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BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NA TU RAl GAS SERVICE TO ELECTRIC
AND NATURAL GAS CUSTOMERS IN
THE STATE OF IDAHO.
) CASE NO. AVU-O4-) AVU-O4-
DIRECT TESTIMONY OF PATRICIA HARMS
IDAHO PUBLIC UTiliTIES COMMISSION
JUNE 21 , 2004
Please state your name and address for the
record.
My name is Patricia Harms.My business address
is 472 West Washington Street Boise Idaho.
By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities
Commission (Commission) as an auditor.
Give a brief description of your educational
background and experience.
I graduated from Boise State Uni versi ty Boise
Idaho in 1981 with a B.A. degree in Business
Administrationl emphasis in Accounting.I am a Certified
Public Accountant licensed by the State of Idaho.Prior
to joining the Commission Staff in 2000 I was employed
by the State of Alaska as an In Charge Audi tor and
performed both financial and performance audits of
governmental agencies.I have attended many seminars and
classes involving auditing and accounting.While at the
Commission I have audited a number of utilities including
water electric and telephone util i ties and provided
comments and testimony in a number of cases that dealt
wi th general rates hook-up fees accounting issues and
other regulatory issues.I have also completed the
National Association of Regulatory Utility Commissioners
(NARUC) annual regulatory studies program at Michigan
CASE NOS. AVU-04-1/AVU-04-
6/21/04
(Di)HARMS
STAFF
State Uni versi ty.I also attend meetings of NARUC'
Staff Subcommittee on Accounting and Finance.I am a
member of the State/Federal Joint Oversight team for the
Qwest 272 Audit.
What is the purpose of your testimony?
I have prepared Staff's revenue requirement
exhibits for Case Nos. AVU-E- 04 -1 and AVU-G- 04 -
testimony summarizes the Staff adjustments rate basel
revenue requirement and revenue requirement increase
proposed in these cases.
Staff calculates an electric rate base of
$418 277 1 000 I an electric revenue requirement deficiency
of $23 078 1 000 and an overall revenue percentage increase
of 15.78%.Staff witness Hessing discusses Staff's total
revenue allocation to customer classes which includes
the Power Cost Adjustment and Demand Side Management
rider rate adjustments in addition to the general rate
adj ustment.
Staff calculates a natural gas rate base of
$58 867 1 000 I a natural gas revenue requirement deficiency
of $3 105/000 and an overall revenue percentage increase
of 5.98%.
ELECTRIC SECTION
What exhibits are you sponsorlng associated
with the electric utility operations?
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
I am sponsoring Staff Exhibit Nos. 101 and 102.
These exhibits outline Staff's proposed electric revenue
requirement and itemize the adjustments to Avista
Corporation (Avista; Company) proposed electric test
year numbers.I also prepared Staff Exhibit Nos. 103 and
104 related to specific Staff adjustments proposed in
this case on transmission and advertising.Finally I am
also sponsoring Staff Exhibit No. 105 which calculates a
deferral of return related to the Coyote Springs
proj ect
What is the purpose of Staff Exhibit No. 101?
This exhibit shows the overall electric net
operating income requirement revenue requirement
deficiency and percent increase for the Idaho
jurisdiction as calculated by Staff and for comparison
purposes as calculated by the Company.
What revenue requirement does Staff propose?
The total Idaho electric net operating income
requirement proposed by Staff is $38 691/000 as shown on
Exhibit No. 1011 line This resul ts in an overall
electric base rate increase of $23 078/000 (line 9) or
15.78% (line 11)The Company had calculated an overall
electric base rate increase of $35 222 1 000 or 24.08%.
How is this revenue requirement calculated?
Staff calculated the electric revenue
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
requirement uslng Avista s proposed 2002 proformed test
year, Staff's adjustments, and Staff's proposed rate of
return while deferring the return on the Coyote Springs
proj ect
What is the effect of deferring the return on
the Coyote Springs 2 proj ect?
This deferral using Staff's recommended return
reduces the Company s electric revenue requirement by
$487 000 (Staff Exhibit No. 101 line 8) or $13/045 per
$1 million in Coyote Springs 2 gross plant.Deferral of
the return on Coyote Springs 2 in this case would reduce
the revenue requirement but still provides the same net
present value over 10 years.The deferred balance
accrues a carrYlng charge at the return authorized in
this case to allow the Company the opportunity to earn
the same revenue it would have earned had the return not
been deferred.The intent of this deferral is to help
mitigate the large base rate increase in conjunction with
recovery of deferred power supply costs.A further
discussion of this deferred return and its calculation in
Exhibit No. 105 is contained at the end of my testimony
in this electric proceeding.
What is the purpose of Staff Exhibit No. 102?
This schedule shows the Company Electric Pro
Forma Totals (from Company Exhibit No. page 9 of 10
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
column aj) In the first column , Staff's proposed
adjustments in the succeeding columns, and Staff'
Electric Pro Forma Totals in the last column.For each
Staff adjustment on Staff Exhibit No. 102 the net
operating income is shown on line 27 total rate base on
line 39 and revenue requirement change on line 40.Net
operating income is comprised of operating income before
federal income taxes (line 24) less the sum of the
current accrual and deferred lncome taxes on ines 25 and
26 of Staff Exhibit No. 102.
AVISTA' S PRO FORMA TOTALS
How did Avista calculate its Pro Forma Totals
on Company wi tness Falkner s Exhibi t No. 14 , page 9 of
10 column aj?
The Company presented electric financial
results for the 2002 test year that were revised by
Standard Commission Basis Adjustments as well as
additional pro forma and normalizing adjustments.Staff
witness Stockton discusses the Company s Standard
Commission Basis Adjustments (Company Exhibit No.
pages 4 through columns c through x) and proposes the
Commission adopt them.
What does Staff recommend regarding each
electric adj ustment proposed by the Company in columns y
through ai on Company Exhibi t No. 14 pages 7 through
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
The Commission Staff places these known and
measurable adj ustments into two categories.First there
are two adj ustments Staff accepts as reasonable in the
amount proposed by the Company.Second the remaining
adjustments proposed by Avista have merit but for a
variety of reasons require a modification.I will
discuss each adjustment category and each adjustment
individually.
In addition to the Standard Commission Basis
Adj ustments which Avista pro forma adj ustments do Staff
recommend the Commission adopt?
Staff recommends the Commission adopt Avista
Electric Pro Forma Insurance adj ustment proposed
Company Exhibi t No. 14 page 8 of 101 column ad.This
adjustment increases operating expenses by $998/000.
Staff witness Stockton testifies about these costs in
greater detail.
Staff also recommends the Commission adopt
Avista s Pro Forma Power Supply adjustment proposed in
Company Exhibi t No. 14 page 8 of column ab.This
adjustment decreases net operating income by $7 832 1 000.
