20160526Kensok Direct.pdf

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]
[e-mail]

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-16-03
OF AVISTA CORPORATION FOR THE )
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC SERVICE ) DIRECT TESTIMONY
TO ELECTRIC CUSTOMERS IN THE ) OF
STATE OF IDAHO ) JAMES M. KENSOK
)

FOR AVISTA CORPORATION

(ELECTRIC)

Kensok, Di 1
Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, employer and business 2
address. 3
A. My name is James M. Kensok. I am employed by
Avista Corporation as the Vice-President and Chief
Information and Security Officer (CISO). My business
address is 1411 E. Mission Avenue, Spokane, Washington.
Q. Please describe your education and business 8
experience. 9
A. I am a graduate of Eastern Washington University
with a Bachelor of Arts Degree in Business Administration,
majoring in Management Information Systems, and a graduate
of Washington State University with an Executive MBA. I
have experience through direct application and management of
Information Services over the course of my 34-year
information technology career. I joined the Company in June
of 1996. I spent approximately one year in Avista’s Internal 17
Audit Department as an Information Systems Auditor with
involvement in performing internal information systems
compliance and technology audits. I have been in the
Information Services Department for approximately 18 years
in a variety of management roles directing and leading
information technology and systems, planning, operations,
system analysis, complex communication networks, cyber

Kensok, Di 2
Avista Corporation
security, applications development, outsourcing agreements,
contract negotiations, technical support, cost management,
data management and strategic development. I was appointed
Vice-President and CIO in January of 2007 and Chief Security
Officer in January of 2013.
Q. What is the scope of your testimony? 6
A. My testimony will describe the costs associated
with Avista’s Information Service/Information Technology
(“IS/IT”) programs and projects. These costs include the
capital investments for a range of systems used by the
Company, including Next Generation Radio Refresh, Technology
Refresh to Sustain Business process, Avistautilities.com WEB
replacement, and several other applications.

II. IS/IT CAPITAL PROJECTS 15
Q. Please provide some background regarding Avista’s 16
Information Services (IS) Department’s operating needs. 17
A. Avista has been, and continues to be, focused on
utilizing cost-effective information and operating
technology to meet business and customer needs. Maintaining
appropriate levels of information and operating technology
funding is increasingly important, and Avista and its
customers rely more and more on computer systems and
technology to meet day-to-day business operations.

Kensok, Di 3
Avista Corporation
Computer hardware, software, networks and related tools
are becoming more indispensable, and more complex, as the
business environment and customer expectations grow, and
more information and transactions flow on-line. There
continues to be exponential growth in the use of Avista
networks for customers transacting on-line and for Avista to
manage its computer system and mobile workforce. For
example, electronic bill presentment and electronic payment
provides convenience for customers to understand their bill
and remit payment electronically, as well as access
extensive information from the Company related to areas such
as energy efficiency and safety. Mobile dispatch of service
crews involves wireless technology in Company field
vehicles, and provides improved customer service for
construction locates and service work, at lower cost.
Without these technologies, Avista could not meet customer
and regulatory expectations, nor achieve many of the cost
savings we have accomplished through the use of technology.
Q. What are the primary business needs supported by 19
Avista’s Information Services Department? 20
A. The Information Services department provides the
technology support required by all Company operations, both
internal as well as customer-facing. Examples include field
operations, engineering, transmission and distribution

Kensok, Di 4
Avista Corporation
operations, power supply, finance, treasury, legal, human
resources, customer solutions, customer services and
regulatory functions. Types of support include the design,
engineering, implementation, and support of cyber security,
computer hardware, application software, data and voice
systems and networks, application integration, business
continuity and disaster recovery, and data management and
mobility. We are moving toward providing customers with
more mobile solutions for transacting business with Avista
that are available 24 hours per day, in addition to having
more data and information about their energy use and tools
to manage their consumption of energy.
Records management is increasing for both natural gas
and electric infrastructure, and Avista is experiencing
continued growth in the use of its networks by customers and
our employees who are increasingly using mobile, real-time
systems to transact business and deliver safe and reliable
energy services. These technologies are foundational to
Avista’s efforts to keep pace with the service expectations 19
of our customers, to fulfill our regulatory requirements,
and to achieve cost savings through prudent technology
deployments.
Q. Please discuss the drivers for the Company’s IS/IT 23
projects that will be completed in 2016 and 2017. 24

