20110706Andrews Di.pdf

RECEi\/EEi
DAVID J. MEYER 201 i JUL -5
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & GOVERNMENtAL AFF~H~S0
AVISTA CORPORATION
P . O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
DAVID .MEYER~AVISTACORP. COM
M1 II: 1..4
~ t ¡ ~j iii" "'~. ;
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN THE
STATE OF IDAHO
CASE NO. AVU-E-11-01
CASE NO. AVU-G-11-01
DIRECT TESTIMONY
OF .
ELIZABETH M. ANDREWS
FOR AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
1
2
CONTENTS
Section
3
4
5
6
7
8
9
10
11
12
13
14
I.Introduction
II. Combined Revenue Requirement Sumry
III. Electric Section
Test Period for Ratemaking Purposes
Revenue Requirement
Standard Commission Basis and Restating Adjustments12
Pro Forma Adj ustments
IV. Natural Gas Section
Revenue Requirement
Standard Commission Basis Adjustments
Pro Forma Adj ustments
V. Alloca tion Procedures
15 VI. Deferred Accounting Request for Major Increases in
16
17
Generating Plant Operation and Maintenance Costs
VII. Other
18 Exhibit No. 10:
19 Schedule 1 - Electric Revenue Requirement and
20
21
22
23
Page
2
4
5
5
10
34
43
45
47
54
61
61
68
Results of Operations (pgs 1-11)
Schedule 2 - Natural Gas Revenue Requirement and
Results of Operations (pgs 1-9)
Andrews, Di 1
Avista Corporation
1
2
I. INTRODUCTION
Q.Please state your name, business address, and
3 present position with Avista Corporation.
4 A.My name is Elizabeth M. Andrews.I am employed
5 by Avista Corporation as Manager of Revenue Requirements in
6 the State and Federal Regulation Department.My business
7 address is 1411 East Mission, Spokane, Washington.
8 Q.Would you please describe your education and
9 business experience?
10 A.I am a 1990 graduate of Eastern Washington
11 Uni versi ty with a Bachelor of Arts Degree in Business
12 Administration, majoring in Accounting.Tha t same year, I
13 passed the November Certified Public Accountant exam,
14 earning my CPA License in August 1991 i .I worked for
15 Lemaster & Daniels, CPAs from 1990 to 1993, before joining
16 the Company in August 1993.I served in various positions
17 wi thin the sections of the Finance Department, including
18 General Ledger Accountant and Systems Support Analyst until
19 2000.In 2000, I was hired into the State and Federal
20 Regulation Department as a Regulatory Analyst until my
21 promotion to Manager of Revenue Requirements in early 2007.
22 i have also attended several utility accounting, ratemaking
23 and leadership courses.
24 Q.As Manager of Revenue Requirements, what are your
25 responsibilities?
1 Currently I keep a CPA-Inactive status with regards to my CPA
license.
Andrews, Di 2AvistaCorporation
1 A.As Manager of Revenue Requirements, aside from
2 special proj ects, I am responsible for the preparation of
3 normalized revenue requirement and pro forma studies for
4 the various jurisdictions in which the Company provides
5 utility services. During the last ten and one-half years,
6 i have assisted or led the Company's electric and/or
7 natural gas general rate filings in Idaho, Washington and
8 Oregon.
9 Q.What is the scope of your testimony in this
10 proceeding?
11 A.My testimony and exhibits in this proceeding will
12 generally cover accounting and financial data in support of
13 the Company's need for the proposed increase in rates.I
14 will explain pro formed operating results, including
15 expense and rate base adjustments made to actual operating
16 resul ts and rate base.I incorporate the Idaho share of
17 the proposed adjustments of other witnesses in this case.
18 In addition, I will explain the Company's request for
19 deferred accounting treatment of changes in generating
20 plant operation and maintenance (O&M) costs related to its
21 Coyote Springs 2 natural gas-fired plant and its 15%
22 ownership share of the Colstrip 3 & 4 coal-fired generating
23 plants.
24 Q.Are you sponsoring any exhibits to be introduced
25 in this proceeding?
26 A.Yes. I am sponsoring Exhibit No. 10, Schedule 1
27 (Electric) and Schedule 2 (Natural Gas) , which were
Andrews, Di 3
Avista Corporation
1 prepared by me.These exhibits consist of worksheets,
2 which show actual 2010 operating results (twelve-month
3 period ending December 31, 2010), pro forma, and proposed
4 electric and natural gas operating results and rate base
5
6
for the State of Idaho.The exhibits also show the
calculation of the general revenue requirement,the
7 derivation of the Company's overall proposed rate of
8 return, the derivation of the net-operating-income-to-
9 gross-revenue-conversion factor, and the specific pro forma
10 adjustments proposed in this filing.
11
12
13
I I. COMBINED REVENU REQUIRENT SUMY
Q.Would you please sumrize the results of the
14 Company's pro form study for both the electric and natural
15 gas operating systems for the Idaho jurisdiction?
16 A.Yes.After taking into account all standard
17 Commission Basis adj ustments, as well as additional pro
18 forma and normalizing adjustments, the pro forma electric
19 and natural gas rates of return ("ROR") for the Company's
20 Idaho jurisdictional operations are 7.57% and 7.31%,
21 respectively.Both return levels are below the Company's
22 requested rate of return of 8.49%. The incremental revenue
23 requirement necessary to give the Company an opportunity to
24 earn its requested ROR is $9,009,000 for the electric
25 operations and $1,921,000 for the natural gas operations.
26 The overall base electric increase associated with this
27 request is 3.66%. The base natural gas increase is 2.72%.
Andrews, Di 4
Avista Corporation
1 Q.What are the Company's rates of return that were
2 last authorized by this Commission for it's electric and
3 gas operations in Idaho?
4 A.The Company's currently authorized rate of return
5 for its Idaho operations is 8.55% , effective October 1,
6 2010 for both our electric and natural gas systems.
7
8 III. ELECTRIC SECTION
9 Test Period for Ratemaking Purposes
10 Q.On what test period is the Company basing its
11 need for additional electric revenue?
12 A.The test period being used by the Company is the
13 twelve-month period ending December 31, 2010, presented on
14 a pro forma basis.Currently authorized rates were based
15 upon the twelve-months ending December 31, 2009 test year
16 utilized in AVU-E-10-01, adjusted on a pro forma basis.
17 Q.Could you please explain the different rates of
18 return that you will be discussing in your testimony?
19
20
A.Yes.There are three different rates of return
that will be discussed.The actual ROR earned by the
21 Company during the 2010 test period of 9.11%2 3, the pro
2 As shown on Exhibit 10, Schedule 1, this return includes deferred
federal income taxes (DFIT) on plant rate base, excluding minor
additional DFIT amounts associated with Coeur d' Alene, Spokane River
Relicensing and Montana Riverbed Lease deferrals included in separate
restating adjustments described later in my testimony.3 The Company will not have an opportunity to earn its current or
requested allowed rate of return for the 2012 rate period without
additional rate relief from this general rate case, due primarily to
the 2011 and 2012 net increases in company expenditures included in
the Company's filed case.
Andrews, Di 5
Avista Corporation
1 forma ROR of 7.24% (determined in my Exhibit No.10,
2 Schedule 1) and the requested ROR of 8.49%.
3 Q.What are the primary factors driving the
4 Company's need for an electric increase?
5 A.Approximately 90% of the Company's revenue
6 requirement requested in this case is due to an increase in
7 Net Plant Investment (including return on investment,
8 depreciation and taxes, and offset by the tax benefit of
9 interest) .This increase is due to an increase of
10 approximately $21.0 million in net plant rate base for the
11 Idaho jurisdiction.
12 The remaining 10% is due to increases in distribution,
13 operation and maintenance (O&M) , and administrative and
14 general (A&G) expenses, offset by a reduction in net power
15 supply and transmission expenditures.
16 Also impacting the Company's request, the Company has
17
18
19
included an Energy Efficiency Load Adj ustment (EELA)
increasing the Company's revenue requirement by
approximately $1.86 million.The reduced load from the
20 EELA causes an increase in revenue requirement in each of
21 the maj or cost categories because the foregone retail
22 revenue from the load reduction is designed to recover
23 costs in each of the categories.
24 Q.What were the major components of the increased
25 net plant investment included in the Company's filing?
26 A.Looking at the changes to "gross" plant in
27 service, Idaho "gross" plant increased by approximately
Andrews, Di 6
Avista Corporation
1 $66.2 million, as compared to what is current.ly included in
2 rates.In order to meet the energy and reliability needs
3 of our customers, $23.0 million of this increase is due to
4 the Company's investment in thermal and hydro generating
5 facili ties, as well as additional transmission investment.
6 Distribution "gross" plant increased $30.1 million above
7 the current level included in rates, while general and
8 intangible "gross" plant increased $13.1 million.After
9 adjusting for accumulated depreciation and amortization,
10 and accumulated deferred income taxes, the net increase to
11 rate base from these items is approximately $21 million.
12 Lastly, the Company included a working capital adjustment
13 in this case of $7.7 million for fuel stock inventory,
14 materials and supplies.
15 The specific 2011 and 2012 pro forma capital
16 expendi tures undertaken by the Company to expand and
17 replace its generation,transmission and distribution
18 facili ties are discussed further by Company witnesses Mr.
19 Lafferty regarding production assets, and Mr. Kinney
20 regarding transmission and distribution assets.In
21 addi tion to discussing the actual restating and pro forma
22 adjustments made regarding net plant investment, Company
23 witness Mr. DeFelice also describes all remaining 2011 and
24 2012 plant additions not described by Mr. Lafferty and Mr.
25 Kinney.
26
27
Q.Mr. DeFelice explains the restating pro form
capi tal adjustments included in this case.Could you
Andrews, Di 7
Avista Corporation
1 please briefly describe the conclusions drawn by Mr.
2 DeFelice regarding the increased capital investmnt?
3 A.Yes.As described in Mr. DeFelice's testimony,
4 the Company is making substantial levels of capital
5 investment in its electric and natural gas system
6 infrastructure to address the replacement and maintenance
7 of Avista' s aging system, and to sustain reliability and
8 safety.As soon as this new plant is placed in service,
9 the Company must start depreciating the new plant and incur
10 other costs related to the investment.Unless this new
11 investment is reflected in retail rates in a timely manner,
12 it has a negative impact on Avista' s earnings, particularly
13 because the new plant is typically far more costly to
14 install than the cost of similar plant that was embedded in
15 rates decades earlier.As plant is completed and is
16 providing service to customers, it is appropriate for the
17 Company to receive timely recovery of the costs associated
18 with that plant.
19 Q.Could you please provide additional details
20 related to the changes in production and transmission
21 expense?
22 A.Yes.As discussed in Company witness Mr.
23 Johnson's testimony, the level of Idaho's share of power
24 supply expense has decreased by approximately $2.2 million
25 ($6.4 million on a system basis) from the level currently
26 in base rates.
Andrews, Di 8
Avista Corporation
1 This decrease in pro forma power supply expense over
2 the expense currently in base rates is caused primarily by
3 two factors, lower loads and lower market prices for
4 natural gas and power.Loads are lower by 50.8 aMW from
5 the authorized loads in current base rates, which used a
6 pro forma load projection. The reduction in load is a
7 result of using historical test-year loads and including
8 the Energy Efficiency Load Adj ustment. The reduction in
9 load due to moving from a pro forma year load to a
10 historical test-year load is 30.7 aMW and the reduction in
11 load due to the Energy Efficiency Load Adjustment is 20.1
12 aMW. Mr. Johnson discusses in further detail the changes in
13 power supply expenses.
14 Pro forma transmission expenditures increased due in
15 part to approximately $747,000 of expenses in 2012 related
16 to a North American Electric Reliability Corporation (NERC)
17 Alert as discussed by Mr. Kinney.
18 Q.Could you please identify the main components of
19 the distribution, O&M and A&G expense changes included in
20 the Company's filing?
21 A.Yes.A number of expense items have increased
22 since the 2009 test year pro forma used in the last rate
23 case.For example, employee benefits such as wages and
24 medical insurance expenses have increased.
25 We are utilizing a 2010 test year, however, new
26 general electric rates resulting from this filing are not
27 expected to go into effect until late in 2011 or early
Andrews, Di 9
Avista Corporation
1 2012.Accordingly, the Company has included a number of
2 pro forma adj ustments to capture some of the cost changes
3 that the Company will experience from the test year.In
4 particular, the Company has pro formed in the increased
5 costs associated with electric distribution vegetation
6 management costs of approximately $1.3 million as discussed
7 by Mr.Kinney,and increased medical expenses of
8 approximately $658,000, discussed further below. These two
9 adjustments alone equate to over 75% of the additional
10 increases in distribution and other expense included in the
11 Company's filing.
12
13 Revenue Requirement
14 Q.Would you please explain what is shown in Exhibit
15 No. 10, Schedule 1?
16 A.Yes.Exhibi t No. 10, Schedule 1, shows actual
17 and pro forma electric operating results and rate base for
18 the test period for the State of Idaho. Column (b) of page
19 1 of Exhibit No. 10, Schedule 1, shows 2010 actual
20 operating results and components of the average-of-monthly-
21 average rate base as recorded (prior to deferred taxes);
22 column (c) is the total of all adjustments to net operating
23 income and rate base; and column (d) is pro forma results
24 of operations, all under existing rates. Column (e) shows
25 the revenue increase required which' would allow the Company
26 to earn an 8.49% rate of return.Column (f) reflects pro
27 forma electric operating results with the requested
Andrews, Di 10
Avista Corporation
1 increase of $9,009,000. The restating adjustments shown in
2 columns (c) through (ag), of pages 5 through 11 of Exhibit
3 No. 10, Schedule 1, are consistent with current regulatory
4 principles and the treatment reflected in the prior
5 Commission Order in Case No. AVU-E-10-01, with a few
6 proposed changes by the Company as described in my
7 testimony below.
8 Q.Would you please explain page 2 of Exhibit No.
9 10, Schedule 1?
10 A.Yes.Page 2 shows the calculation of the
11 $9,009,000 revenue requirement at the requested 8.49% rate
12 of return.
13 Q.What does page 3 of Exhibit No. 10, Schedule 1
14 show?
15 A.Page 3 shows the proposed Cost of Capital and
16 Capital Structure utilized by the Company in this case, and
17 the weighted average cost of capital 8.49%.Company
18 witness Mr. Thies discusses the Company's proposed rate of
19 return and the pro forma capital structure utilized in this
20 case, while Company witness Dr. Avera provides additional
21 testimony related to the appropriate return on equity for
22 Avista.
23 Q.Would you now please explain page 4 of Exhibit
24 No. 10, Schedule 1?
25
26
A.Yes.Page 4 shows the derivation of the net-
operating-income-to-gross-revenue-conversion factor.The
27 conversion factor takes into account uncollectible accounts
Andrews, Di 11
Avista Corporation
1 receivable, Commission fees and Idaho State income taxes.
2 Federal income taxes are reflected at 35%.
3 Q.Now turning to pages 5 through 11 of your Exhibit
4 No . 10 , Schedule 1 , would you please explain what those
5 pages show?
6 A.Yes. Page 5 begins with actual operating results
7 and rate base (prior to inclusion of deferred taxes) for
8 the 2010 test period in column (b). Individual normalizing
9 and restating adjustments that are standard components of
10 our annual reporting to the Commission begin in column (c)
11 on page 5 and continue through column (ag) on page 9.
12 Individual pro forma adj ustments begin in column (PF1) on
13 page 10 and continue through column (PF12) on page 11. The
14 final column on page 11 is the total pro forma operating
15 resul ts and net rate base for the test period.
16
17 Standard Commssion Basis and Restating Adjustmnts
18 Q.Would you please explain each of these
19 adjustments, the reason for the adjustment and its effect
20 on test period State of Idaho net operating income and/or
21 rate base?
22 A.Yes, but before I begin, I will note that in
23 addition to the explanation of adj ustments provided herein,
24 the Company has also provided workpapers, both in hard copy
25 and electronic formats,outlining additional details
26 related to each of the adjustments.
Andrews, Di 12
Avista Corporation
1 The first adjustment, column (c) on page 5, entitled
2 Deferred FIT Rate Base, reflects the rate base reduction
3 for Idaho's portion of deferred taxes.The adj ustment
4 reflects the deferred tax balances arising from accelerated
5 tax depreciation (Accelerated Cost Recovery System, or
6 ACRS, and Modified Accelerated Cost Recovery, or MACRS) and
7 bond refinancing premiums.These amounts are reflected on
8 the average-of-monthly-average balance basis.The effect
9 on Idaho rate base is a reduction of $104,677,000.
