20230201Benjamin Direct.pdf

DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & 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 ) CASE NO. AVU-E-23-01
OF AVISTA CORPORATION FOR THE ) CASE NO. AVU-G-23-01
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC AND ) DIRECT TESTIMONY
NATURAL GAS SERVICE TO ELECTRIC ) OF
AND NATURAL GAS CUSTOMERS IN THE ) TIA C. BENJAMIN
STATE OF IDAHO )
)

FOR AVISTA CORPORATION

(ELECTRIC AND NATURAL GAS)

Benjamin, Di 1
Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, employer and business address. 2
A. My name is Tia C. Benjamin. I am employed by Avista Corporation as 3
Manager of Regulatory Affairs in the Regulatory Affairs Department. My business address is 4
1411 East Mission, Spokane, Washington. 5
Q. Please briefly describe your educational background and professional 6
experience. 7
A. I am a 2009 graduate from the University of Idaho with a Bachelor of Science 8
degree, majoring in Accounting. After spending nearly four years in financial services in the 9
public school system, I joined Avista in July 2011 where I have since served in several roles 10
including an Analyst on our Asset Management team and several years on our Budget and 11
Forecasting team before joining the Regulatory Affairs Department in September 2020. In my 12
current role as Manager of Regulatory Affairs, I am responsible for, among other things, 13
preparing the capital additions pro forma adjustments in determination of the revenue 14
requirement for all jurisdictions in which the Company provides utility services. 15
Q. Have you provided testimony before the Commission in prior 16
proceedings? 17
A. No, this is the first general rate proceeding in the State of Idaho that I have 18
sponsored testimony in since I began working in Regulatory Affairs. 19
Q. What is the scope of your testimony? 20
A. My testimony and exhibit in this proceeding will describe the Company’s 21
restated twelve-months ended (12ME) June 30, 2022 net plant from average-of-monthly-22
averages (AMA) to end-of-period (EOP) adjustment, as well as explain how pro forma capital 23
additions for the period of July 1, 2022, through August 31, 2025, including the effect of 24
Benjamin, Di 2
Avista Corporation

proposed depreciation rates, are incorporated into the Company’s Two-Year Rate Plan1 and 1
proposed electric and natural gas revenue requirements sponsored by Company witness Ms. 2
Schultz. A table of contents for my testimony is as follows: 3
TABLE OF CONTENTS 4
Description Page 5
I. INTRODUCTION ............................................................................ 1 6
II. CAPITAL ADDITIONS WITNESSES .......................................... 2 7
III. SUMMARY OF CAPITAL ADJUSTMENTS ............................. 5 8
IV. DEPRECIATION STUDY .......................................................... 12 9
10
Q. Are you sponsoring any exhibits? 11
A. Yes. I am sponsoring Exhibit No. 13, Schedule 1, which provides a summary 12
of the capital additions included in each of the capital witnesses’ testimonies by project 13
(Business Case) for the period of July 1, 2022, through August 31, 2025.2 14
15
II. CAPITAL ADDITIONS WITNESSES 16
Q. Would you please provide a brief summary of the witnesses who provide 17
testimony related to capital additions in this proceeding? 18
A. Yes. Other capital witnesses, besides Ms. Schultz and myself who support the 19
capital-related adjustments, provide more detailed information on certain capital projects and 20
describe the need for and timing of these capital projects. The following witnesses are 21
presenting direct testimony supporting the capital additions adjustments I sponsor3 as outlined 22

1 The Company is proposing a Two-Year Rate Plan for the period September 1, 2023, through August 31, 2025.
For both electric and natural gas, the Company is proposing an increase for Rate Year 1 effective September 1,
2023 (hereafter “RY1”), and Rate Year 2 effective September 1, 2024 (hereafter “RY2”).
2 Company witnesses Mr. DiLuciano, Mr. Howell, Mr. Kensok, Mr. Kinney, and Ms. Hydzik sponsor testimony
explaining the Company’s capital additions for the Pro Forma adjustments I sponsor.
3 With the exception of the Pro Forma Colstrip Unit 3 and 4 investment and regulatory amortization included in
Pro Forma Adjustments 3.17 discussed and sponsored by Company witness Ms. Andrews.
Benjamin, Di 3
Avista Corporation

