20230201Kensok 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 ) JAMES M. KENSOK
STATE OF IDAHO )
)

FOR AVISTA CORPORATION

(ELECTRIC & NATURAL GAS)

Kensok, Di 1
Avista Corporation
I. INTRODUCTION 1
Q. Please state your name, employer and business address. 2
A. My name is James M. Kensok. I am employed by Avista Corporation as the 3
Vice-President, Chief Information Officer (CIO) and Chief Information Security Officer 4
(CISO). My business address is 1411 E. Mission Avenue, Spokane, Washington. 5
Q. Mr. Kensok, please provide information pertaining to your educational 6
background and professional experience. 7
A. I am a graduate of Eastern Washington University with a Bachelor of Arts 8
Degree in Business Administration, majoring in Management Information Systems and from 9
Washington State University with an Executive MBA. I have experience through direct 10
application and management of Information Services over the course of my 34-year 11
information technology career. I joined Avista in June of 1996. I have been in the Information 12
Services Department for approximately 25 years in a variety of management roles directing 13
and leading information systems, infrastructure technology and security strategy, system 14
delivery and operations, complex communication networks, cyber security, applications 15
development, outsourcing agreements, contract negotiations, technical support, cost 16
management, and data management. I was appointed Vice-President and Chief Information 17
Officer in January of 2007, and Chief Security Officer in January of 2013. 18
Q. What is the scope of your testimony in this proceeding? 19
A. I will provide an overview of, and discuss capital additions and expenses 20
associated with, the Company’s Information Service/Information Technology (IS/IT) 21
programs, projects and security included in the Company’s filed case over its proposed Two-22
Year Rate Plan. These costs are comprised of the capital investments for a range of IS/IT 23

Kensok, Di 2
Avista Corporation
projects that support systems used by the Company, as well as cyber and physical security 1
projects and costs. I will explain why our information technology and security investments 2
are necessary in the time frames indicated. While I discuss this plan in detail within my 3
testimony and exhibits, Company witnesses Ms. Schultz and Ms. Benjamin incorporate the 4
capital additions, and incremental expenses associated with the Company’s IS/IT costs 5
included in the Company’s request for rate relief over the Two-Year Rate Plan effective 6
September 1, 2023, and ending August 31, 2025. 7
A table of contents for my testimony is as follows: 8
Table of Contents 9
I. INTRODUCTION ........................................................................................................1 10
II. IS/IT OVERVIEW ......................................................................................................2 11
III. IS/IT PRIORITIZATION, DELIVERY AND GOVERNANCE PROCESS ............4 12
IV. IS/IT TECHNOLOGY CAPITAL BUSINESS CASES ............................................8 13
V. IS/IT OPERATING AND MAINTENANCE EXPENSES ......................................24 14
15
Q. Are you sponsoring any exhibits in this proceeding? 16
A. Yes. I am sponsoring Exhibit No. 11, Schedule 1, which includes Information 17
Technology Capital Project Business Cases. 18
19
II. IS/IT OVERVIEW 20
Q. How are Avista’s technology investments linked to supporting business 21
processes? 22
A. Avista’s technology investments fall into two major areas: (1) enabling 23
technology and (2) business and operating application systems. Avista also takes an 24
enterprise-wide approach to security and disaster recovery (resiliency) that links our 25
technology investments with protecting our people, our assets, and our facilities. 26

Kensok, Di 3
Avista Corporation
Specifically, “enabling technology” consists of the technology infrastructure such as 1
data storage, and endpoint compute hardware, (e.g., Server Storage, Personal Computers (PC), 2
Laptops, and Mobile Devices). Enabling technology also includes operating systems and 3
network transport connectivity (e.g., microwave radios, routers, and switches). Additionally, 4
enabling technology includes databases and data schemas, integration software, business 5
intelligence tools, and communication systems, etc. necessary to enable business capabilities 6
through business application systems. It is the foundation on which we deliver energy safely 7
and reliably, meet business objectives, and deliver value to our customers through business 8
and operating application systems. 9
“Business and operating application systems” are dependent on a reliable 10
infrastructure that delivers the technology foundation for meeting customer needs. Some of 11
the business capabilities within these areas include electric and natural gas service design in 12
the field in response to customer requests for prompt installation of new electric or natural gas 13
service. Business application systems help business capabilities by automating business 14
processes to optimize efficiencies and add functionality. 15
Illustration No. 1 below shows the relationship between the areas of Enabling 16
Technologies, Business & Operating Application Systems, and Enterprise Security and how 17
those fit into the different capital business cases discussed later in my testimony. Enabling 18
technology is there to support the business and operating application systems, and just as 19
importantly, neither of the two can co-exist without proper security to protect the information 20
that is used to make business decisions and deliver energy to our customers. 21

Kensok, Di 4
Avista Corporation
Illustration No. 1- Business Technology Structure: 1
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III. IS/IT PRIORITIZATION, DELIVERY AND GOVERNANCE PROCESS 12
Q. How are the enabling technologies and business and operating application 13
systems business cases prioritized within IS/IT? 14
A. The IS/IT department uses a decision tree designed by Gartner1 for both 15
enabling technologies and business and operating application systems to help organize capital 16
projects into three categories: run, grow, and transform2. 17
Q. Did Avista consider alternatives to technology investments? 18

1 Gartner is a research and advisory company, which delivers technology-related insights to its clients to make
right decisions. It operates through the following segments: Research, Consulting and Conferences.
https://www.gartner.com/smarterwithgartner/align-it-functions-with-business-strategy-using-the-run-grow-
transform-model/
2 The “run” category includes technology projects aimed at running the day-to-day business. The “grow”
category projects are focused on developing and enhancing systems to enable business growth including new
customers. Finally, the “transform” category are projects that aid the Company in addressing new customer and
employee needs that recently have included remote work and mobile transactions. It also includes new operating
models such as outage restoration and wildfire resiliency.