Staff witness Sterling discusses the Company s Pro Forma
Power Supply adjustment.
Which Avista adjustments have merit but should
be attributed a different dollar amount than that
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STAFF
proposed by the Company?
All of the electric adjustments proposed by the
Company in columns y through ai on Company Exhibi t No.
14 pages 7 through should be revised except for the
adj ustments relating to insurance and power supply.
many instances (Coyote Springs Cabinet Gorge
Vegetation Management and Labor) Staff recommends that
the Company s adj ustments be revised to reflect actual
costs instead of estimates.In other instances
(Transmission l Small Generationl Capital Costs Small
Generation Options and Pensions) Staff recommends
disallowing a portion of the costs proposed by the
Company as explained later in my testimony.Staff'
revisions to these adjustments are included on Staff
Exhibit No. 102.
Transmission
Please explain Staff's adj ustment El on Exhibit
No.1 02 page 1 of
The first adj ustment relates to three
transmission proj ects estimated for completion after the
Company s proposed 2002 test year.Two of these proj ects
were estimated for completion after the Company s rate
case filing.These proj ects are included in the
Company s filing (Company Exhibit No. 14, page 9 of 10,
column ah) as if they were in service the entire year and
CASE NOS. AVU-04-1/AVU-04-6/21/04 (Di)HARMS
STAFF
use engineering estimates as the cost basis of the
Company s adj ustment.The Company increased rate base by
$8 849 1 000 and decreased net operating income by $249 000
to reflect proj ect estimated costs depreciationl
property taxes and lncome taxes.
However one of the three proj ect s the Beacon
to Bell line, included within the Company s filing has
been suspended until 2005 and should therefore be
removed.AdditionallYI actual costs for the remaining
two proj ects Beacon to Rathdrum line and Pinecreek
Substation Rebuildl are less than those included in the
Company s filing; therefore the pro forma rate base and
operating resul ts should reflect these actual costs.
These two updates result in reduced rate base of $438/000
and $615,000.Finally, the Company s filing has not
reflected any reduced costs or increased revenues
associated wi th the proj ects to provide proper matching.
Therefore including the plant investment as if the plant
had been in operation the full year lS unreasonable.
The Commission in Order No.2 9505 dated May
251 2004 for Idaho Power Company clearly recognlzes that
transmission proj ects generate revenue or reduce
expenses.As noted on page 7
, "
the Commission expects
all utilities to attempt to identify expense saving and
revenue producing effects when proposing rate base
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
adj ustments for maj or plant additions. Avista
proposed plant adj ustment does not provide any increased
revenue or expense savings to match the proj ect costs it
proposes.Al though the Commission stated in Order No.
29505 that the proxy calculation should not be used as
precedent in other cases / it is unreasonable to expect
the Commission to allow full recovery of plant investment
as if the plant had been in operation the full year
wi thout a corresponding adj ustment to revenues and
expenses.To that end/ Staff has proposed adjustment E1.
Adj ustment E1 reduces rate base costs for these
transmission proj ects to reflect actual costs provided by
the Company during Staff's May 2004 on-site audit and
removes the annualization of rate base costs for these
proj ects.Plant annualization adjustments include new
plant investment in the calculation of rate base as if it
were in service the entire year when it was not.The
Company s annualization of these costs is replaced by
Staff's calculation of the projects ' actual costs as if
the proj ects were in rate base for one month (December
31/ 2002) of the test year. This adjustment lS necessary
because the Company did not provide expense saving and
revenue producing effects for this annualized rate base
adj ustment Staff's adj ustment reduces the Company-
proposed Idaho electric rate base by $8/518/000 and
CASE NOS. AVU-04-1/AVU-04-6/21/04
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STAFF
reduces the Company-proposed Idaho electric operating
expenses for associated depreciation l property and state
income taxes by $358 000.After federal income taxes
the effect of this adj ustment increases Idaho electric
net operating lncome by $230 000.The net effect of this
adj ustment decreases the Company s Idaho electric revenue
requirement by 592 1 000.
However if the Commission chooses to annualize
the proj ects ' costs rather than deny the adj ustment
outright until Avista s next rate case an adj ustment is
required to eliminate the potential mismatch between
revenues expenses and rate base.Using a ratio of
revenues to plant and maintenance expense to plant
proxy for imputed revenues and maintenance expense
reductions can be developed.These ratios applied to the
plant additions produces approximately $270 000 of Idaho
electric revenue to be imputed and $30 000 of reduced
Idaho electric maintenance expenses using a method
similar to that identified in Order No. 295051 Case No.
IPC-E- 03 -13 .Al though this methodology does not provide
precedential value it offers the Commission the option
to include new transmission investment in rate base while
protecting customers from inequities of a mismatch.
If these proj ects are included in this case
the corrected annualized costs result in a $7 801/000
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
rate base increase.As noted previously based upon the
most recent Commission Order discussing this issue
adjustment imputing revenue increases and expense
reductions is required before these proj ects can be
included in rate base without the inequities of a
mismatch.
The rate base amount of $7 801 000 reflects a
change in depreciation rates to incorporate the
Washington rates recommended by Staff witness English in
this al ternati ve rate base calculation.See Staff
Exhibit No. 103 for a table including these proposals.
Has the Company annualized other construction
proj ects completed in or after its proposed test year?
Yes.The Company has annual i zed the Coyote
Springs Small Generation and Cabinet Gorge proj ect
costs.
Has Staff accepted annualization of these
Company-proposed adj ustments?
Yes.The increased revenues or reduced
expenses associated with these proj ects are included in
the Company s power supply model and as a resul t
provide adequate matching of the revenue and expenses
these investments in plant.
Cabinet Gorge
Please explain why adj ustment E2 on Exhibi t No.
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
102 page 1 of 3 reduces rate base for Cabinet Gorge.
Adj ustment E2 relates to the Cabinet Gorge
construction proj ect completed after the Company
proposed 2002 test year.Based upon estimates of the
total plant cost, the Company s proposed adj ustment
(Company Exhibit No. page 9 of 10 column ai)
increased Idaho electric rate base by $2 232 000 and
reduced Idaho electric net operating income by $17/000.
Staff proposes reducing the costs in the Company s filing
associated with Cabinet Gorge to those actually incurred
as of April 2004 because the project was completed in
March 2004.Staff's adj ustment reduces the Company-
proposed Idaho electric rate base by $110 000 and reduces
the Company-proposed Idaho electric operating expenses
for associated property and state income taxes by $2 000.
After federal income taxes this adj ustment increases
Idaho electric net operating income by 000.The ne
effect of this adjustment is a $17 000 decrease in the
Company s Idaho electric revenue requirement.