in Section III below: 1
Mr. Scott Kinney, Vice President of Energy Resources, will address the generation 2
capital projects, including investment in Colstrip Unit 3 and 4, described in this case. 3
In addition, he will discuss Resource Planning, Resource Adequacy and Gas Supply. 4
5
Mr. Josh DiLuciano, Vice President of Energy Delivery, will explain capital additions 6
related to electric transmission and distribution, natural gas delivery, facilities, fleet, 7
as well as general plant. 8
9
Mr. James Kensok, Vice President and Chief Information and Security Officer, will 10
provide an overview of Avista’s Information Service/Information Technology (IS/IT) 11
programs and projects. This includes summaries of the Company’s capital additions 12
for a range of IS/IT systems used by the Company, many representing short-lived 13
assets. 14
15
Ms. Nicole Hydzik, Director of Energy Efficiency, will discuss capital additions 16
related to the Company’s “Customer at the Center” initiative. 17
18
Mr. David Howell, Director of Electric Operations and Asset Maintenance, will 19
discuss the strategy and actions comprising the Company’s Wildfire Resiliency Plan. 20
21
Q. How have capital witnesses presented the transfers-to-plant information 22
in their testimony? 23
A. Mr. Kinney, Mr. DiLuciano, Mr. Kensok, Ms. Hydzik and Mr. Howell present 24
capital transfers-to-plant information (gross plant additions) on a calendar-year and system 25
basis (Idaho, Washington, and Oregon jurisdictions) grouped by plant investment driver. Each 26
witness’s testimony discusses capital additions from July 1, 2022, to August 31, 2025, on a 27
system basis. A detailed listing of project (Business Case) names and calendar year totals can 28
be found in my Exhibit No. 13, Schedule 1. Table No. 1 below reflects the calendar year 29
transfers-to-plant (TTP) for projects that are discussed in each witness’s testimony, on a 30
system basis: 31
Benjamin, Di 4
Avista Corporation

Table No. 1: 1
2
3
4
5
6
7
8
Q. Company witness Mr. Thies identifies and briefly explains the six 9
“Investment Drivers” or classifications of Avista’s infrastructure projects and 10
programs. How then do these “drivers” translate to the capital additions that are 11
represented in each capital witness’s testimony? 12
A. Mr. Thies provides an overview of our capital investment prioritization process 13
and the six key “Investment Drivers”. The Company’s six Investment Drivers are briefly 14
described as follows: 15
1. Customer Requested – Respond to customer requests for new service or 16
service enhancements required for connecting new distribution customers or 17
large transmission-direct customers. 18
19
2. Mandatory and Compliance – These investment drivers are compelled by 20
regulation or contract and are generally beyond the Company’s control as they 21
are a direct result of compliance with laws, regulations and agreements, 22
including projects related to dam safety upgrades, public safety, air and water 23
quality, and equipment essential to legally operate within the interconnected 24
grid, among others. 25
26
3. Failed Plant and Operations – This investment driver includes the 27
replacement of equipment that is damaged or fails due to an accident, or normal 28
wearing out requiring periodic replacement. The large, massive rotating 29
equipment and associated support machinery used for electric generation, for 30
example, can experience sudden mechanical failures or electrical insulation 31
breakdowns even with the benefit of ongoing maintenance and preventive 32
Benjamin, Di 5
Avista Corporation