Kensok, Di 5
Avista Corporation
A. Alternatives are considered to determine if opportunities are available using 1
existing technology and/or changes to business processes as well as new technology options. 2
For example, a growing alternative to the traditional “buy or build” approach has been 3
Software as a Service (SaaS), whereby the software asset that once was in Avista’s data center 4
on site, is now in the technology vendor’s data center (cloud environment). Assessments on 5
the feasibility of SaaS are performed by the Company on a case-by-case basis to determine 6
how the benefits might outweigh the costs and/or other risks. 7
Q. As discussed above, the software industry is shifting delivery of 8
application technology solutions from a “buy or build” model to SaaS. Please explain 9
how Avista is handling this transition, and what impact this has on capital and operation 10
& maintenance costs? 11
A. On site solutions presently run in Avista’s onsite data centers. They require 12
capital investments in licensing and infrastructure, and on-premises personnel and support 13
agreements to operate and maintain them as required by vendor specifications. Vendor 14
managed SaaS cloud environment solutions range widely in what they deliver. They can range 15
from delivering data and information only, or running applications and storing data, to fully 16
replicating all the infrastructure, computing power and storage necessary to the point that only 17
an internet connection is needed for the access of said SaaS solution to make it useful. In 18
general terms, as solutions move across the spectrum of fully on premise to fully vendor-19
managed cloud-based, the cost to implement and run those solutions shifts along the spectrum 20
from capital investment to expense. This is a result of the accounting treatment of cloud-based 21
SaaS solutions moving the Company from capital investments in licensing, infrastructure, and 22
implementation to outsourcing those components as services, and the expenses entailed. 23

Kensok, Di 6
Avista Corporation
Q. Does this mean that Avista will be making fewer capital investments as 1
technology solutions shift to the cloud? 2
A. No. The need for technology investment will continue to increase as 3
traditionally mechanical and manual functions within different business areas of the Company 4
move more towards digitalization. A great example of this effort is our Outage Management 5
System & Advanced Distribution Management System (OMS/ADMS) business case 6
discussed in further detail, later in my testimony. The replacement of Avista’s legacy Outage 7
Management tool (OMT) and Distribution Management System (DMS) is aimed at improved 8
field and office worker productivity, providing more accurate data and improvement of outage 9
management and restoration times. 10
In addition, it is likely not all our vendors are moving to the cloud, meaning we need 11
to continue to invest in and support on-premise solutions, as well as network infrastructure 12
(which is part of IS/IT investment) throughout our service territory. As mentioned above, 13
Avista will continue to evaluate SaaS solutions on a case-by-case basis to determine how the 14
benefits might outweigh the costs and/or other risks. 15
Q. Describe the alternatives evaluated and how the solutions were chosen. 16
A. Technology evolves in short cycles, as new and sometimes improved 17
technologies can perform more efficiently than older ones. Through our technology programs, 18
Avista evaluates and plans the direction of its information technology portfolio. A team of 19
IS/IT professionals guide technology programs by analyzing the benefits and costs of 20
investing in new technology verses maintaining existing technology. The team considers 21
whether the current technology environment is stable and secure (e.g., run-the-business), so 22
that it is in Avista’s and its customers’ best interests to maintain it, and if so, for how long. If 23

Kensok, Di 7
Avista Corporation
not, other options that may better suit the technology needs of Avista and its customers are 1
considered. The technology programs also evaluate the risks of not making an immediate 2
technology change or delaying a change to a later date. Through these programs and the 3
technology leadership team, continuous re-evaluation of alternatives in technology 4
investments are recommended to the Technology Planning Group (TPG – comprised of 5
Directors from each business area) for the best path forward of technology investments. 6
Q. What is the governance or cost controls for all business cases with 7
technology investments? 8
A. There are three levels of governance that occur within technology business 9
cases. Executive, Director, and Business Case Governance detailed below in Illustration No. 10
2. 11
Illustration No. 2 – Technology Governance Structure 12
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Under each business case there are two more levels of governance depending on if it 21
is a program or project through Program Steering Committees and Project Steering 22
Committees. Both have cost control responsibilities to manage and therefore meet regularly 23

Kensok, Di 8
Avista Corporation
to stay on track. Governance committee responsibilities are described further below. 1
Program Steering Committee - The Program Steering Committee consists of 2
members in management positions that are identified and responsible for prioritizing 3
the projects within each respective program. The Program Steering Committee is 4
accountable for the financial performance of the program and hold regular meetings 5
to review the progress of the program and make decisions on the following topics: 6
• Project prioritization and risk 7
• Approving program funding requests 8
• New project initiation and sequencing 9
10
The program is facilitated and administrated by an assigned Program Manager within 11
the IS/IT Project Management Office (PMO). The project queue is reviewed 12
periodically and consists of projects needed to meet program goals for technology 13
solutions under each respective program. 14
15
Project Steering Committee - Project Steering Committees act as the governing body 16
over each individual project within a program and consist of key members in 17
management positions that are identified as responsible for the successful completion 18
of the scope of work identified in the Charter document for each respective project. 19
The Project Steering Committee is responsible to provide guidance and make 20
decisions on key issues that affect the following topics: 21
• Scope 22
• Schedule 23
• Budget 24
• Project Issues 25
• Project Risks 26
27
Project Steering Committees meet at defined intervals documented in the Charter of 28
the project and are facilitated by an assigned Project Manager from within the IS/IT 29
PMO. Project Steering Committees may or may not be necessary depending on the 30
size of the project. In addition, Project Steering Committees may not meet on a 31
monthly or regular basis if the project is on track with all the above deliverables and 32
may only communicate with stakeholders via email or other communication methods. 33
34
IV. IS/IT TECHNOLOGY CAPITAL BUSINESS CASES 35
Q. Please describe the Enterprise Technology capital business cases with 36
projects that are planned to be transferred to plant in service during 2022 - 2025. 37