Kensok, Di 5
Avista Corporation
A. The utility industry is undergoing a period of
renewal, calling for technology in all areas of our business.
Specific drivers that prompt capital projects during the
2016 and 2017 time periods include: (1) a transition from
legacy custom-coded applications to commercial off-the-shelf
solutions to increase security and reliability (i.e., outage
management system), allow flexibility and scalability, and
system lifecycle planning, (2) continuous upgrades of
Operating System and Database software to maintain vendor
maintenance and support, (3) technology infrastructure
investment, such as communication equipment on mountain tops
and radios in fleet vehicles to increase worker efficiency
and safety during unplanned outages and emergency events,
and (4) network infrastructure efforts to respond to an ever
increasing demand for secure data transfer, sensor
technology (i.e., plant intelligent software), reliability
and redundancy.
Q. As Information Services requirements have 18
increased, has Avista focused on managing its overall 19
technology costs for the benefit of its customers? 20
A. Yes. Over the past several years, Avista has
focused on managing customer transaction costs through the
prudent deployment of technology. Along with meeting
customer needs, Avista works continuously to minimize its

Kensok, Di 6
Avista Corporation
costs and to maximize employee efficiency through the use of
appropriate technology and staffing.
As discussed in further detail below, the Avista
Facility Maintenance project’s purpose is to take advantage
of commercial tools that provide improved capabilities,
application functions and reliability. As a result, it will
enable field workers to provide more accurate information in
a timely and more complete fashion, improving the overall
customer experience.
Q. How does Avista’s technology department prioritize 10
capital projects before they are submitted to the Capital 11
Planning Group? 12
A. Avista’s Information Systems and Technology
department uses program steering committees for project
identification and prioritization. The steering committees
prioritize projects using criteria such as (1) support of
operational control, safety and compliance requirements, (2)
customer facing and supporting solutions, and (3)
maintaining back-office technology. Specifically,
technology replacement projects are in alignment with
roadmaps for application and technology lifecycles to
provide a stable and reliable application and computing
platform to allow for the safe and reliable operation of our
electric and natural gas infrastructure. Technology

Kensok, Di 7
Avista Corporation
expansion efforts anticipate growth in work requirements,
strategic initiatives and technology shifts.
Q. Please provide a brief description of the IS/IT-3
related capital projects that are included in the Company’s 4
revenue requirement for 2016 and 2017.
A. As shown in Table No. 1 below, the Company has
included IS/IT projects for 2016 and 2017 that total $43.8
million and $75.7 million respectively, on a system basis.
Details about these technology-related capital projects are
discussed below.

The following projects are included in the Company’s Pro 33
Forma Study for 2016 and 2017. See Ms. Schuh’s Exhibit 10, 34
Schedule 4 for business cases supporting these projects as 35
well as additional support for certain projects, filed with 36
the Company’s case: 37
Business Case Name
2016
$ (000's)
2017
$ (000's)
Technology Refresh to Sustain Business Process $ 18,001 $ 17,250
Mobility in the Field 650
Next Generation Radio Refresh 6,000 375
Enterprise Security 1,360 2,500
Customer Facing Technology 286 4,000
High Voltage Protection for Substations 887
Avista Facilities Maintenance COTS Migration 3,800 11,500
AvistaUtilities.com Redesign 5,536
Enterprise Business Continuity Plan 664 450
Technology Expansion to Enable Business Process 2,742 13,700
Microwave Refresh 4,543 4,000
Meter Data Management 21,299
Total Planned Enterprise Technology Capital Projects $ 43,817 $ 75,724
TABLE NO. 1
Enterprise Technology Capital Projects (System)

Kensok, Di 8
Avista Corporation
Technology Refresh to Sustain Business Processes–2016: 1
$18,001,000; 2017: $17,250,000 2
The Technology Refresh to Sustain Business Processes
program is in place to provide for technology refresh
of existing technology in alignment with the roadmaps
for application and technology lifecycles. Aging
technology is the driving factor behind this project.
As technology ages, it presents a risk to Avista in the
form of increased failure rate, inefficient work
practice, and employee/public safety incident due to
system failures.

