20201208Reply Comments.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
December 8, 2020
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W Chinden Blvd. Building 8, Suite 201-A
Boise, ID 83714
RE: Avista Utilities Reply Comments to Staff Comments in Case AVU-E-20-09 and AVU-G-
20-06.
Dear Ms. Noriyuki:
Avista Corporation, doing business as Avista Utilities, submits these Reply Comments
regarding comments submitted by the Staff of the Idaho Public Utilities Commission regarding
Avista’s application for an accounting order for approval of depreciation and amortization rates
for investments in software.
Please direct questions on this matter to me at [phone].
Sincerely,
/s/Elizabeth Andrews
Senior Manager, Revenue Requirements
Regulatory Affairs
[e-mail]
RECEIVED
Tuesday, December 8, 2020 1:18:05 PM
IDAHO PUBLIC
UTILITIES COMMISSION

Reply Comments of Avista Corporation Page 1
Case No. AVU-E-20-09 and AVU-G-20-06
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY AND GOVERNMENTAL AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99220-3727
TELEPHONE: [phone]
[e-mail]

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
AVISTA CORPORATION, D/B/A AVISTA
UTILITIES, FOR AN ACCOUNTING ORDER
FOR APPROVAL OF DEPRECIATION AND
AMORTIZATION RATES FOR INVESTMENT
IN SOFTWARE
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CASE NO. AVU-E-20-09

CASE NO. AVU-G-20-06

REPLY COMMENTS OF
AVISTA CORPORATION

I. INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter “Avista” or
“Company”), submits these Reply Comments regarding comments submitted by the Staff of the Idaho
Public Utilities Commission (“Staff”) regarding the above referenced case.
II. BACKGROUND
On October 9, 2020, Avista applied for an order seeking Commission authorization to use
an amortization period for its capitalized software license costs and capitalized software
implementation costs that aligns with the life of the underlying contract for Information Technology
("IT") services. The purpose of depreciation and amortization expense is to provide for recovery of
the original cost of plant (less estimated net salvage) over the used and useful life of the property by
means of an equitable plan of charges to operating expense. Intangible assets, including software, are
amortized and tangible assets like plant, property, or equipment, are depreciated. Avista’s depreciation

Reply Comments of Avista Corporation Page 2
Case No. AVU-E-20-09 and AVU-G-20-06
rates were updated in 2019 (see Order No. 34276) but that case did not address the amortization period
for capitalized software costs.
If cloud computing arrangements include a license for internal-use software, then the
software license is capitalized over a five-year period under authorized accounting practices. Avista
requests approval to use an amortization period for the license of internal -use software and
implementation costs of cloud computing arrangements that reflect the actual useful life of the
software arrangement. The Company anticipates this would cause the lives of its various software and
other cloud computing arrangements and extensions to be amortized over periods from two to ten
years.
The Company is not requesting a change to customers' rates at this time and will only begin
to utilize the new amortization period for projects that become used and useful after obtaining
Commission approval in all its jurisdictions: Idaho, Oregon and Washington, as most of these assets
are common to all jurisdictions. The impact on amortization expense would be included in a future
general rate case.
III. AVISTA’S REPLY COMMENTS
Avista appreciates and thanks Staff for their filed comments and agrees with their position,
i.e., approve Avista’s application allowing the Company to use amortization periods for its software
licenses and its capitalized software integration costs that align with the length of the underlying
license or contract. Avista also supports the Commission Staff’s recommendation that if the contract
length is indeterminant, the amortization period should default to five years.
IV. CONCLUSION
Avista respectfully requests the Commission approve the Company's Application allowing the
Company to use amortization periods for its software licenses and its capitalized software integration

Reply Comments of Avista Corporation Page 3
Case No. AVU-E-20-09 and AVU-G-20-06
costs that align with the length of the underlying license or contract. If the contract length is
indeterminant, the amortization period should default to five-years.
DATED at Spokane, Washington, this 8th day of December 2020.
AVISTA CORPORATION
By
Patrick Ehrbar
Director of Regulatory Affairs - Avista