20170914final_order_no_33874.pdf

Office of the Secretary
Service Date
September 14,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION DBA AVISTA )CASE NOS.AVU-E-17-03
UTILITIES FOR AN ORDER )AVU-G-17-02
AUTHORIZING A CHANGE IN ELECTRIC )
ANI)NATURAL GAS DEPRECIATION )ORDER NO.33874
RATES )
On June 19,2017.Avista Corporation dba Avista Utilities filed an Application
requesting that the Commission approve changes to the Company’s depreciation rates for electric
and natural gas property (software),Avista serves customers in Washington,Idaho and a small
portion of Oregon.
On July 26,2017,the Commission issued a Notice of Application and established an
August 22,2017 deadline for all comments.Commission Staff filed the only comments in the
case supporting the Company’s requested changes to its depreciation rates.Based upon our
review of the Application and Staff comments,we approve the requested depreciation rate
treatment.
THE APPLICATION
In February 2015,Avista implemented Oracle CC&B,its current customer software.
Application at 2.The system supports several functions including billing,payment processing,
collections,and customer service orders.Id.at 2-3.The Company stated that in the second half
of 2017,it will implement a Meter Data Management (MDM).Id.at 3.
Here,the Company requested to depreciate the software investment associated with
the MDM system over 12.5 years,rather than the standard approved depreciable life of 5 years.
The Company requested a 12.5 year rate because it plans to replace Oracle CC&B in February
2030.Id.at 4.The 12.5 year rate would ensure that the system would be fully depreciated by
that time.The Company proposed continuing use of the five-year rate for MDM hardware.Id.
at 5.
STAFF COMMENTS
Staff reviewed the Company’s Application and found the Company’s request
reasonable and recommended approval.Staff noted that the MDM implementation in Idaho is
estimated to cost approximately $1.5 million for hardware and approximately $5.9 million for
ORDER NO.33874
software.Because the customer information system and the MDM system are inter-related,the
requested 12.5-year life is prudent.Staff also recommended that the MDM hardware life remain
at five years,and adjusted,if necessary,after the next depreciation study.
DISCUSSION AND FINDINGS
The Commission has jurisdiction over Avista,an electric and gas utility,and the
Application in this matter pursuant to Title 61,Idaho Code,and the Commission’s Rules of
Procedure,IDAPA 31.01.01.000,et seq.More specifically,we are empowered to ascertain and
determine the proper and adequate rates of depreciation under the provisions of Idaho Code §61-
525.Each utility under the Commission’s jurisdiction is required to conform its depreciation
accounts to the rates ascertained and determined by the Commission.The Commission may
make changes in such rates of depreciation from time-to-time as the Commission may find
necessary.
After reviewing the Application and the supportive comments of Staff,we find it is
reasonable to approve the request.Likewise,we find it appropriate to accept the depreciation
rates:a 12.5-year (or 8%)depreciation rate for the MDM software,and a 5-year (or 20%)
depreciation rate for the MDM hardware.Further,we direct the Company to fully study all
computer hardware and software computer components in the current depreciation study and
present the data in its next depreciation case.In conclusion,the Commission finds these
depreciation rates fair,just and reasonable,and in the public interest.
ORDER
IT IS HEREBY ORDERED that the Company’s Application for a change in its
electric and natural gas deprecation rates is approved.Avista’s depreciation rates for Idaho
electric and gas properties are approved for the Idaho jurisdiction as set forth above.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)or in interlocutory Orders previously issued in this Case Nos.AVU-E-17-
03 and AVU-G-17-02 may petition for reconsideration within twenty-one (21)days of the
service date of this Order with regard to any matter decided in this Order or in interlocutory
Orders previously issued in these cases.Within seven (7)days after any person has petitioned
for reconsideration,any other person may cross-petition for reconsideration.See Idaho Code §
6 1-626.
ORDER NO.33874 2
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2017.
ATTEST:
/
Diane M/Hanian
Commission Secretary
O:AVU-E-I 7-O3AVU-G-I 7-02bk2
PAUL PRESIDENT
ERIC ANDERSON,COMMISSIONER
ORDER NO.33874 3