Kensok, Di 9
Avista Corporation
A. The Enterprise Technology capital business cases with projects that are 1
planned to be transferred to plant in service during 2022 - 2025 are shown in Table No. 1 2
below. An explanation of each of the Business Cases follows the table. 3
Table No. 1 – Enterprise Technology Capital Additions: 4
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Investment Driver
Business Case Name Project Type 20221 2023 2024 20252
Mandatory and Compliance
High Voltage Protection (HVP) Refresh Enabling Technology 693$ 366$ 334$ 198$
Failed Plant and Operations
Technology Failed Assets Enabling Technology 171$ 544$ 544$ 363$
Asset Condition - Enabling Technology
Technology Refresh to Sustain Business Process Enabling Technology 2$ -$ -$ -$
Performance & Capacity - Enabling Technology
Basic Workplace Technology Delivery Enabling Technology 252$ 800$ 800$ -$
Control and Safety Network Infrastructure Enabling Technology 709 2,203 1,243 907
Data Center Compute and Storage Systems Enabling Technology 1,275 2,518 2,184 529
Digital Grid Network Enabling Technology 4,026 2,169 1,763 1,293
Endpoint Compute and Productivity Systems Enabling Technology 4,392 2,553 3,063 637
Enterprise & Control Network Infrastructure Enabling Technology 1,492 - - -
Enterprise Communication Systems Enabling Technology 2,156 1,684 1,974 709
Enterprise Network Infrastructure Enabling Technology 722 2,977 1,663 944
Environmental Control & Monitoring Systems Enabling Technology 869 1,050 1,016 597
ET Modernization & Operational Efficiency - Technology Enabling Technology 1,402 3,360 2,796 294
Fiber Network Lease Service Replacement Enabling Technology 1,861 820 963 1,095
Land Mobile Radio & Real Time Communication Systems Enabling Technology 4,383 2,437 1,971 86
Network Backbone Enabling Technology 315 2,932 5,714 3,264
Asset Condition - Business & Operational Application Technology
Project Atlas (Avista Facilities Management Replacement)Business & Op Technology 1,746$ 2,500$ 2,075$ 580$
Outage Management System & Advanced Distribution Management System
(OMS & ADMS)Business & Op Technology 631 - - 33,190
Performance & Capacity - Business & Operational Application Technology
Energy Delivery Modernization & Operational Efficiency Business & Op Technology 5,851$ 5,830$ 3,349$ 3,114$
Energy Resources Modernization & Operational Efficiency Business & Op Technology 2,430 2,471 2,965 100
Financial & Accounting Technology Business & Op Technology 1,753 2,053 1,900 2,129
Human Resources Technology Business & Op Technology 485 435 450 -
Legal & Compliance Technology Business & Op Technology 163 461 465 -
Mandatory and Compliance - Security
CIP v5 Transition - Cyber Asset Electronic Access Security -$ 416$ -$ -$
Identity and Access Governance Security 595 420 201 -
Security Compliance Security 235 250 250 -
Customer Service Quality and Reliability - Security
Enterprise Business Continuity Security 41$ 349$ 100$ -$
Enterprise Security Security 2,216 2,811 1,405 956
Facilities and Storage Location Security Security 441 370 345 -
Generation, Substation & Gas Location Security Security 725 645 518 -
Telecommunication & Network Distribution location Security Security 97 161 115 110
Total Planned Enterprise Technology Capital Projects 42,129$ 45,585$ 40,166$ 51,095$
(1) Includes system pro forma capital additions for the period of July 01, 2022 though December 31, 2022.
(2) Includes system pro forma capital additions for the period of January 01, 2025 though August 31, 2025.
Enterprise Technology Capital Projects (System) In $(000's)

Kensok, Di 10
Avista Corporation
Q. Please provide an overview of the technology programs made by Avista 1
from July 1, 2022 and estimated 2023 through August 31, 2025. 2
A. Table No. 1 above provides the listing of IS/IT business cases for the period 3
July 1, 2022 through August 31, 2025. These business cases are summarized into the 4
investment drivers of Mandatory and Compliance, Failed Plant and Operations, Asset 5
Condition, Performance and Capacity, and Customer Service Quality and Reliability as 6
further explained by Ms. Benjamin. These are also organized by project type as discussed 7
earlier in my testimony of Enabling Technology, Business and Operating Application Systems 8
and Enterprise Security. Business case narratives for each business case shown in Table No. 9
1 are provided in Exhibit No. 11, Schedule 1. 10
Q. Again, generally, what alternatives were considered for the above 11
Enabling Technologies, Business & Operating Application Systems, and Enterprise 12
Security programs? 13
A. Alternatives considered for each program can vary and may include the type 14
of technology solutions available in the market, the total cost of ownership for the technology, 15
the option to do the work differently, such as leasing or hiring a service. In addition, running 16
the technology asset longer by purchasing extended warranties, or running the technology to 17
failure for technology assets with an available sparing model are also alternatives. Additional 18
alternatives considered under each program include balancing the performance and capacity 19
requirements for each respective technology investment impacted by vendor driven 20
technology obsolescence lifecycles. For example, how long can an upgrade be deferred before 21
business risks become greater than the necessary upgrade? This can lead to security risks by 22