10 The adjustment in column (d), Deferred Gain on Office
11 Building, reflects the removal of the amortization gain
12 included in the Company's 2010 test period related to
13 Idaho's portion of the amortized gain on the sale of the
14 Company's general office facility.The facility was sold
15 in December 1986 and leased back by the Company.Although
16 the Company repurchased the building in November 2005, the
17 deferred gain was amortized over the period ending in 2011.
18 Therefore, during the 2012 rate period the average of
19 monthly averages (AM) amount of the deferred gain is zero.
20 The effect on Idaho rate base is zero. The effect on Idaho
21 net operating income is an increase of $43,0004.
22 The adjustment in column (e) ,Colstrip 3 AFC
23 Elimination,is a reallocation of rate base and
4 During the process of completing the Company's filing the Company
discovered it had inadvertently reduced expense for removal of the
deferred gain included in the test period. Rather, this adjustment
should have removed the gain, increasing expense, decreasing net
operating income $43,000. The impact of correcting for this error
increases the requested electric revenue requirement in this case by
approximately $135,000.
Andrews, Di 13
Avista Corporation
1
2
depreciation expense between jurisdictions.In Cause Nos.
U-81-15 and U-82-10,the Washington Utilities and
3 Transportation Commission (WUTC) allowed the Company a
4 return on a portion of Colstrip Unit 3 construction work in
5 progress (CWIP). A much smaller amount of Colstrip Unit 3
6 CWIP was allowed in rate base in Case U-1008-144 by the
7 IPUC. The Company eliminated the AFUDC associated with the
8 portion of CWIP allowed in rate base in each jurisdiction.
9 Since production facilities are allocated on the
10 Production/Transmission formula, the allocation of AFUDC is
11 reversed and a direct assignment is made.The rate base
12 adj ustment reflects the average-of-monthly-averages amount
13
14
for the test period.The effect on Idaho net operating
income is a decrease of $191,000.The effect of the
15 reallocation on Idaho rate base is an increase of
16 $1,493,000.
17 The adjustment in column (f), Colstrip Common AFUC,
18 is also associated with the Colstrip plants in Montana, and
19 increases rate base. Differing amounts of Colstrip common
20 facilities were excluded from rate base by this Commission
21 and the WUTC until Colstrip Unit 4 was placed in service.
22 The Company was allowed to accrue AFUDC on the Colstrip
23 common facilities during the time that they were excluded
24 from rate base.It is necessary to directly assign the
25 AFUDC because of the differing amounts of common facilities
26 excluded from rate base by this Commission and the WUTC.
27 In September 1988, an entry was made to comply with a
Andrews, Di 14
Avista Corporation
1 Federal Energy Regulatory Commission (FERC)Audit
2 Exception, which transferred Colstrip common AFUDC from the
3 plant accounts to Account 186.These amounts reflect a
4 direct assignment of rate base for the appropriate average-
5 of-monthly-averages amounts of Colstrip common AFUDC to the
6 Washington and Idaho jurisdictions.Amortization expense
7 associated with the Colstrip common AFUDC is charged
8 directly to the Washington and Idaho jurisdictions through
9 Account 406 and is a component of the actual results of
10 operations. The rate base adjustment reflects the average-
11 of-monthly-averages amount for the test period. The effect
12 on Idaho rate base is an increase of $774,000.
13
14
The adjustment in column (g), Kettle Falls & Boulder
Park Disallowances, decreases rate base.The amounts
15 reflect the Kettle Falls generating plant disallowance
16 ordered by this Commission in Case No. U-1008-185 and the
17 Boulder Park plant disallowance ordered by the IPUC in case
18 No. AVU-E-04-1.This Commission disallowed a rate of
19 return on $3,009,445 of investment in Kettle Falls, and
20 $2,600,000 million of investment in Boulder Park.The
21 disallowed investment, and related accumulated depreciation
22 and accumulated deferred taxes are removed. These amounts
23 are a component of actual results of operations.The
24 effect on Idaho rate base is a decrease of $1,880,000.
25 The adjustment in column (h), Customer Advances,
26 decreases rate base for moneys advanced by customers for
27 line extensions, as they will be recorded as contributions
Andrews, Di 15
Avista Corporation
lin aid of construction at some future time. The effect on
2 Idaho rate base is a decrease of $858,000.
3 Q.Please turn to page 6 and explain the adjustments
4 shown there.
5 A.Page 6 starts with the adjustment in column (i),
6 Weatherization and DSM Investment, which includes in rate
7 base the Sandpoint weatherization grant balance (FERC
8 account 124.350) ,and removes the 1994 DSM Program
9 amortization expense included in the 2010 test period.
10 Beginning in July 1994 accumulation of AFUCE5 ceased
11 on Electric DSM and full amortization began on the balance
12 based on the measure lives of the investment. Beginning in
13 1995 the amortization rates were accelerated to achieve a
14 14 year weighted average amortization period, which was
15 completed in 2010. As no expense will be incurred during
16 the 2012 rate year the 2010 amortization is being
17 eliminated in this adjustment. The effect on Idaho rate
18 base is an increase of $65,000. The effect on Idaho net
19 operating income is an increase of $147,000.
20 The adjustment in column (j) ,Restating CDA
21 Settlement, adjusts the 2010 AMA test period annual
22 amortization expense, net asset ($41.6 million (system) of
23 payments and deferred costs) and DFIT balances related to
24 the 2008 through 2010 CDA Tribe Settlement payments (Past
25 Storage/§10 (e)) and deferred costs to a 2012 AM basis.
5 Allowance for funds used to conserve energy.
Andrews, Di 16
Avista Corporation
1 The regulatory treatment of the CDA Settlement was approved
2 by the Commission in Case No. AVU-E-09-01.The effect on
3 Idaho rate base is a decrease of $317,000 below that in the
4 test period. The effect on Idaho net operating income is a
5 decrease of $19,000.
6 The adjustment in column (k), Restating CDA Settlement
7 Deferral, adj usts the net assets and DFIT balances
8 associated with the 2008/2009 past storage and §10 (e)
9 charges deferred for future recovery to a 2012 AMA basis,
10 and records the annual amortization expense based on a ten-
11 year amortization, as approved in Docket No. AVU-E-10-01.
12 The effect on Idaho rate base is an increase of $166,000.
13 The effect on Idaho net operating income is a decrease of
14 $12,000.
15 The adjustment in column (l), Restating CDA/SRR
16 (Spokane River Relicensing) CDR, adjusts the net assets and
17 DFIT balances associated with the CDA Tribe settlement 4 (e)
18 Spokane River relicensing conditions, deferred for future
19 recovery, to a 2012 AMA basis. The expense portion of this
20 adjustment includes the annual amortization of the net
21 total asset ($12 million (system) of payments and deferred
22 costs); amortization of the deferred balance over a ten-
23 year period, as approved in Case No. AVU-E-10-01; and the
24 annual $2 million (system) of Coeur d' Alene Reservation
25 Trust Restoration Fund (CDR) payment expense over the 2010
26 AMA expense level.The effect on Idaho rate base is a
Andrews, Di 1 7
Avista Corporation
1 decrease of $ 68,000.The effect on Idaho net operating
2 income is a decrease of $223,000.
3 The adjustment in column (m), Restating Spokane River
4 Deferral, adj usts the net asset and DFIT balances related
5 to the Spokane River deferred relicensing costs to a 2012
6 AMA basis, and records the annual amortization expense
7 based on a ten-year amortization as approved in Case No.
8 AVU-E-10-01. The effect on Idaho rate base is an increase
9 of $31,000. The effect on Idaho net operating income is a
10 decrease of $2,000.
11 The adjustment in column (n), Restating Spokane River
12 PM&E Deferral, adjusts the net asset and DFIT balances
13 related to the Spokane River deferred PM&E costs to a 2012
14 AMA basis, and records the annual amortization expense
15 based on a ten-year amortization as approved in Case No.
16 AVU-E-10-01. The effect on Idaho rate base is an increase
17 of $145,000. The effect on Idaho net operating income is a
18 decrease of $13,000.
19 Q.Please turn to page 7 and explain the adjustmnts
20 shown there.
21 A.Page 7 starts with the adjustment in column (0),
22 Restating Montana Riverbed Lease, which reflects the costs
23 associated with the Montana Riverbed lease settlement. In
24 this settlement, the Company agreed to pay the State of
25 Montana $4.0 million annually beginning in 2007, with
26 annual inflation adjustments, for a 10-year period for
27 leasing the riverbed under the Noxon Rapids Project and the
Andrews, Di 18
Avista Corporation
1 Montana portion of the Cabinet Gorge Project.The first
2 two annual payments were deferred by Avista as approved in
3
4
Case No. AVU-E-07-10.In Case No. AVU-E-08-01 (see Order
No.30647) ,the Commission approved the Company's
5 accounting treatment of the deferred payments, including
6 accrued interest, to be amortized over the remaining eight
7 years of the agreement starting October 1, 2008.This
8 adjustment includes amortization of one-eighth of the
9 deferred balance and the adjustment to lease payment
10 expense for the additional annual inflation.This
11 adjustment decreases Idaho net operating income by $29,000
12 and increases rate base by $996,000.
13 The adjustment in column (p) , Working Capi tal,
14 increases total rate base for the Company's working capital
15 adjustment.Cash Working capital represents the funds
16 required to enable the Company to operate its business on a
17 daily basis. The need for these funds results from the fact
18 that there is a lag in time between the collection of
19 revenues for services rendered and the necessary outlay of
20 cash by the Company to pay the expenses of providing those
21 services. Cash working capital represents investor supplied
22 funds that are properly included in the Company's rate base
23 for ratemaking purposes.Application of the overall rate
24 of return to this element of rate base allows the Company
25 to service the capital costs associated with the cash
26 working capital.
Andrews, Di 19
Avista Corporation
1 Al though there are various appropriate methods used
2 to determine a Company's working capital, to reduce the
3 issues in this case6 the Company has calculated its working
4 capital in this proceeding by including Idaho's electric
5 portion of the 2010 average-monthly-average balances of
6 FERC accounts 151 (Fuel Stock Inventory) and 154 (Plant
7
8
Materials and Supplies).The Company believes this is a
reasonable approach to working capi tal,representing
9 specific items of expended funds to provide reliable
10 service to its customers. The effect on Idaho rate base is
11 an increase of $7,710,000.
12 The next column marked by a dash, entitled Subtotal
13 Actual represents actual operating results and rate base
14 plus standard rate base adjustments that are included in
15 Commission Basis reporting, plus additional restating
16 adjustments required to annualize previous approved rate
17 base items.
18 Q.Please continue describing the adjustments on
19 page 7 that continue after the Subtotal Actual colum.
20 A.The adjustment in column (q), Eliminate B & 0
21 Taxes, eliminates the revenues and expenses associated with
22 local business and occupation (B & 0) taxes, which the
23 Company passes through to its Idaho customers.The
, The Company, of course, reserves the right to argue a different
methodology in a future proceeding if appropriate.
Andrews, Di 20
Avista Corporation
1 adjustment eliminates any timing mismatch that exists
2 between the revenues and expenses by eliminating the
3 revenues and expenses in their entirety.B & 0 taxes are
4 passed through on a separate schedule, which is not part of
5 this proceeding. The effect of this adjustment is to
6 decrease Idaho net operating income by $4,000.
7 The adjustment in column (r), Property Tax, restates
8 the test period accrued levels of property taxes to the
9 most current information available and eliminates any
10 adjustments related to the prior year. The effect of this
11 adjustment decreases Idaho net operating income by
12 $309,000.
13 The adjustment in column (s), Uncollectible Expense,
14 restates the accrued expense to the actual level of net
15 write-offs for the test period.The effect of this
16 adjustment is to increase Idaho net operating income by
17 $102,000.
18 The adjustment in column (t), Regulatory Expense,
19 which restates recorded 2010 regulatory expense to reflect
20 the IPUC assessment rates applied to expected revenues for
21 the test period period and the actual levels of FERC fees
22 paid during the test period. The effect of this adj ustment
23 is to increase Idaho net operating income by $2,000.
24 The adjustment in column (u), Injuries and Damges, is
25 a restating adj ustment that replaces the accrual with the
26 six-year rolling average of actual injuries and damages
27 payments not covered by insurance.A six-year rolling
Andrews, Di 21
Avista Corporation
1 average and the reserve method of accounting for injuries
2 and damages, net of insurance proceeds, is a practical
3 methodology to deal with these normal utility operating
4 expenses that happen to occur on an irregular basis and
5 differ markedly in materiality.This methodology was
6 accepted by the Idaho Commission in Case No. WWP-E-98-11,
7 and has been used since that time. The effect of this
8 adjustment is to increase Idaho net operating income by
9 $396,000.
10 Q.Please turn to page 8 and explain the adjustments
11 shown there.
12 A.Page 8 starts with the adj ustment in column (v),
13 FIT, adj usts the FIT calculated at 35% wi thin Results of
14 Operations by removing the effect of certain Schedule M
15 items, matching the jurisdictional allocation of other
16 Schedule M items to related Results of Operations
17 allocations and adjusts the appropriate level of production
18 tax credits and income tax credits on qualified generation.
19 The net FIT and production tax credit adj ustments
20 decrease Idaho net operating income by $279,000. Adjusting
21 for the proper level of deferred tax expense for the test
22 period increases Idaho net operating income by $210,000.
23 This adjustment also reflects the proper level of amortized
24 income tax credit for the test period decreasing Idaho net
25 operating income by an additional $8,000.Therefore, the
26 net effect of this adjustment, all based upon a Federal tax
Andrews, Di 22
Avista Corporation
1 rate of 35%, is to increase Idaho net operating income by
2 $77,000.
3 The adjustment in column (w), Idaho PCA, removes the
4 effects of the financial accounting for the Power Cost
5 Adjustment (PCA).The PCA normalizes and defers certain
6 power supply costs on an ongoing basis between general rate
7 filings. Certain differences in actual power supply costs,
8 compared to those included in base retail rates are
9 deferred and then surcharged or rebated to customers in a
10 future period. Revenue adj ustments due to the PCA and the
11 power cost deferrals affect actual results of operations
12 and need to be eliminated to produce a normal period.
13 Actual revenues and power supply costs are normalized in
14 adjustments in column (w) and column (PF1), respectively.
15 The effect of this adjustment is to decrease Idaho net
16 operating income by $6,415,000.
17 The adjustment in column (x), Nez Perce Settlement
18 Adjustment, reflects a decrease in production operating
19 expenses.An agreement was entered into between the
20 Company and the Nez Perce Tribe to settle certain issues
21
22
regarding earlier owned and operated hydroelectric
generating facilities of the Company.This adjustment
23 directly assigns the Nez Perce Settlement expenses to the
24 Washington and Idaho jurisdictions.This is necessary due
25 to differing regulatory treatment in Idaho Case No. WWP-E-
26 98-11 and Washington Docket No. UE-991606.The effect of
Andrews, Di 23
Avista Corporation
1 this adjustment is to increase Idaho net operating income
2 by $11,000.
3 The adjustment in column (y), Eliminate A/R Expenses,
4 removes expenses incurred associated with the fees charged
5 the Company for its customer accounts receivable program.
6 The Company's accounts receivable program was terminated in
7 December 2010 .The effect of this adjustment is to
8 increase Idaho net operating income by $79,000.
9 The adjustment in column (z), Revenue Normlization,
10 is an adjustment taking into account known and measurable
11 changes that include revenue repricing (including the
12 current authorized rates approved in Case No. AVU-E-10-01),
13 weather normalization and a recalculation of unbilled
14 revenue.Schedule 91 Tariff Rider and Schedule 59
15 Residential Exchange are excluded from pro forma revenues,
16 and the related amortization expense is eliminated as well.
17 Company witness Ms. Knox is sponsoring this adjustment.
18 The effect of this particular adjustment is to increase
19 Idaho net operating income by $11,504,000.
20 The adjustment in column (aa), is the Company's
21 Miscellaneous Restating Adjustment. For this adj ustment,
22 the Company completed an extensive review of its 2010
23 expenditures included in its test period, removing a number
24 of non-operating or non-utility expenses associated with
25 advertising, dues and donations, etc., included in error,
26 and removes or restates other expenses incorrectly charged
Andrews, Di 24
Avista Corporation
1 between service and or jurisdiction, totaling approximately
2 $143,000.