The continuation of technology refresh programs
provides benefits by providing a stable and reliable
application and computing platform to allow for the
safe and reliable operation of our electric and natural
gas infrastructures. This program is a collection of
sub-programs which are described below:

Distributed Systems
This program is for the replacement of distributed
technology beyond the planned life cycle, such as
desk top computers, mobile computers, printers,
faxes, scanners and multi-purpose devices. It
also includes upgrades to operating systems, email
systems and standard personal productivity
applications. It includes such devices as desktop
computers for Customer Service Representatives,
rugged mobile computers used by field personnel
who respond to service calls and software such as
MS Office and other productivity software
applications. During this period, the program is
replacing its Endpoint Configuration Management
System, which has reached end of life. The System
Center Configuration Manager (SCCM) is a tool that
provides remote control, patch management,
software distribution, operating system
deployment, network access protection and hardware
and software inventory. SCCM requires complex
technology architecture and advanced
configuration to manage thousands of computers.
Additionally, existing rugged mobile computers
have also reached end of life and available parts,
maintenance and support, thus requiring a full
replacement of all rugged mobile computers and
their truck mounts, docking stations and cabling
in all existing fleet vehicles.

Kensok, Di 9
Avista Corporation
Communication Systems
This program is for the replacement of
communication technology beyond the planned life
cycle such as mobile radios, cell phones, desk top
phones and supporting systems, communication cable
and fiber. It includes PBX phone systems and
mobile radios used by field personnel. During this
period, Avista’s Enterprise Call Recording System, 8
to meet Federal regulatory compliance requirements
of a vertically integrated utility, is requiring
replacement as the current licenses and recorders
are at end of life. The system supports Credit
Dispatch, Distribution Dispatch, Power Supply, Gas
Supply, System Operations, Generation Control
Center, Claims and the Technology Service Center.

Network Systems
This program is for the replacement of network
equipment beyond the planned life cycle, such as
routers and switches. It includes networks for
moving data between offices, from field devices
back to offices and to support data transport for
SCADA and other operation systems. Avista
leverages various network transports (Campus
Network, Data Center, Local Area Network, Wide
Area Network and Field Area Network) in its
architecture to maximize efficiency, reliability
and redundancy. Network equipment replacement
aligns with Avista’s Enterprise Network
Communications Strategy, which outlines the need
to meet various use cases across our service
territory utility infrastructure, business,
operations, and services.

Central Systems
This program is for the replacement of data center
servers and storage equipment beyond the planned
life cycle. It includes data processing and
storage for such systems as outage management and
construction design. Specifically, during this
period, a major upgrade was conducted on the
Windows Server Operating System, as updates and
patches are no longer supported by the vendor, to
protect and maintain Avista’s data center 44
infrastructure. Additionally, a portion of data
center storage equipment was replaced in
accordance with life cycle planning.

Kensok, Di 10
Avista Corporation
Environmental System
This program is for the replacement of systems
that support multiple other systems. The program
covers heating, cooling, systems and back-up
generators, and uninterruptable power supply
systems that are beyond the planned life cycle.
It includes back-up power supply systems in
offices to assure that the systems will function
during power outages.

Business Application
This program is for upgrading software that has
reached the end of the supported version. It
includes upgrades to systems such as Outage
Management System (OMS), Customer Care and Billing
(CC&B), Maximo, Mobile Work Management (MWM)
system, energy trading settlement system and
financial and operations systems. Regular
upgrades, as part of the software life cycle, and
required for vendor supplied maintenance and
support, including patches, bug fixes, or interim
releases.

Mobility in the Field - 2017: $650,000 24
This program is designed to increase the Company’s 25
mobility in the field using mobile devices. A Mobile
Road Map Team has documented at least 30 near-term
opportunities where mobile technology could be used in
the field and provide substantial benefits. These
Mobile opportunities are planned to be completed in
phases over a five-year period. Phases already
complete, include ‘Visibility in the Field’ which 32
enabled Gas Leak Survey and Gas Service Dispatch that
provided spatial maps in the field using mobile
devices. Other planned opportunities include, View GIS
Layers, Multiple Maps in the Field, Gas Exposed Pipe
Report, Capture Facility Data, and Damage Assessment.

The many benefits would include operations improvements
to reduce compliance risk, reduce duplicate effort, and
more timely entry of data, along with improved tools
and information in the field.

Next Generation Radio Refresh – 2016: $6,000,000; 2017: 44
$375,000 45
This project is refreshing Avista’s 20-year-old Land
Mobile Radio system. The Company maintains this

Kensok, Di 11
Avista Corporation
private system because no public provider is capable of
supporting communications throughout our rural service
territory. And, because our systems comprise a portion
of our nation’s critical infrastructure, Avista is 4
required to have a communication system that will
operate in the event of a disaster. This project
fulfills a mandate from the Federal Communications
Commission that all licensees in the
Industrial/Business Radio Pool migrate to spectrum
efficient narrowband technology.
11
Enterprise Security Program – 2016: $1,360,000; 2017: 12
$2,500,000 13
There are three primary drivers of capital spending for
Enterprise Security: cyber security and physical
security. Each plays a critical role in supporting our
delivery of safe and reliable energy to our customers.