Kensok, Di 11
Avista Corporation
the vendors no longer offering system patches or system reliability risks as systems can 1
become incompatible with one another. 2
Q. Referring to the Table No. 1 above, the overall level of Enterprise 3
Technology additions ranges from approximately $40 million to approximately $51 4
million over the next four years. Would you explain why there is such a variance between 5
years of additions? 6
A. Yes. The following illustration portrays the IS/IT Capital Investment from 7
2022 through 2025 included in this case, distinguishing between what are ongoing projects 8
from 2022, and new projects introduced in 2022-2025. 9
Illustration No. 3 – IS/IT Plant Investment (System Transfers to Plant) 10
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As you can see from this illustration, most of the capital investment relates to ongoing, multi-23

Kensok, Di 12
Avista Corporation
year efforts that continue over time, at various funding levels. The rationale and justification 1
for these ongoing projects, however, does not change over time, only the funding levels. The 2
additional business cases listed in 2025 relates to the Outage Management System & 3
Advanced Distribution Management System that is discussed later in my testimony. In 4
addition, the 2022 and 2025, as noted earlier in Table No. 1, represent a partial year of 5
additions and not full calendar years. 6
Q. Do Enabling Technologies, Business and Operating Application 7
Technology, and Enterprise Security programs have completion timelines? 8
A. Technology investments can fall into programs with both ongoing and defined 9
timelines, as well as projects with defined timelines. All projects transfer to plant the total cost 10
of each project at the completion of every project, which at times can straddle calendar years. 11
This includes projects that fall within a program, as well as those that are standalone projects. 12
Quarterly forecasts capture changes in transfers to plant schedules and costs determined by 13
project status. 14
Information Related to “Enabling Technology” Projects Listed in Table No. 1 15
Q. Please describe the investments in Enabling Technology from July 1, 2022 16
to August 31, 2025 included in Table No. 1. 17
A. As previously mentioned, enabling technology consists of the infrastructure 18
technology required to enable business and operating application systems that in turn enable 19
business capabilities. For comparison purposes, it is the concrete footings, the framing, the 20
roof, the conduit, and drywall that transform materials into a house that people make into a 21
home. Below are the Enabling Technologies that are Mandatory and Compliance, Failed Plant 22
and Operations, Asset Condition, and Performance and Capacity as defined by Ms. Benjamin. 23

Kensok, Di 13
Avista Corporation
High Voltage Protection Upgrade for Substations – 2022: $693,000; 2023: $366,000; 1
2024: $334,000; 2025: $198,000 2
Technology investments under the High Voltage Protection business case are needed to 3
provide high voltage protection for communication circuits in high voltage areas in support of 4
employee and public safety, system reliability, and business productivity throughout our 5
service territory. Avista is required to provide high voltage protection for leased 6
communication circuits in high voltage areas newer than September 12, 1994, under an FCC 7
Tariff and, thus this is a Mandatory and Compliance business case. If Avista does not meet 8
the tariff requirements, telecommunication companies can turn off communication circuits to 9
substations until Avista electrically isolates the copper wire coming into a substation, thereby 10
affecting phone, modem, SCADA, and other metering and monitoring systems at substations. 11
12
Technology Failed Assets – 2022: $171,000; 2023: $544,000; 2024: $544,000; 2025: 13
$363,000 14
This program includes a range of solutions from computers to hand-held radios carried by 15
field staff to printers in remote offices to networking equipment. Sometimes technology assets 16
fail prior to being refreshed as part of a lifecycle management program. Any failed asset can 17
cause downtime for an employee or system resulting in significant disruption to daily 18
operations across the service territory depending on where and to what asset the failure 19
occurred. To support these types of unplanned failures, the Technology Failed Assets program 20
was established and consists of technology assets meant for rapid deployment as failures occur 21
and when repairs are not feasible. A technology inventory is maintained to quickly restore 22
business automation. This program provides benefits to customers by providing a technology 23
inventory to quickly restore business automation and reduce the downtime caused by the 24
failure. This business case is planning for laptop, mobile phone, printer, field area network, 25
audio visual devices, and monitor replacements when the assets fail, just to name a few. 26
27
Technology Refresh to Sustain Business Process – 2022: $2,000 28
This business case was determined to sunset at the end of 2018, as projects were completed. 29
Many of the ongoing projects were completed in 2019, except for one (Mission In-Building 30
Cellular Booster Refresh). This project refreshes existing cellular signal amplifiers to support 31
LTE 4G voice and data at Avista’s Mission campus and service building. Due to building 32
infrastructure and cellular carrier technology obsolescence, many users experience a poor 33
signal or no signal at all on their LTE capable smart phones. These devices are a significant 34
tool for business communications that support all our customers, the signal strength needed to 35
be upgraded to a cellular carrier-supported signal. 36
37
Basic Workplace Technology – 2022: $252,000; 2023: $800,000; 2024: $800,000 38
This business case represents hardware and software that end users need to perform day-to-39
day job functions. This may generally include personal computers, tablets, print/copy/scan 40
systems, television displays, monitors, mobile phones etc., and the basic software productivity 41
tools. Without Basic Workplace Technology Delivery hardware and software, productivity is 42
significantly impacted and can become a blocking factor, as some job functions are extremely 43
difficult to perform without digital productivity tools. For example, a new worker would not 44
be able to adequately meet job function performance requirements in a customer call center 45
without a personal computer and telephone. 46

