20210224Avista Deferred Accounting Report.pdf

Avista Corp.
141I EastMssion P.O. Box3727
Spokane, Washington 99220 -05 00
Telephone [phone]
Toll Free 800-727-9170
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February 24,2021
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JanNoriyuki, Secretary
Idaho Public Utilities Commission
I1331 W. Chinden Blvd.
Boise, ID 83714
Case No. GNR-U-20-03 (including Consolidated Case Nos. AVU-E-20-03 and AVU-
G-20-03) - Avista COVID-l9 Deferrrcd Accounting Report - 2020 Supplemental
DearMs. Noriyuki:
Avista Corporation, dba Avista Utilities (Avista or the Company), hereby submits its
Supplementalz0z0 COVID-I9 deferred accountingreport, perCommission OrderNo. 34718 of
Case No. GNR-U-20-03 (including Consolidatod Case Nos. AVU-E-20-03 and AVU-G-2043) at
pageT:
. .. Any utihty deferring uncollectible bad debts related to the Emergency must also file a
report with the Commission by December 31, 2020 detailing its current deferral amount
and projections for additional deferrals if the utility is still suspending disconnections at
the time of reporting.
Per Commission Order, atpage I 0, utilities were granted authority to account forthe unanticipared,
Emergency-related expenses due to the COVID-l9 public health emergency by booking the
expenses as regulatoryassets (account 182.3) forpossible recovery through future rates, underflre
following conditions: Each utility -
must analyze the CARES Act NOL provision and apply any benefit to offsetting the
deferral account created for Emergency-related expenses. The utilities must also account
forthe decreases in expenses related to reducedemployee tavel and training etc. due to
the stay-at-home order, with any reduction in these expenses being applied to offset lhe
deferral accormt balance;
may book incremental uncollectible bad debts incuned during the Emergency and
stemming from the suspension of late payment fees and disconnections. In determining
the incremental amounts to be booked to the regulatory asset utilities should use 2019
Re
levels as theirbaseline - exceptAvista as described in Order 34718.r Any amounts above
baseline levels may be booked in the regulatory asset account;
may include in the regulatory asset account the 2019 level of late fees for the period trat
late fees were waived, representing the revenue from late fees that would have otherwise
been received ab sent the Emergency;
may book any additional incremental O&M expenses related to the Emergency into the
regulatory asset account;
may hack costs related to reduced sales for customer classes that are not included in the
FCA - if the utility has an FCA;
must file a report with the Commission by December 3l ,2020 detailing the expenses
deferred and any reduced sales revenues trackod;
may not apply a carryingcharge to theirEmergency-related deferral accounts duringfte
deferral period; and
before any utility may recover expenses booked in the regulatory asset accourt they must
come before the Commission for a prudencyreview of those expenses the utility seeks b
recover.
The Company submits this COVID-I9 Deferred Accounting2020Year-End Supplemental report
to update year-end information following the guidance per Commission Order as discussed above.
As summarized below, the Companyhas identified and/or deferredthe following direct costs and
benefits associated with the COVID-I9 pandemic resulting in a net liability balance of $632A27
for Idaho electric and $37 1,248 for Idaho natural gas as of December 3 1, 2020.
The followingtable provides a summary of the netbenefits as of December3l,2A0.
The Company will continue to deferthe specific COVID-I9 deferredcosts and benefits as
discussed below on a go-forward basis, impacting the net balances shown, and will update and
reportthese Idahobalancesupon filingwiththe Commission foraprudencyreview ofthe netcosb
or benefits the utility seeks to recover from or rebate to customers.
I Per Orrder No. 347 I 8 Avista will be allowed to use the levels set in its most recent rate cases AVU-E-19{4 and
AVU-G-I7-01.
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Idaho COVID Dcbnzl Summary as oIl2Bll202O
Deferral Type IDE IDG Total
Bad Debt Expense
Term Loan Interest/Fees
Other Direct COVID Costs
Total182.3
Other Direct COVID Benefits
CARES Act Tax Benefit
"Iotal254
Total Ending Balance Owed Customers @12.31.2O20
1339,505 $
15y',,426
I10,631
1,614,562
(636,878)
(1,610,1 l1)
(2246989) (817,7s9)
$ (632,427\ S (371,248)
$382,609
34470
29,432
446,511
(16ey'30)
(ewze)
$ 1,722,114
l9g,g96
140.063
2,061p73
(806,308)
Q2s8.440\
G"0&J48\
$ (r.003.67s)
Bad DebtExpense
The Company's bad debt expense has significantly increased as a result of the COVID-19
pandemic. [n order to determine the incremental impact on bad debt expense, the Company
compared the actualbaddebt expense incurredto the amounts set in eachof its jurisdiction'smost
recent general rate cases. [n all instances, bad debt exceededthe levels built into customers' raEs.