maintenance programs. 1
2
4. Asset Condition – Replace infrastructure assets or portions of assets at the end 3
of their functional service life based on asset condition due to age, 4
obsolescence and parts availability, and degradation of the asset. This category 5
includes replacement of critical parts requiring replacement prior to failure, as 6
well as replacing or overhauling older equipment to bring it up to meet current 7
codes and standards. 8
9
5. Customer Service Quality and Reliability – Meet our customers’ 10
expectations for quality and reliability of service, as well as increasing the 11
reliability of operating assets. 12
13
6. Performance and Capacity – Programs and projects to address system 14
performance and capacity issues so Company assets can continue to satisfy 15
business needs and meet performance standards to support the interconnected 16
grid and to ensure the ability to participate in the regional wholesale energy 17
market. 18
19
Each of the Company’s capital witnesses outlined above provide additional detail as 20
well as the main drivers for capital investments under their area of responsibility. 21
Q. Mr. Thies refers to planned capital expenditures of $475 million per year. 22
Why do the annual totals in Table No. 1 differ from the $475 million planned 23
expenditures? 24
A. The primary reason the totals in Table No. 1 above differ from Mr. Thies’ $475 25
million is that Table No. 1 represents transfers-to-plant, whereas Mr. Thies’ $475 million 26
represents capital expenditures (i.e., spend). There is a timing difference between when the 27
dollars are spent, and when the various capital projects are completed and transferred to plant-28
in-service. 29
30
III. SUMMARY OF CAPITAL ADJUSTMENTS 31
Q. Would you please summarize the adjustments included in the Company's 32
Two-Year Rate Plan as it relates to new additions in utility plant to serve customers? 33
Benjamin, Di 6
Avista Corporation

A. Yes. The Company is proposing a Two-Year Rate Plan for the period 1
September 1, 2023, through August 31, 2025. For both electric and natural gas, the Company 2
is proposing an increase for Rate Year 1 effective September 1, 2023 (RY1), and Rate Year 2 3
effective September 1, 2024 (RY2). As discussed by Ms. Schultz, the Electric and Natural 4
Gas Pro Forma Studies include restating and pro forma adjustments beyond the historical test 5
year (12ME June 30, 2022). The Company started with utility plant rate base balances from 6
historical accounting information, which for this case consists of the actual AMA balances for 7
the 12ME June 30, 2022, and made the following adjustments: 8
Rate Year 1 9
10
(1) Adjustment (1.01) – Deferred FIT Rate Base: This adjustment adjusts the 11
electric and natural gas accumulated deferred federal income tax (ADFIT) rate 12
base balance included in the Results of Operations to the adjusted ADFIT balance 13
reflected on an AMA basis. ADFIT reflects the deferred tax balances arising from 14
timing differences between book recognition and tax recognition of certain income 15
and deductions. The primary deductions that have timing differences, and therefore 16
associated ADFIT, are accelerated tax depreciation over book depreciation and the 17
repairs deduction. 18
19
(2) Adjustment (1.04) – Restate 06.2022 AMA Rate Base to EOP: This adjustment 20
adjusts plant-in-service, accumulated depreciation (A/D) and ADFIT to restate the 21
June 30, 2022 AMA rate base to June 30, 2022 EOP balances. The impacts of 22
retirements through June 30, 2022, are included in the test year. 23
24
(3) Pro Forma Adjustment (3.08) – 2022 Pro Forma EOP: This adjustment 25
includes three components. The first component adjusts EOP June 30, 2022 rate 26
base to EOP December 31, 2022 rate base by extending A/D and ADFIT balances 27
on utility plant-in-service from June 30, 2022 EOP balances to December 31, 2022 28
EOP balances. The second component reflects the impact of retirements from July 29
1, 2022, through December 31, 2022. The third component reflects additions to 30
plant-in-service, inclusive of new growth capital4, between July 1, 2022, and 31
December 31, 2022, on an EOP basis, inclusive of the A/D, depreciation expense, 32

4 For the period July 1, 2022, through August 31, 2025, capital additions associated with connecting new
customers to the Company’s system (New Revenue – Growth Business Case) were included. As discussed by
Ms. Schultz in her testimony, an increase in revenues from growth in the number of customers from the historical
test year to the RY1 and RY2 rate periods are included, therefore, the growth in plant investment associated with
customer growth was also included.
Benjamin, Di 7
Avista Corporation

