20160526Schuh 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 ) KAREN K. SCHUH
)

FOR AVISTA CORPORATION

(ELECTRIC)
Schuh, Di 1
Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, employer and business 2
address. 3
A. My name is Karen K. Schuh. I am employed by Avista
Corporation as a Senior Regulatory Analyst in the State and
Federal Regulation Department. My business address is 1411 East
Mission, Spokane, Washington.
Q. Please briefly describe your educational background 8
and professional experience. 9
A. I graduated from Eastern Washington University in
1999 with a Bachelor of Arts Degree in Business Administration,
majoring in Accounting. After spending six years in the public
accounting sector, I joined Avista in January of 2006. Since
2006, I have worked in various positions within the Company in
the Finance Department (Plant Accounting and Resource
Accounting) and joined the State and Federal Regulation
Department as a Regulatory Analyst in 2008. Currently, as a
Senior Regulatory Analyst, I am responsible for, among other
things, preparing the capital pro forma adjustments in
determination of revenue requirements for all jurisdictions.
Q. What is the scope of your testimony? 21
A. My testimony and schedules in this proceeding will
cover the Company’s planned capital investments in utility
plant for the 2016 and 2017 time period, and explain details of
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Avista Corporation
the Company’s planned investment in general plant. Company
witness Ms. Andrews has included adjustments to reflect these
investments in her electric revenue requirement for the 2017
rate year.
A table of contents for my testimony is as follows:
Description Page
I. Introduction 1
II. Capital Additions from January 2016
through December 2017 3
III. Capital Planning and Review 5
IV. Capital Additions Detail 13
V. Capital Adjustments 22
13
Q. Are you sponsoring any exhibits? 14
A. Yes. I am sponsoring Exhibit No. 10, Schedules 1
through 4 which were prepared by me or under my direction. This
Exhibit has been included to provide supporting information for
the capital investment described in this testimony. Schedule 1
shows actual and planned capital expenditures from 2011 through
2020. Schedule 2 depicts the increases in costs of transmission
substations, transmission equipment, distribution substations,
and distribution equipment that the utility industry has
experienced over the past fifty years. Schedule 3 lists and
describes the capital projects included in this case. Schedule
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Avista Corporation
4 includes business cases, including cover sheets and other
project justification information relating to each of the
projects included in this case.

II. CAPITAL ADDITIONS FROM January 1, 2016 5
THROUGH DECEMBER 31, 2017 6
Q. How were the capital additions through the 2017 rate 7
year developed in this case? 8
A. As in prior rate cases, Avista started with rate base
for the historical test year, which, for this case, is the
average-of-monthly-averages (“AMA”) for the twelve months ended
December 31, 2015, and made the following adjustments as
described below:
(1) 2015 Plant In Service – The 2015 AMA plant in service
balance is adjusted to a 2017 AMA balance. This is
done by first walking forward the accumulated
depreciation (“AD”) and accumulated deferred federal 17
income taxes(“ADFIT”) to a 2015 end-of-period (“EOP”)
balance, then to a 2016 EOP balance, and finally,
to a 2017 AMA balance.
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Avista Corporation
(2) 2016 Capital Additions – This adjustment adds capital
additions to plant in service during 2016,1 including
the AD, depreciation expense and ADFIT associated
with these additions, on a 2016 EOP basis. Also
included is an adjustment for the impact of asset
retirements in 2016.2 This adjustment also includes
annualizing depreciation expense on the plant-in-
service at December 31, 2015. Next, these additions
are carried forward to a 2017 AMA basis by extending
AD, and ADFIT balances.
(3) 2017 Capital Additions – This adjustment adds the
capital additions to plant in service during 2017 on
an AMA basis. This adjustment includes the
depreciation expense, AD and ADFIT associated with
these additions. This also includes an adjustment for
the impact of asset retirements in 2017.3
The specific capital additions are identified later in my
testimony. In addition, the plant tables depicting the electric

