction, A vista states it is
necessary to obtain Commission approval to account for these costs in Account 107-CWIP.
DECISION MEMORANDUM
On June 25, 2008, the Commission issued a Notice of Application and Notice of
Modified Procedure that, among other things, established a period for interested parties to file
comments. Written comments were filed only by Staff.
Staff recommends the Commission authorize A vista to book the described costs
associated with wind generation site land, land rights, reservation costs and other incremental
costs as CWIP, and that Avista be required to utilize a separate subaccount for the AFUDC and
maintain workpapers identifying the components of AFUDC.
COMMISSION DECISION
Should A vista Corporation s Application for an accounting order authorizing wind
generation site costs as construction work in progress be approved?
vfL:/
Weldon B. Stutzman
Deputy Attorney General
blsIM:A VU-O8-04 ws2
DECISION MEMORANDUM