and ADFIT5 associated with these additions for the period. This adjustment also 1
adjusts depreciation expense to reflect the appropriate level of expense at 2
December 31, 2022. 3
4
(4) Pro Forma Adjustment (3.09) – August 2023 Pro Forma EOP: This adjustment 5
includes three components. The first component adjusts plant-in-service at 6
December 31, 2022 EOP balances to August 31, 2023 EOP balances by extending 7
A/D and ADFIT balances. The second component reflects the impact of 8
retirements from January 1, 2023, through August 31, 2023. The third component 9
reflects additions to plant-in-service, inclusive of new growth capital, between 10
January 1, 2023, and August 31, 2023, on an EOP basis, inclusive of the A/D, 11
depreciation expense, and ADFIT associated with these additions for the period. 12
This adjustment also adjusts depreciation expense to reflect the appropriate level 13
of expense at August 31, 2023. 14
15
(5) Pro Forma Adjustment (3.10) – Depreciation Study: This adjustment includes 16
two components. The first component captures the effect of updating electric and 17
natural gas depreciation rates for both common/allocated plant and direct Idaho 18
plant effective September 1, 2023, on plant-in-service at August 31, 2023, on an 19
AMA basis. The impact of changing depreciation rates for plant-in-service at 20
August 31, 2023, on an EOP basis and all additions after September 1, 2023, are 21
built into the other capital adjustments (3.11, 24.01-24.02). The second component 22
represents specific recovery for the reserve amortization for certain general plant 23
accounts for electric, gas and common assets. See Section IV. Depreciation Study 24
for more detail. Company witness Mr. Spanos sponsors and discusses in detail the 25
Company’s depreciation study, including the reserve amortization adjustment. 26
27
(6) Pro Forma Adjustment (3.11) – August 2023 EOP to August 2024 AMA: This 28
adjustment includes three components. The first component adjusts plant-in-29
service at August 31, 2023 EOP balances to August 31, 2024 AMA balances by 30
extending A/D and ADFIT balances. The second component reflects the impact of 31
retirements from August 31, 2023 EOP balances to August 31, 2024 AMA 32
balances. The third component reflects additions to plant-in-service, inclusive of 33
new growth capital, between August 31, 2023, on an EOP basis and August 31, 34
2024, on an AMA basis, inclusive of the A/D, depreciation expense, and ADFIT 35
associated with these additions for the period. This adjustment also adjusts 36
depreciation expense to reflect the appropriate level of expense at August 31, 2024. 37
38
Rate Year 2 39
40
(7) Pro Forma Adjustment (24.01) – August 2024 AMA to August 2024 EOP: This 41
adjustment includes two components. The first component adjusts plant-in-service 42
at August 31, 2024 AMA balances to August 31, 2024 EOP balances by extending 43

5 For each of the Pro Forma rate base adjustments for the period June 30, 2022 EOP through August 31, 2025
AMA, the associated ADFIT includes an estimated basis deduction (repairs, IDD #5, and meters), where
applicable.
Benjamin, Di 8
Avista Corporation

A/D and ADFIT balances. Since this adjustment is only pro forming the change 1
from August 31, 2024, from an AMA to EOP basis, there is no impact to 2
depreciation expense for the capital additions and retirements because the impact 3
was recorded in PF Adj. 3.11 – August 2023 EOP to August 2024 AMA. The 4
impact of changing from AMA to EOP of depreciation expense on additions and 5
retirements for the 12ME August 31, 2024, is picked up in the subsequent 6
adjustment, PF Adj. 24.02 – August 2024 EOP to August 2025 AMA, described 7
below. The second component reflects the impact of retirements from August 31, 8
2024 AMA balances to August 31, 2024 EOP balances. 9
10
(8) Pro Forma Adjustment (24.02) – August 2024 EOP to August 2025 AMA: This 11
adjustment includes three components. The first component adjusts plant-in-12
service at August 31, 2024 EOP balances to August 31, 2025 AMA balances by 13
extending A/D and ADFIT balances. The second component reflects the impact of 14
retirements from August 31, 2024 EOP balances to August 31, 2025 AMA 15
balances. The third component reflects additions to plant-in-service, inclusive of 16
new growth capital, between August 31, 2024, on an EOP basis and August 31, 17
2025, on an AMA basis, inclusive of the A/D, depreciation expense, and ADFIT 18
associated with these additions for the period. This adjustment also adjusts 19
depreciation expense to reflect the appropriate level of expense at August 31, 2025. 20
21
An overall summary of the change in rate base associated with the adjustments 22
outlined above is included as Table No. 2 (electric) and Table No. 3 (natural gas) below. 23
Detailed calculations for each adjustment that I sponsor have been provided in my workpapers 24
filed with the Company’s case. Please note, however, that Ms. Andrews discusses and 25
sponsors the pro forma capital additions adjustment (3.17) related to Colstrip Units 3 and 4. 26
These capital additions are included in Ms. Schultz’s Electric and Natural Gas Pro Forma 27
Studies but are not included in my summary tables below. 28
Q. What is the change in electric and natural gas net plant for the capital 29
adjustments included in this testimony? 30
A. The results of the Electric and Natural Gas Pro Forma Studies reflect the net 31
plant that will be in service serving customers during RY1 and RY2. Prior to reflecting the 32
additional projects sponsored by Ms. Andrews (Colstrip Units 3 and 4), for RY1, Electric net 33
plant, after ADFIT, increases $98,822,000 from the June 30, 2022 AMA results of operations 34
Benjamin, Di 9
Avista Corporation