1 For each of the adjustments for the periods 2015 AMA to 2015 EOP, 2016 EOP
and 2017 AMA, distribution-related capital expenditures associated with
connecting new customers to the Company’s system were excluded. The Pro
Forma adjustments do not include the increase in revenues from growth in
the number of customers from the historical test year to the 2017 rate year,
and therefore, the growth in plant investment associated with customer
growth should also be excluded.
2 The 2015 test year and the adjustment from AMA 2015 to EOP 2015 capture
the impacts of retirements for 2015. The adjustment to capital rate base
for 2016 and 2017 includes reducing rate base and depreciation expense for
the impact of retirements.
3 Id.
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Avista Corporation
Pro Forma adjustments from the 2015 AMA test period through the
2017 AMA rate period are shown later in my testimony at Table
Nos. 6 and 7.

III. CAPITAL PLANNING AND REVIEW 5
Q. Please describe Avista’s capital planning process. 6
A. Avista utilizes a comprehensive capital planning and
budgeting process. Capital expenditure assessment and cross-
Company prioritization enables the allocation of limited
resources to the highest impact projects and programs. The
Company also employs a systematic review process to adjust
course as necessary. The capital planning and budgeting process
at Avista begins with engineers and subject matter experts
performing studies and gathering data about our assets to
determine the type and level of work that is needed to keep our
system operating in a safe, reliable and efficient manner. The
identified work is then prioritized at the department level for
the ensuing five-year period.
For each project or program that meets a departmental
screening, a business case is completed and submitted for
consideration of funding. A business case is a summary document
that provides a description of the capital project or program
as well as additional information and support. Components of a
business case generally include: the project description,
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Avista Corporation
project alternatives, cost summary, an assessment score,
justification for the project (e.g., mandatory, resource
requirements, etc.), milestones, and key performance
indicators. An assessment score for each business case is
calculated, which is comprised of a business risk assessment
with a risk analysis using mitigated enterprise risk management
definitions, a financial assessment focusing on customer
internal rate of return (IRR) as the key proxy for
attractiveness, a strategic assessment which is a dimension
aimed at evaluating alignment with corporate initiatives, and
project/program risk to quantify the level of certainty around
the projected costs and timeline. The assessment score is one
data point that is considered when prioritizing capital
funding. Other considerations include, but are not limited to,
the availability/utilization of crews, compliance requirements,
work efficiency, safety, reliability, and partial funding
versus an “all or nothing” approach. Business cases, cover
sheets and other project justification information relating to
each of the projects included in this rate case, have been
provided in Exhibit No. 10, Schedule 4.
Completed business cases are submitted to the Capital
Planning Group (“CPG”). The CPG is a group of internal director 22
level employees that represent the capital intensive areas of
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Avista Corporation
the Company4. The CPG meets monthly to review the submitted
business cases and prioritize funding to limit the total capital
spending to the level set by Company officers. Due to the large
amount of funding requests and the limitation of the capital
budget, some program requests are scaled back, some projects
may not get funding, and some activities may be deferred or
delayed.
Once funding is prioritized for the coming five-year
period, the CPG meets with Company officers to review all
business case submissions and the funding prioritization. The
Company officers provide feedback and ultimately approve a
capital budget that is then reviewed with the Finance Committee
of the Board of Directors (“FC”) for their approval of the
spending for the first year of the five-year plan. The five-
year capital plan is reviewed with the FC to keep them apprised
of the longer-term capital spending plan. The status of the
planned versus actual capital spend is reviewed with the FC at
least twice a year in accordance with their calendar of reviews
and actionable items.

4 The CPG group currently includes: The Director of IT and Security, Director
of Generation Production and Substation Support, Director of Electrical
Engineering, Director of Natural Gas, Director of Transmission and West
Electric Operations, Director of Environmental Affairs, and Director of
Customer and Shared Services.
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Avista Corporation
During the year, the CPG meets monthly to review the status
of the capital projects and programs, and approve or decline
new business cases and spending adjustments to current projects
and programs as well as monitoring the overall capital spend.
As a result of the constrained capital spend level, capital
projects must be prioritized so that the dollars flow where
they are most needed. As unexpected, high-priority capital
projects arise, the capital projects for the year must be
reprioritized to limit the total spend to the amount established
by the Company and approved by the FC. This can cause some
projects to be delayed so that higher-priority projects can be
completed.5 There were $54 million of unfunded projects in 2013,
and $55 million of unfunded projects in 2014. Illustration No.
1 below (also appearing in Mr. Thies’ testimony) depicts the 14
capital planning process described above.