3 The Company also removed 10% of Avista Corp. director
4 fees (and 100% of director fees associated with Advantage
5 IQ)totaling approximately $35,000.Lastly,this
6 adjustment removes Idaho's electric portion of consulting
7 services, totaling approximately $770,000 from the test
8 period to reduce the revenue requirement requested in this
9 case. The detail of these adjustments can be found within
10 my workpapers. The effect of this adjustment is to increase
11 Idaho net operating income by $606,000.
12
13
Q.As noted above, the Company removed 10% of Avista
Corp. director fee expenses.What is the basis for
14 removing 10% of these costs?
15 A.In 2010 the Company requested from each of its
16 directors, based on their actual experience, the estimated
17 time spent on utility versus non-utility duties and
18 responsibilities.The responses from the Directors
19 indicated that approximately 90% of the Directors' time is
20 dedicated to utility matters, and approximately 10% to non-
21 utility.
22 This 90/10 split is consistent with the average split
23 that has been used in recent years by Avista' s senior
24 officers.Director fees paid to board members for their
25 duties specific to other Avista boards, i. e. Advantage
26 I.Q., were also removed. Using a 90/10 'sharing for the
27 remaining director fees paid for participating in Avista
Andrews, Di 25
Avista Corporation
1 Corp. /Utili ty board meetings reduced the Company's expense
2 included in this filing by approximately $35,000.
3 Q.Please turn to page 9 and explain the adjustmnts
4 shown there.
5 A.Page 9 starts with the adjustment in column (ab),
6 Restating Incentives, which restates the actual employee
7 payroll incentives included in the Company's test period
8 using a six-year average adjusted by the Consumer Price
9 Index. The effect of this adj ustment is to increase Idaho
10 net operating income by $ 631,000.
11 Q.Please briefly explain the Company's incentive
12 plan.
13 A.Avista's current incenti ve plan was first
14 designed in 2002, the goal of which was to focus on three
15 key elements: cost control, customer satisfaction and the
16 reliabili ty of the energy we provide to our customers. The
17 Employee Incentive Plan is a pay-at-risk plan whereby
18 employees are eligible to receive cash incentive pay if the
19 stated targets are achieved. The plan encourages employees
20 at all levels to focus on common objectives that are
21 designed to align the interests of employees with the
22 interests of our customers. Establishing specific targets
23 for each element, measuring progress toward meeting the
24 targets, and paying an incentive for achieving them
25 motivates employees to focus on the key elements each year.
26 Q.How is the pay-at-risk component incorporated
27 into Avista's total compensation package for employees?
Andrews, Di 26
Avista Corporation
1
2
A.Avista is commi tted to providing a total
compensation program that provides base salaries,
3 performance-based award programs and benefits that are
4 competitive in the marketplace. Market data shows that pay-
5 at-risk or variable pay plans are prevalent in over 80% of
6 organizations, and most utili ties, including Avista, have
7 some kind of pay-at-risk plan.
8 The Company views the Plan as a competitive necessity,
9 and a driver of desired behavior among employees, as well
10 as a means to achieve cost-control. For example, if the
11 existing incentive plan were to be eliminated, base
12 salaries would need to be adjusted in order for Avista's
13 total compensation to remain competi ti ve with other
14 utilities.
15 A pay-at-risk component of compensation is not
16 designed to payout the full incentive opportunity every
17 year, nor is it designed to have no payout for an extended
18 period of time. Pay-at-risk plans are designed to help
19 focus employees on making decisions that benefit the
20
21
Company and its customers,while at the same time
functioning as an integrated component of total
22 compensa tion .
23 Q.Please describe the specific targets included in
24 the Company's 2010 incentive plan?
25 A.The targets included in the Company's 2010 plan
26 included: 1) an O&M cost per customer target metric to
27 focus the business on controlling costs and driving
Andrews, Di 27
Avista Corporation
1 efficiencies in order to keep our costs reasonable for our
2 customers; 2) use of a Customer Satisfaction rating to
3 track satisfaction levels of customers that have had recent
4 contact with us; and 3) a reliability index measure, which
5 combines three common industry indices in order to balance
6
7
our focus on electric reliability.These reliability
measures include:the Customer Average Interruption
8 Duration Index (CAIDI), measuring the average restoration
9 time for sustained outages; the System Average Interruption
10 Frequency Index (SAIFI), which measures the average number
11 of customers who had sustained outages (~5 minutes),
12 divided by the customers served;and the Customer
13 Experiencing Multiple Sustained Interruptions (more than 3)
14 (CEMi3) ,measuring the percentage of customers that
15 experienced more than three sustained outages in the year.
16 Each of these targets are independent components to
17 the incentive plan with individual targets or measures that
18 must be achieved for a portion of the payout. The customer
19 satisfaction and reliability index measures are core
20 objectives to our business therefore; these non-financial
21 measures are designed as a "meets" or "not meets" metric,
22 paying out only if the target of "meets" is achieved.
23 The O&M cost per customer target is based on the
24 proj ected number of customers, targeted O&M expense and a
25 savings mechanism between employees and the Company. This
26 measure provides an incentive for employees to keep actual
27 O&M costs as low as possible. Payments under this portion
Andrews, Di 28
Avista Corporation
1 of the plan can range from 0% to 150% depending on the
2 level of performance achieved. In 2010 the company added a
3 sharing mechanism to the cost per customer target, sharing
4 costs savings at certain levels between employees and
5 customers.
6 Q.Please explain the use of a six-year average to
7 restate incentive expense.
8 A.Since annual Company incentive plan payouts can
9 often vary year-to-year, the Company believes an average of
10 annual payouts is most appropriate in order to "normalize"
11
12
these costs.Often where there are revenues or expenses
that can vary significantly from year-to-year,the
13 Commission has approved averages to properly reflect a fair
14 and reasonable level of revenue or expense to be included
15 in customers' rates.Utilizing a six-year average of the
16 Company' s incentive plan payouts is consistent with other
17 averaging methods utilized by this Commission in past
18 proceedings.For example, as shown in the table below
19 using the years 2005 through 2010, one can see the large
20 variability that can occur in each year in payout, and
21 therefore the variability in customer rates if an average
22 was not utilized, and the impact of the six-year average as
23 proposed in this case:
24
Andrews, Di 29
Avista Corporation
1 Illustration No. 1 (System)
2
3
4
5
6
7
8
9
10
Six-Year Average of Incentive Plan Payout
*6-Year Average - 2010 GRC (Millons)
2005 $6.2
2006 $4.7
2007 $3.4
2008 $2.9
2009 $5.1
2010 $9.4
6-Yr Average $5.3
Test Year Incentive Exp.$9.4
Restating Adjustment ($4.1)
*Includes payroll taxes and adjustment for CPI
11 In this instance, the table above reflects a restating
12 reduction to test period expense of $4.1 million (system),
13 showing a significant fluctuation in the level of expense
14 between periods supporting the argument that use of an
15 averaging methodology is appropriate.
16 Q.Wha t are some other examles where the use of an
17 average has been used by the Company, and approved by the
18 Commission, to determine the appropriate level of revenue
19 or expense to include in its general rate case filings?
20 A.There are several examples of revenue or expense
21 amounts which have been averaged or normalized and approved
22 by this Commission.One example is the calculation of
23 injuries and damages expense, which includes the restating
24 adjustment described earlier in my testimony that replaces
25 the amount accrued in the test period with a six-year
26 rolling average of actual payments for injuries and damages
Andrews, Di 30
Avista Corporation
1 not covered by insurance. Another example is the use of a
2 five-year average for power plant availability.
3 Q.Briefly explain the reasoning behind the use of
4 the CPI to adjust the average incentive level.
5
6
7
A.Incentive compensation is based on employees
salary levels at the time of payout.These salary levels
increase over time.If one does not adjust the historical
8 years' expenses so that they are based on a comparable
9 level of salaries, when the calculation is computed to
10 determine the average, one is not using comparable levels
11 of expenses in order to get to an "apples to apples"
12 comparison.
13 Q.What is the imact of the Company's adjustment
14 for a six-year average in this case?
15 A.The Company adjusted the six-year average by the
16 CPI explained above, but also excluded all incentive target
17 payouts that are not specifically related to reliability,
18 customer service and operational efficiency targets, i. e.,
19 the earnings per share portion of the officer incentive
20 plan are excluded from utility expenditures.The adj usted
21 six-year average reduces the Company's electric and natural
22 gas revenue requirement by approximately $989,000 and
23 $249,000 respectively.
24 Q.Please continue with explaining the adjustments
25 on Page 9 of Exhibit 10, Schedule 1.
26 A.The adjustment in column (ac), Restating CS2
27 Levelized Adjustment, adjusts the deferred return amounts
Andrews, Di 31
Avista Corporation
related to Coyote Springs 2 (CS2) to the amounts that will
2 be recorded during the rate year.In the Company's
3 electric general rate case, Case No. AVU-E-04-1, Order No.
4 29602, dated October 8, 2004, the Commission approved the
5 deferral of return on CS2 investment in early years for
6 recovery in later years in order to levelize the revenue
7 requirement on CS2 plant investment for the first ten years
8 of operation of the plant.The ten-year period runs from
9 September 1, 2004 through August 31, 2014. This adjustment
10 restates the test period amount of amortization expense,
11 inclusive of the carrying charge on the deferred return, to
12 the amount that will be recorded in the rate year.The
13 change in deferred income tax expense from the test period
14 to the rate period is also reflected. This adjustment
15 reduces net operating income by $182,000.
16
17
The adjustment in column (ad) , Removal Colstrip
Lawsuit Settlement,reflects the removal of the
18 amortization of the Company's share of the lawsuit
19 settlement amount included in the 2010 test period.In
20 Case No. AVU-E-09-01 the Idaho Commission approved the two-
21 year amortization treatment proposed by the Company
22 starting in August 1, 2009 through July 31, 2011. In July,
23 2010, Avista received insurance proceeds recovering the
24 majority of the amount yet to be amortized and recovered
25 from customers. This adjustment removes the test period
26 expense amount since the amortization period is complete
Andrews, Di 32
Avista Corporation
1 prior to the 2012 rate period. This adjustment increases
2 Idaho net operating income by $148,000.
3 The adjustment in column (ae), Removal Chicago Climte
4 Exchange, removes the effect in the test period of
5 amortization revenue included related to the expiration of
6 the two-year amortization of the Chicago Climate Exchange
7 approved in AVU-08-01.In AVU-08-01 the IPUC approved a
8 two-year amortization (beginning in October 2008 through
9 September 2010) of the other revenue included in Idaho's
10 share of the revenues, net of expenses, from the sales of
11 Carbon Financial Instruments (CFIs) on the Chicago Climate
12 Exchange.This adjustment decreases Idaho net operating
13 income by $219,000.
14 The adjustment in column (af), Operation & Maintenance
15 (O&M) Savings,includes a reduction to expense for
16 anticipated operation and maintenance savings expected
17 during the pro forma period, as compared to the 2010 test
18 period.These O&M savings include reductions related to
19 certain additional generation, transmission, distribution
20 and general plant investment included in the 2010, 2011 and
21 2012 capital addition adjustments. The savings related to
22 capital projects have been discussed further within Mr.
23
24
25
Lafferty's (generation projects) ,Mr.Kinney's
(distribution and transmission projects) ,and Mr.
DeFelice's (general plant) direct testimony.Additional
26 detail can be found wi thin my workpapers included with the
Andrews, Di 33
Avista Corporation
1 Company's filing. This adjustment increases Idaho net
2 operating income by $101,000.
3 The adjustment in column (ag), Restate Debt Interest,
4 restates debt interest using the Company's pro forma
5 weighted average cost of debt, as outlined in the testimony
6 and exhibits of Mr. Thies. As applied to Idaho's pro forma
7 level of rate base, this produces a pro forma level of tax
8 deductible interest expense. The Federal income tax effect
9 of the restated level of interest for the test period
10 decreases Idaho net operating income by $276,000.
11 The last column on page 9, entitled Restated Total,
12 subtotals all the preceding columns (b) through column
13 (ag) ,excluding the subtotal column.These totals
14 represent actual operating results and rate base plus the
15 standard normalizing adjustments that the Company includes
16 in its annual Commission Basis reports, except power
17 supply.?
18
19 Pro Form Adjustmnts
20 Q.Please explain the significance of the 12 colums
21 beginning at page 10 on your Exhibit No. 10, Schedule 1.
22 A.The adjustments starting on page 10 are pro forma
23 adjustments that recognize the jurisdictional impacts of
24 items that will impact the pro forma operating period for
7 The restated total also includes an increase in expense necessary to
annualize certain 2010 expenses included in the test period as
restating adjustments, (i.e. Montana riverbed lease, Spokane River and
CDA Tribe Settlement expense), and includes a reduction to expense for
a 6-year average of incentives.
Andrews, Di 34
Avista Corporation
1 known and measurable changes.They encompass revenue and
2 expense items as well as additional capital proj ects.
3 These adjustments bring the operating results and rate base
4 to the final pro forma level for the test year.
5 Q.Please continue with your explanation of the
6 adjustments starting on page 10.
7 A.The adjustment in column (PF1), Pro Form Power
8 Supply, was made under the direction of Mr. Johnson and is
9 explained in detail in his testimony.This adjustment
10 includes pro forma power supply related revenue and
11 expenses to reflect the twelve-month period January 1, 2012
12 through December 31, 2012, using historical loads.Mr.
13 Johnson's testimony outlines the system level of pro forma
14 power supply revenues and expenses that are included in
15 this adjustment.8 The adjustment in column PF1 calculates
16 the Idaho jurisdictional share of those figures.The net
17 effect of the power supply adj ustments decrease Idaho net
18 operating income by $5,840,000.
19 The adjustment in column (PF2), Pro Form Energy
20 Efficiency Load Adjustment, reflects the reduction in
21 retail revenues due to energy efficiency programs, the
22 resul ting savings in power supply expense, and includes the
23 change in all other revenue related expenses and taxes
· Mr. Johnson also explains the Company's use of historical loads in
this case and the impact of the Energy Efficiency Load Adjustment
described in adjustment PF2, rather than the use of pro forma loads
used in the previous Company Case No. AVU-E-I0-0l. Due to the use of
historical loads, the Company has also excluded the Production
Property adjustment included in the Company's prior Case No. AVU-E-I0-
01.
Andrews, Di 35
Avista Corporation
1 associated with this adjustment, as described in detail by
2 Mr. Ehrbar.The effect of this adjustment on Idaho net
3 operating income is a decrease of $1,184,000.
4 The adjustment in column (PF3), Pro Form Labor-Non-
5 Exec, reflects known and measurable changes to test period
6 union and non-union wages and salaries, excluding executive
7 salaries, which are handled separately in adjustment PF4.
8 For non-union employees, test period wages and salaries are
9 restated to include the March 2011 overall actual increase
10 of 2.8%, and 10 months of the planned March 2012 minimum
11 increase of 2.5%. This 2012 minimum increase was presented
12 to the Compensation Committee of the Board of Directors and
13 was approved at the Board's May 2011 meeting.
14 Also included in this adjustment are the 2011 and 2012
15 union contract increases agreed to in 2010 of 3% for both
16
17
years.The methodology behind this adjustment is
consistent with that used in Case No. AVU-E-10-01.The
18 effect of this adjustment on Idaho net operating income is
19 a decrease of $625,000.
20
21
The adjustment in column (PF4), Pro Form Labor-
Executive,reflects known and measurable changes to
22 executive compensation, restating executive compensation
23 test period salary expense to actual salary levels at 2011.
24 This adjustment reflects the annual increase for the actual
25 overall 2011 officer increase of 3.79%. Compensation costs
26 for non-utility operations are excluded, as executives
27 routinely charge a portion of their time to non-utility
Andrews, Di 36
Avista Corporation
1 operations, commensurate with the amount of time spent on
2 such acti vi ties, based on a survey of each executive. The
3 methodology behind this adj ustment is consistent with that
4 used in Case No. AVU-E-10-01.The effect of this
5 adjustment on Idaho net operating income is a decrease of
6 $10,000.
7 The adjustment in column (PF5), Pro Form Transmission
8 Rev/Exp, was made under the direction of Mr. Kinney and is
9 explained in detail in his testimony.This adjustment
10 includes pro forma transmission-related revenues and
11 expenses to reflect the twelve-month period January 1, 2012
12 through December 31, 2012.The net effect of the
13 transmission revenue and expense adjustments decreases
14 Idaho net operating income by $760,000.
15 The adjustment in column (PF6), Pro Form Capital
16 Additions 2010, pro forms in the capital cost and expenses
17 associated with adjusting the 2010 average-of-monthly-
18 average (AMA) plant related balances to end-of-period (EOP)
19 balances for plant in service at December 31, 2010.The
20 capital costs have been included for the December 31, 2010
21 pro forma period with the associated depreciation expense
22 and property tax, as well as the appropriate accumulated
23 depreciation and deferred income tax rate base offsets.