balance of $905,070,000 to the August 31, 2024 AMA balance of $1,003,892,000. For RY2, 1
Electric net plant, after ADFIT, increases $34,859,000 from the August 31, 2024 AMA 2
balance of $1,003,892,000 to the August 31, 2025 AMA balance of $1,038,751,000. Table 3
No. 2 below summarizes the adjustments for electric capital additions included in this 4
testimony and sponsored by me. 5
Table No. 2: 6
7
8
9
10
11
12
13
14
15
16
17
For RY1, Natural Gas net plant, after ADFIT, increases $14,705,000 from the June 18
30, 2022 AMA balance of $193,748,000 to the August 31, 2023 AMA balance of 19
$208,453,000. For RY2, Natural Gas net plant, after ADFIT, increases $4,604,000 from the 20
August 31, 2024 AMA balance of $208,453,000 to the August 31, 2025 AMA balance of 21
$213,057,000. Table No. 3 below summarizes the adjustments for natural gas capital additions 22
included in this testimony and sponsored by me. 23
Benjamin, Di 10
Avista Corporation

Table No. 3: 1
2
3
4
5
6
7
8
9
10
11
Q. Please describe how the capital additions included in the pro forma 12
adjustments described above are derived. 13
A. The Company directly assigns costs when appropriate. Costs not specifically 14
identifiable to a specific jurisdiction are allocated in accordance with an approved allocation 15
procedure. If costs were not directly assigned to electric or natural gas projects specific to our 16
Idaho jurisdiction, all other costs were allocated to Idaho as part of an allocation process, 17
which designates costs as common to all services and jurisdictions (CD.AA), common to 18
electric operations only (ED.AN) or common to natural gas operations only (GD.AA). 19
Q. Please explain what offsets have been included within the pro forma 20
capital additions adjustments. 21
A. First, for each of the pro forma capital adjustments described in my testimony, 22
I have included the reduction in depreciation expense related to plant retirements. The overall 23
effect of reflecting retirements from June 30, 2022 plant-in-service to August 31, 2025 AMA 24
Benjamin, Di 11
Avista Corporation