Kensok, Di 14
Avista Corporation
Additionally, Basic Workplace Technology Delivery deployments that fall under this business 1
case are often in short notice, and minimum inventory quantities are maintained to meet 2
business value time frames. The business case is structured in such a way to handle both 3
planned and unplanned short-cycle business demand to deliver basic technology items to all 4
job functions and office areas. 5
6
Control and Safety Network Infrastructure – 2022: $709,000; 2023: $2,203,000; 2024: 7
$1,243,000; 2025: $907,000 8
The Control and Safety Network Infrastructure business case invests in network assets that 9
deliver reliable network communication solutions that allow Avista to manage and operate 10
our electric grid assets, gas network assets and safety communication systems. The Control 11
and Safety Network Infrastructure enables the ability to remotely monitor, control, and operate 12
critical business and safety systems. These systems include those that connect users in 13
emergency or safety situations, control generation assets, maintain and expand network 14
transport systems that enable push-to-talk radio connectivity for field crews and other 15
personnel, deliver communication networks for protective relays, and supervisory control 16
by providing data from transmission and distribution assets in the field. 2022 projects include 17
investments in replacing end of life assets that mitigate cyber and network security risks on 18
the very networks that allow Avista to operate and control our generation assets and refreshing 19
legacy end-of-life network equipment that meets compliance requirements for field worker 20
communications. 21
22
Data Center Compute and Storage Systems – 2022: $1,275,000; 2023: $2,518,000; 2024: 23
$2,184,000; 2025: $529,000 24
This business case represents projects that are driven by performance and capacity. This 25
includes investment in server technology required to process and store massive amounts of 26
data to automate and enable business processes that support natural gas and electric customers 27
across service territories. The technology solutions to meet performance standards and 28
reliability requirements can vary from hardware and software upgrades in an on-premise data 29
center, offsite storage, or service provider (cloud) facility, or in operating technology to 30
optimize compute and storage capacity. Avista’s office, call center, and field staff require on-31
demand information to meet customer needs, when providing natural gas and electric service 32
to customers across our service territory. The information can be critical to prevent, reduce, 33
or optimize an outcome that benefits our customers. Data center processing and storage 34
investment benefits all Avista customers, as it optimizes cost and productivity by not reverting 35
to manual business processing, which would result in increased labor costs, human error, and 36
overall processing delays. 37
38
Digital Grid Network Expansion – 2022: $4,026,000; 2023: $2,169,000; 2024: $1,763,000; 39
2025: $1,293,000 40
This program provides network solutions that optimize technology communication and 41
operations for field crews, inspectors, employees, contractors, and customers, and is critical 42
to maintain the ability of providing safe and reliable electric and natural gas service. 43
Technology investments under the Digital Grid Network program are necessary for expanding 44
and maintaining network assets for system reliability and business productivity throughout 45
our service territory. Not investing in this business case may result in reduced quality and 46

Kensok, Di 15
Avista Corporation
performance of our network system to transmit information, data and communication for 1
back-office transactions, operation systems, and customer service centers, across our service 2
territory. The Digital Grid business investments expand and maintain network assets in 3
support of system reliability and business productivity, ensuring our ability to appropriately 4
and timely respond to the needs of our customers. 5
6
Endpoint Compute and Productivity Systems – 2022: $4,392,000; 2023: $2,553,000; 7
2024: $3,063,000; 2025: $637,000 8
This program addresses technology obsolescence by delivering technology solutions required 9
to support day-to-day operations. Technology solutions under this program include, but are 10
not limited to, Personal Computer (PC) hardware and operating systems, various handheld 11
devices, printers, configuration and management systems as well as productivity toolsets like 12
Microsoft Office365. Each technology under this program undergoes regular review of 13
utilization and performance levels to determine if expected performance standards are being 14
met and to review the capacity requirements to maintain system reliability under the 15
established budget constraints. These reviews can result in the periodic need for additional 16
investments to address technology that is falling behind determined lifecycles performance 17
standards. Additionally, and as part of keeping up with vendor-driven technology 18
obsolescence, Avista’s technology team manages technology lifecycle plans to maintain 19
system reliability. For example, Avista is replaced rugged laptop PC’s and related mounting 20
equipment in vehicles during 2022 due to product end-of-life and limited vendor support. 21
22
Enterprise & Control Network Infrastructure – 2022: $1,492,000 23
This program provides technology network solutions that support a variety of site locations 24
and systems within each facility environment. This technology includes, but is not limited to, 25
emergency and safety systems, control systems, customer systems, and enterprise back-office 26
productivity systems. Without continuous investment in the Enterprise and Control Network 27
Infrastructure business case, Avista’s telecommunication backbone would become unreliable. 28
This, in turn, would have significant consequences for every other business process that uses 29
various network transportation paths to move data, information or communication. The 30
infrastructure is a necessary core capability for utility operations that requires reliable 31
networks in conjunction with commercial carrier and private network solutions to maintain 32
system reliability for Avista customers. This business case will sunset in early 2023 after the 33
completion of two projects. For additional visibility and tracking, this business case has been 34
divided in to three new Business Cases, consisting of Enterprise Network Infrastructure, 35
Control and Safety Network Infrastructure, and Network Backbone Infrastructure. This is 36
discussed later in my testimony. 37
38
Enterprise Communication Systems – 2022: $2,156,000; 2023: $1,684,000; 2024: 39
$1,974,000; 2025: $709,000 40
All Avista business functions are affected by this program, as it enables all day-to-day work 41
activities and automated business processes around communications. From service center to 42
call center to field work, every worker requires communications systems technology to 43
perform their business function and deliver natural gas and electric service to our customers. 44
These investments include video- and tele-conferencing platforms, electronic mail, instant 45
messaging, and calendar systems to support a hybrid digital workforce. The Enterprise 46