24 This adjustment was made under the direction of Mr.
25 DeFelice and is described further in his testimony.This
26 adjustment is consistent with that included in the most
27 recent Idaho general rate case proceeding, Case No. AVU-E-
Andrews, Di 37
Avista Corporation
1 10-01.This adjustment decreases Idaho net operating
2 income by $419,000 and increases rate base by $11,643,000.
3 Q.Please now turn to page 11 and continue with your
4 explanation of the adjustmnts included on that page.
5 A.Column (PF7), Pro Form Capital Additions 2011,
6 pro forms in the capital cost and expenses associated with
7 capital expenditures for 2011.This adj ustment includes
8 projects expected to be completed and transferred to plant-
9 in-service by December 31, 2011, and thus were normalized
10 to reflect annual amounts.The capital costs have been
11 included for the appropriate pro forma period with the
12 associated depreciation expense and property tax, as well
13 as the appropriate accumulated depreciation and deferred
14 income tax rate base offsets. In addition, the total plant
15 in service at December 31, 2010 (including accumulated
16 depreciation and deferred FIT) was adjusted to an EOP
17 December 31, 2011 adjusted balance.This adjustment was
18 also made under the direction of Mr. DeFelice and is
19 described further in his testimony.This adjustment
20 decreases Idaho net operating income by $1,941,000 and
21 increases rate base by $11,578,000.
22 Column (PF8), Pro Form Capital Additions 2012, pro
23 forms in the capital cost and expenses associated with
24 capital expenditures for 2012.This adjustment includes
25 projects expected to be completed and transferred to plant-
26 in-service during 2012, and thus were included on an AMA
27 plant basis for the 2012 rate period.The capital costs
Andrews, Di 38
Avista Corporation
1 have been included for the appropriate pro forma period
2 with the associated depreciation expense and property tax,
3 as well as the appropriate accumulated depreciation and
4 deferred income tax rate base offsets.In addition, the
5 total plant in service at December 31, 2011 (including
6 accumulated depreciation and deferred FIT) was adjusted to
7 a 2012 AM plant basis.This adjustment was also made
8 under the direction of Mr. DeFelice and is described
9 further in his testimony. This adjustment decreases Idaho
10 net operating income by $394,000 and decreases rate base by
11 $2,043,000.
12 The adjustment in column (PF9), Pro Form Noxon
13 Generation 2011/2012, pro forms in the 2011 Noxon Unit #2
14 generation plant upgrade (included in the 2010 rate case),
15 and the 2012 Noxon Unit #4 generation plant upgrade at a
16 2012 AM basis, as explained further by Mr. Lafferty. These
17 Noxon upgrades are not included in the 2011 and 2012
18 capital additions explained above.
19
20
These unit upgrades are planned to increase unit
efficiency and boost unit ratings.The additional
21 generation from the Noxon Unit #2 and Unit #4, (Unit #2
22 completed in May 2011, and Unit #4 planned for May 2012)
23 has also been included in the Aurora Dispatch Model for the
24 rate year, as discussed by Company witness Mr. Kalich.
25 Including the additional generation from these Noxon
26 upgrades in the Dispatch Model, ultimately reducing power
27 supply expenses for customers in the 2012 rate year, and
Andrews, Di 39
Avista Corporation
1 including these project in rate base for the rate period,
2 provides a proper match in revenues with expenses for these
3 projects.The Noxon Unit #4 project was included in rate
4 base and within the Aurora model at approximately 67% of
5 the cost and generation (equivalent to 8 months due to a
6 May 1, 2012 in-service date).This adjustment decreases
7 Idaho net operating income by $113,000 and increases rate
8 base by $4,650,000.
9 The adjustment in column (PF10), Pro Form Emloyee
10 Benefits, adjusts for changes in both the Company's pension
11 and medical insurance expense and decreases Idaho net
12 operating income by $433,000.
13 Q.Please describe the pension expense portion of
14 the Employee Benefits adjustment and Idaho's share of this
15 expense.
16 A.The Company's pension expense portion of this
17 adjustment is determined in accordance with Financial
18 Accounting Standard 87 ("FAS-87"), and has remained fairly
19 flat on a system basis from approximately $19.5 million for
20 the actual test year costs for the twelve months ended
21 December 31, 2010, to $19.6 million for 2011. At this time
22 the amounts included in this case are based on the most
23 current available data.Preliminary Pension expense is
24 determined by an outside actuarial firm, in accordance with
25 FAS-87, and provided to the Company late in the first
26 quarter of each year.These calculations and assumptions
27 are reviewed by the Company's outside accounting firm
Andrews, Di 40
Avista Corporation
1 annually for reasonableness and comparability to other
2 companies.Due to the timing of this report, additional
3 information may become known during the course of these
4 proceedings that may require a modification to this
5 adjustment.
6 Changes in pension expense typically are due primarily
7 to the investment performance of plan assets during the
8 past year.In addi tion, the Pens ion Protection Act (PPA)
9 of 2006 requires companies to annually increase the funding
10 level of their pension plans in order to eventually achieve
11 a fully-funded plan, which also impacts the plan asset
12 balance and level of expense.
13 Q.Please now describe the medical insurance expense
14 portion of the Employee Benefits adjustment and Idaho's
15 share of this expense.
16 A.The Company's medical insurance expense is the
17 majority portion of this adjustment, adjusting for the
18 medical insurance costs planned for 2011 above the test
19 period.Medical insurance expense has increased on a
20 system basis from $20.54 million for the actual test year
21 costs for the twelve months ended December 31, 2010, to
22 $25.27 million for 2011. This increase in medical cost is
23 due to an aging workforce requiring more health care at an
24 ever increasing cost, which is consistent with what is
25 occurring on a national level.Large claims activity
26 driven by various diagnostic categories such as cancer and
Andrews, Di 41
Avista Corporation
1 heart disease are also to blame for a portion of the
2 increase.
3 The net impact of the change in medical and pension
4 costs is an increase in Idaho expense of approximately
5 $666,000.
6 Q.Please continue your explanation of the
7 adjustment colums on page 11.
8 A.The adjustment in Column (PF11), Pro Form
9 Insurance, adjusts the test period insurance expense for
10 general liability,directors and officers ("D&O")
11 liabili ty, and property to the actual cost of insurance
12 policies that are in effect for 2011. Costs of system-wide
13 insurance policies for 2011 varied only slightly from those
14 policies in 2010.Insurance costs that are properly
15 charged to non-utility operations have been excluded from
16 this adjustment.This adj ustment increases Idaho net
17 operating income by $30,000.
18 The adjustment in column (PF12), Pro Form Vegetation
19 Management, pro forms in the additional distribution
20 vegetation management (VM) O&M expense needed to reduce the
21 distribution VM cycle (expense level) to a four-year cycle
22 (expense level) to be used in 2012, as described further
23 by Mr. Kinney.This adjustment decreases Idaho net
24 operating income by $822,000.
25 The last column, Pro Forma Total, reflects total pro
26 forma results of operations and rate base consisting of
Andrews, Di 42
Avista Corporation
1 test period actual results (twelve-months ending December
2 31, 2010) and the total of all adjustments.
3 Q.Referring back to page 1, line 42, of Exhibit No.
4 10, Schedule 1, what was the pro form electric rate of
5 return by the Company during the test period?
6
7
A.For the State of Idaho, the pro forma rate of
return is 7.57% under present rates.Thus, the Company
8 does not, on a pro forma basis for the test period, realize
9 the 8.49% rate of return requested by the Company in this
10 case.
11 Q.How much additional net operating income would be
12 required for the State of Idaho electric operations to
13 allow the Company an opportunity to earn its proposed 8.49%
14 rate of return on a pro form basis?
15 A.The net operating income deficiency amounts to
16 $5,746,000, as shown on line 5, page 2 of Exhibit No. 10,
17 Schedule 1. The resulting revenue requirement is shown on
18 line 7 and amounts to $9,009,000, or an increase of 3.66%
19 over pro forma general business revenues.
20
21
22
iv. NATUR GAS SECTION
Q.On what test period is the Company basing its
23 need for additional natural gas revenue?
24 A.The test period being used by the Company is the
25 twelve-month period ending December 31, 2010, presented on
26 a pro forma basis.
Andrews, Di 43
Avista Corporation
1 Q.When was the last change to base rates in the
2 Idaho jurisdiction?
3 A.The last change to base gas rates in Idaho
4 occurred on October 1, 2010 as a result of the Order
5 received in Case No. AVU-G-10-01.
6 Q.Could you please explain the different rates of
7 return shown in your natural gas results presented in your
8 testimony?
9
10
11
A.Yes.As discussed previously in the Electric
Section,there are three different rates of return
calculated.The actual ROR earned by the Company during
12 the 2010 test period of 7.21%9, the pro forma ROR of 7.24%
13 (determined in my Exhibit No.10, Schedule 1) and the
14 requested ROR of 8.49%.
15 Q.Wha t are the primary factors driving the
16 Company's need for additional natural gas revenues?
17 A.The Company's natural gas request is driven by
18 changes in various operating cost components, approximately
19 two-thirds distribution O&M and A&G expenditures, such as
20 increased costs in employee benefits, i. e. wages and
21 medical insurance expenses, and one-third increased net
22 plant investment, due to additional Company investment in
23 underground storage facilities, distribution and general
24 plant.
25 The total of the increased operating cost components
, As shown on Exhibit 10, Schedule 1, this return includes deferred
federal income taxes (DFIT) on plant rate base.
Andrews, Di 44
Avista Corporation
1 requested in this case causes an increase in the fixed
2 costs of providing gas service to customers.I describe
3 the pro forma adjustments included in this case later in my
4 testimony.
5
6 Revenue Requirement
7 Q.Would you please explain what is shown in Exhibit
8 No. 10, Schedule 2?
9 A.Yes. Exhibit No. 10, Schedule 2 shows actual and
10 pro forma gas operating results and rate base for the test
11 period for the State of Idaho.Column (b) of page 1 of
12 Exhibit No. 10, Schedule 2, shows 2010 actual operating
13 resul ts and components of the average-of-monthly-average
14 rate base as recorded (prior to deferred taxes); column (c)
15 is the total of all adjustments to net operating income and
16 rate base; and column (d) is pro forma results of
17 operations, all under existing rates. Column (e) shows the
18 revenue increase required which would allow the Company to
19 earn an 8.49% rate of return.Column (f) reflects pro
20 forma gas operating results with the requested increase of
21 $1,921,000.
22 Q.Would you please explain page 2 of Exhibit No.
23 10, Schedule 2?
24 A.Yes.Page 2 shows the calculation of the
25 $ 1,921,000 revenue requirement at the requested 8.49% rate
26 of return.
Andrews, Di 45
Avista Corporation
1 Q.Wha t does page 3 of Exhibit No. 10 , Schedule 2
2 show?
3 A.Page 3 shows the proposed Cost of Capital and
4 Capital Structure utilized by the Company in this case, and
5 the weighted average cost of capital calculation of 8.49%.
6 Mr. Thies discusses the Company's proposed rate of return
7 and the pro forma capital structure utilized in this case,
8 while Dr. Avera provides additional testimony related to
9 the appropriate return on equity for Avista.
10 Q.Would you now please explain page 4 of Exhibit
11 No. 10, Schedule 2?
12
13
A.Yes.Page 4 shows the derivation of the net-
operating-income-to-gross-revenue conversion factor.The
14 conversion factor takes into account uncollectible accounts
15 receivable, Commission fees and Idaho State income taxes.
16 Federal income taxes are reflected at 35%.
17 Q.Now turning to pages 5 through 9 of your Exhibit
18 No . 10 , Schedule 2, would you please explain what those
19 pages show?
20 A.Yes. Page 5 begins with actual operating results
21 and rate base (prior to inclusion of deferred taxes) for
22 the 2010 test period in column (b). Individual normalizing
23 adjustments that are standard components of our annual
24 reporting to the Commission begin in column (c) on page 5
25 and continue through column (t) on page 810. Individual pro
10 The restated total also includes an increase in rate base necessary
to include the Company's requested working capital adjustment, and
includes a reduction to expense for a 6-year average of incentives.
Andrews, Di 46
Avista Corporation
1 forma adjustments begin in column (PF1) on page 8 and
2 continue through column (PF10) on page 9. The final column
3 on page 9 is the total pro forma operating results and rate
4 base for the test period.
5
6 Standard Commission Basis Adjustments
7 Q.Would you please explain each of these
8 adjustments, the reason for the adjustment and its effect
9 on test period State of Idaho net operating income and/or
10 rate base?
11 A.Yes, but before I begin, I will note that in
12 addition to the explanation of adjustments provided herein,
13 the Company has also provided workpapers outlining
14 additional details related to each of the adjustments. The
15 restating adjustments shown in columns (c) through (t) are
16 consistent with methodologies employed in our prior cases
17 and current regulatory principles, with a few proposed
18 changes as described further in my testimony.
19 The first adjustment, column (c) on page 5, entitled
20 Deferred FIT Rate Base, reflects the rate base reduction
21 for Idaho's portion of deferred taxes.The adj ustment
22 reflects the deferred tax balances arising from accelerated
23 tax depreciation (Accelerated Cost Recovery System, or
24 ACRS, and Modified Accelerated Cost Recovery, or MACRS),
25 bond refinancing premiums, and contributions in aid of
26 construction.These amounts are reflected on the average
Andrews, Di 47
Avista Corporation
1 of monthly average balance basis. The effect on Idaho rate
2 base is a reduction of $19,934,000.
3 The adjustment in column (d), Deferred Gain on Office
4 Building, reflects the removal of the amortization expense
5 included in the Company's 2010 test period related to
6 Idaho's portion of the amortized gain on the sale of the
7 Company's general office facility.The facility was sold
8 in December 1986 and leased back by the Company. Although
9 the Company repurchased the building in November 2005, the
10 deferred gain was amortized over the period ending in 2011.
11 Therefore, during the 2012 rate period the average of
12 monthly averages (AMA) amount of the deferred gain is zero.
13 The effect on Idaho rate base is zero. The effect on Idaho
14 net operating income is an increase of $14,00011.
15 The adjustment in column (e), Gas Inventory, reflects
16 the adjustment to rate base for the average-of-monthly-
17 average value of gas stored at the Company's Jackson
18 Prairie underground storage facility through the test
19 period.The effect on Idaho rate base is an increase of
20 $ 4 , 5 0 9, 000 .
21 The adjustment in column (f), Weatherization and DSM
22 Investment, removes the amortization expense included in
23 the test period due to the weatherization and DSM
11 During the process of completing the Company's filing the Company
discovered it had inadvertently reduced expense for removal of the
deferred gain included in the test period. Rather, this adjustment
should have removed the gain, increasing expense, decreasing net
operating income $14,000. The impact of correcting for this error
increases the requested electric revenue requirement in this case by
approximately $44,000.
Andrews, Di 48
Avista Corporation
1
2
3
4
investment rate base being fully amortized in 2010.The
effect of this adjustment is to increase Idaho net
operating income by $64,000.
The adjustment in column (g) ,entitled Customer
Advances,decreases rate base for funds advanced by
customers for line extensions,as they are generally
5
6
7 recorded as contributions in aid of construction at some
8 future time.The effect of this adjustment on Idaho rate
9 base is a decrease of $74,000.
10 Q.Please turn to page 6 and explain the first
11 colum shown there, and the adjustments that follow.
12 A.The first column on page 6 is adjustment (h),
13 Working Capital, which increases total rate base for the
14 Company's working capital adj ustment described further in
15 the Electric Section above. The Company has calculated its
16 gas working capital by including Idaho's gas portion of the
17 2010 average-monthly-average balances of FERC accounts 151
18 (Fuel Stock Inventory)and 154 (Plant Materials and
19 Supplies). The effect on Idaho rate base is an increase of
20 $ 1 , 553, 000 .
21 The next column marked by a dash and labeled Subtotal
22 Actual, is a subtotal of columns (b) through (h) and
23 reflects adj ustments,the standard rate base e.g. ,
24 adjustments that reflect rate base items previously
25 addressed by the Commission. 12
12 This subtotal also includes an increase in rate base necessary to
include the Company's requested working capital adjustment.
Andrews, Di 49
Avista Corporation
1 The next adjustment on page 6 in column (i), entitled
2 Revenue Normlization, is an adj ustment taking into account
3
4
known and measurable changes that include revenue
normalization (including the current authorized rates
5 approved in Case No. AVU-G-10-01), which reprices customer
6 usage under presently effective rates, as well as weather
7 normalization and an unbilled revenue calculation.