Small Generation (Boulder Park and Kettle Falls)
Please explain why adj ustment E3 on Exhibi t No.
102 page 1 of 3 reduces depreciation for Boulder Park.
The Company s adj ustment to annualize the costs
of Boulder Park (Company Exhibi t No. 14 page 7 of 101
column z which annualized costs for both Boulder Park and
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
Kettle Falls) used 5% as the depreciation rate for
Account 344 (Generators) instead of 4.14% as approved by
the State of Washington.Staff witness English
recommends the Commission adopt the depreciation rates
approved by the State of Washington.As a resul t
Staff's proposed adj ustment reduces Idaho electric
depreciation expense by $88 000 and reduces Idaho
electric accumulated depreciation by $44 000.The after-
tax effect is an increase in Idaho electric net operating
income of $57 000 and an increase in Idaho electric rate
base of $13/000.The net effect of this adjustment lS an
$87 000 decrease in the Company s Idaho electric revenue
requirement.
Please explain why adj ustment E4 on Exhibi t No.
102 page 1 of 3 reduces Boulder Park costs by 10%.
Staff witness Sterling has reviewed the Boulder
Park cost overruns and recommends that 10% of the proj ect
costs be disallowed.Staff's proposed adj ustment reduces
Idaho electric rate base including changes in
accumulated depreciation and taxes) by $1/085 1 000.
Staff's proposed adj ustment also reduces Idaho electric
depreciation expense by $44 000.This adj ustment after
taxes increases Idaho electric net operating income by
$31 000.The net effect of this adj ustment on the
Company s Idaho electric revenue requirement is a
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
$205/000 decrease.
Did Commission Staff review the prudency of the
Kettle Falls proj ect costs?
Staff wi tness Sterling reviewed theYes.
proj ect costs and recommended allowance of all costs
included in the Company s Pro forma adjustment for Kettle
Falls.
Skookumchuck
Please explain why Staff proposes adjustment E5
on Exhibit No. 102/ page 1 of 3 related to Skookumchuck.
Avista has entered into a Purchase and Sale
Agreement to sell its interest in the Skookumchuck
hydroelectric plant (see Case No. AVU-04-On a
going- forward basis / this plant is not used and useful
because it will no longer be owned by the Company.
Staff's proposed adj ustment removes the financial effects
of this plant.Staff's adj ustment, after taxes / reduces
Idaho electric rate base by $104 000/ increases Idaho
electric net operating income by $8/000 and reduces the
Company s Idaho electric revenue requirement by $28,000.
Deferred Federal Income Tax
Please explain why Staff proposes adjustment E6
on Exhibit No. 102/ page 1 of 3 to reduce deferred taxes
in rate base.
Pursuant to Internal Revenue Service tax
CASE NOS. AVU-E- 04 -1/AVU-04-6/21/04
(Di)HARMS / P
STAFF
changes / Avista is now allowed to expense and deduct
certain plant and inventory in the current period that
were once required to be capi tal i zed.This tax benefit
resulted in a 2003 refund on taxes paid by the Company in
prlor years and is the basis of Staff's proposed
$9/966/000 reduction in Idaho electric rate base.Staff
witness English will provide additional details regarding
this adj ustment, which reduces the Company s Idaho
electric revenue requirement by 91/442/000.
Coyote Springs
Please explain why Staff proposes adjustment E7
on Exhibit No. 102/ page 1 of 3 that reduces the
Company s Coyote Springs 2 Pro Forma adj ustment.
The Company s filing (Company Exhibit No. 14,
page 7 of 10/ column y) included Coyote Springs 2 proj ect
costs that were a combination of actual and estimated
costs.The Company s pro forma adj ustment increased
Idaho electric rate base by $36/965/000 and decreased
Idaho electric net operating income by $1/896/000.The
adjustment proposed by Staff witness Stockton reduces the
Company-proposed Idaho electric rate base by $1/621 000
and increases the Company-proposed Idaho electric net
operating income by $172/000 to reflect actual costs as
of the end of April 2004.This adjustment incorporates
the latest insurance payment received by Avista for the
CASE NOS. AVU-E- 04 -l/AVU-G- 04-
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(Di)HARMS / P
STAFF
transformer and reduces the Company s Idaho electric
revenue requirement by $504 000.
Did Commission Staff review the prudency of the
project's costs?
Staff witness Sterling reviewed theYes.
Coyote Springs 2 proj ect costs and recommended allowance
of all incurred costs.
Small Generation Options
Please explain Staff's proposed adj ustment
on Exhibit No. 102 page 2 of 3 that reduces the
Company s Small Generation Options Pro Forma adj ustment.
The Company s filing included capi tal proj ect
costs associated wi th leased turbines that the Commission
in Order No. 29130 stated should be removed from the
Power Cost Adj ustment deferral accounts.These proj ects
(Kettle Falls Bi-Fuel, Devil's Gap, and Othello) are not
used and useful on a going- forward basis because the
proj ects were never completed or beneficial to the
customers.Staff's adj ustment as discussed in more
detail by Staff witness Stockton l removes the rate base
treatment of these proj ects.This adjustment reduces
Idaho electric rate base by $539/000 and has no impact on
Idaho electric net operating income.This adjustment
reduces the Company s Idaho electric revenue requirement
by $ 7 8 0 0 0 .
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
Labor (Executive and Non-Executive)
Please explain why Staff proposes the
adjustments to executive and non-executive labor expenses
(adj ustments E9 and E10 on page 2 of 3/ Exhibi t No. 102)
In its filing (Company Exhibit No. 14/ pages
and 9 of 10/ columns ae and af) the Company proposed
adjustments to these expense categories for expected
increases.As a resul t / the Company s pro forma
adjustment decreases Idaho electric net operating lncome
by $705/000 and $15/000 for non-executive and executive
labor / respectively.Staff wi tness Stockton discusses
these adj ustments in more detail and proposes Staff
adjustments E9 and E10 to reflect actual labor expenses
incurred during 2004.These adjustments proposed by
Staff increase Idaho electric net operating income by
$26/000 for non-executive labor and $9/000 for executive
labor.These adj ustments decrease the Company s Idaho
electric revenue requirement by $41/000 (non-executive
labor) and $14 000 (executive labor)
Vegeta tion Management
Please explain why Staff proposes adjustment
Ell on Exhibit No. 102/ page 2 of 3 to vegetation
management expenses.
In its filing (Company Exhibit No. 14/ page
of 10/ column ag) the Company proposed an adj ustment for
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS / P
STAFF
this expense category to reflect planned increases in
these vegetation management expenses as discussed in more
detail by Staff wi tness Stockton.The Company-proposed
adjustment reduces Idaho electric net operating income by
$785/000.