Cyber Security
The security of our electric and natural gas
infrastructure is a significant priority at a
national and state level, and is of critical
importance to Avista. Threats from cyber space,
including viruses, phishing, and spyware, continue
to test our industry’s capabilities. And while 25
these malicious intentions are often unknown, it
is clear the methods are becoming more advanced
and the attacks more persistent. In addition to
these threats, the vulnerabilities of hardware and
software systems continue to increase, especially
with industrial control systems such as those
supporting the delivery of energy. For these
reasons, Avista must continue to advance its cyber
security program and invest in security controls
to prevent, detect, and respond to these
increasingly frequent and sophisticated attacks.

Physical Security
While considerable attention is focused on cyber
security, physical security also remains a concern
for our industry. Physical security encompasses
the aspects of employee safety and the protective
security of our facilities and critical
infrastructure. Acts of theft, vandalism, and
sabotage of critical infrastructure not only
results in property losses, but can also directly
impact our ability to serve customers. Securing

Kensok, Di 12
Avista Corporation
remote unmanned or unmonitored critical
infrastructure is difficult, especially when
traditional tools such as perimeter fencing by
itself are not adequate. In response to these
challenges, the Company has focused its resources
on additional physical security protection (i.e.,
lighting and crash barriers), remote detection and
response technology, which is creating the need
for additional physical security items, expertise
and technology.

Customer Facing Technology Program – 2016: $286,000; 12
2017: $4,000,000 13
New technologies continue to emerge at a rapid pace.
The Company has already funded the development of
foundational systems that will better allow us to keep
pace with customer expectations and demands, through
projects such as Project Compass. Customers continue
to demand a more engaging user experience and access to
data and tools that are comparable to technology
industry leaders. Enhancing customer engagement across
digital channels and providing customers with tools and
resources to effectively manage their energy use and
bill payment and management, makes it easier for them
to do business with Avista.

High Voltage Protection Upgrade – 2016: $887,000 27
Telecommunication facilities, including Phone,
Communication Switches, SCADA, and Metering &
Monitoring systems, are commonly co-located inside the
Company’s high voltage substations. This requires 31
communications technicians to work in close association
with our high-voltage electrical equipment. The
Company has implemented new high-voltage protection &
isolation standards designed to lower potential risks
to our personnel and equipment. This project will
implement the clearance changes required to meet the
new standards.
39
Avista Facility Maintenance COTS Migration – 2016: 40
$3,800,000; 2017: $11,500,000 41
AFM is an internally developed custom application that
was built by Avista to manage the electric and gas
facility & equipment data. This tool was created in
the early 2000’s and has been used by engineering and 45
operations for the last decade to complete construction
design, manage outages, plan work, and manage locations

Kensok, Di 13
Avista Corporation
of assets. Originally the Geographical Information
System (GIS) was implemented at Avista to manage the
location of gas and electric facilities with an
electronic mapping system that allowed for
centralization. Over time, this system became heavily
integrated with the customer system of record (Customer
Care and Billing), the Asset system of record, and used
to report outage information to customers. At this
time 100% of Avista’s electric & natural gas
distribution systems are mapped in GIS. The existing
data is used daily to maintain and operate Avista’s 11
infrastructure and to report on system characteristics.

There are technical and business risks associated with
the AFM suite that must be addressed by replacing them
with new commercial solutions. Some of these risks
include the cost of extending current legacy solutions,
ongoing support and maintenance of the tools, asset
data integrity, and the increasingly complex
distribution grid that requires improved IT systems to
manage effectively.

This project will take advantage of commercial tools
that provide improved application functions,
capabilities and reliability. Improvement of customer
experience is at the core of the AFM system replacement
and enhancements. An upgrade to the mobile workforce
management system will also occur improving user
experience through improved appointment booking and
workforce optimization. These new tools will enable
Avista office and field workers to respond to customer
requests faster, provide information to customers that
will be more accurate, timely, complete, and improve
customer experience when they interact with Avista.