8 Associated gas costs are replaced with gas costs computed
9 using normalized volumes at the currently effective
10 weighted-average-cost-of-gas, or WACOG rates in Schedule
11 150.Revenues associated with the temporary Gas Rate
12 Adjustment Schedule 155, Schedule 191 Tariff Rider, and
13 Schedule 199 Deferred SIT Adjustment are excluded from pro
14 forma revenues, and the related amortization expenses are
15 eliminated as well.Ms.Knox is sponsoring this
16 adjustment. The effect of this particular adjustment is to
17 increase Idaho net operating income by $1,189,000.
18 The adjustment in column (j), Eliminate B & 0 Taxes,
19 eliminates the revenues and expenses associated with local
20 business and occupation taxes, which the Company passes
21 through to customers. The adjustment eliminates any timing
22 mismatch that exists between the revenues and expenses by
23 eliminating the revenues and expenses in their entirety.
24 B & 0 Taxes are passed through on a separate schedule,
25 which is not part of this proceeding.The effect of this
26 adjustment decreases Idaho net operating income by $1,000.
Andrews, Di 50
Avista Corporation
1 The adjustment in column (k), Property Tax, restates
2 the test period accrued levels of property taxes to the
3 most current information available and eliminates any
4 adjustments related to the prior year. The effect of this
5 adjustment decreases Idaho net operating income by $23,000.
6 The adjustment in column (l), Uncollectible Expense,
7 restates the accrued expense to the actual level of net
8 wri te-offs for the test period.The effect of this
9 adjustment is to increase Idaho net operating income by
10 $155,000.
11 Q.Please turn to page 7 and explain the adjustments
12 shown there.
13 A.The first adjustment on page 7 in column (m),
14 entitled Regulatory Expense Adjustment, restates recorded
15 2010 regulatory expense to reflect the IPUC assessment
16 rates applied to revenues for the test period. The effect
17 of this adjustment is to increase Idaho net operating
18 income by $26,000.
19 The adjustment in column (n), entitled injuries and
20 Damges, is a restating adjustment that replaces the
21 accrual with the six-year rolling average of actual
22 injuries and damages payments not covered by insurance.
23 This methodology was accepted by the Idaho Commission in
24 Case No. WWP-E-98-11, and has been used since that time.
25 The effect of this adjustment is to increase Idaho net
26 operating income by $31,000.
Andrews, Di 51
Avista Corporation
1 The adjustment in column (0), entitled FIT, adjusts
2 the FIT calculated at 35% wi thin Results of Operations by
3 removing the effect of certain Schedule M items and matches
4 the jurisdictional allocation of other Schedule M items to
5 related Results of Operations allocations. This adjustment
6 also reflects the proper level of deferred tax expense for
7 the test period. The effect of this adjustment, all based
8 upon a Federal tax rate of 35%, is to increase Idaho net
9 operating income by $2,000.
10 The adjustment in column (p), Eliminate A/R Expenses,
11 removes expenses incurred associated with the fees charged
12 the Company for its customer accounts receivable program.
13 The Company's accounts receivable program was terminated in
14 December 2010 as explained by Mr. Thies.The effect of
15 this adjustment is to increase Idaho net operating income
16 by $13,000.
17 The adjustment in column (q) is titled Miscellaneous
18 Restating Adjustments. This adj ustment removes a number of
19 non-operating or non-utility expenses, and removes or
20 restates other expenses incorrectly charged between service
21 and or jurisdiction, totaling approximately $21,000.
22 The Company also removed 10% of Avista Corp. director
23 fees (and 100% of director fees associated with Advantage
24 IQ) totaling approximately $9,000. Lastly, this adjustment
25 removes Idaho's gas portion of consulting services,
26 totaling approximately $194,100 from the test period to
27 reduce the revenue requirement requested in this case.
Andrews, Di 52
Avista Corporation
1 This adjustment is described further in the Electric
2 Section above and the detail of these adjustments can be
3 found wi thin my workpapers. The effect of this adjustment
4 is to increase Idaho net operating income by $144,000.
5 The adjustment in column (r), Restating Incentives,
6 restates the actual incentives included in the Company's
7 test period using a six-year average adjusted by the
8 Consumer Price Index. This adjustment is described further
9 in the Electric Section above. The effect of this
10 adjustment is to increase Idaho net operating income by
11 $159,000.
12
13
The adjustment in column (s), Operation & Maintenance
(O&M)Savings, includes a reduction to expense for
14 anticipated operation and maintenance savings expected
15 during the pro forma period, as compared to the 2010 test
16 period.These O&M savings include reductions related to
17 certain additional general plant investment included in the
18 capi tal additions adj ustments. Mr. DeFelice describes the
19 general plant savings wi thin his direct testimony and
20 additional detail can be found wi thin his workpapers
21 included with the Company's filing.This adj ustment
22 increases Idaho net operating income by $4,000.
23 Q.Please turn to page 8 and explain the adjustments
24 shown there.
25 A The first adjustment on page 8, column (t)
26 enti tled, Restate Debt Interest, restates debt interest
27 using the Company's pro forma weighted average cost of
Andrews, Di 53
Avista Corporation
1 debt, as outlined in the testimony and exhibits of Mr.
2 Thies. As applied to Idaho's pro forma level of rate base,
3 it produces a pro forma level of tax deductible interest
4 expense.The federal income tax effect of the restated
5 level of interest for the test period decreases Idaho's net
6 operating income by $77,000.
7 The next column on page 8, entitled Restated Total,
8 subtotals all the preceding columns (b) through column (t),
9 excluding the subtotal column.These totals represent
10 actual operating results and rate base plus the standard
11 normalizing adj ustments. 13
12
13
14 Q.
Pro Form Adjustments
Please explain the significance of the 10 colums
15 subsequent to the Restated Total colum on pages 8 through
16 9 of your Exhibi t No. 10, Schedule 2.
17 A.The adjustments starting on page 8 are pro forma
18 adj ustments to reflect known and measurable changes between
19 the test period and the pro forma period. In this case,
20 they encompass revenue and expense items, and natural gas
21 inventory and capital projects.These adjustments bring
22 the operating results and rate base to the final pro forma
23 level for the test year.
24 Q.Please continue with your explanation of the
25 adjustments on page 8.
13 The restated total also includes an increase in rate base necessary
to include the Company's requested working capital adjustment, and
includes a reduction to expense for a 6-year average of incentives.
Andrews, Di 54
Avista Corporation
1 A.The first adjustment on page 8 in column (PF1),
2 Pro Form Labor-Non-Exec, reflects known and measurable
3 changes to test period union and non-union wages and
4 salaries, excluding executive salaries, which are handled
5 separately in adjustment PF2. This adjustment is described
6 further in the Electric Section above. The effect of this
7 adjustment is to decrease Idaho net operating income by
8 $155,000.
9
10
The adjustment in column (PF2), Pro Form Labor-
Executive,reflects known and measurable changes to
11 executive compensation, restating executive compensation
12 test period salary expense to actual salary levels at 2011.
13 This adjustment is described further in the Electric
14 Section above. The methodology behind this adjustment is
15 consistent with that used in Case No. AVU-G-10-01.The
16 effect of this adjustment on Idaho net operating income is
17 a decrease of $14,000.
18 The adjustment in column (PF3), Pro Form Employee
19 Benefits, adjusts for changes in both the Company's pension
20 and medical insurance expense (as explained in the Electric
21 Section above) and decreases Idaho net operating income by
22 $ 1 0 9 , 00 0 .
23 The adjustment in Column (PF4), Pro Form Insurance,
24 adjusts the test period insurance expense for general
25 liability, directors and officers (D&O) liability, and
26 property to the actual cost of insurance policies that are
27 in effect for 2011 (as explained in the Electric Section
Andrews, Di 55
Avista Corporation
1 above) .This adj ustment increases Idaho net operating
2 income by $8,000.
3 The adjustment in column (PF5), Pro Form Survey &
4 Replacement Program, pro forms additional incremental
5 operating and maintenance labor expense related to survey
6 and replacement programs starting in 2011. The Company is
7 implementing a special cathodic protection program for the
8 purpose of finding and addressing isolated steel in its
9 natural gas piping systems. This adjustment was made under
10 the direction of Company witness Mr. Kopczynski and is
11 described further in his testimony. This adjustment
12 decreases Idaho net operating income by $106,000.
13 Q.Please turn to page 9 and explain the adjustments
14 shown there.
15 A.The first adjustment on Page 9 in column (PF6),
16 entitled Pro Form Atmospheric Testing, adjusts the test
17 period expense for Atmospheric Corrosion expense. This is
18 an inspection program to find conditions in the Company's
19 system that could lead to corrosion issues on customer
20 meter sets.This program is a federally-mandated program
21 that requires the Company to inspect all above ground steel
22 pipe at a frequency not to exceed three-years. This expense
23 is on a three-year rotation between the Company's
24 jurisdictions (Idaho,Washington and Oregon)and is
25 therefore, coded directly to Idaho operations for the year
26 in which the inspection occurs (2011 for Idaho estimated at
27 a total cost of $450,000).The Company is proposing to
Andrews, Di 56
Avista Corporation
1 collect one-third of these costs over a three-year basis
2 (2012-2014), and, therefore, has pro formed $150,000 for
3 atmospheric O&M expense. The Company has received approval
4 of this accounting treatment in its Oregon jurisdiction and
5 has requested this treatment in the Company's recent filed
6 Washington general rate case as well, so the Company
7 remains whole on an annual basis. This adjustment was made
8 under the direction of Mr. Kopczynski and is described
9 further in his testimony. This adjustment decreases Idaho
10 net operating income by $86,000.
11 The adjustment in column (PF7), Pro Form Capital
12 Additions 2010, pro forms in the capital cost and expenses
13 associated with adjusting the 2010 average-of-monthly-
14 average (AMA) plant related balances to end-of-period (EOP)
15 balances for plant in service at December 31, 2010.The
16 capital costs have been included for the December 31, 2010
17 pro forma period with the associated depreciation expense
18 and property tax, as well as the appropriate accumulated
19 depreciation and deferred income tax rate base offsets.
20 This adjustment was made under the direction of Mr.
21 DeFelice and is described further in his testimony.This
22 adjustment is consistent with that included in the most
23 recent Idaho general rate case proceeding, Case No. AVU-G-
24 10-01.This adjustment decreases Idaho net operating
25 income by $104,000 and decreases rate base by $497,000.
26 The adjustment in column (PF8), Pro Form Capital
27 Additions 2011, pro forms in the capital cost and expenses
Andrews, Di 57
Avista Corporation
1 associated with capital expenditures for 2011.This
2 adjustment includes proj ects expected to be completed and
3 transferred to plant-in-service by December 31, 2011, and
4 thus were normalized to reflect annual amounts.The
5 capital costs have been included for the appropriate pro
6 forma period with the associated depreciation expense and
7 property tax, as well as the appropriate accumulated
8 depreciation and deferred income tax rate base offsets. In
9 addition, the total plant in service at December 31, 2010
10 (including accumulated depreciation and deferred FIT) was
11 adjusted to an EOP December 31, 2011 adjusted balance.
12 This adj ustment was also made under the direction of Mr.
13 DeFelice, is described further in his testimony, and is
14 consistent with that included in the most recent Idaho
15 general rate case proceeding, Case No. AVU-G-10-01.This
16 adjustment decreases Idaho net operating income by $304,000
17 and decreases rate base by $2,297,000.
18 The adjustment in column (PF9), Pro Form Capital
19 Additions 2012, pro forms in the capital cost and expenses
20 associated with capital expenditures for 2012.This
21 adjustment includes projects expected to be completed and
22 transferred to plant-in-service during 2012, and thus were
23 included on an AM plant basis for the 2012 rate period.
24 The capital costs have been included for the appropriate
25 pro forma period with the associated depreciation expense
26 and property tax, as well as the appropriate accumulated
27 depreciation and deferred income tax rate base offsets. In
Andrews, Di 58
Avista Corporation
1 addition, the total plant in service at December 31, 2011
2 was adjusted to a 2012 AMA balance.This adjustment was
3 also made under the direction of Mr. DeFelice and is
4 described further in his testimony.This adjustment
5 decreases Idaho net operating income by $64,000 and
6 decreases rate base by $687,000.
7 The adjustment in column (PF10), Pro Forma JP Storage
8 2011, pro forms expenses, capital investment and inventory
9 for the increased storage capacity and deli verabili ty
10 associated with the transfer of a portion of the Jackson
11 Prairie (JP) Storage facility to the utility on May 1,
12 2011. System assets with a net book value of approximately
13 $11.6 million transferred to the utility on May 1, 2011,
14 comprised of approximately $5.9 million of cushion gas and
15 approximately $5.7 million of fixed assets. The accounting
16 treatment of the JP cushion gas recorded in both
17 recoverable and non-recoverable FERC accounts, and the
18 increases related to the additional plant, inventory and
19 O&M expenses were approved in Case No. AVU-G-10-01, Order
20 No.32070,Settlement Stipulation, page 11,section
21 III.17(c).
22
23
Idaho's share of these assets on a 2012 average-of-
monthly-average basis increases net rate base by
24 approximately $1.6 million. The adjustment also includes a
25 rate base increase of $3.2 million for the working gas and
26 recoverable cushion gas inventory associated with the 2011
27 addi tional storage.In addition, underground storage
Andrews, Di 59
Avista Corporation
1 expense increased for the additional operating,
2 depreciation and property taxes expense by approximately
3 $209,000.
4 Company witness Mr. Christie provides an overview of
5 the Jackson Prairie natural gas storage facility within his
6 testimony.The details of this adjustment can be found
7 wi thin my workpapers included with the Company's filing.
8 The impact of this adjustment decreases Idaho net operating
9 income by $134,000 and increases rate base by $4,879,000.
10 The last column on page 9, Pro Form Total, reflects
11 total pro forma results of operations and rate base
12 consisting of twelve-months ended December 31, 2010 actual
13 results and the total of all normalizing, restating and pro
14 forma adjustments.
15 Q.Referring back to page 1, line 44, of Exhibit No.
16 10, Schedule 2, what was the pro form gas rate of return
17 realized by the Company during the test period?
18
19
A.For the State of Idaho, the pro forma rate of
return is 7.31% under present rates.Thus, the Company
20 does not, on a pro forma basis for the test period, realize
21 the 8.49% rate of return requested by the Company in this
22 case.
23 Q.How much additional net operating income would be
24 required for the State of Idaho gas operations to allow the
25 Company an opportuni ty to earn its proposed 8.49% rate of
26 return on a pro form basis?
Andrews, Di 60
Avista Corporation
1 A.The net operating income deficiency amounts to
2 $1,225,000, as shown on line 5, page 2 of Exhibit No. 10,
3 Schedule 2. The resulting revenue requirement is shown on
4 line 7 and amounts to $1,921,000, or an increase of 2.72%
5 over pro forma general business and transportation
6 revenues.
7
8
9
V. ALLOCATION PROCEDURS
Q.Have there been any changes to the Company's
10 system and jurisdictional procedures since the Company's
11 last general electric and natural gas cases, Case Nos. AVU-
12 E-10-01 and AVU-G-10-01?
13 A.No.For ratemaking purposes,the Company
14 allocates revenues, expenses and rate base between electric
15 and gas services and between Idaho, Washington and Oregon
16 jurisdictions where electric and/or gas service is
17 provided. The annually updated allocation factors used in
18 this case have been provided with my workpapers.
19
20 VI. DEFERRD ACCOUNTING REQUEST FOR THE VARIABILITY IN
21 GENERATING PLAT OPERATION AN MAINTENANCE COSTS
22
23 Q.Would you please explain the Company's request
24 for deferred accounting associated with the variability in
25 operation and maintenance costs related to its two major
26 therml generating plants?
27 A.Yes.The Company is proposing to defer changes
28 in operation and maintenance costs related to its Coyote
Andrews, Di 61
Avista Corporation
1 Springs 2 (CS2) natural gas-fired generating plant located
2 near Boardman, Oregon, and its 15 percent ownership share
3 of the Colstrip 3 & 4 coal-fired generating plants located
4
5
in southeastern Montana.Both the Coyote Springs 2 and
Colstrip 3 & 4 plants have schedules where maj or
6 maintenance is to be performed.
7 The Company is requesting deferred accounting
8 treatment for these two plants specifically (CS2 and
9 Colstrip) because major maintenance is scheduled every
10 third or fourth year, providing large cost swings for these
11 plants in any given year. This fluctuation in maintenance
12 costs is typically not experienced by the Company's other
13 hydro operating facilities or its Kettle Falls generating
14 plant. For example, each unit at Colstrip has a regularly
15 scheduled overhaul every third year.Since we have two
16 uni ts, this means that two out of every three years will
17
18
19
have a scheduled maj or maintenance outage and its
associated costs.Whereas the maintenance interval at
Coyote Springs 2 is based on hours of operation.We
20 schedule these maj or outages in accordance with Original
21 Equipment Manufacturer (OEM) guidelines on wear patterns
22 and cycles for key plant equipment.