5 If circumstances indicate the capital spend for a year will exceed the
level previously approved by the FC of the Board, the additional capital
spend is presented to the FC for approval.
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Avista Corporation
Illustration No. 1:

Q. What actions are being taken to provide continuous 14
improvement to the capital planning process? 15
A. A group of employees with financial and operational
knowledge have been directed to review each submitted business
case for completeness and validity prior to the request being
submitted to the CPG for approval. In order to allow for ample
time to review business case funding submissions, a strict
adherence to submission deadlines has been adopted. Prior to
submittal to the CPG for funding decisions, each business case
will be required to have director level support to ensure that
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Avista Corporation
department level prioritization has occurred. Additional
improvements will come through educating project and program
managers on the importance of accurately planning the monthly
capital spend and transfers to plant. Further, the business
case document will be refined as the capital planning process
continues to mature and develop, and the Company will have a
continued focus on project management best practices.
Q. What is driving the significant investment in new 8
utility plant? 9
A. As Company witnesses Mr. Thies, Ms. Rosentrater, Mr.
Kinney, Mr. Kensok and Mr. Cox explain in their testimony, it
is necessary to add or upgrade generation facilities and
transmission and distribution facilities, due in part to asset
management programs, compliance with state and federal
requirements, improvements and efficiencies, reliability,
maintenance, resource supply, and safety and security.
A significant factor in the growth in net plant investment
and rate base is the cost today of new utility equipment and
facilities, as compared to the cost of the older facilities
that are now being replaced. Some of the facilities we are
replacing or upgrading were installed 40-60 years ago, or even
before that time. The cost to replace these facilities today
is many times more expensive than when they were installed
decades ago.
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Avista Corporation
Q. What data is available that depicts the increase in 1
the cost of utility plant assets that have been added in recent 2
years, as compared to the cost of the facilities being replaced? 3
A. The Handy-Whitman Index Manual6 provides cost
comparison information over time for several major categories
of plant. Exhibit No. 10, Schedule 2 depicts the increases in
costs of transmission substations, transmission equipment,
distribution substations, and distribution equipment that the
utility industry has experienced over the past fifty years.
These charts show what these categories of plant have cost
historically on a relative scale. For example, on Page 4 of
Exhibit No. 10, Schedule 2, and also shown in Illustration No.
2 below, distribution poles (FERC Account 361) fifty years ago
would have a cost approximately 9% - 10% of the current
replacement cost.