The adjustment proposed by Staff represents an
average of the actual amounts expended for vegetation
management during 1998 through 2003.Thi s average
reflects the variability in the amount expended from year
to year due to the cyclical nature of the vegetation
management program and recognizes that the amount
recorded in the test year is abnormally low in comparison
to other years.This adj ustment increases Idaho electric
net operating income by $288/000.This adj ustment
reduces the Company s Idaho electric revenue requirement
by $451/000.
Accounts Receivable Fees
Please explain why Staff proposes to remove
accounts receivable fees in adjustment E12 on Exhibit No.
102 on page 2 of
These fees are associated wi th the Accounts
Receivable Sale Program.Staff wi tness Stockton
discusses this adj ustment In more detail.Staff has
removed these fees from the filed expenses and increased
Idaho electric net operating income by $357/000 because
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS / P
STAFF
the Company states that this program is like a working
capital addition to rate base.Staff witness Stockton
has calculated a negative cash working capi tal for the
Company.As a resul t working capi tal should not be
included in the Company s filing.This adj ustment
reduces the Company s Idaho electric revenue requirement
by $ 5 5 8 0 0 0 .
Pensions
Please explain why Staff proposes adjustment
E13 on Exhibit No. 102 on page 2 of 3 to pensions.
Staff witness English addresses this adjustment
in his testimony.He disagrees with the Company
treatment of pension expense because the Company uses an
actuarial assumption of future rates of return that are
significantly different than those used for 2004.
Additionally he believes that recovery of pension
expense in this case should be based on the actual amount
of cash that a company is required to contribute to the
penslon plan to meet its minimum funding liability and
avoid interest and penal ties.Staff's proposed
adjustment increases Idaho electric net operating lncome
by $554,000.This adj ustment reduces the Company s Idaho
electric revenue requirement by $867 000.
CASE NOS. AVU-04-1/AVU-04-
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(Di)HARMS
STAFF
Depreciation Expense
Please explain why Staff proposes adjustment
E14 on Exhibit No. 102 on page 2 of 3 to depreciation
expense.
Staff recommends that the Company
depreciation rates authorized be the same as those in its
Washington jurisdiction because logic dictates that plant
in Idaho would not depreciate faster than the same plant
in Washington.Staff witness English discusses this
adj ustment in further detail and notes that the current
overall depreciation rates of Avista for its Idaho
jurisdiction are significantly higher than rates more
recently approved by this Commission.The adjustment
increases Idaho electric net operating income by $432 000
and reduces the Company s Idaho electric revenue
requirement by $676 000.
Corporate Fees
Please explain why Staff proposes adj ustment
E15 on Exhibit No. 102 on page 2 of 3 related to
Corporate Fees.
Staff proposes reducing these expenses to
reflect costs attributable to the Company s affiliates.
Staff witness Stockton discusses this adjustment in
greater detail.The adjustment increases Idaho electric
net operating income by $ 7 4 000 and reduces the Company
CASE NOS. AVU-E- 04 -l/AVU-G- 04-
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(Di)HARMS
STAFF
Idaho electric revenue requirement by $116/000.
Legal Expenses
Please describe Staff adjustment E16 on Exhibit
No. 102 (page 3 of 3) related to legal expenses.
This adjustment reduces expenses for legal
costs that should have been directly assigned to
unregulated affiliates or were for extraordinary events
that will not recur (such as the bankruptcy filing
Enron Corporation and the closed Federal Energy
Regulatory Commission investigation) Staff witness
English discusses this adjustment in greater detail.
This adjustment increases Idaho electric net operating
income by $366/000 and reduces the Company s Idaho
electric revenue requirement by $573/000.
Miscellaneous Expenses
Please describe Staff adj ustment E1 7 on Exhibi t
No. 102 (page 3 of 3) related to miscellaneous expenses.
Staff witness English proposes reducing
expenses by amounts pertaining to the promotion of
corporate image/ holiday lunches and charitable
organi za t ions.This adjustment increases Idaho electric
net operating income by $250/000 and reduces the
Company s Idaho electric revenue requirement by $391 000.
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS / P
STAFF
Western Electricity Coordinating Council (WEEC) Dues
Please explain why Staff proposes adj ustment
E18 on Exhibit No. 102 (page 3 of 3) related to WECC
dues.
The Company is no longer a member of WECC and
therefore is no longer incurring the expenses for WECC
administrative and security dues.Staff's adjustment
increases Idaho electric net operating income by $10 000
and reduces the Company s Idaho electric revenue
requirement by $16 000.
Avista is still incurring expenses associated
with the Pacific Northwest Security Coordinator (PNSC)
and as a result Staff has not adjusted the expenses
associated with the PNSC.
Advertising Expenses
Please explain why Staff proposes adjustment
E19 on Exhibit No. 102 (page 3 of 3) to advertising
expenses.
Staff has removed costs associated with
advertising expenses that include the naming rights
contract for Avista Stadium and rotunda signage at the
Spokane airport (see Staff Exhibit No. 104 for a further
description of these and other advertising costs) Due
to the nature of this advertising the Company did not
provide copies of them to Staf f Staf f has observed the
CASE NOS. AVU-04-1/AVU-04-
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HARMS
STAFF
(Di)
Avista slgn at the airport and photographs of the Avista
Stadium sign; neither provides educational messages
related to the Company s operations.Therefore, this
advertising is image related and should be recorded
below-the-line.
Staff's adj ustment also removes expenses
associated with the Company s sponsorship of Spokane
Hoopfest and the Spokane Interplayers Ensemble.
While Staff does not discourage Avista from
providing sponsorships and Company presence in its
communi ty these expenses should be recorded as below-
the-line expenses that are not paid by regulated
customers.This Commission has consistently disallowed
charitable contributions and image advertising for
ratemaking purposes.These costs should continue to be
disallowed for ratemaking purposes because they are not a
cost of providing electrical service to the Company
customers.
Finally Staff has removed the expenses
allocated to the utili ty ' s electrical operations for an
educational radio spot relating to the reduction in
natural gas expenses residential customers were to pay in
2002.These costs are not appropriate for the electrical
utility and should have been allocated only to the
Company s gas operations.
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
Staff's adj ustment for the preceding items
increases Idaho electric net operating income by $36 000
and reduces the Company s Idaho electric revenue
requirement by $56 000.
Avista Foundation
Please explain why Staff proposes adjustment
E20 on Exhibit No. 102 on page 3 of 3 related to Avista
Foundation.
The Avista Foundation (Foundation) is a
charitable organization that was created by Avista Corp.
While Staff does not discourage the charitable efforts of
the Company the costs (primarily consulting/legal fees)
associated with the creation of the Foundation are not
related to the provision of electrical service to
customers and should be removed from the Company
filing.The adjustment increases Idaho electric net
operating income by $5,000 and reduces the Company
Idaho electric revenue requirement by $8 000.
