20071101Application.pdf

Avista Corp.
1411 East Mission P,O, Box 3727
Spokane, Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
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li')P\I"iO PUBLIC
UTILJtlES COf.'iMISSIO:
October 31 , 2007
Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ill 83702-5983
Re:Case Nos. A VU-07-1l & A VU-07-
Application of A vista Corporation for an Order Authorizing Change in Depreciation Rates
Dear Ms. Jewell:
Enclosed is A vista s Application for an Order Authorizing Change in Depreciation Rates. The filing
consists of an original and seven copies of Avista s Application and nine copies of pre-filed
testimony and exhibits. Also enclosed are three copies of supporting work papers.
Please direct any questions regarding this filing to Liz Andrews at [phone].
Sincerely,
Kelly Norwood
Vice President, State and Federal Regulation
Enclosure
See attached service list
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation s Application for an Order
Authorizing a Change in Depreciation Rates by mailing a copy thereof, postage prepaid
to the following:
Ms. Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington
Boise, ID 83720-5983
Scott Woodbury
Deputy Attorney
Idaho Public Utilities Commission
472 W. Washington
Boise , ID 83702-0074
Pamela Mull
Vice President & General Counsel
Potlatch Corporation
601 Riverside Ave., Suite 1100
Spokane , W A 99201
Dated at Spokane, Washington this 31st day of October 2007.
Rates Coordinator
David J. Meyer
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION, dba A VISTA
UTILITIES, FOR AN ORDER
AUTHORIZING A CHANGE IN
DEPRECIATION RATES
CASE NO. A VU-07- (t
CASE NO. AVU-07-
APPLICATION OF
A VISTA CORPORATION
I. INTRODUCTION
Avista Corporation, doing business as Avista Utilities (hereinafter Avista or
Company), at 1411 East Mission Avenue, Spokane, Washington, pursuant to Section 61-525
Idaho Code and Rule 52 of the Idaho Public Utilities Commission ("Commission Rules of
Procedure ) hereby applies to the Commission for approval of proposed changes to
depreciation rates applicable to the Company s depreciable property. The Company requests
the Commission issue an order approving the proposed changes to depreciation rates to
coincide with the effective date of the depreciation rate changes in Washington, currently
expected on January 1 , 2008. Pursuant to Commission Rule of Procedure 201 , the Company
requests that this filing be processed under the Commission s modified procedure rules.
Avista is a utility that provides service to approximately 346 000 electric customers
and 211 000 natural gas customers in a 26 000-square-mile area in eastern Washington and
northern Idaho. Avista Utilities also serves 94 000 natural gas customers in Oregon. The
APPLICATION OF AVISTA CORP.Page 1 of 6
largest community served in the area is Spokane, Washington, which is the location of the
corporate headquarters.
Communications in reference to this Application should be addressed to:
Kelly O. Norwood
Vice President
State and Federal Regulation
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: kellv.norwoodCC4avistacorp.com
David J. Meyer, Esq.
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
A vista Corporation
1411 E. Mission Avenue
Spokane, Washington 99220
Phone: [phone]
Fax: [phone]
E-mail: david.meverCC4avistacorp.com
II. BACKGROUND
The Commission is empowered to ascertain and determine the proper and adequate
rates of depreciation of the Company s property used in the rendering of retail electric and
natural gas service under the provisions of Section 61-525 Idaho Code, Each utility under the
Commission s jurisdiction is required to conform its depreciation accounts to the rates so
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.
The Company last changed its depreciation rates in Idaho effective September 9 2004
in accordance with Order No. 29602, issued in Case Nos. A VU-04-1 and A VU-04-1. In
those cases, the Company agreed on rebuttal to adopt Staff's proposal to synchronize
depreciation rates between states, so that Idaho rates would be changed to agree with rates
approved by the Washington Utilities and Transportation Commission in Docket No. DE-
991606. Those depreciation rates were based on a depreciation study from 1997.
A vista hired Gannett Fleming, Inc. to undertake a Depreciation Study (the Study)
its depreciable electric, gas and common plant in service as of December 31 , 2004. The
APPLICATION OF A VISTA CORP.Page 2 of6
obj ecti ve of this assignment was to recommend depreciation rates to be utilized by A vista for
accounting and ratemaking purposes. Workpapers, including the detailed Study prepared by
Gannett Fleming, Inc., are included with this filing.
On April 26, 2007, Avista filed with the Washington Utilities and Transportation
Commission (WUTC) a request for electric and natural gas rate increases in Docket Nos.