6 “The Handy-Whitman Index of Public Utility Construction Costs”, is
published by Whitman, Requardt and Associates, Baltimore, Maryland,
published in May 2015. The Handy-Whitman Indices of Public Utility
Construction Costs show the level of costs for different types of utility
construction. Separate indices are maintained for general items of
construction, such as reinforced concrete, and specific items of material
or equipment, such as pipe or turbo-generators. Handy-Whitman Index numbers
are used to trend earlier valuations and original cost at prices prevailing
at a certain date.
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Avista Corporation
Illustration No. 2:
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Illustration No. 2 above and Exhibit 10, Schedule 2, show
that the cost of the equipment and facilities that are being
added today are many times more expensive than those same
facilities installed in the past. Our retail rates are "cost-
based" and reflect the low cost of the old equipment serving
customers. When the equipment is replaced, it requires an
increase in rates to reflect the much higher cost of the new
equipment.
Q. With respect to Avista’s capital additions through 23
2017 included in the Company’s revenue requirement, would there 24
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
1960 1970 1980 1990 2000 2010 2014
Handy Whitman Cost Index
(Published in May 2015)
Distribution Substations
Structures & Improvements (FERC Acct. 361)Station Equip. (FERC Acct. 362)
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Avista Corporation
be operation and maintenance (O&M) savings associated with the 1
replacement of some of the aging equipment? 2
A. Yes. In some instances there will be a reduction to
O&M associated with the investment, and O&M cost savings have
been identified. However, on a net basis, we will continue to
experience increased O&M costs to maintain a system that
continues to age. Our general practice is to attempt to replace
our aging equipment before it fails, because it is not only
less costly to replace this equipment on a systematic, planned
basis, but it also results in more reliable service to
customers, which is expected by all utility stakeholders. If
our practice were to avoid replacing utility equipment until it
failed, the reliability of our system would suffer.
Therefore, it is imperative that we continue every year to
reinvest and upgrade a portion of our utility system, in
addition to the investments needed to meet mandatory
reliability requirements. The reinvestment and upgrades
actually serve, to a large extent, to slow the growth of annual
O&M costs, but does not result in a year-over-year reduction to
overall O&M costs.
21
IV. CAPITAL ADDITIONS DETAIL 22
Q. Please provide a summary of the capital projects for 23
2016 and 2017. 24
Schuh, Di Page 14
Avista Corporation
A. Exhibit No. 10, Schedule 3 details the system-level
capital projects that were, or will be, transferred to plant
for 2016 and 2017. A listing and/or description of the capital
projects and their system costs is provided below:
Generation: 5
The electric generation projects that will transfer to plant-
in-service are described in detail in Mr. Kinney’s direct 7
testimony. A listing of these projects on a system basis is
included in Table No. 1 below.

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Business Case Name
2016
$ (000's)
2017
$ (000's)
Colstrip Thermal Capital $ 12,292 $ 12,432
Cabinet Gorge Unit 1 Refurbishment 14,702
Post Falls South Channel Replacement 15,648
Nine Mile Rehab 73,193 3,814
Little Falls Plant Upgrade 23,833 11,470
Spokane River License Implementation $ 1,007 $ 17,764
Kettle Falls Stator Rewind 7,930
Peaking Generation 500 500
Cabinet Gorge Automation Replacement 2,342
Cabinet Gorge HED - Gantry Crane Replacement 3,500
Kettle Falls CT Control Upgrade 667
Kettle Falls Reverse Osmosis System 4,750
Generation DC Supplied System Upgrade 700 1,033
Coyote Springs Long Term Service Agreement 1,980 1,980
Noxon Station Service 1,477 1,172
Base Load Hydro 1,149 1,149
Regulating Hydro 5,786 3,533
Base Load Thermal Plant 2,200 2,200
Clark Fork Settlement Agreement 6,093 4,226
Hydro Safety Minor Blanket 75 80
Total Planned Generation/Production Capital Projects $ 165,387 $ 75,791
TABLE NO. 1
Generation / Production Capital Projects (System)
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Avista Corporation
Electric Transmission: 1
The electric transmission projects that will transfer to plant-
in-service are described in detail in Mr. Cox’s direct 3
testimony. A listing of these projects and system costs is
included in Table No. 2 below.
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Business Case Name
2016
$ (000's)
2017
$ (000's)
Reliability Compliance Projects:
Transmission - NERC Low Priority Mitigation $ 1,675 $ 3,000
Transmission - NERC Medium Priority Mitigation 2,576 1,000
SCADA - System Operations and Backup Control Center 1,002 1,044
Environmental Compliance 50 50
Contractual Requirements:
Tribal Permits and Settlements 314 300
Colstrip Transmission 568 398
Reliability Improvements:
Noxon Switchyard Rebuild 11,500 6,700
Substation - Station Rebuilds 4,260 7,540
Westside Rebuild Phase One 2,525
South Region Voltage Control 5,000
SCADA Completion 1,000
Transmission - Reconductors and Rebuilds 17,559 20,830
Spokane Valley Transmission Reinforcement 1,340 7,200
Reliability Replacements:
Storms (Transmission)1,000 1,000
Substation - Capital Spares 5,200 4,565
Substation - Asset Mgmt. Capital Maintenance 4,100 4,100
Transmission - Asset Management 1,772 1,780
Total Planned Transmission Capital Projects $ 60,442 $ 60,507
TABLE NO. 2
Transmission Capital Projects (System)
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Avista Corporation
Electric Distribution: 1
2
The electric distribution projects that will transfer to plant-
in-service are described in detail in Ms. Rosentraters’s direct 4
testimony. A listing of these projects and system costs is
included in Table No. 3 below.