Restate Debt Interest
Please describe Staff adjustment E21 on Exhibit
No. 102 page 3 of 3 related to the restatement of debt
interest.
This adjustment restates debt interest uslng
the Staff -proposed embedded weighted average cost of debt
and applies this percentage (4.69%) to Staff's pro forma
CASE NOS. AVU-E- 04 -l/AVU-G- 04-
6/21/04
(Di)HARMS
STAFF
rate base.This restatement decreases the Idaho electric
current federal income tax accrual by $9/000 and reduces
the Company s Idaho electric revenue requirement by
$14 000.
Deferred Return on Coyote Springs 2 proj ect
Please describe Exhibit No. 105 that calculates
a deferred return on the Coyote Springs 2 proj ect.
Line 22 on this exhibit reflects the deferred
Idaho electric revenue requirement per million dollars of
Coyote Springs 2 gross plant.This $13/054 is the
difference between the present value of the revenue
requirement return of $119/155 In year one (line 19) and
the levelized return of $106/101 (line 21) .This
deferral changes from year to year because the revenue
requirement associated wi th the Coyote Springs 2 proj ect
decreases each year as a resul t of increasing accumulated
depreciation.
The deferral account activity (lines 26 through
30 on Exhibit No. 105) shows that the deferral of return
is reversed wi thin the ten-year period.This confirms
that the overall effect of this proposal is to defer the
return and not deny the return on the Coyote Springs
proj ect Full recovery of this return deferral
completed in year 10 as shown on line 30.
Because this deferral is reflected on Exhibit
CASE NOS. AVU-04-1/AVU-04-6/21/04
(Di)HARMS
STAFF
No. 1011 line 8 after the conversion factor has been
appliedl the Idaho electric deferral amount of $8 345
(line 28) must be grossed up for ratemaking purposes to
reflect the deferral on the same basis as the Idaho
electric revenue requirement deficiency on Exhibit No.
101 line This resul ts in an Idaho electric deferral
of $13 054 per million dollars of Coyote Springs 2 gross
plant or $486/797 as reflected on Exhibit No. 1011 line
and no t e ( 1)
Does this conclude your direct testimony in
this electric proceeding?
Yes, it does.
GAS SECTION
What exhibits are you sponsorlng associated
with the gas utility operations?
I am sponsoring Staff Exhibit Nos. 106 and 107.
These exhibi ts outline Staff's proposed Idaho gas revenue
requirement and itemize Staff's adjustments to Avista
proposed test year numbers for the gas operations.
also prepared Staff Exhibit No. 108 related to the
advertising adj ustment proposed by Staff in this gas
case.
What is the purpose of Staff Exhibit No. 106?
This exhibit shows the overall natural gas net
operating income requirement, revenue requirement
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
def iciency and percent increase for the Idaho
jurisdiction as calculated by Staff andl for comparison
purposes as calculated by the Company.
What revenue requirement does Staff propose?
The total Idaho gas net operating lncome
requirement proposed by Staff is $5 445 000 as shown on
Staff Exhibit No. 106 line This resul ts in an
overall Idaho gas base rate increase of $3 105 1 000 (line
7) or 5.98% (line 9) .The Company had calculated an
overall Idaho gas base rate increase of $4 754 1 000
16%.
How is this revenue requirement calculated?
Staff calculated the Idaho gas revenue
requirement using Avista s proposed 2002 proformed test
year , Staff's adj ustments, and Staff's proposed rate of
return.
What is the purpose of Staff Exhibit No. 107?
This schedule shows the Company Pro Forma Gas
Total (from Company Exhibit No. 151 page 7 of 81 last
column) in the first column, Staff's proposed adjustments
in the ~ucceeding columns, and Staff's Pro Forma Gas
Total in the last column.
AVISTA' S PRO FORMA TOTALS
How did Avista calculate its Pro Forma Totals
on Company wi tness Falkner s Exhibit No. 15, page 7 of
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
(last column)?
The Company presented Idaho gas financial
results for the 2002 test year that were revised by
Standard Commission Basis Adjustments as well as
additional pro forma and normalizing adjustments.Staff
wi tness Stockton discusses the Company s Standard
Commission Basis Adjustments (Company Exhibit No. 151
pages 4 through 6, columns c through 0) and proposes the
Commission adopt them except for the Company s gas
inventory adj ustment that increases Idaho gas rate base
by $1/572 1 000 (Company Exhibit No. 151 page 4 column e)
The Gas Inventory section of this testimony and Staff
witness Stockton s testimony discuss Staff's view of this
adj ustment in greater detail.
What does Staff recommend regarding each
adj ustment proposed by the Company in columns p through t
on Company Exhibit No. 151 pages 6 through
The Commission Staff places these known and
measurable adjustments into two categories.First there
lS one adjustment Staff accepts as reasonable in the
amount proposed by the Company.Second the remaining
adj ustments proposed by Avista have meri but require a
modification.I will discuss each adjustment category
and each adj ustment individually.
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
In addition to the Standard Commission Basis
Adjustments which Avista pro forma adjustment does Staff
recommend the Commission adopt?
Staff recommends the Commission adopt Avista
Pro Forma Insurance adj ustment proposed in Company
Exhibit No. 151 page 7 of 81 column r.This adjustment
increases Idaho gas operating expenses by $202,000.
Staff witness Stockton testifies to these costs in
greater detail.
Which Avista pro forma adjustments have merit
but should be attributed a different dollar amount than
that proposed by the Company?
The adjustments to labor costs (executive and
non-executive) proposed by the Company in columns s and t
on Company Exhibi t No. 15 page 7 of 8 should be revised
to represent actual costs as discussed in Staff wi tness
Stockton s testimony.
The Pro Forma Revenue Gas Supply adj ustment
proposed in Company Exhibit No. 15, page 6 of 8, column p
decreases Idaho gas net operating income by $112 000.
Staff witness Fuss discusses the Company s Gas Supply
adjustment and proposes a minor adjustment related to it.
The adj ustment to pension costs proposed by the
Company in column q on Company Exhibit No. 151 page 7 of
8 should be revised as discussed later in my testimony
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
and in Staff witness English's testimony.Staff'
revisions to these adjustments are included on Staff
Exhibit No. 107.
Gas Inventory
Please describe Staff's adjustment Gl on
Exhibit No. 107 page 1 of 2 that reduces Idaho gas rate
base for gas inventory.
The first adjustment eliminates gas inventory
from rate base as discussed in greater detail by Staff
wi tness Stockton.Inventory is a component of working
capi tal.Because the Company is not eligible to rate
base and earn a return on cash working capi tall it should
be removed from rate base.Staff witness Stockton
discusses this adj ustment in further detail.This
adjustment reduces Idaho gas rate base by $1/572 1 000 and
decreases the Company s Idaho gas revenue requirement by
$227/000.
