20170822Comments.pdf

BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-OO]4
(208) 334-03s7
IDAHO BAR NO. 7956
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702.5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
:l *i! II: I 5
IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION DBA AVISTA
UTILITIES FOR AN ORDER AUTHORIZING A
CHANGE IN ELECTRIC AND NATURAL GAS
DEPRECIATION RATES
CASE NO. AVU-E.17-03
AVU-G-17-02
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COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission comments as follows on Avista
Corporation dba Avista Utilities.
BACKGROUND
On June 19,2017, Avista Utilities filed an Application requesting that the Commission
approve changes to the Company's depreciation rates for electric and natural gas software
property. Avista serves customers in Washington, Idaho and a small portion of Oregon. The
Company requests that the Commission make a determination on the matter before the end of
August.
Avista implemented its current customer software information system in February 2015
for both electric and natural gas service. The system supports several functions including billing,
payment processing, collections, and customer service orders. The Company plans to implement
a Meter Data Management (MDM) system in the second half of 2017. The Company proposes
to depreciate the software investment associated with the MDM system over 12.5 years.
1STAFF COMMENTS AUGUST 22,2017
STAFF REVIEW AND ANALYSIS
The Meter Data Management system is a platform including both computer hardware and
software applications for data management and integration with business systems such as billing
and the Customer Service Information System (CIS). For the MDM implementation, current
estimates indicate that the Idaho share of the MDM system will cost approximately $1.5 million
for hardware and approximately $5.9 million for software. Prudence of the meter data
management system will be evaluated in the general rate case. These comments will focus solely
on the appropriate depreciation rates for the project.
The Company currently uses five-year group depreciation lives for both software and
hardware related to computer equipment. Staff evaluated the current life and the proposed lives
for both the hardware and software components. The MDM system is estimated to be completed
in the latter half of 2017 and will probably be replaced in February 2030 at the same time as the
CIS and billing systems are scheduled for replacement. Because the customer information
system and the MDM system are inter-related, it is reasonable to use the same remaining
12.S-year life or 8% depreciation ratel for software components.
Staff also evaluated the five-year life used for hardware components. Although the
Company and its depreciation consultant represent a five-year depreciation life for the hardware
is still reasonable, Staff is aware that many servers are lasting for a longer period of time. To
properly address the ongoing remaining life of various hardware components each hardware
account needs to be fully studied in the next Depreciation Study. Preliminary work on the next
Depreciation Study has begun with targeted completion in 2017. The full study data and results
should be presented in the next depreciation case.
STAFF RECOMMENDATIONS
Staff recommends the MDM software remaining depreciation life be initially set at 12.5
years with a corresponding depreciation rate of 8 percent.
Staff recommends the MDM hardware life currently remain at five years.
I 8% is the rate for a 12.5 year life.
STAFF COMMENTS AUGUST 22,20172
Staff recommends the Company be required to fully study all computer hardware and
software computer components in the current depreciation study and present the data in its next
depreciation case.
Respectfully submitted this
Technical Staff: Terri Carlock
Bentley Erdwurm
Molly Tripp
i : umisc/comments/avue I 7.3_avugl T.2bkbememt comments
fvn/day ofAugust2017
JSTAFF COMMENTS AUGUST 22,2017
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 22ND DAY OF AUGUST 2017,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NOS. AVU-E-17-03/AVU-G.17-02, BY E-MAILING AND MAILING A COPY
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
KELLY O NORWOOD
VP STATE & FED REG
AVISTA CORPORATION
PO BOX3727
SPOKANE W A 99220-3727
E-MAIL: [e-mail]
DAVID J MEYER
VP & CHIEF COLINSEL
AVISTA CORPORATION
PO BOX3721
SPOKANE W A 99220-3727
E-MAIL: [e-mail]
J,
SECRE
CERTIFICATE OF SERVICE