Business Case Name
2016
$ (000's)
2017
$ (000's)
Meter Minor Blanket $ 403 $ 403
Elec Replacement/Relocation 2,750 2,600
Distribution Minor Rebuild 8,609 8,867
Storms (Distribution)2,090 2,183
Primary URD Cable Replacement 200 500
Street Light Management 1,500 2,720
Substation - Asset Mgmt. Capital Maintenance 18 52
Worst Feeders 1,500 2,499
Distribution Transformer Change-Out Program 8,406 8,115
Distribution Wood Pole Management 7,840 12,000
Substation - New Distribution Stations 400 275
Distribution Grid Modernization 6,359 13,118
Segment Reconductor and FDR Tie Program 3,801 4,175
Distribution Line Protection 125 125
Environmental Compliance 350 350
$ 44,351 $ 57,982
TABLE NO. 3
Distribution Capital Projects (System)
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Avista Corporation
Enterprise Technology: 1
The enterprise technology projects that will transfer to plant-
in-service are described in detail in Mr. Kensok’s direct
testimony. A listing of these projects and system costs is
included in Table No. 4 below.

General Plant: 31
32
Q. Please discuss the drivers for the Company’s general 33
plant capital projects that will be completed in 2016 and 2017. 34
A. Avista’s Facilities Department is the driver for
most of the general plant capital additions in the upcoming
years. They have reviewed many of Avista’s physical facilities
(i.e., buildings, property, etc.) and determined that in
certain areas the following issues need to be addressed:
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. 4
Enterprise Technology Capital Projects (System)
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Avista Corporation
customer and employee parking, material storage, employee
office space, safety, the needs of the Company’s Fleet
Department, and reducing offsite leased office space. Further,
many of our service centers throughout our service territory
were built between 1950 and 1970 and are now requiring extensive
maintenance and capital investment as they are reaching the
end, or are already beyond their useful life. 7
Q. How does Avista’s Facilities Department prioritize 8
capital projects before they are submitted to the CPG? 9
A. The overall process to prioritize projects in the
Facilities Department is as follows: facilities managers and
project managers meet and identify issues, propose solutions,
and review the potential solutions for viability. Stakeholders
from other areas of the Company such as Environmental, Real
Estate, Operations, Supply Chain and other directly affected
groups are then brought in to discuss the project and potential
solutions. If these groups agree, then the project is presented
to Facilities Management for approval. If approved, a business
case is developed and presented to the CPG.
In addition, the Facilities Department has completed an
internal building survey of all of the service centers and rated
each one on its existing condition. Using this information
they then meet with stakeholders from Operations,
Environmental, Real Estate, and other directly related decision
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Avista Corporation
makers and discussed the business needs in each region, taking
into account current and future materials storage needs,
expansion possibilities, current offsite storage yards,
environmental issues, and other factors, to rate whether each
site warrants capital upgrades only, or possible sale and
replacement. Based on this discussion, sites were identified
for possible replacement or upgrade and a capital plan was
created. 8
Q. Please provide a brief description of the general 9
plant-related capital projects that are included in the 10
Company’s electric Pro Forma Adjustments for 2016 and 2017.
A. As shown in Table No. 5 below, general plant projects
for 2016 and 2017 total $18.6 million and $17.6 million
respectively, on a system basis. Details about these general
plant-related capital projects are discussed below. 15
16

