20210827Final_Order_No_35148.pdf

ORDER NO. 35148 1
Office of the Secretary
Service Date
August 27, 2021
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF AVISTA’S
APPLICATION FOR AN ACCOUNTING
ORDER AUTHORIZING ACCOUNTING
AND RATEMAKING TREATMENT OF
COSTS RELATED TO ALLOWANCE FOR
FUNDS USED DURING CONSTRUCTION
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CASE NO. AVU-E-21-06
AVU-G-21-05

ORDER NO. 35148

On July 6, 2021, Avista Corporation dba Avista Utilities (“Company”) applied to the
Commission for authorization of accounting and ratemaking treatment related to Allowance for
Funds Used During Construction (“AFUDC”). The Company requested its Application be
processed by modified procedure.
On July 22, 2021, the Commission issued a Notice of Application and established dates
for public comments and the Company’s reply. Staff filed comments. The Company filed
comments acknowledging and agreeing with Staff’s positions.
The Commission now issues this final Order approving the Company’s Application, as
described below.
THE APPLICATION
AFUDC represents the cost of the debt and the equity funds used to finance utility plant
additions during the construction period. AFUDC is capitalized during construction as part of the
cost of utility plant and the Company is authorized to recover the capitalized AFUDC through its
inclusion in rate base and the provision for depreciation after a related utility plant is placed in
service.
The Company seeks authority to amortize the regulatory asset1 using the approved
depreciation rate by plant Federal Energy Regulatory Commission (“FERC”) account that has been
approved by the Commission in the most recent depreciation study and to be able to update the
amortization rate with each depreciation study going forward.

1 The Company was authorized to defer the difference calculated between the state regulatory AFUDC rate and the
FERC AFUDC rate and amortize the balance over the composite remaining life of the plant-in-service. See Order No.
34326.
ORDER NO. 35148 2
The AFUDC capitalized to plant-in-service is depreciated at a rate determined by a
depreciation study at the individual plant account level that is performed periodically.2
The Company has received approval from the Washington Utilities and Transportation
Commission and will request approval from the Public Utility Commission of Oregon to use the
same method of amortization of the deferred AFUDC costs it seeks approval to use in Idaho.3
THE COMMENTS
Staff filed comments supporting the Company’s Application. Staff recommended the
Commission approve the Company’s Application. Staff also recommended the amortization rate be
updated periodically as the Company receives authorization of new depreciation rates.
Staff recalled that when the Company filed the original accounting application to defer
a portion of the AFUDC in Case Nos. AVU-E-19-02 and AVU-G-19-01, the Commission
approved the Company’s request to amortize the AFUDC regulatory asset using a composite rate
of depreciation expense for all plant-in-service. At that time, the Company did not know the
capabilities of the software it uses to track the deferred AFUDC costs. Staff noted the Company
is working with its software vendor to automate the deferral, tracking, and amortization of the
deferred AFUDC costs. The Company stated that the software has the capability to amortize the
regulatory asset in the same manner as the other AFUDC capitalized to plant-in-service.
Staff noted that by maintaining uniform utility accounts and AFUDC methods for
common plant consistent among the Company’s regulatory jurisdictions, the Company will not
need to keep multiple sets of depreciation accounts and records that would have to be adjusted
annually for changes in allocation factors—eliminating a costly administrative burden on the
Company and unnecessary expense for customers.
COMMISSION FINDINGS AND DECISION
The Commission has jurisdiction over this matter under Idaho Code §§ 61-502 and 61-
503. The Commission has the express statutory authority to investigate rates, charges, rules,
regulations, practices, and contracts of public utilities and to determine whether they are just,
reasonable, preferential, discriminatory, or in violation of any provision of law, and may fix the
same by order. Idaho Code §§ 61-502 and 61-503. We have reviewed the Application and the

2 The Company’s last depreciation study was approved March 19, 2019, in Case Nos. AVU-E-18-03 and AVU-G-18-
02. See Order No. 34276.
3 The Company states it is critical to maintain uniform utility accounts and AFUDC methods for common plant among
the Company’s regulatory jurisdictions.
ORDER NO. 35148 3
comments of Commission Staff. Based on our review, we authorize the Company to amortize the
regulatory asset over the same depreciable life for each plant FERC account. There will be no
impact on the Company’s overall rate base, and the move will align the Company’s practices with
FERC procedures. We direct the Company to update its amortization rate periodically as new
depreciation rates are approved.
O R D E R
IT IS HEREBY ORDERED that the Company’s proposed accounting treatment to
amortize the AFUDC regulatory asset over the depreciable life for each plant FERC account using
the Company’s current depreciation rates is approved. The Company should update the
amortization rate periodically with the approval of new depreciation rates.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order regarding any matter
decided in this Order. Within seven (7) days after any person has petitioned for reconsideration,
any other person may cross-petition for reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 27th
day of August 2021.

PAUL KJELLANDER, PRESIDENT

KRISTINE RAPER, COMMISSIONER

ERIC ANDERSON, COMMISSIONER

ATTEST:

Jan Noriyuki
Commission Secretary

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