23 Therefore, depending on when the outages for each of
24 these plants fall, we can have as much as two scheduled
25 outages in one year or no scheduled outages, providing the
26 potential for large cost fluctuations on a year-to-year
27 basis. Unexpected outages also cause costs to fluctuate as
Andrews, Di 62
Avista Corporation
1 more costs are incurred to repair the plant.However, in
2 an unexpected outage situation, we may on a case-by-case
3 basis have instances where operation and maintenance
4 expense may actually be lower than authorized, as a portion
5 of the repair costs are likely to be capitalized. The use
6 of deferred accounting would smooth out these costs.
7
8
Q.How would the proposed deferred accounting work?
A.The Company would compare actual, non-fuel,
9 operation and maintenance expenses for the Coyote Springs 2
10 and Colstrip 3 & 4 plants to the amount of expenses
11 authorized for recovery in its last general rate case, and
12 defer the difference from that currently authorized.The
13 deferral would occur annually, with a carrying charge, with
14 deferred costs being amortized over a three-year period,
15 beginning in January of the year following the period costs
16 are deferred. The comparison of actual to authorized costs
17 would use the combined costs from the Coyote Springs 2 and
18 Colstrip 3 & 4 plants.The reason for combining costs is
19 to allow for the possibility that there might be lower than
20 authorized costs from one plant that would offset higher
21 than authorized costs from another plant in a given year.
22 Q.Why are you including both operation and
23 maintenance expenses rather than just maintenance expense?
24
25
26
27
A.Operation and maintenance expenses are combined
to take into account that during times of major
ma in tenance,operation expense will decline,while
maintenance expense will increase.By including both
Andrews, Di 63
Avista Corporation
1 operation and maintenance expense, the decline in operation
2 expense may partially offset the increase in maintenance
3 expense.
4 Q.Would you please explain how the Company proposes
5 to account for the deferred operations and maintenance
6 expenses?
7 A.Pursuant to Idaho Code § 61-524, the Company
8 requests to defer the operations and maintenance expenses
9 referenced above in Account 182.3 Other Regulatory
10 Assets. The deferrals would be allocated to the Idaho and
11 Washington jurisdictions based on the Production /
12 Transmission allocation percentages in place at the time
13 the deferrals are made, and placed in separate Idaho and
14 Washington sub-accounts. Account 182.3 - Other Regulatory
15 Assets would be debited, and Account 407.4 - Regulatory
16 Credi ts would be credited as the deferrals are recorded.
17 Amortization would be recorded by debiting Account 407.3 -
18
19
Regulatory Debits, and crediting Account 182.3 Other
Regulatory Assets.Interest would accrue on the Idaho
20 share of the deferrals, net of deferred federal income tax,
21 at the Company's weighted cost of debt, updated and
22 compounded semi-annually.
23 Q.What is the amount of actual,non-fuel,
24 operations and maintenance costs for the Coyote Springs 2
25 and Colstrip 3 & 4 plants included in the 2010 test period?
Andrews, Di 64
Avista Corporation
1 A.The system amount of actual, non-fuel, operations
2 and maintenance costs for the 2010 test period for the
3 indicated plants is shown below (millions):
4
5
6
7
8
9
Total (System)
$ 4.5
$11. 0
$15.5
Coyote Springs 2
Colstrip 3 & 4
Q.What is the forecast of operation and maintenance
10 costs for the Coyote Springs 2 and Colstrip 3 &4 plants?
11 A.The following Illustration No. 2 shows the system
12 forecast of non-fuel, operations and maintenance costs for
13 the plants separately, and in total, for the five-year
14 period of 2011 through 2015, as well as the actual costs
15 for the 2010 test period. The system forecast shows major
16 maintenance occurring for Coyote Springs 2 in 2012 and
17 2015, and for Colstrip 3 & 4 occurring in 2013 and 2014.
Andrews, Di 65
Avista Corporation
1 Illustration No. 2 (System)
2
3
4
5
6
7
8
9
10
11
12
13
14
CS2IColstrp Non-fuel O&M Projections
2010-2015
I~ CS2 Total Non-Fuel O&M
II Colstrip Total Non-Fuel O&M
* Total Joint Project Non-Fuel O&M
$25,000
$20,000
$15,000
$10,000
$5,000
$0
2013 2014 2015201020112012
What operation andofnon-fuel,Q.amount
15 maintenance expense for Coyote Springs 2 and Colstrip 3 & 4
16 should be included for recovery in a general rate case?
17 A.The amount of expense to be included for recovery
18 in a general rate case should be the actual O&M expense
19 recorded in the test period, excluding any amount deferred
20 during the test period, plus the amortization of previously
21 deferred costs in the test period.
22 Q.Why is it not appropriate to use a historic
23 average of operation and maintenance costs for the therml
24 plants to determine the amount of expense to be included
25 for recovery in a general rate case?
26 illustrates theThepreviousbarchartA.
27 variability in operations and maintenance costs for the
Andrews, Di 66
Avista Corporation
1 thermal plants, and the upward trend in costs. The Company
2 expects these costs to rise as the plants age, and as parts
3 and labor become more expensive. Use of a historic average
4 would likely understate the level of costs that the Company
5 will experience in the future. A historic average can also
6 be impacted by limiting, or expanding, the number of years
7 used in computing the average, depending on the annual
8 amounts of costs that have previously been incurred.
9 Q.Has the Company included or pro formd any
10 additional O&M expense in this case for 2012 above that
11 included in the 2010 test period?
12 A.No.Al though the Company is anticipating
13 incurring this additional expense during the 2012 rate
14 period, this additional expense has not been included in
15 the Company's case.
16 Q.Why did the Company choose a three-year
17 amortization period?
18 A.A three-year amortization period was chosen as a
19 reasonable recovery period since spikes in operations and
20 maintenance expenses can occur every three to five years.
21 For example, the Company's Colstrip units have outages two
22 out of three years, however, the CS2 unit, based on hours
23 typically dictates an outage every forth year.The three-
24 year amortization period would generally fully amortize the
25 costs of maj or maintenance of a unit, prior to the maj or
26 maintenance occurring again for the same unit.
Andrews, Di 67
Avista Corporation
1
2
VII. OTHER
Q.Please address the filing requirements as
3 required in Order No. 29962.
4 A.In Order No. 29962 (Case Nos. AVU-E-05-9 and AVU-
5 G-05-3), the Commission directed the Company to record
6 regulatory assets or liabilities associated with the
7
8
implementation of Statement of Financial Accounting
Standards (SFAS) 143.As a result of the Order, the
9 Company is required to file annually, and as part of any
10 rate case filing, all journal entries made under the
11 requirements of SFAS 143. These ARO transactions have been
12 removed from the test year (twelve months ended December
13 31, 2010) Results of Operations and have no impact on the
14 Company's earnings or rate request in this case.The
15 journal entries for the calendar year 2010 have been filed
16 with the Commission in our annual compliance filing.
17 Q.Is the Company requesting a change in the annual
18 filing requirement that is required by Order No. 29962?
19 A.Yes. The Company requests that the Commission
20 eliminate the annual filing requirement that is required by
21 Order No. 29962. Avista has filed the journal entries in
22 compliance filings for the past four years.The journal
23 entries have been routine in nature, including recording
24 accretion of the ARO liabilities and depreciation of the
25 ARO assets.Because of this, and the fact that all ARO
26 transactions are removed from Idaho results of operation,
27 the Company is requesting that filing obligations under the
Andrews, Di 68
Avista Corporation
1 Commission's prior order be removed.The Company will
2 maintain the same records regarding the ARO transactions
3 and would have them available to Staff and any other party
4 upon request.
5 Q.Does that conclude your pre-filed direct
6 testimony?
7 A.Yes, it does.
Andrews, Di 69
Avista Corporation
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
FACSIMILE: [phone]
DAVID .MEYER~AVISTACORP. COM
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN THE
STATE OF IDAHO
CASE NO. AVU-E-11-01
CASE NO. AVU-G-11-01
EXHIBIT NO. 10
ELI ZABETH M. ANDREWS
FOR AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
AVISTA unrms
EI REULTS OF Ol'T1
IDAH PlO FOlUREULTSTWVRMONllEO D~ 31, 2110
(OO OF l))
DETl
"REI iot Geer Bl_
2 Inl~ti Sii
3 Sules for a_Ie4 Th Sii nfl'clly
S OIer Ilue
6 Tool Rleç R_ue
EXPE1'diòi MdTrjllòi
7 Oping fupe..
II l'rcos Powe
9 Delloollù AnilàiOl10 Tllei
Il TotiPrdiOl &; Tl'sm$$OI
DìirbuliQl12 Opinii~
13
14
16
11
111
AdinÌ$¡w& Geen
19 Opm;Il~-
20 Dlli1lìon
21 Tlleø22 Tol.IAd. &CII
23 Totil'c ll_
24 OPETIG INCOME BHORlJlr
FEI! INL.'OMi TAX25 C'! """".1
26
21
~EXCltml'OWf
28 Nm OPmTlG INCOMi
RABAB
l'Ni IN SF VICE
1$ Intagible30 l'roclioo
31 Trism..¡oo
32 Dislhulioo33 Ge..i
34 Toiu1l'hiii iu S..oo
15 ACCtJMULA11 'OT1
36 AC.l'ROVl FOR. AMO:iTJN
37 Tòll Ae. DeiM &0 Am.
0A ON SAL OF BtJGWOlG CAAL4í DlJ1'AX
41 TOAL RAT! BAS
42 RAT!OFRBJR
S149,'n
210
S';.101
339,233
44,9112
38,21$
114.913
i08,132
7.293
$.21í
246,222
8.746
10.295
$,468
24,509
23,695
5,26
Zll,9tl
311,611
72,530
11,35$
7,176
(4S)
(74,55)
(7S,108)
(39,123
(117,233)
(SO. 130)
(58.813
8,052
668
(100.2)
1,495
1,60
(2422)
713
(1911)
(7,511)
1
(1,780)
1,219
241
(320)
(107,612)
(9,621)
(4,336)
1.,307
(34)
Pm Fll
Tom
,¡
210
14.746
261.25
5,Il7
26,982
14,803
49,919
15,35
5,932
145$99
10,21
11,935
UJ46
25,222
6,425
241
28,$8120.Q
62,9
WI PItOS BATESP~ 1'I'F_~_.. PFllh Tome f
3;12
7,019
8,483
9,009
9,009
1I,lI1
3,094
SZSS,I111
ZIt)
14,746
:m,I34
$.57
275.991
o
74,803
49,919
15,345
5,932
145,9
10,241
11 ,95
3,m
25,351
3,137
531
ILL
71,750
10,113
8,&3
(79)
S54,ll4
$41,199
;71,892
167,91
406,22J
67.510
1,054.173
350.181
6,399
356,580
(~,$S8)
59,360
21,i 17
16,973
33,403
12,517
93,430
57,311
51,393
1,710
(114.339)
$47,486
$$f.759
393.009
1&4,064
439,6:2
1l,147
1,147.603
407,574
6,399
413$7
7,7lO
(114,339)
$5,747
135
135
15
18 21.933
6,25
:21
28,$99
2ll,241
Sim,OOl
8.49% Ex No. 10
Ca No. AVt-11-o1 an AVU-G11-o1E, Af', Avi
Sch 1, p. 1 01 11
III
lôll
$5U33
o
$50,759
393,009
Il1,06
439.624
1l,147
1,141,603
407,514
6,399
413$7o
7,710
(114,39)
$691,593
7.15%
l-
(9.1% lncludin¡t ""114,339;' Dm on llii11lli se ulii pall 5 oill, Sde 1)
(51;302)S621æ1
1.7%
so
Line
No.
AVISTA UTILITI
CaJeulati of QmaJ Revnue Réq1Òremeiit
IDAIO * Eleetre ~y5l
TWVE MONTS ENDED DECEMBER 31, :Z010
Deseetin
Pr Form Rae Bas
2 Proped Rate ofRetum
3 Net Optig Inco Requirt
4 Pr Form Net Opting Inooe
5 Ne Op lnme Deficiency
6 Conveon Factor
7 Ree Requiremt
8 Total GwerBusil'cSS Revue
9 Pertage Reveue ltcrease
((l'sof
Dohws)
$627,001
8.49%
$53,
$47,486
0.63778
~$9,0091
$246,379
3.66%
Exhibit No. 10
Cas No. A VU-E-11..1 and A VU-G-11-01
E. Andrew, Avlsta
Schedule 1, p. 2 of 11
Idao
Compoìlent
LMg.Tei Debt
PrfTr
Comon
Total
A VIA UTTIS
Calculation of Gteral Revenue Reuiremet
Idaho - Eledrie
Pro Forma Cost of Capital
(00'8 OF DOLLA)
Black Box-Current Appr Co$l of Capital
Capitill Weighted Exclud~S'I
Strdu Cost Cost
49 050%3 .02% ID Wtd Debt
3.02%
0.00% O. 000\0.00%
50. J.5'l J.O. 90%5.47%
100.00%8:.9%
Exhibit NO.1 0
Cas No. AVU-E-U.01 and AVU-G-11..1
e. Andrew. Avista
SChedule 1, p. 3 of 11
A VITA UIITIE
CALCULATION OF CONVRSION FACTOR: IDAHO ELECTRIC
TWLVEMONTS ENEDDItEMBEI 31, 2010
Reenue 1.000000
Expe:
LJncollecbles (1)(J,()OI665
COmmission Fee (2)O,OOZ039
Idaho Incoe Tax (3)0.015093
Total Expen 0.018797
Net Opatg Incoe Bee FIT 0.981203
FederalIncon 0.35 0.343421
RE CONRSlON FACTOR 0.63178
exhibit No. 10
Cas No. Avu-11-Q1 and AvuG-11-Q1
E. Andrew, Avtst
Schedule 1, p. 4 of 11
DESCRJON
a
RhV1
i Toial C'.merl Biii_
2 Iii~iii Sales
3 Saes for acm"
45 oili~ii"6 TcmElç"l_
EXll
J'çtiOOiid Ihiiiiiiiias1~1h~II .Piw~9 .DepîaiOtiid~(10 Tllei11 Tclal1'çtiOl.t 1
DislbuliOl
12
13
14
is.
O¡ll Expc_Deol
Tax..
Tot1.DisWtOl
Hi ~ AtIÌlll11 Cl Sllcc.t IifOllion
18 Sa1esEx_
b
$249.122
ZIO
89,31
339,i33
44,982
:iš4,¡i¡$
1,293
5,Z6
246,22
lI,1l\
10.25
5¡46S
;iJOO
3,9"..
S,1I6
11
~M.tOmer19 Opilig1ìpc_ 23,69520 ~iiOl 5,221 'Ies22 lQ1 Ad. &. (l. ZSJ)Ol
2l lQial Elecc Bxpcw 311.6S5
II iI IIeII
o o oIIIIII
o o o ó oo
191
()191 0 0 0
(I (I o(I o
(66)
(J (66)0 0 0 0
ci (65)ILIL 0 ci 0
0 65 (191)0 0 0
2Z
24 OPl1JGlNMHmlJ.ìl
Fi lN TACul AcDecm lm T""""
21 Amlz rr . NoxOt
1231
28 N1 Ol11O lNCOMH
oEl'
RAlIBAB
PLA 1N smtvicB29Ii'~blè30 :lueiOl31 TriiiiOlJ2 DisbulÌoo33 0e_134 Toi Plant iii Slle.
35 ACCUMUIAmD DEPRECIATIN
36 ACCU PROVI FOll A.\rT31 Toial kt\l De¡iatioo "
38 GA ON SAl OOlRlNG
39 WoiG CAITAL40 n~TA:
$54Jl $0
01&1'
($191) $0¿¡bY' b~l'$0 $0bil543
bE¡:
$41,399
311,$92 1,325 174 (5,609)
161.091
406,221 (SSS)
61,$10
1,054.173 0 0 1.325 774 (5.609)(858)
350.181 S,S3Z (3,11)
6,393U,s ;)S,U¡0 (3,119)0
004,671)610
41 roALRAlEDA8E
42 RAlE 01' tu
$6!n,š3 It W~t''T1 SO $1.93 $14 ($~ ,li) ($l!?