Business Case Name
2016
$ (000's)
2017
$ (000's)
Central Office Facility Long Term Restructuring- Phase 1 $ 9,550
New Airport Hangar 1,500
Clark Fork Engineering Building 1,089
Apprentice Training 60 60
Structures and Improvements/Furniture 3,600 3,600
Capital Tools & Stores Equipment 2,400 2,400
Central Office Facility Long Term Restructuring- Phase 2 2,991 8,979
Total Planned General Plant Capital Projects $ 18,601 $ 17,628
TABLE NO. 5
General Plant Capital Projects (System)
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Avista Corporation
The following projects are included in the Company’s Pro Forma 1
Adjustments for the years 2016 and 2017. For the following 2
capital projects, see Exhibit 10, Schedule 4 for business cases 3
supporting these projects, as well as additional support for 4
certain projects, filed with the Company’s case: 5
6
Central Office Facility (“COF”) Long Term Campus 7
Restructuring Plan Phase 1 – 2016: $9,550,000 8
The COF campus restructuring plan, phase one, is a two-
year, multiple project plan to address material storage,
field recovery operations, and office space needs. Over
the past few years, our warehouse material inventory has
increased and presently the materials are scattered in
multiple locations in the COF, because they outgrew their
allocated space. The campus restructuring will increase
and consolidate their storage area, resulting in greater
efficiencies for the warehouse and field crews. In
addition, two new structures will be built to consolidate
transformer recovery, hazardous waste & material, and
investment recovery (recycling) operations. This will
improve the safety and efficiencies for collection of all
field recovery materials, as well as provide a one-stop
drop location for field crews (instead of the three
different locations). Avista is also remodeling two
existing areas in our service building that will provide
approximately 30 new cubicles, meeting rooms, and offices.
This will help accommodate our new growth and may allow
employees in leased office space to return to the COF.
29
New Airport Hanger – 2017: $1,500,000 30
In 2017 Avista will lose the lease on its existing airport
hangar. The owner is losing their lease and the hangar
will be demolished. Avista will have to lease a new space
or buy land and build a hangar. An additional option
includes leasing property and building a hangar on the
leased property in exchange for a 30 to 50 year lease.
37
Clark Fork Engineering Building – 2017: $1,089,000 38
This project is related to the construction of engineering
and operations office space at Cabinet Gorge Hydro
Electric Facility for use by plant engineers, the Plant
Manager, and visiting Staff. The existing building has
been converted from a former guest house, and is in poor
condition, inadequate for current needs. This building
serves as our headquarters in this area.

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Avista Corporation
Apprentice Training – 2016: $60,000; 2017: $60,000 1
This program is for on-going capital improvements to
support the training needed for journeyman workers,
apprentices and pre-apprentices. Capital expenditures
under this program include items such as: building new
facilities or expanding existing facilities, purchase of
training equipment, or build out of realistic utility
field infrastructure used to train employees.

Structures and Improvements/Furniture – 2016: $3,600,000; 10
2017: $3,600,000 11
This program is for the capital maintenance, improvements,
and furniture at 50 plus Avista offices and service centers
(over 700,000 square feet in total). Many of the included
service centers were built in the 1950's and 1960's and
are starting to show signs of severe aging. The program
includes capital projects in all construction disciplines
(roofing, asphalt, electrical, plumbing, HVAC, energy
efficiency projects etc.).

Capital Tools & Stores Equipment – 2016: $2,400,000; 2017: 21
$2,400,000 22
This category includes equipment utilized in warehouses
throughout the service territory, such as forklifts,
manlifts, shelving, cutting/binding machines, etc. 25
Expenditures in this category also include large tools and
instruments used throughout the Company for natural gas
and/or electric construction and maintenance work,
distribution, transmission, or generation operations,
telecommunications, and some fleet equipment not
permanently attached to the vehicle.

Central Office Facility (“COF”) Long-Term Restructure 33
Phase 2 - 2016: $2,991,000; 2017: $8,979,000 34
Avista’s COF Long Term Restructuring Plan, Phase 2 35
involves the construction of a new fleet vehicle garage
and four story parking structure. By the end of 2015,
facilities projects added approximately 183 new cubicles.
Our parking lots are beyond maximum capacity. The Company
currently leases space from Burlington Northern Railroad
for employee parking. This lease space could be at risk in
the future, if Burlington needs the space. The Fleet garage
is over 50 years old and is constrained. Once Fleet is
relocated, there will be a distinct separation between
operational/service vehicles and employee vehicles. This
separation will increase safety by eliminating
intermingling of pedestrians in work areas. The office
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Avista Corporation
building & parking garage is projected to allow the Call
Center and any leased facilities to come back to the COF.
The Ross Park conversion to office space will cover any
future employee expansion that will occur. Avista’s 4
current main office building and surrounding facilities
were originally constructed in 1958, and the facilities
have been adapted over time to accommodate the growth in
the need for office space, parking, materials storage,
fleet, etc. These Phase 2 improvements will enable Avista
to continue to use the existing main office facilities for
years to come.