AvistaUtilities.com Redesign – 2016: $5,536,000
Like many businesses today, the Company is experiencing
continued growth in the use of its customer website,
Avistautilities.com. The website was originally built
in 2006-2007, but because the technology landscape has
advanced so quickly, the site does not meet current web
best practices for customer usability and security.
This project will update and improve the technology,
overall web usability, security and customer
satisfaction. The website is part of the Company’s 45
strategy to provide customers a more effective channel
to meet their expectations for self-service options,

Kensok, Di 14
Avista Corporation
including mobile, energy efficiency education, and to
drive self-service as a means to lower transaction
costs.

Enterprise Business Continuity Plan - 2016: $664,000; 5
2017: $450,000 6
Avista has developed and maintains an Enterprise
Business Continuity Plan (EBCP) to continually enhance
and improve the Company’s emergency response, and to 9
ensure the continuity of its critical business systems
under crisis conditions. The framework includes the
key areas of technology recovery, alternate facilities,
and overall business processes. The effort of
developing and continuously improving the EBCP ensures
the readiness of systems, procedures, processes, and
people required to support our customers and our
communities any time we are required to operate under
critical emergency conditions.

Technology Expansion to Enable Business Processes– 20
2016: $2,742,000; 2017: $13,700,000 21
This program facilitates technology growth throughout
the Company and is driven by customer and business
needs. This includes the expansion of equipment or
systems to accommodate staff growth for the entire
workforce, automate business process, or enhance
customer experience. Some of the subprograms included
are described further below:

Distributed Systems
This includes expansion and enhancement of desk
top computers, mobile computers, and virtual
computers that is required to align hardware
specifications with application software
requirements.

Communication Systems
This includes equipment such as mobile radios,
cell phones, desk top phones and supporting
systems, communication cable and fiber. New Call
Center technology, Virtual Hold with Call-back
Assist, allows options for a customer to hold,
when expecting longer than average wait times or
have a return call at a later time, maintaining
their place in the queue, and allowing them to go

Kensok, Di 15
Avista Corporation
about their business until they reach the front of
the queue. Additionally, an Enterprise Mobility
Management tool allows for stronger management of
ever-growing mobile devices to reduce risk to the
Avista network, systems and data.

Network Systems
This equipment such as routers and switches, which
are located in offices, poles, substations, power
plants and homes, support the expansion of the
various transports called by emerging utility use
cases demanding new technology architecture,
device management, and security requirements.

Business Application Expansion
Expanding and enhancing systems such as Outage
Management System (OMS), Customer Care and Billing
System(CC&B), Maximo, Mobile Work Management (MWM)
system, energy trading settlement system and
financial and operations systems. This period
included enhancements to business application
systems to improve operational functions and in
response to changing business requirements.

Other minor applications and projects
Enhancements to the functionality of other
business applications not included above such as
customer email management system, compliance
management system, enterprise voice portal system
and engineering design and analysis systems. This
category also includes small projects for new
software or hardware that are not covered under
other programs.

Microwave Refresh – 2016: $4,543,000; 2017: $4,000,000; 35
The Company manages an ongoing program to
systematically-replace aging and obsolete technology
under “refresh cycles” that are timed to optimize 38
hardware/software system changes. This project will
replace aging microwave communications technology with
current technology to provide for high speed data
communications. These communication systems support
relay and protection schemes of the electrical

Kensok, Di 16
Avista Corporation
transmission system. Reducing Avista's risk of failure
of these critical communication systems will have a
significant impact on Avista's transmission capacity
and ability to serve our customers electrical needs.

Meter Data Management Hardware/Software/Communication 6
– 2017: $21,299,000 7
The Meter Data Management (MDM) system will replace the
customized system that the Company is currently using
through Oracle’s Customer Care and Billing system to 10
perform similar functions and provide additional
benefits. The Meter Data Management system consists of
computer hardware and software applications that store,
validate, edit, and analyze the interval consumption
data for use with Avista’s billing system, as well as 15
coordinate specified metering commands. This system
will allow consideration of daily meter reads and
enable appointment scheduling and optimized routing
through integrated modules with Oracle. The MDM
implementation will support the collection of data from
meters in all of Avista’s jurisdictions, including the 21
existing advanced meters (AMR) deployed in Idaho. MDM
will also create a platform for the future
implementation of advanced metering infrastructure and
includes integrations with legacy applications.
26
Q. Does this conclude your pre-filed direct 27
testimony? 28
A. Yes it does.