Deferred Federal' Income Tax
Please explain why Staff proposes adj ustment
on Exhibit No. 107 page 1 of 2 to reduce deferred taxes
in rate base.
Pursuant to Internal Revenue Service tax
changes Avista is now allowed to expense and deduct
certain plant and inventory in the current period that
were once required to be capitalized.This tax benefit
CASE NOS. AVU-04-1/AVU-04-
6/21/04
(Di)HARMS
STAFF
resulted in a 2003 refund on taxes paid by the Company in
prlor years and is the basis of Staff's $2,639,000
reduction in Idaho gas rate base.This adjustment
reduces the Company s Idaho gas revenue requirement by
$382/000.Staff witness English will provide additional
details regarding this adjustment.
Labor (Executive and Non-Executive)
Please explain why Staff proposes adjustments
G3 and G4 on Exhibit No. 107 page 1 of 2 to executive
and non-executive labor.
In its filing (Company Exhibit No. 151 page
of 81 columns s and t) the Company proposed adjustments
to these labor expense categories for expected increases.
The Company-proposed adj ustments decreased Idaho gas net
operating income by $174 000 and $8/000 for non-executive
and executive labor respectively.Staff witness
Stockton discusses these adj ustments in more detail and
proposes adjustments to reflect actual labor expenses
incurred during 2004.The adjustments proposed by Staff
increase Idaho gas net operating income by $2 000 for
executive labor and $6/000 for non-executive labor.
These adj ustments reduce the Company s Idaho gas revenue
requirement by $3/000 (executive labor) and $9/000 (non-
executive labor)
CASE NOS. AVU-04-1/AVU-04-
6/21/04
(Di)HARMS
STAFF
Accounts Receivable Fees
Please explain why Staff proposes to remove
account receivable fees in adj ustment G5 on Exhibi t No.
107 page 1 0 f 2.
These fees are associated with the Accounts
Receivable Sale Program.Staff witness Stockton
discusses this adj ustment In more detail.Staff has
removed these fees from the filed expenses because the
Company states that this program is like a working
capi tal addi tion to rate base.Staff wi tness Stockton
has calculated a negative cash working capi tal for the
Company.As a resul t working capi tal should not be
included in the Company s filing.This adj ustment
increases Idaho gas net operating income by $56 000 and
reduces the Company s Idaho gas revenue requirement by
$88 000.
Pens ions
Please explain why Staff proposes adj ustment
on Exhibit 107 page 1 of 2 to pensions.
Staff witness English addresses this adjustment
in his testimony.He disagrees wi th the Company
treatment of pension expense because the Company uses an
actuarial assumption of future rates of return that are
significantly different than those used for 2004.
Additionally he believes that recovery of pension
CASE NOS. AVU-04-1/AVU-04-
6/21/04
(Di)HARMS
STAFF
expense in this case should be based on the actual amount
of cash that a company is required to contribute to the
pension plan to meet its minimum funding liability and
avoid interest and penalties.Staff's proposed
adjustment increases Idaho gas net operating income by
$137,000 and decreases the Company s Idaho gas revenue
requirement by $214 000 .
Depreciation Expense
Please explain why Staff proposes adj ustment
on Exhibit No. 107 page 1 of 2 to depreciation expense.
Staff recommends that the Company
depreciation rates authorized be the same as those in its
Washington jurisdiction because logic dictates that plant
in Idaho would not depreciate faster than the same plant
in Washington.Staff witness English discusses this
adjustment in further detail and notes that the current
overall depreciation rates of Avista for its Idaho
jurisdiction are significantly higher than rates more
recently approved by this Commission.The adj ustment
increases Idaho gas net operating income by $28 000 and
reduces the Company s Idaho gas revenue requirement by
$44/000.
Legal Expenses
Please describe Staff adjustment G8 on Exhibit
No. 107 page 2 of 2 related to legal expenses.
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
This adjustment reduces expenses for legal
costs that should have been directly assigned to
affiliates or were for extraordinary events that will not
recur (such as the bankruptcy filing of Enron
Corporation) as discussed in greater detail by Staff
witness English.This adjustment increases Idaho gas net
operating lncome by $13,000 and reduces the Company
Idaho gas revenue requirement by $20 000 .
Miscellaneous Expenses
Please describe Staff adjustment G9 on Exhibit
No. 107 page 2 of 2 related to miscellaneous expenses.
Staff witness English proposes reducing
expenses by amounts pertaining to the promotion of
corporate image holiday lunches and charitable
organi za t ions.This adj ustment increases Idaho gas net
operating income by $ 71,000 and reduces the Company
Idaho gas revenue requirement by $111 000.
Corpora te Fees
Please explain why Staff proposes adjustment
G10 on Exhibit No. 107 page 2 of 2 related to Corporate
Fees.
Staff proposes reducing these expenses to
reflect costs attributable to the Company s affiliates.
The adjustment increases Idaho gas net operating income
by $17 , 000 and reduces the Company s Idaho gas revenue
CASE NOS. AVU-E- 04 -l/AVU-G- 04-6/21/04
(Di)HARMS
STAFF
requirement by $271 000 .Staff witness Stockton discusses
this adjustment in greater detail.
Advertising Expenses
Please explain why Staff proposes adj ustment
G11 on Exhibit No. 107 , page 2 of 2 to advertising
expenses.
Staff has removed costs associated with
advertising expenses that include the naming rights
contract for Avista Stadium and rotunda signage at the
Spokane airport (see Staff Exhibit No. 108 for a further
description of these and other advertising costs) Due
to the nature of this advertising the Company did not
provide copies of them to Staf f .Staff has observed the
Avista sign at the airport and photographs of the Avista
Stadium sign; neither provides educational messages
related to the Company s operations.Therefore, this
advertising is lmage related and should be recorded
below-the-line.
Staff's adj ustment also removes expenses
associated with the Company s sponsorship of Spokane
Hoopfest and the Spokane Interplayers Ensemble (see Staff
Exh i bit No.1 0 8)
While Staff does not discourage the Company
from providing sponsorships and Company presence in its
communi ty these expenses should be recorded as below-
CASE NOS. AVU-04-1/AVU-04-
6/21/04
HARMS
STAFF
(Di)
the-line expenses that are not paid by regulated
customers.This Commission has consistently disallowed
charitable contributions and image advertising for
ratemaking purposes.These costs should continue to be
disallowed for ratemaking purposes because they are not a
cost of providing gas service to the Company s customers.