As of December 3l ,2020, actual bad debt expense incurred for Idaho has exceeded the amount
authorized by $ 1,339,505 for Idaho electic and $3 82,609 for Idaho natural gas. Incremental bad
debt expense is being deferred to account 1 82.3 Regulatory Assets.
Short-Term Inferest/F ees
In April 2020, the Company entered into a short-term credit agreement in the amount of $100
million to provide additional liquidity to the Company due to the pandemic. The incremental
interest expense and loan fees associated with obtaining the term loan were arlralyzed. For Idaho,
as short-term debt is excluded in the authorized capital stucture and d$t costs, actual costs of tre
term loan, net of interest income, were calculated to be$164,426 forldaho electric and$34A70
for Idaho natural gas as of December 31, 2020 and were deferred to accountl8z.3 Regulatory
Assets.
Other Direct COVID Costs
Other direct costs identified by the Company as of December 3I,2020 include those chargod
directly to specific pandemic projects set up to capture costs incurred to protect the health and
safety of utility employees, including personal protective equipment, janitorial services, cleaning
supplies and additionalhardware/software andotherequipmentnot capitahzedto allow employees
toworkfromhome. Idaho'sshareofthesedirectcostswascalculatedtobe$140,063(or$110,631
Idaho electic and $29,432 Idaho natural gas) and was deferred to account 182.3 Regulatory
Assets.
Other Direct COVID Benefits
Other direct benefits (reductions in costs as a result of the pandemic) identifiedby the Company
as of December 3 I , 2020 were identified as employee expenses related to travel and training due
to COVID-I9 restictions as well a reduction in fleet fuel consumption at the beginning of the
pandemic when crews were at limited capacity. Idaho's share of these direct benefits was
calculated to be $806,308 (or $636,878 Idaho electric and $ 169,430 Idaho natural gas) and has
been deferredto accourtZ54Other RegulatoryLiabilities, offsettingdefened expenses.
CARES Act Tax Benefit
As described in the Supplemental filing on May 1,2020 in Case No. GNR-U-20-03 (including
Consolidated Case Nos. AVU-E-20-03 and AVU-G-20-03), the Company will receive a beneft
from carrying back its 201 9 NOL to the five prior tax years. The benefit is approximately $ 7.9M
on a system basis, or$ 1,610,1 11 allocated to Idaho electric and$648,329 allocated to Idahonatural
gas. The Company filed the carry back form during Q4 2020 and recorded this benefit as an offset
to COVID-19 deferral costs. Idaho's share of this benefithas beendeferredto account 254Old;ler
Regulatory Liabilities.
The Company filed several accounting method changes for tax purposes with its 2019 federal ux
return. The IRS Tax Forms 3 1 15, Application for a Change in Accounting Method, were filed
with the Commission on October 19,2020. The method changes provided a significant amount of
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deductions thatresulted in a 2019 netoperating loss. Withoutthese method change deductiong
the Company would not have recognized a net operating loss and would therefore not have
received this benefit. The service allocations fromthese additional method change doductions are
beingused to allocate the benefit.
Late Pavment Fees/Reconnection Charges
The Company's Idaho late fee revenues (electic and natural gas in total) have decreased
approximately $337,000 fromMarchl,2020 through Decernber3 l,2020ascompared to the same
period lri,2019. Due to revenue recognition accountingrules, the Company is tackingthese lab
fees but will not record a deferral until revenue is recorded lrl,2021. In addition, reconnection
charges are also being analyzed and a defe,rral determination will be made at a later date.
Reduced Sales Revenues
The Company does not plan to track or request recovery of costs related to reduced sales for
customer classes that are not included in the FCA.
As noted above, all pandemic related response increases and reductions in expenses and revenues
will continue to be analyzedbeyondyear-end202D on a go-forward basis. As a result, additional
adjustrnents to the deferral balances will be recorded for Idaho electric and Idaho natural gas in
Account 182.3 Regulatory Assets for additional expenses ard254 Other Regulatory Liabilities for
additional benefits to customers as necessary.
The Company has not applied a carrying charge to its Emergency-related deferred 182.3
Regulatory Asset I 254 Other Regulatory Liabilities balances during the deferral period. And
finally, in seeking recovery of Avista's net deferred expenses booked in account 1 82.3 Regulabry
Asset / 254 Other Regulatory Liabilities, Avista will come before the Commission for a prudency
review of its deferred expenses in a future proceeding.
Please direct any questions regarding this report to me at 509-495-8601 or
liz. andrews@,avistacorp. com.
Sincerely,
lsl Elizabeth Andrews
Elizabeth Andrews
Sr. Manager, Revenue Requirements
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