':"~;y:i' .:.' -0_. Acll (Bcliiii inar lIdiiiiiu1 nmT ìiçJ iii NSlliniilIjusl ii
~:';:¡:':~¡l~ with CD Spoc llVì &. Mlla deill ""u8eill (i) iini (oJ)
Extt No. 10
Ca No. AVU.11.(1 ar AVu-.11.(1E. Anr_. Avi
Sel 1. p. 5 of 11
AVIA umllcn imULrs OF 0P11
lDAH RETAll imULrsTWVE MO ENED ~ ~i, 20
(OO'S 01 OOUA)
DESCTION
R~g8p.. lUDe
Reo8p lUPl'E De
II II .Rll
1 Th Ocei BuQS
2 Inl~iai S"3 Sale for Ree
4 Tot Swat of Blecciiy$ Oter Jl..""6 Tot Il Reue
o o o o o
o o o o o
IOSESl'ciion iid~ioi7 0pll RxJl""s ~p_!I ~iidAil'ic
Tøxei
348
Totl'ío &: 1
29 18
Õ iî 1§
~20
34îi 3 ¡¡
Dì&tbuliOl
12
13
14
is
Op¡~Deiilioi
TlI""
Tolal DiMbuío
3
3 o o f)$)(¡o
16 Cui- ÁCuIiIÎl¡17 eu St! &: IifQllionis S"Rx~(229)
Atíilt &: 0c19 OpgRxpe..20 DeiliiCl21 Tax""zi ThAdIi.&Gi
23
II 0 (¡0
(2i)2!Ui:34~
22 (2)(ILL)(343)
19 (ie)(6)(1:i)
II
..
(¡
20
24
FlBRINCOME TAXCu AcaltllliiTIlUlI27 Aiæd rr . Noii""
(I)(7)
iii NE Ol''lGINCOME $147az ($19)oib OKAY
($12)($m)oM oily (2)(13)OKAY
RAl1UIA8E
PLANllN SBIVJCE29 In'iigible30 l'm31 ~iOl
DiMliliOlOc""34 Tota i'lm .~Ol
$317 :10 $270
65
6S (¡LII1 Il 61l 2"0
481 62 illS 12 41
4S1 6:1 HlS 12 47
170 ($9)31 OZ)OS)
($311 81M eS!tll $145
ACll i:TlN
ACCtl.PlWVONFOR AMORTIT.37 Tolii ÁCm. ~iiìoi ,& 0GA ON SA OF1'GWORlO CAAL
40 Dll TAX
41 TOALRATEBAE W
42 RATE OF JU
EXhibi No. 10
Cue No. AVu--11-Ð1 an AW.G-11-Ð1E..~.Avi$ta
Scheul 1. ¡i.a of 11
A VI tIEL lUUr.:rs OF 01''lN'l lUTl iu
TWVBMON llED DECmt :l1,21(ìl'S OF oo)
DESCRTION
It~
1 Toal Qemi Buin..2. Ii!~laSa
i Sal., for Res4 To Sil.. offlleclyS OIR_ii6 Tola Eliiric RlIl.
IDSE
PtdUt!ion m TíiiOl1 O¡s~8 Pull loWl11 D.iiiaiOl ai Aiii:ìtJl Til..11 Tot PrclOl &1
DilrbutiOl
12
13
14
IS
Optl ExpeDq.!.0l
Tlles
1'0~i1 DibutiOl
16
17
18
21
22
o p
o
$29,722
210
ß!.JOI
o n§,213
44,982o Ji,2iS
$ (3,Oll/
(3,01l/
6,OlL/
(¡
ç¡,(12)
(3,012)
r II
o o o
o
'Iii 125.'27
108,732
7,554
5,26
246,ff
o
()()o
'Iii ()
297
297 o
(l
(I)
8,746
10,295
5,~
24,507
175
115
2
2 ()
9
9()
(is?)
0)
Tot Ad, &Qe,
475
()
(157)
en
(3)
!619)
(610)23 Tot Eleçc ~
24 01''IGlNCOME tmoiumr
FBDfllNCOM'D\
2S Cut Acal
26 Deered 1' TII..
27 An2i rr . Noion
(4S)
(16)
o
4S
o
o
28,8
312,ö43
o
(;;IHZ)
(6)(415)1S7 IilOo72,172
(166)55 21411,296
7,176
(45)
28 Nl 01''IG IN
MAY
29
34 Totl Plan! in SClC¡
35 AceTl DlClON
36 ACci.P'OVlioN FOR AMORll.17 Tola.~ lJiation '*
38 GA ON SA OFirlNtl39 woiitl CAlT40 Il TAX
41 TOALRA1IBA
3f~29)
l,33
l,S33
(537)
$l96
$0 SS3i'4S
OKAY
($+) dF?
o
o
$0
$102
oElr
$2 S399
OKA.Ybl
o
$42,ö46m,91l
161,?1
405,ii
67,570
o 1,G8,050
353,607
6,399
o 360,006
o ll o
7,710 7,710
(lö4è81)
$7,110 $61,1'73
o o oo
SJ $0 so SJ
42 RA1I OF iæ
exibNo.10
C_ No. Avu-11.Q1 md AVlG-11-Q1
E. Andll. AviÙl
Sclul& 1. p. 7 óf 11
A VTA uns
lìC IUìSii:rS OF OPERTIN
ii ImSTATl USTS
TWVI MONl HNEO DRCEl 3 i, 20
(000'S OF DOS)
DESlUON
II v :i lI~I Tot oenu_II fnl~So3 SalClforiie
4S O!el:Rllll6 Tøll.~~
$.16,7S1
16,751 o
¡6,1S1 o
lOSE
J'llîOl on4tro~øi7 ~1I~8 l'P""
9~Ì!lt¡0l.3I Ailmic10 T...jj tot~i;Qn.tl
(311 (1)
6,4ll
6,OSS (I)
ILL
13
14IS Tcial Dùtiti
(I)
16 Cii:AclI
17 C'omer Ser"" &:.lIomQt
18 S.i"" llpe..
$;
I)0 I)2
(33)$(lll)
211
21
14
13
29
(7,339)
3
(28)
AdislnVv &: Gior19 ~a EipeCt2ll De'lí!l2.1 Tiies22 Tøii Ad. &: (ì
23 TollElClc~
(m
I).(m I)0
0 (3,l3)(17)(l24)
(J (9,169)11 124
6
34 (919)
34
(941)
17,68
(919)
(m)
932ll OPGIN Jmllm
326
28 NE OPERG INME $17oCr d;,41S)99 oCr
$U
bh9 $1 Sll,.04
ob9
s06
oCi
RATEnAS
I" IN SEl Vl29 fnlagibi..30 1'cl(llwiio31 Tl'Ol32 Dísbuiloi33 Geor34 Tot Pla! li SCCi
3$ ACctTl DEITl
36 ACC. nOVIlOFORAMOlT.Total Ál. Doon a
OA ON SAL OP ßtmlN
WOLKLCL CAPIr40 DEl TAX
o o o o o o
o o o o o
41 TOAL RABAfi so so so $0 so so
42 RAUl OF Rhït
Extt No, 10
Ca No. Avu.11-Q1 an AVu-11-Q1
E. Anf'. AWi
Scl\ul 1, p. 8 of 11
A VIA Ul
El RBSULTS OF 0l11N
IDAH RITAUI RITS
TWvtMON1 ENED DECE 31, 2í
(GGll'S OFOOl1)
DESCTlQ."I
li llC ..at IlalU1 Tot C/en Biei
2 .l~la SIéi
.) Siieidhr'l4 1\ Sal.. mElity
5 Olll_e6 Tot EI R_
o o o o o
$2$0.393
2111
8\)01
339,9
44,91!2
3S4)il
o
Q o o o o o
1
8
9
10
11
(21)(9)12,382
lílll,132
14,MS
5,$61i3.2l
it 342
Tot Prciioc ¿I 1 o it (23(1)342 (9)1)
DllmlìOl
12
13
14
15
otìill~$'"IlìllìQl'les
(35)
Tot DiiliìOl
15 3 m
IS (I :I (S)
2
(33)
s:l0
10,252,2
21,911)
HI Ciii ~li817 Ci Seçe ¿I Iiomiii
III saes llpæ_
Adìsw ¿I Oe19 0¡8~2í Ðeoi21 Ti22 Tot Ad. ¿I C/.
23 Toiol Bleee ~
17
(Jlll)(23)ZI.0$(
5.2í
3
(984)0 Q 0 (23)0 UJ*
(911):is((22 337 (155)Q 302,6l!
911 (2s()221 (337)155 0 112,191
341l 79 (llll)54 276 13,710
(9ll)8,83
(53)
:l Ol'nNG lNCæ.im0i: FT
Flll lNCOMI TAX2$ t'urrt Aeo12í Deer lncuT....
27 Amorize Ir . Nmcoii
21 NE OmRnNG lNCOMI $631 ($182)
OKAr
5148bm ($219)Stir SlOl ~276)biU bJar ss9,l78i
29
34 Totl'Ùli in SerCl 0 II 0 0 0 0
0 b II 0 0 0
:12,046
31,9ir
1(i7,091
405.33
67,570
i,àSf,IlSO
353,07
6,3"
360;o
ACClLUI DEP1lAC. l'OVOFOIl AMllTlT.37 1\ ~ Deiioo &.38 GA ON SA OFBUJ39 WORGCAAL40 Df1U TAX
$0 $0 $0
7.710
(104.51l1 )
$61,1141 TOALRA1l BAS $0 $0 $0
42 llA1lOF iu
Exhibit NQ. 10
Cas No. AVU-E.11.(1 an AVU-G11.(1
E. Anr_. Avila
Schellel,p. 9 of 11
A VITA UllIm: RllU.:rs OF Ol'll
IDAH RlTA1l lfßSU.TSTWVE MON BN DB 31. 2tl(00'8 OF lX)
DESRl'lON
a
1
:2
3
4
S OIerB.evue6 Totl Elecllc R_lIé
EXsnsPrion MdT~ion7 OpIÌl$Expéé$S l' l~
9 ~Liion and Aii7.,10 Tax..11 Totl PrClon oi 1
(75.756)
(75,756)
p8.17)
(l14,5Ui)
(47,747)
(57,66)
$(4,2)
$1,201
(3,023)
(3,tl23)
$(1,157)
371
(I o (I
Ó
o
(355)(m)
(I
o o
743
89 115 328
224
115 SŠ
972 534
~IOI 241
62 175
Di3!bliion
832
12
13
14
15
OplÌiilhii~\l
Twu",
Tol Dilili\l
16
11
IS
Adiiiv.t Geer19 OpiilhJ'$Ì20 ~jilìUl21 T"",,22 Tol Ad. & Ge,
Tötll E!øec lhp_
(105.03)
(138)
(138)
(1,157)
$(28)
(28)
$(7
$ (!I)
311
243
(15)m
91n
I
:r
:2
o
(18)
OS)
14
(4:m 1.,4SO
119
14 tl (,133)l1i¡~
16 814 644 i,11
(16)(1;169)(64)(i,86)
(6)(409)(22)(1,045)
24 Ol'1lGINOO BlOl m
Fmmt lNCOMETAX25 Cumi! Ac
Ui Def'l In"" Tax",
V A.i: lT . NOloo
o
(10S,5I)
($,985
(l,14SJ
(9)
(I.2Ol)
(1.822)
$ (938)
259
961
(91)
(336)
2l NmOl''lCllNOO
t)l.41)8
RAm BAPLlN t.'EVI29 Inli¡¡ble30 PrciOl31 1hìsiOlJ2 lMlributiM33 Gami34 Tol Plan! in SeN",
35 ACCU DBPREll
AC l'ovWFOR AMORTlT.Tol Ac Deió &
38 0A ON SAr OF BtWORCAlrALDmi TAX
($S,!I())
OKAY
($1.184)
6KAY
o
(1625)bU
(I
(SIO)
3iA'($760)6U t1!l)¿¡,.
(I
51.157
2,949
5,596
7,64S
4,306
21.656
6.lm
U,S62
5,552
9,407
19,155
¡¡,in2
46,008
30;%3
o o
41 'lALRAllHlASE
42 RAm OF lU
$l
o
$l
(I
so
o 6,813oo 30,623
$l
(3.40)
511ß43
(3,807)
$11,578so
Eilil No 10
Ca No. AVU.11-01 ia AW-G11-o1
E. Andn. AVÍ
Scedul 1. Po 10 of 11
AVIA úrErlWlS OFOP'OlI
IDAH lUATI lWlS1'VEM0 HN DB 31 , 20
(00'S OP OOLt)
DESCON
.lU
I Tl3ii Goen I3Ìleo2 Ini~ia Sii3 Sill th R-.
4 To Smes orE1iieily
$ Oter It-=ue6 Toi E1~c 11_110
1
8
')
10
11 Toi l'ct & ï
OillbullOl
12
13
14
1$
O¡ii~Dela
Tax..
Toi DiIlJiOl
16 ~ Acg17 CUS~& InfomooIII Sillii
A.nÌlÌ\ k(lO¡ii llpe_DqlliOl
ThM
19
20
2122 Toi A.n. k~
23 Toi !i~c axii
o II
PYIO PFll
o
o
52
52 0
4
(lO~
(6
2
618 (41)
172
59Ði 0 618 (47)
60 214 66 (46)
(60)(214)(666)46
PF12
o
112-,169
:UO
14,146
o 261,lZS
5,$7
¡¡ W.911ooo
14.S03
49.919
15,35
5,9n
o 14SJJ
1)8
(19)
1,25
3,04
ZS.22
57
:81
1:1
isi
66
i17
21,915
6,ZS
241
(¡ 2t,SSl
I,2S 20,()7
24 (1,265) 62.
ZS
26
27
547,4$628 NI OPE1llNME
MtlllWE
l1lN SEVICB~ Ii~~.30 Prion31 ThiiiiOl32 Dibul,oi33 6e34 Tl3l'lal Ìl SeiCt
35 ACctTI nnP1I
36 AC.l'O~ FOR AM1lWA'l37 TI3 ~ DeiiÎoi "
38 GA ONSALOF j3Ulit39 W~CArrAL40DE TAX
41 mTllTBlWB
42 llTB OF lU
134
103
237
(3)
(3)
(26)
($94)8i eil3b£
SI,994
3,447
l,l70
7.458
1,919
16.SOS.
16.,50
16,330
5,Olll
5,fIil
121
121
(2,s01)
($2043)
S310)
54,6S
(5433)
8kAl
1130ob'
o
o
so
;;2)
8i
o
S$,759
393,00
184,06
419,624
SO,141
1,141,603
407,574
6,391)
413sm
o
o o
so so
(114;39)
o
$621,l1
3.722
531
18
1.7%
Exhib No. 10
CæNo.AVUoE.11.f1 anAVl11.f1
E. AnIV, A'I
Scl 1, p. 11 of 11
AViS!A UTLl
OAS RETll 01' OPeRTIN
IDMIO PRQ l' REts
TWVE MOllDECEMiiIU1, 2110(ll'S 01' 1X)
DllCltlJ'ION
/lRB
1 TOU ci.. 1l2 Tollti~3 Ot ll""4 TOUOiR_
EXPENSll!lloiQoIl~i'Ó Cilyoa~7 ~ Oi ii
s NeNIlOiSliiTTl9 Tolll'U~~HI ~ll'!..n ~12 T_13 rl!~~~oni 4 ()gE::iIS ~
16 T._
11 T.. Dî5lbuon
is Cu_~
19 Cu_ ~ &; lnfò
20 Sa", n.~&0e21 ~Ilexpe..
:i DeiiOlTixTl! Ai &. 0e
2S tOU ei ii
21 0I1l TI INME BmlU l'
l'1. INCOE TAX21 Cu Ac28 D~fe l'
29 AmITC
3() NET OlTI INCO
RATe BAI!: PLA IN SILW1C131 ~~32 Dí PI_33 0e P134 f.. PJ in SeioACCTJ 00R1 11i5 ~~
36 Dìbuon PJ31 Oe P1t
38
39
40
41
42
43 TOiALRATeBAl!
44 IVTe OF JU
Sf2)l71
454
SI,440
114,112
8SJ8l
l15
(lJ61)
&4.197
3,s
M45
1,672
9.05
9,l7S
ri.2i9)
4)199
(17)
6i'ri2
8,839
14&.34S
UJIS
1'12.69
l'F..