Finally Staff has added expenses originally
allocated to the utili ty' s electrical operations for an
educational radio spot relating to the reduction in
natural gas expenses residential customers were to pay In
2002 .These costs are more appropriately wholly
allocated to the Company s gas operations.
Staff's net adj ustment for the preceding items
lncreases Idaho gas net operating income by $6/000 and
decreases the Company s Idaho gas revenue requirement by
$9/000.
Avista Foundation
Please explain why Staff proposes adjustment
G12 on Exhibit No. 107 , page 2 of 2 related to Avista
Foundation.
The Avista Foundation (Foundation) lS a
charitable organization that was created by Avista Corp.
While Staff does not discourage the charitable efforts
the Company the costs (primarily consultant/legal fees)
associated with the creation of the Foundation are not
CASE NOS. AVU-E- 04 -l/AVU-G- 04-
6/21/04
(Di)HARMS
STAFF
related to the provision of gas servlce to customers and
should be removed from the Company s filing.The
adj ustment lncreases Idaho gas net operating income by
000 and decreases the Company s Idaho gas revenue
requirement by $2 000 .
Actual Therm Usage
Please describe Staff adjustment G13 on Exhibit
No. 107, page 2 of 2 related to the Company s Cost of
Service Study.
Staff witness Fuss identified this adjustment
during his review of the Company s Cost of Service Study
and provides further detail about it in his testimony.
The Company understated revenue when calculating its Pro
Forma Gas Supply adj ustment The actual therm usage
adj ustment reduces the Company s Idaho gas revenue
requirement by $231 000 .
Schedule M Allocator
Please describe Staff adj ustment G14 on Exhibit
No. 107 , page 2 of 2 related to the Company
Jurisdictional Separation Study.
Staff witness Fuss identified this adjustment
during his review of the Company s Jurisdictional
Separation Study and describes the reason for it in his
testimony.He recommends and the Company agrees that
the appropriate allocator be used to distribute certain
CASE NOS. AVU-E- 04 -l/AVU-G- 04-
6/21/04
(Di)HARMS
STAFF
gas costs.This adj ustment reduces Idaho s share of
taxes.The Company Idaho
reduced by $ 0 0 0 .
Restate Debt Interest
gas revenue requirement is
Please describe Staff adjustment G15 on Exhibit
No. 107 , page 2 of 2 related to the restatement of debt
interest.
This adjustment restates debt interest uslng
the Staff -proposed embedded weighted average cost of debt
and applies this percentage (4.69%) to Staff's pro forma
rate base.This restatement increases the current Idaho
gas federal lncome tax accrual by $491 000 and increases
the Staff -proposed Idaho gas revenue requirement by
$77 000.
Does this conclude your direct testimony in
thi s gas proceeding?
Yes l it does.
CASE NOS. AVU-04-1/AVU-04-
6/21/04
(Di)HARMS
STAFF
AVISTA UTILITIES
STAFF'S CALCULATION OF GENERAL REVENUE REQUIREMENT
IDAHO ELECTRIC SYSTEM
TEST YEAR 2002
(ODD'S OF DOLLARS)
Line STAFF COMPANY
No.Descri tion IDAHO IDAHO
Pro Forma Rate Base $418 277 $440 207
Proposed Rate of Return 250%820%
Net Operating Income Requirement $38 691 $43 228
Pro Forma Net Operating Income $23 627 $20 712
Net Operating Income Deficiency $15 064 $22 516
Conversion Factor 63926135 63926135
Revenue Requirement Deficiency $23 565 $35 222
Levelized Deferred (1) Return on Coyote Springs 2 (487)
$35 222Revised Revenue RequIrement Deficiency $23 078
Total General Business Revenues $146 248 $146 248
Percentage Revenue Increase 15.78%24.08%
Revenue Increase without Levelization 16.11%
(1) This reflects the deferral of the Company s return on the Coyote Springs 2 plant for the
first 10 years of its life. The deferral is calculated on Staff Exhibit No. 105.
The effect of this deferral is $13 054 per $1 million in Coyote Springs 2 gross plant.
Total gross plant as proposed by Staff witness Stockton equals 37 291 000
multiplied by 054
486 797
487
per million
at OOOs level.
Exhibit No. 101
Case No. A VU-04-
A VU -04-
P. Harms, Staff
6/21/04
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Vendor Description
Adventures in Advertising
Brett Sports & Entertainment
Brett Sports & Entertainment
Community Colleges of Spokane
Eastern Washington University
Gonzaga University:
Hanna & Associates:
Hospital Activity Book
Interspace Services Inc.
Leadership Spokane
Playstream LLC
AVISTA UTILITIES
ELECTRIC ADVERTISING EXPENSES ADJUSTMENT
(EXHIBIT NO.1 02, PAGE 3 OF 3, E19)
Purpose
Western Energy Institute annual meeting.
Avista Stadium naming rights contract. Agreement
includes stadium naming rights, signage, television
radio, website and print ads, product promotion
and marketing opportunities, substantial media
exposure, customer messaging opportunities
(safety, service, customer assistance) and
other marketing and promotional opportunities.
Agreement covers activities at Joe Albi Stadium
and various team sporting clubs. Agreement
includes signage, radio, print and website
advertising, the Avista Hero school program, the
Avista Community MVP and other promotional
considerations.
Annual sponsorship and advertising agreement.
Avista receives scoreboard signage for all athletic
events, program advertising, product and service
marketing opportunities, promotional opportunities
public address recognition at all events and other
considerations.
Agreement includes signage, print and radio
advertising, in-game promotions, program
advertising and other promotional considerations.
Agreement includes signage, in-game promotions,
print and radio advertising and other promotional
considerations.
Labor, prep. work and radio promotional spots for
gas decreases during 2002. Promotional ads
also included description of how to save money
on fuel bills by conserving energy.
Community-oriented advertisement in the Hospital
Activity Book for Children.
Advertising/signage agreement with Interspace
Airport Advertising. Contract includes rotunda
signage on the main concourse at the Spokane
International Airport.
Sponsorship of community education project.
Audio production costs related to an interview
with Gary Ely for posting on the Avista Corp. website.
Exhibit No. 104
Case No. A VU-04-
A VU -04-
P. Hanns, Staff
6/21/04 Page 1 of
Electric
162.
258.
565.47
632.
742.
126.45
397.
243.42
390.46
1,439.
231.
945.
991.
137.
569.
106.
604.
604.
604.
590.46
316.
28.45
AVISTA UTILITIES
ELECTRIC ADVERTISING EXPENSES ADJUSTMENT
(EXHIBIT NO.1 02, PAGE 3 OF 3, E19)
Spokane Hoopfest Association
Purpose
Avista receives signage at the Arena as well as
other promotional considerations as agreed upon
by the City and Avista.