Other Plant: 13
Q. Please discuss some of the drivers and prioritization 14
for the Company’s other plant projects that will be completed 15
from 2016 and 2017. 16
A. The fleet department uses a vehicle management
assessment tool to determine the life cycle for fleet assets.
The transportation project costs (system) that will transfer to
plant-in-service for 2016 and 2017 are included below: 20
Fleet Budget – 2016: $5,660,000; 2017: $7,700,000 21
Expenditures are for the scheduled replacement of trucks,
off-road construction equipment and trailers that meet the
Company's guidelines for replacement, including age,
mileage, hours of use and overall condition. This also
includes additions to the fleet for new positions or crews
working to support the maintenance and construction of our
electric and natural gas operations.

V. CAPITAL ADJUSTMENTS
Q. What is the net impact to electric rate base for the 32
twelve months ended December 31, 2015, in order to restate 33
capital from an AMA to an EOP basis? 34
Schuh, Di Page 23
Avista Corporation
A. Electric net rate base for capital investment as of
year-end December 31, 2015 increased $18,731,000 from
$664,266,000 on a 2015 AMA basis to $682,997,000 on an December
31, 2015 EOP basis as shown in Table No. 6 below.
Table No. 6 5
6
7
8
9
10
11
12
Q. What is the change to electric rate base from January 13
1, 2016 through 2017 on an AMA basis?
A. Electric rate base increases $46,999,000, from
$682,997,000 to $729,996,000, from 2015 EOP through 2017 on an
AMA basis, as shown in Table No. 7 below.
Table No. 7: 18

Plant Additions in 000's
Adjustment Number- Exhibit No_(EMA-4)1.03
Workpaper Reference - Exhibit No.__(EMA - 4)E- CAP15
AMA 12.31.15 EOP
2015 Adjustment 12.31.15
Total Plant Cost 1,296,352$ 39,427$ 1,335,779$
Total Accumulated Depreciation (466,396) (12,607) (479,003)
Total Accumulated DFIT (165,690) (8,089) (173,779)
Net Rate Base 664,266$ 18,731$ 682,997$
Plant Additions in 000's
Adjustment Number- Exhibit No_(EMA-4)3.06 3.07
Workpaper Reference - Exhibit No.__(EMA - 4)E-CAP16 E-CAP17
EOP 2016 EOP EOP 2017 AMA AMA BALANCE
12.31.15 Adjustment 12.31.16 Adjustment 2017
Total Plant Cost 1,335,779$ 94,350$ 1,430,130$ 24,001$ 1,454,131$
Total Accumulated Depreciation (479,003) (30,249) (509,252) (16,420) (525,672)
Total Accumulated DFIT (173,779) (17,758) (191,537) (6,926) (198,463)
Net Rate Base 682,997$ 46,343$ 729,340$ 656$ 729,996$
Schuh, Di Page 24
Avista Corporation
Q. Did you factor in retirements for the January 2016 1
through December 2017 Electric capital adjustments? 2
A. Yes. The Company used an estimate of retirements
based on planned transfers-to-plant and historical retirements,
and then allocated these by functional group to service and
jurisdiction. Further detail is provided in my workpapers.
Q. Were benefits from increased generation included in 7
this case? 8
A. Yes, the output from generation assets is included in
the AURORAXMP power cost model (sponsored by Company witness Mr.
Kalich). Therefore, to the extent that the additional
investments serve to either preserve or increase generation
from the generation projects, the benefits are already
reflected in the AURORAXMP model.
Q. Does this conclude your pre-filed direct testimony? 15
A. Yes, it does.