UE-070804 and UG-070805.The proposed depreciation rates from the Study were
incorporated into those filings.Partial Settlement Stipulation between A vista
Commission Staff, and the other intervenors (the Parties) was filed on October 15 2007, in
which the parties agreed to accept the depreciation rates proposed in the Study, including a
WUTC Staff proposed reduction in the negative net salvage values the Company used in
determining new depreciation rates on four electric accounts, which results in lower
depreciation accrual rates on those accounts than were proposed in the Study. These
accounts include Account 311 - Structures & Improvements, Account 312 - Boiler Plant
Equipment, Account 356 - Overhead Conductor & Devices, and Account 369 - Services.
This filing incorporates those changes.On October 29 , 2007, the Parties reached a
settlement on all remaining issues in the case, including an agreement for the effective date
of January 1 2008. Neither the Partial Settlement Stipulation nor the Settlement Agreement
in Washington has yet been approved by the WUTC.
In order for the Company to maintain uniform utility accounts, the depreciation rates
for system-allocated plant (i.e. production, transmission, and certain general plant) must be
uniform and consistent among the Company s Idaho and Washington regulatory
jurisdictions. In the event different depreciation rates were ordered in these two states, it
would result in multiple sets of depreciation accounts and records that would need to be
APPLICATION OF AVISTA CORP.Page 3 of 6
adjusted annually for changes in allocation factors, which would impose a costly
administrative burden on the Company and unnecessary expense for the Company
ratepayers.
The Company s fixed assets books and records are maintained in an electronic system
that is integrated with its financial books and records. The system requires that the approved
depreciation rates be entered into the system prior to processing the current month'
depreciation expense. The system does not allow for updating previous month's depreciation
expense. The Company is proposing an effective date that would allow the change in Idaho
depreciation rates to coincide with the effective date of rates approved by the WUTC in the
Company s pending Washington general rate cases, currently expected on January 1 2008.
A vista has made a similar filing to update its depreciation rates in the Oregon jurisdiction
however, the timing of the change in depreciation rates does not need to be synchronized
with Idaho and Washington s change since the impact to Oregon s common property
depreciation expense is not material.
III. SUMMARY OF CHANGES IN DEPRECIATION RATES
The Study updates the Company s book depreciation accrual rates based on all plant
in service as of December 31 , 2006. The results of the Study show that the Company
current annual depreciation expense for its Idaho jurisdiction should be increased by
approximately $128 000 for electric property and decreased by approximately $132 000 for
natural gas property in order to set the depreciation accrual rates at the most appropriate level
for assets in place as of December 31 , 2006. Approval of the Study rates would be for
accounting purposes only and would not impact customer rates at this time. The relatively
small impact of these changes to depreciation rates would be reflected in Avista s next
APPLICATION OF A VISTA CORP.Page 4 of 6
general rate case.
Company witness Dave B. DeFelice, Senior Business Analyst, provides testimony
addressing the Company s proposed depreciation rates and provides background information
describing the depreciation study process. Mr. DeFelice is sponsoring Exhibit No.1 01
(Depreciation Expense - Electric), No. 102 (Depreciation Expense - Gas), No. 103
(Depreciation Parameters) and No. 104 (Electric Accounts with WUTC Proposed Rates).
IV. REQUEST FOR RELIEF
WHEREFORE, A vista respectfully requests that the Commission issue a final Order
determining:
The Depreciation Study recommendations regarding depreciation rates are the proper
and adequate current depreciation rates for the Company; and
The Company shall reflect the depreciation rates proposed in the Depreciation Study
in its accounts and records on the date that coincides with the effective date of the
depreciation rate changes in Washington, currently expected on January 1 , 2008.
The Company requests that the matter be processed under the Commission
Modified Procedure rules through the use of written comments.
Dated at Spokane, Washington this 3151 day of October 2007.
A VISTA CORPORATION
BY (I, dxwaaJ
Kelly O. N rwood
Vice President
State and Federal Regulation
APPLICATION OF AVISTA CORP.Page 5 of 6
VERIFICATION
ST ATE OF WASHINGTON)
County of Spokane
Kelly O. Norwood, being first duly sworn on oath, deposes and says: That he is
the Vice President of State and Federal Regulation of Avista Utilities and makes this
verification for and on behalf of A vista Corporation, being thereto duly authorized;
That he has read the foregoing filing, knows the contents thereof, and believes the
same to be true.
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SIGNED AND SWORN to before me this 31 st day of October 2007, by Kelly O.
Norwood.
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NOTARY UBLIC in and for the State of
Washington, residing at Spokane.
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APPLICATION OF A VISTA CORP.Page 6 of 6