Kensok, Di 16
Avista Corporation
Communication Systems business case benefits Avista’s customers by enabling the 1
communication between employees to be able to provide safe, reliable service and by enabling 2
communication to our customers. 3
4
Enterprise Network Infrastructure (2022: $722,000; 2023: $2,977,000; 2024: $1,663,000; 5
2025: $944,000) 6
The Enterprise Network Infrastructure business case invests in network assets that deliver 7
network capacity and reliability for day-to-day enterprise business productivity and back 8
office system traffic. These investments deliver the enterprise network infrastructure that 9
serve access to data from one endpoint, system and/or user to another. 2023 projects include 10
investment in a new network impact analysis solution that allows us to optimize and baseline 11
our network load and capacity; and investments that remove cyber risks from our network by 12
replacing end of life assets that carry and serve enterprise network traffic at remote office 13
sites, substations, district offices and generation plants; investments that replace end of life 14
enterprise network traffic load balancing solutions. 15
16
Environmental Control & Monitoring Systems – 2022: $869,000; 2023: $1,050,000; 17
2024: $1,016,000; 2025: $597,000 18
The Environmental Control and Monitoring systems ensure reliable operation of Telecom 19
facilities by managing the performance and capacity of assets that support safety, control, 20
customer facing and back office automated business processes. Assets require specific 21
operating environments to prevent physical damage, such as temperature, humidity, and 22
power supply voltages. Environmental Control and Monitoring systems monitor and control 23
these environmental parameters and alert operational personnel when they fall outside of 24
optimal conditions. The alarms allow operational personnel to respond to issues that may 25
cause damage to other assets well in advance of any failure resulting in loss of business 26
automation processes. 27
28
ET Modernization & Operational Efficiency - Technology – 2022: $1,402,000; 2023: 29
$3,360,000; 2024: $2,796,000; 2025: $294,000 30
This program was designed to keep up with supporting the growth of business application 31
technology and complexity. The program invests in the digital systems and tools to address 32
the needs of the IS/IT department to support business applications. These technology systems 33
and tools provide functional enhancements that address ongoing changes in the workplace, 34
provide increased employee efficiency through the reduction of steps required to complete a 35
task, and make better use of Avista resources. The technology tools and systems under this 36
program benefit all Avista customers, as they support business application systems throughout 37
the Company. 38
39
Fiber Network Lease Service Replacement – 2022: $1,861,000; 2023: $820,000; 2024: 40
$963,000; 2025: $1,095,000 41
This project is a multi-year effort to transition, by 2027, Avista’s use of leased fiber optic 42
cable, which transports emergency and control network data, to a private network 43
infrastructure. This transition aligns to the Company’s network strategy, reduces operating 44
costs, and gains control over the 54 fiber segments for critical communication paths. The 45
technology investments under this business case benefit customers by investing in the 46

Kensok, Di 17
Avista Corporation
privately-owned fiber optic cable segments thereby mitigating the potential of increased O&M 1
costs for leased fiber in the future and having full control over the fiber that transports 2
emergency & control data. The underlying agreement expires in 2027 with an option to renew 3
for (5) five years. To reduce leasing costs and maintain control of critical infrastructure, Avista 4
will not renew the leased fiber agreement. Therefore, if this program stays on schedule and 5
maintains the appropriate priority, it will sunset in 2027 or 2028. 6
7
Land Mobile Radio & Real Time Comm Systems – 2022: $4,383,000; 2023: $2,437,000; 8
2024: $1,971,000; 2025: $86,000 9
The investments under this program provide the communication technology that enables real 10
time communication with natural gas and electric field staff. Due to the remoteness and 11
topology of the service territory, the technology investments span a wide range across field 12
radio sites where traditional commercial cellular or telecommunication services are not 13
available. The Land Mobile Radio & Real Time Communications Systems facilitates critical 14
communication between field personnel, dispatch, system operations, and other end users. 15
This radio system is used for normal day to day operation work, coordinating responses to 16
outage events, switching and tagging procedures, communication with external agencies 17
including Public Safety entities, and several other uses. It is a business-critical system used to 18
maintain day to day operations and respond to emergency situations. 19
20
Network Backbone Infrastructure – 2022: $315,000; 2023: $2,932,000; 2024: $5,714,000; 21
2025: $3,264,000 22
The Network Backbone Infrastructure business case invests in network assets that deliver and 23
expand data and communication transport networks in support of system reliability and 24
business productivity for Avista. This network backbone infrastructure is the transmission 25
system to our digital network. Across Avista, we move very large amounts of enterprise, 26
control, and safety traffic types all via our network backbone infrastructures. 2022 projects 27
include investment in legacy end of life microwave transport system assets, private fiber 28
infrastructure investments and access points, and assets that manage the movement and 29
prioritization of traffic over this infrastructure. 30
31
Q. How do the Enabling Technology projects benefit Avista Customers? 32
A. Enabling technology benefits our customers by providing the foundational 33
technology infrastructure required to connect with our customers over the phone, web, text, 34
or the ability to process billing, meter reads, or communicate outages and restoration times 35
during an unplanned outage. It also enables our field workers to safely connect over the radio 36
across rugged remote locations or during storm restoration efforts that require significant field 37
coordination to maintain employee safety. As the foundation to delivering natural gas and 38
electric service safely to our customers. 39