Totl
d ,
$7,l04
(Ji)
'5i,10)
(44,128)
$ll,lll
332
131
70.64
$1,921
1,921
~31
12,565
161
1*
53
374
(43,898)41,4SS 41.4SS
IS 390 390
1,510 9 9
(42,13)41.811 0 41.l
lsI 31S
21 1&2
29 ii ll
:w Sii °5$
411 4.JS 4.3IS
12 l.$67 3;561
(1,031)(;)29 670
(4'2)SJ13 :l s.Si2
(l9l)3
(2.79
0 7
5,034 ..5,m
683 1,710 UIO(\71 71
311 681S 4 6 t9
4S~1 6t:Ill 36 6t lIS
1,087 10.462 L.LL'12.347
44 (1,71l)óó (l.m)
9 4;1011 4.708
0 (7)(17)
()
$632 7,554 $1¿iS $8,779
1,896 IQ,m 10.735
4.316 1S.m isi.ni
41SZ4 2Î,ll9 2Î,039
10,19 183,495 0 193,495
7
115,9$6 PIZ,S48) 103.4l $l I03,4l5;97% 7.31% 8.49%
(7.21% illlllng ...$23,67;i DFI on Plal Ra ba _ il.. Ilht9, Scule 2)
Exltib1 No. 10
Case No. AVu--ll..lllnd AVlJ11..1
E. .A. Avltl
SChed12. p. 1 of 9
LiRe
No.
2
3
4
5
6
7
Il
9
A VISTA UTmii
Caleutioo of GelÚ Reveue Reiremt
Jdø.-Gas
TWLVE MONTS J: DICEMBER 31, 2ft.
(",'s OF DOLLAR)
Derition
Pr Forma Rae Bas
Propose Rate of Retrn
Net Opng Inc RequÙ'ent
Pro Forta Net Opatng InCOe
Net Opting Income Deciency
Convtion Factor
Revenue Reuiret
Tota Geer Bunes Revenue
Pertae Reveue Incr
l I 1JAHO I
StOMOl
8.49%
$8,719
$7,554
$1,225
0.637780
~ $1,921 ~
2.72%
Exhibit No. 10
Ca No. AVU-E-11"(1 and AVU-G..11..1
E. Andre, Avista
Scheule 2, p. 2 of 9
AVISTA UTLITIES
Cakulati of GeeralRevell1le Reqiiiremeht
Idao- Ga
Pro 'orma Cost of Capital
(OOO's OF DOLLA)
Idao
ent
Blaekhx-errt aiove Cos of Capi. I
Capil Weilite Exdies sm
Stretre Cos Cos
Løg~TerDeb 49.85% 6.050%3.02t ID Wtd Det
3.02%
PreTrust o . oat a . 000%0.00%
PrefStock 0.00%
Coon SO.lSt 10.90%5.47%
Tot 100.00,4 8.49%
Exhibit No. 10
Case No. AVU-E.11..1 and AVU-G-11..1
E. Anew, Avista
SChedule 2, p. 3 of 9
Revenues
Ex:
Uncollectiles (1)
Commsson Fees (2)
Ida Income Tax (3)
Total Exns
Net OpgIncom Bere FIT
Federal It\ 35.00%
REVE CONERSION FACTOR
A VISTA UTILITS
CALCULATION OF CONVRSION FAcrOR: IDAHO GAS
TWELVE MONTHS ENDED DECEMBER 31. 2010
1.o0
0.001665
0.002039
0.015093
O~Olg797
0.981203
0.343421
0.63778
Exhibit No. 10
Case No. AVU..E-11..1 and AVU-G..11..1
E. Andrew, Avista
Scheule 2, p. 4 of 9
Pe ~~Cî Wl:~
U..~m oiom.Ga aiiUS Clr
Ji..l)ESPTON Il.~Dø Boíl I~.~Il ~
AV1STA tJTIllTES
GAS RESLTS Ol OPERTION
IDO ~'TATI RESTS
TWVE MON1S RN OOllflR 3 i, 2llO
100 Ol OOlLRS
II
RlMtm
i TOl oei Busi2 Tiiii! Tramm3 0I~4 Tnlal OIl Re
EXENSES5 E,plital p.~Pruc(, ~~~re~_~7 ~Gas~S Net Net Gi SIn. TI'9 Tot11'ion~.Stragc10 ~~II ~12 TåXes13 Totl Undnd Stl'gc~
IS Cusme ACCntlng
19 Cus_ Seìe &; Infi:
20 Slle I!iiAdtlve &; GeO¡mtl~i:ÍlnTax
21
2.
23
24
25 Totl Gas I!ii
Telal Ail &, oei
26 OPERTING INCOMEtlFiRl! FI
!'.oaAL INCOME TAX27 Cu Aecl
28 OefemFl
29 AinlTC
30 NET OPER TIO INCOME
Il Tl BASI I'tANTlNSIlVICE31 ~~32 OisibutlOlI'I¡¡33 Ge pi.34 Tniill'nt m $m
ACCUMtlTFJ) DEPRECIATION35 1.mi Stl'gc36 ombuit Plant
37 Gel'lanl3l TOl A_ i:iaÛ\n39 Il~FI40 GAS INRY
41 WOIUGCAPlAL
42 GAIN ON.$AL,Ol'lllJ!N
43 TOTALRATEl'ASE
44 RATE 01' RE
li tl fee I
$11,878
454
51,44
114,77 o o o o o
o
85,383
375
0,5(1)
11,I91 o o o o o
167
154
53
374 oo ooo
3,LLSS
3,445
iétt
9,005
2.
:I()
MOO
1,02
I
0 0
0 ()
(21)
0
0
21 ()
7
0 0
99 0
99 0
35
o
2,
3,11
7
()
(101)
()
o
o
9,375
o
(2,229)
M99
(17)
$6,92.
o
8,1l39
148,345
1S,SIS
11,699
3,488
48,439
4,W
$(,749
o
o
o
(I
o o o oo
(19,934)4,s
S1l5.!sa t\.:,~na. "-lIl~Dlonellie'-so ($14)
Extbit No. 10
case No. AW.E.11..1 an Avu.11..1
E. Anre. Avista
Sci,e 2, p. 5 of 9
W¡,rki ~w,,'"ltlóll
Litl Capal Slbt N_llJzø 8&0 Propert Umoltl
No.IlESl'ION Aetvll T_Tax Exii"".
a II
1i
3
4
REToll 0-1 Busi
Toll TfltinOtl~Toi Ga Re_
5
EXENsm¡Exim Decl~ti
Cit Ga i'I'li Ga I1
Nl Nat Ga ~ Tmnloll PrtiU~SloOp~~
Taxes
6
7
S
9
10
11
12
13 T0I1l.r~ llni
14
IS
16
17
DiirOpti~~iiTaxToi Dibuti
18 Cus Acoi
19 Cume Seice &: Iiifonna20 Sl Ei
Adlini$l!iw &. eiOpti EiDeti
Taxçi
21
22
23
2425 Toll Gas ~Toi Adll. " ei
26
ÆDElL 1NS TAX27 ClIt At2S ~Fl29 i\rt rr
30 NETOPER1TO fNCOM
OKY
RATE BAS PLANT fNSEVl31 ~lliin Diii lla33 aeillla34 1'011 Plat Ìl Seic
ACClJULTE DEPREIA nON35 ~llge36 OlstrnPlinf
37 o-lPla38 rcítiAi:. ~Ì8tin39 ~Fl
4f OAŠINVORY
41 WORKIOCAPITAL
42 GAI ON SALE OrBUlLDfNO
I,SS.3
so43 TOALRATE8ASE
44 RATE OF R.N
SI,SS3
(I
$62.878
454
SI,44
114,772
o
(I
85.38
375
(1.561)
11,197
o
167
154
53
374
o
3,8&1l
3,445
1,674
9,07
2.204
3,071
7
o
(I
S,379
1.tl7
II
6,417
105,277
o 9,49S
o
(2.1117)
4.69
(17)
so 57.00
(I
8.839
1411,271
IS,SIS
17M2'
(I
3,4l1
48,009
4,LI2L
56,749
(19.9341
4.509
1,53
II
$102.
6.6%
$8.427
(1l4)
(51)10)
(42,99)
(43,89)
(9180
(42.37)
14
(2.721)
190
(W26)
1,829
$1,189
OKAY
Ii
S (1,12)
(ll)
(1,131)o o
II o ()
o 0 0 ()
(1,130)35 4
(1,1)0)35 ..
0 (242)
28
28
17
173
o
(1,1301
(I)
o
35
o
(238)
238
64 (12)83
(Sl) ($2)OKy OKy S15
OKY
o o oo
(I o oo
so $0 $0
Exbit No. 10
Can No.AV1.11-1 an AW...11.01E. An. Aviila
Seul 2, p. EI of 9
IUIi Injri EIiill Misc.Ràll 04iM
Ui Exp an AIR ~i-ive S"vl
No DESCmON AllIt Dam_FIT En_Alis "4'
AVlSTA umll
GAS RI'.8ui TS OF OP! Tt
IDAHO ltF.T A TED RESTS
TWVE MONTHS ENED DECEMER 31. 2010
(OOS OF OOl.ttlS)
Il
REVUl1 Totl o-i Buln2 Totl Tl'lÍoli3 Otrw4 Totl Go rw
lOENSI5 ~lI.~f'tk
6 Cit Gate Pl1i7PW'llllGa ~eS N.N~G.~T~., Tota f'~.Stonp10 Opl:~11 ~Îlooii12 Taxe13 Totl Uiii StompDitrtk14 () ~15 ~iaooi:16 TUG17 TotPì
IS Cu Ac()im19 Cu_!l A liiomooii20 Sill~Nltr A o-iO¡li ~OeT_
21
22
23
24
25 1'0111 Ga Ex
Totil Ad&o-
26 OPERTIG INCOME BEFRE m
FEERAL INCOME TAX
27 Cur Accnl
28 Deer FI
29 Am lT
3(1 NET OPERTIG INCOE
RATE BASE: PUNT tN SERVICE31 ~S132 Pì P1
33 o- flam34 Totl l'mÎl SeÌieACCUTE DElIATION35 l.~~36 Dislmtk I'i
37 o- Pla38 Totl Ami ~ia
39 J)!£l'
40 GAS 1NvtTORY41 WölCAl'TAL42 GAI ON SA OF BttNG
43 TOTAL RATE BASE
44 RATE 01' RE
01 II p II"
o (I (I oo(I(I
(1)
0 (I (l 0 (l (l 0
0 0 (I (l 0 0 0
(S)
3 4
()0 (2)4 0
(J (20)2
17
(41)(4l)(231)(i49)(6)
HI)(4$)0 Q (237 Pm (6)
tW (47)0 (20)(221)g45~(6l
40 47 0 20 221 2.45 6
14 16 75 7 77
(77)lI6
m $31 $2 $13 $1+4 SIS'$4
OKAY OKAY OKAY aKY OKY OKY &KAY
o ti ti (Io(l (J
()o o (I(II)(J
$0 $0 $0 $0 $0 $0$0
ExiblNo.10
Case No. AVU.E.11.(1snd AVU-G-11-Q1E. Anre. Avita
Sctiule 2. p. 1 of 9
II VISTA 1JUTIES
GAS lUTS Ol OPE 1'01'
IDAOO REA1' RESTSTWVFMOl' 1i m!1! 31, 2010
(O OF 00)~l'.FiI'l'Fon l'Foml l'Foml l'l!on
Lie ne .~li\"1"..~lìm_S1&..,i)~ÔN J."'TIí l'~Exec ~
a l'1 1'l'J3 PFo4 1'F5
1UVE.81 Tom Oeil Bi
2 Tom Tniiti3 OibR__4 TotOas~
21
22
23
24is Tot Ga Ex Toml Mi II Gel
$71l,82m
130
0 70,64 0 0 0 0 0
0
41,4S5
365 11 14
9
0 41,859 II 0 14 0 0
167
154
53
0 374 0 0 0 0 0
l,Slll 120 2 165
3.4$
6211 (.)Il)lêì
II 7;9 lUi 0 m (I 163
i,!l53 49
3ú7 6
7
4,SIS S(21 IS4 (1)
1,20
11
0 6,1)56 21 154 (12)0
0 5&,S!l 238 21 Hill (11)163
0 12,105 (:38)(21)(168)12 (163)
77 (1,i)(83)(7)(59)4 (57)
",70s
OJ)
'W $3,622 e15!)($14)($109l sa ($106)
OKy OKY oKAY oKAY OKAY OKY
8.839
148;71
15,.SI
II 00m.62S 0 0 0
3,488
48,439
4,822
00Sû,'749 0 II 0 0
(19,934)4,m
1,553
0
so $102100 SO SO so SO SO
8.5%
EXl!SES5 l:3l ~liProti
6 Cit O#ii 1'ha'7 I'm-G.~8 !'et Nll 0#.. SIge Tl'rl9 To1i11'ooii
LJll Stor10 ~~11 PqíiOOIl12 Tll13 l'ot tJ SIge0ì14 ~.~IS PqlØ16 '1_
17ill euA~19 C_ Se &; liitlim20 Sale ExAdiiiitre II o-l~ExDeTell
26 OPERATING INMll BEF I'l'
f'L INCE TAX
i7 Curi Ai1'128 De&r fiT
29 AmltlTC
30 NEOPERTIO INCOME
RATE BASE PLANT IN SEVICE31 tJ St
i; Dlirbu I'
33 Genel Pli34 Totl P!iii! iii Seit
ACCULATE DEPREIA 1'01'
35 tJ Storage36 DiUl Pla
37 o-i P!im:38 Tol Accm. Oeíiti39 OEl fi
40 GAS lNl.Y
41 WORKIG CAPrTAt,
42 GA ON SALE 01, BUItDlN
43 TOALRATEBA
44 RATi:Of1Rh"l
Exibit No. 10
Cas No. Avu-11-G1 an AVlG-11-G1
E. Ai, AVlsta
SCule 2, p. S of 9
l'. Fuma l'Fllma l' Fuma l'Fora l'For_
Liii ~ii CapMd CapalAdd CaMd JP l'F_.
No.~l"QN Twm 2&tO 2&tt 2&11 sm Tol
A vtA tmES
GASREUL TSOF OPERTIN
IDAHO RESTATE RJUL TS
TW V! MONS BNOO DOOl!ER 31, 2010
(OOS OF OOUARS
-
REENUE
1
'2
3
4
EXENSESS lltiam ~l
I'dicton
6 CJt Oøie Pun:æ-7 Puse Ga. Ex
8 Ne Nat GU St TIlll9 Totll'Undun Slri10 Op EipeII De12 TlIcs13 TolilJnd StoDltiii14 Opii ~IS ~iiûM16 Tax17 Totl Oitr'bti
ls Cuim~19 Ciiim See &; imnrtloii
20 SiIcEipeseAdmÎl &; 0-1~.~~latin
Taxe
21
22
23
2425 TotlGU Ex Totl Adi " 0-1
26
27
28
29 Am lT
31) NE OPERTIG INME
RATE BASlJPLA IN SERVICE31 Und sioitl32 Dì'l f'1I
33 Gen11'1i34 Totl f'lailn Se
ACClJULTEDEIlA nON35 Uner Sto36 Oitr'bti f'lali
37 Genill'3S TOO Aci:, ~lan39 PTll'
40 GAS INVENTORY
41 WORKl'CAPITAL
42 GA(N ON SAOfBUtiING
43 TOTALRATEBASE
44 RA TI Of RE
m PF7 m l'WIO
$70,182
1m
130
0 0 Il 0 ()10,64
0
41.4$5
9
0 0 II 0 0 4(,884
m 318
(9)2 32 182
2 1 26 1I2
I)(9)3 2t 582
$135 4,305
18 30 14 3.51
$(2)(2)13 24 PI ó41
133 16 43 38 (3 8,513
2,00
373
7
5,034
93 374 43 1,710
4S LS 71
.0 93 419 ss 0 61lHS
133 100 461 %l 20Q ti,lll
(133)(lti)(467)(~)(206)101462
0
S(47)(~)(163)(35)(1,7$3)
ofl70
(11)
($$)(!IM)'$30)'$62 ($134)Sf.s,.
OfAr OK.4r OKi BlJ'OKY
$(34)$102 $91 $1,731 10,735
1,31 1,374 t,115 152,721
S3i 3,099 992 20,039
0 1.859 4,476 2,798 1,737 183.95
73 147 75 36 3,S19
1,270 3,4%1,769 54.974
(284)1.4S2 898 6,918
0 1,059 S,I2S 2,742 36 65,711
(1,297)(1,648)(743)(50)(23,672)
3,228 7,137
1,553
0
$0 1$497)($2tm 1$481)$4,879 $~1)3,402
7.31%
Exbi No. 10
Cu No. A\!-E-11.Q1 and AVl11-01
E. Anrew, Avist
Sche 2. p. 90f 9