Annual marketing and advertising sponsorship
for Hoopfest of Spokane. Avista is the "master
scoreboard" sponsor for this event and is listed as
an official sponsor in all marketing, advertising,
promotional and collateral material for this event.
Electric
587.
Vendor Description
Spokane Arena
793.
Spokane Youth Sports Association
University of Idaho
Annual sponsorship of the Spokane Interplayers
Ensemble. Agreement includes program/playbill
advertising and other promotional opportunities.
One-time sponsorship of fundraising event.
163.Spokane Interplayers
Washington State University
Agreement includes radio and print advertising,
signage, message center recognition, public
address recognition , marketing opportunities and
other promotional considerations.
One time contribution to the Dept. of Marketing
and the College of Business and Economics related
to position on the school's marketing advisory
committee.
442.
322.
264.
Total Advertising Adjustment to Allocate to Idaho Electric System
Allocation Percentage
Allocation to Idaho based upon number of customers
$165 262.
557%
57.
This schedule is based on the Company s response to IPUC Audit Data Request No. 65
Exhibit No. 104
Case No. A VU-04-
A VU -04-
P. Harms, Staff
6/21/04 Page 2 of
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26
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30
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6
AVISTA UTILITIES
STAFF'S CALCULATION OF GENERAL REVENUE REQUIREMENT
IDAHO GAS
TEST YEAR 2002
(OOO'S OF DOLLARS)
STAFF COMPANY
Descri tion IDAHO IDAHONo.
Pro Forma Rate Base $58 867 $63 078
Proposed Rate of Return 250%820%
Net Operating Income Requirement 445 194
Pro Forma Net Operating Income 460 155
Net Operating Income Deficiency 985 039
Conversion Factor 63926135 63926135
754Revenue Requirement Deficiency 105
Total General Business Revenues $51 919 $51 896
Percentage Revenue Increase 98%16%
Exhibit No. 106
Case No. A VU-04-
A VU -04-
P. Harms, Staff
6/21/04
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Vendor Description
Adventures in Advertising
Brett Sports & Entertainment
Brett Sports & Entertainment
Community Colleges of Spokane
Eastern Washington University
Gonzaga University:
Hospital Activity Book
Interspace Services Inc.
Leadership Spokane
Playstream LLC
Spokane Arena
Spokane Hoopfest Association
AVISTA UTILITIES
GAS ADVERTISING EXPENSES ADJUSTMENT
(EXHIBIT NO.1 08 , PAGE 2 OF 2, G11)
Purpose
Western Energy Institute annual meeting.
Avista Stadium naming rights contract. Agreement
includes stadium naming rights, signage, tv
radio, website and print ads, product promotion
and marketing opportunities, substantial media
exposure, customer messaging opportunities
(safety, service, customer assistance) and
other marketing and promotional opportunities.
Gas
94.
741.
Agreement covers activities at Joe Albi Stadium
and various team sporting clubs. Agreement
includes signage, radio, print and website
advertising, the Avista Hero school program, the
Avista Community MVP and other promotional
considerations.
634.
Annual sponsorship and advertising agreement.
Avista receives scoreboard signage for all athletic
events, program advertising, product and service
marketing opportunities, promotional opportunities
public address recognition at all events and other
considerations.
367.
Agreement includes signage, print and radio
advertising, in-game promotions, program
advertising and other promotional considerations.
Agreement includes signage, in-game promotions
print and radio advertising and other promotional
considerations.
757.
73.
302.44
Community-oriented advertisement in the Hospital
Activity Book for Children.
Advertising/signage agreement with Interspace
Airport Advertising. Contract includes rotunda
signage on the main concourse at the Spokane
International Airport.
62.
Sponsorship of community education project.
Audio production costs related to an interview
with Gary Ely for posting on the Avista Corp. website.
096.45
096.45
096.45
230.
183.
16.
Avista receives signage at the Arena as well as
other promotional considerations as agreed upon
by the City and Avista.
Annual marketing and advertising sponsorship
for Hoopfest of Spokane. Avista is the "master
scoreboard" sponsor for this event and is listed as
an official sponsor in all marketing, advertising,
promotional and collateral material for this event.
4,412.
206.
Exhibit No.1 08
Case No. A VU-04-
A VU -04-
P. Harms, Staff
6/21/04 Page 1 of 2
AVISTA UTILITIES
GAS ADVERTISING EXPENSES ADJUSTMENT
(EXHIBIT NO. 108 , PAGE 2 OF 2 , G11)
Spokane Youth Sports Association
University of Idaho
Purpose
Annual sponsorship of the Spokane Interplayers
Ensemble. Agreement includes program/playbill
advertising and other promotional opportunities.
One-time sponsorship of fundraising event.
Gas
676.
Vendor Description
Spokane Interplayers
Washington State University
Agreement includes radio and print advertising,
signage, message center recognition, public
address recognition, marketing opportunities and
other promotional considerations agreed upon.
One time contribution to the Dept. of Marketing
and the College of Business and Economics related
to position on the school's marketing advisory
committee.
257.41
677.
735.46
Subtotal of Image Advertising and Charitable Contributions to remove from Company Filing $71 720.
Reduce Staffs Proposed Adjustment by the Gas Radio Spot Expenses Originally Allocated to
Electrical System that should have been recorded to gas operations only:
(243.42)
390.46)
(1,439.68)
231.35)
945.31 )
991.65)
137.24)
(28 569.11 )
$29 771.
31.703%
Total Advertising Adjustment to Allocate to Idaho Gas
Allocation Percentage
Allocation to Idaho based upon number of customers
This schedule is based on the Company s response to IPUC Audit Data Request No. 65
Exhibit No. 108
Case No. A VU-04-
A VU -04-
P. Harms, Staff
6/21/04 Page 2 of 2
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 21ST DAY OF JUNE 2004
SERVED THE FOREGOING DIRECT TESTIMONY OF PATRICIA HARMS, IN
CASE NO. AVU-04-l/AVU-04-, BY MAILING A COpy THEREOF POSTAGE
PREPAID, TO THE FOLLOWING:
DA VID 1. MEYER
SR VP AND GENERAL COUNSEL
VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220-3727
KELLY NORWOOD
VICE PRESIDENT STATE & FED. REG.
VISTA UTILITIES
PO BOX 3727
SPOKANE WA 99220-3727
CONLEY E WARD
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701-2720
DENNIS E PESEAU, PH. D.
UTILITY RESOURCES INC
1500 LIBERTY ST SE, SUITE 250
SALEM OR 97302
CHARLES L A COX
EV ANS KEANE
III MAIN STREET
PO BOX 659
KELLOGG ID 83837
BRAD M PURDY
ATTORNEY AT LAW
2019 N 17TH ST
BOISE ID 83702
SECRET ARY
CERTIFICATE OF SERVICE