Kensok, Di 18
Avista Corporation
Q. When looking at Table No. 1 and the above projects Control and Safety 1
Network Infrastructure, Enterprise Network Infrastructure and Network Backbone 2
Infrastructure, it appears that these are new business cases for 2022. Please describe if 3
the nature of this work occurred in another business case in 2021. 4
A. Projects included in Control and Safety Network Infrastructure, Enterprise 5
Network Infrastructure, and Network Backbone Infrastructure were previously included as 6
one business case in 2021 under the Enterprise & Control Network Infrastructure. The only 7
remaining projects in Enterprise & Control Network Infrastructure in 2022 include inflight 8
projects that have been carried over from 2021. After these projects complete, this business 9
case will sunset going forward with minimal trailing charges occurring in early 2023. 10
Q. Why did the Company choose to separate Enterprise & Control Network 11
Infrastructure business case going forward? 12
A. The Company chose to break apart this large business case for several reasons. 13
The first reason was to provide more visibility into the projects and to help prioritize the 14
projects under each functional area. In addition, even though these three business cases have 15
similar assets they are implementing with routers, switches, microwaves communication 16
systems, etc. they are based on functional area and align more closely with the resources 17
completing the work. 18
Information Related to “Business and Operating Application Technology” Projects Listed 19
in Table No. 1 20
21
Q. Please describe investments in Business and Operating Application 22
Technology in 2022 through August 31, 2025. 23

Kensok, Di 19
Avista Corporation
A. Business and Operating Application Systems are the engines that produce, 1
store, and compute information that allow decision-making and automate what once were 2
manual processes. 3
Project Atlas (Avista Facilities Management Replacement) – 2022: $1,746,000; 2023: 4
$2,500,000; 2024: $2,075,000; 2025: $580,000 5
This is a multi-year year program to strategically replace the suite of custom Geographic 6
Information System (GIS) applications known as Avista Facility Management (AFM). AFM 7
is the system of record for spatial electric facilities in Washington and Idaho and natural gas 8
facility data in Washington, Idaho and Oregon, and provides the connectivity model to support 9
GIS engineering and analysis applications. AFM is a cornerstone to Avista’s ability to provide 10
responsive service across its territory. Replacing AFM will enable Avista to take advantage 11
of commercial GIS applications that provide improved mobile and desktop functionality, 12
increased collaboration capabilities and increased reliability. The proposed next generation 13
applications will enable Avista workers, office and field, to respond to customer requests 14
faster; provide information to customers that is more accurate, timely and complete; and 15
improve customer experience when interacting with Avista. By investing in new commercial 16
solutions, Avista gains the ability to integrate with natural gas and electric planning and 17
analysis tools more fully. This leads to a better understanding of infrastructure weaknesses 18
that may exist and be able to proactively reinforce those areas improving reliability for our 19
customers. 20
21
Outage Management System & Advanced Distribution Management System (OMS & 22
ADMS) – 2022: $631,000; 2025: $33,190,000 23
Avista’s Outage Management Tool (OMT) is an in-house developed custom application that 24
supports outage analysis, management, and restoration. OMT provides the functionality to 25
help manage the overall cycle of electric outage and restoration processes for the Idaho and 26
Washington service territories. It works in synchronization with Avista’s Distribution 27
Management System (DMS), feeding it current operating state data of its electric assets to 28
monitor and control Avista’s electric distribution network efficiently and reliably. The DMS 29
is a commercial application used to monitor and control the distribution grid. It relies on GIS 30
data to determine the current operating state. The OMT and DMS applications and electric 31
and gas data model have been used for nearly two decades and have reached technology 32
obsolescence. 33
34
Replacing Avista’s OMT and DMS with a modern commercial Outage Management System 35
(OMS) and Advanced Distribution Management System (ADMS) will improve field and 36
office worker productivity, provide more accurate data, and provide the ability to reengineer 37
work processes and methods to support the continuous improvement of Avista’s outage 38
management and restoration program. An OMS/ADMS solution also provides Avista with the 39
ability to respond to more stringent and detailed regulatory compliance reporting 40
requirements, enables effective operation of an increasingly complex and dynamic 41
distribution grid, and delivers more accurate estimated restoration time (ERT) information to 42
electric customers during outages. The improved ERT accuracy and restoration status for 43