reduces the incremental depreciation expense pro formed in these adjustments by $6.2 million 1
(or a reduction of 40%) for electric and $1.5 million (or a reduction of 65%) for natural gas. 2
In addition, each pro forma capital project included in the pro forma capital 3
adjustments was also analyzed to determine if any additional offsets (e.g., reduced O&M 4
costs) were probable. For example, maintenance records were reviewed to determine whether 5
any specific maintenance costs were incurred in the test period that would be reduced or 6
eliminated by the investment at the facility. When reviewing project offsets, typically projects 7
may have two types of offsets. The first type of offset is a redeployment of costs or efficiency 8
gains, that do not generally allow for an offset to its O&M costs, as there are no changes to 9
the total level of expense that the Company will incur during the rate year. The second type 10
of offset includes actual or “hard” incremental savings expected beyond the historical test 11
period, that will occur during the rate-effective period, as a result of the capital investment. 12
These offsets result in an overall reduction in the level of expense the Company will incur, 13
such as a reduction in workforce or energy savings. 14
After review of the capital projects included in this case during RY1, September 1, 15
2023, through August 31, 2024, quantifiable savings included as a reduction to O&M in 16
Adjustment 3.12 – Pro Forma Revenue and O&M Offsets are approximately $153,000 for 17
electric operations and $79,000 for natural gas operations. For RY2, September 1, 2024, 18
through August 31, 2025, quantifiable savings included as a reduction to O&M in Adjustment 19
24.06 – Pro Forma Revenue and O&M Offsets are approximately $106,000 for electric 20
operations. Refer to Adjustments 3.12 and 24.06 – Pro Forma Revenue and O&M Offsets 21
workpapers for more information on the specific projects (Business Cases) included in this 22
adjustment. 23
Q. What conclusions have you drawn regarding the increased capital 24
Benjamin, Di 12
Avista Corporation

additions included in this case? 1
A. The Company is making substantial levels of capital additions in its electric 2
and natural gas system infrastructure to address customer growth, replacement and 3
maintenance of Avista’s aging system, and to sustain reliability and safety. As soon as this 4
new plant is placed in service, the Company must start depreciating the new plant and incur 5
other costs related to the addition. Unless these capital additions are reflected in retail rates 6
in a timely manner, it has a negative impact on Avista’s earnings, particularly because the new 7
plant is typically far more costly to install than the cost of similar plant that was embedded in 8
rates decades earlier. As plant is completed and is providing service to customers, it is 9
appropriate for the Company to receive timely recovery of the costs associated with that plant. 10
11
IV. DEPRECIATION STUDY 12
Q. Would you please provide an overview of the Company’s most recent 13
depreciation study to be filed in each of the Company’s jurisdictions? 14
A. Yes, on or before February 22, 2023, the Company will file in separate dockets 15
electric and natural gas applications requesting Commission approval to revise its book 16
depreciation rates for both common/allocated plant and direct Idaho plant, effective 17
September 1, 2023. The Company will also file similar applications in Washington and 18
Oregon at that same time. 19
Periodically the Company completes a depreciation study and requests modifications 20
to its depreciation rates. The proposed rates appropriately reflect the rates at which Avista’s 21
assets should be depreciated over their useful lives. Mr. Spanos sponsors the Depreciation 22
Study in his testimony and explains the methods used for determining the appropriate 23
depreciation rates. 24
Benjamin, Di 13
Avista Corporation

The Company is also proposing the use of reserve amortization, which Mr. Spanos 1
supports and recommends, to achieve a more stable accrual for certain general plant accounts 2
in the future. He recommends a five-year amortization to adjust unrecovered or over-3
recovered reserves based on the amortization period, by account. Mr. Spanos provides more 4
information on this topic in his testimony. 5
Q. Have you prepared an adjustment to reflect the impact of the proposed 6
depreciation rates in this case? 7
A. Yes, Adjustment 3.10 – Depreciation Study, as previously discussed in my 8
testimony and included in Ms. Schultz’s Electric and Natural Gas Pro Forma Studies, 9
incorporates the Company’s proposed depreciation rates for electric and natural gas operations 10
per the Depreciation Study. This adjustment reflects the impact to the August 31, 2023 AMA 11
level of depreciation expense updated for the proposed depreciation rates effective September 12
1, 2023. It also reflects the impact of the reserve amortization on depreciation expense. The 13
effect of this adjustment decreases overall depreciation expense by $1,524,000 for electric and 14
$324,000 for natural gas. The impact of changing depreciation rates for plant-in-service at 15
August 31, 2023, on an EOP basis and all additions after September 1, 2023, are embedded 16
within subsequent pro forma capital adjustments (3.11, 24.01-24.02). This assumes that the 17
Commission approves Avista’s separate deprecation applications in those separate dockets, as 18
well as receipt of Orders from the other two affected Washington and Oregon Commissions. 19
Q. Does this conclude your pre-filed direct testimony? 20
A. Yes, it does. 21