Kensok, Di 20
Avista Corporation
customers will improve customer confidence in the information which will reduce the number 1
of calls received by our customer service representatives, as well as call durations. 2
3
The work is scheduled to start in late 2022 and early 2023, so that it can be completed while 4
the current data model used by OMT is still supported by the vendor. If the work is not 5
completed on schedule, there will be significant risks and costs to maintain the decades old 6
OMT with the existing data model and application version. 7
8
Energy Delivery Modernization & Operational Efficiency – 2022: $5,851,000; 2023: 9
$5,830,000; 2024: $3,349,000; 2025: $3,114,000 10
This business case supports both existing and new technologies leveraged by the Energy 11
Delivery business areas including Gas Engineering & Operations, Electric Engineering & 12
Operations, Asset Management & Supply Chain, Facilities, Fleet Operations, and Metering. 13
These technologies are used to automate and augment business solutions bringing efficiencies 14
and capabilities to support the delivery of energy to customers. This support includes the 15
following: 1) improving the performance and capacity of business resources by implementing 16
new functionality in existing technologies, 2) improving the performance and capacity of 17
business resources by implementing overall new technologies, and 3) modernizing existing 18
technologies in accordance with product lifecycles and technical roadmaps, typically through 19
product or system upgrades. 20
21
Major applications supported in this business case include Enterprise Asset Management 22
system (Maximo), mobile workforce management, crew planning and schedules, system 23
operations support, and metering support, among other things. 24
25
Direct offsetting benefits associated with this project of $100,000 for 2023 on a system basis 26
has been calculated and included in the Company’s revenue requirement as a reduction. These 27
savings are a result of avoiding extended support costs as a result of an upgrade to Maximo. 28
Those offsets are included in pro forma Adjustment 3.12. 29
30
Energy Resources Modernization & Operational Efficiency – 2022: $2,430,000; 2023: 31
$2,471,000; 2024: $2,965,000; 2025: $100,000 32
This program supports the application-related technology initiatives for all areas within 33
Energy Resources, which includes Power Supply, Gas Supply, Generation Production 34
Substation Support (GPSS), and Environmental and Real Estate. Application refresh projects 35
are necessary to maintain updates, upgrades and/or replacements to existing Energy Resource 36
applications, to respond to changing business needs and/or technical obsolescence. These 37
refreshes or upgrades are essential to remain current, maintain compatibility, reliability and 38
address security vulnerabilities. The Energy Resources programs supported in this business 39
case include support for Avista’s energy risk management and energy trading operations, 40
including Avista’s Decision Support System (ADSS), Nucleus (Avista’s energy transaction 41
book of record), and Energy Risk Management system, among other items. 42
43
Financial & Accounting Technology – 2022: $1,753,000; 2023: $2,053,000; 2024: 44
$1,900,000; 2025: $2,129,000 45
This program supports financial applications critical to maintaining the financial health and 46

Kensok, Di 21
Avista Corporation
compliance of regulatory requirements through the completion of reoccurring business 1
processes. The business processes change on a frequent basis, driven by several factors and is 2
dictated by the lifecycles of the applications governed in the business case, further requiring 3
resources and adaptive technology solutions. Investment in this program supports Company 4
applications including Oracle e-Business Suite, PowerPlan (for fixed assets and tax), 5
depreciation forecasting, supply chain support, and FERC reporting, among other things. 6
7
Human Resources Technology – 2022: $485,000; 2023: $435,000; 2024: $450,000 8
The Human Resources Technology business case supports the technology-related application 9
projects required for both expansion and refresh activities required within the Human 10
Resources business area. This program is required to support the application related 11
technology initiatives for all areas of Human Resources including Human Resources Labor 12
and Employee Relations, Leadership and Organizational Development, Human Resources 13
Shared Services, Craft Training, Safety, and Internal Communications. Direct offsetting 14
benefits for this business case of $16,300 for 2023 on a system basis, has been calculated and 15
included in the Company’s revenue requirement as a reduction. Those offsets, which are 16
related to reducing costs of printing, copier maintenance and filing of paper documents, are 17
included in pro forma Adjustment 3.12. 18
19
Legal & Compliance Technology – 2022: $163,000; 2023: $461,000; 2024: $465,000 20
The various business entities within Avista rely on the legal and compliance systems to ensure 21
business operations are done in the most efficient and cost-effective manner. The legal and 22
compliance technology systems vary from the simple to complex and require continuous 23
management of the enhancements needed to meet the internal and external business 24
requirements. 25
26
Information Related to “Security” Projects Listed in Table No. 1 27
Q. Please describe any major changes in “Security”. 28
A. In the Spring of 2021, President Biden’s Administration launched a 100-day 29
initiative to secure our nation’s critical infrastructure. The initiative focused primarily on 30
improving cybersecurity of industrial control systems of electric utilities. The initiative 31
represents swift, aggressive actions to confront cyber threats from adversaries who seek to 32
compromise critical systems that are essential to U.S. national and economic security. 33
Secondarily, in July of 2021, the Biden Administration expanded the initiative to 34
include natural gas pipelines. The initiative established voluntary cybersecurity goals, as well 35
as mandatory requirements that clearly outline expectations for owners and operators of 36

Kensok, Di 22
Avista Corporation
critical infrastructure. The voluntary goals and mandatory requirements are based on 1
cybersecurity ‘best practices’. Investments to meet the new mandatory obligations required a 2
reprioritization of 2021 planned investments in various areas of Enterprise Security, Business 3
Continuity, and Disaster Recovery. Furthermore, should requirements continue to change, 4
based on ever-changing cyberthreats, further reprioritization will continue in future years. 5
Q. Please describe major investments in Enterprise Security – Physical and 6
Cyber Security, Business Continuity, and Disaster Recovery from July 1, 2022 through 7
August 31, 2025. 8
A. Avista understands that a safe, reliable, and secure energy infrastructure is 9
essential to the economies in the areas that we serve and our customer's way of life and that 10
intruders can use a variety of cyber and physical attacks to try and disrupt the delivery of safe, 11
reliable, and secure energy. Cyber and physical attacks can not only have a reliability impact 12
but also can lead to data breaches, ransomware, or other costly system repairs and threaten 13
employee safety. Based on information from our government partners in the Information 14
Sharing and Analysis Centers (ISACs), FBI, DHS, TSA, and State Fusion Centers, we know 15
the attacks continue to grow in size and complexity and therefore it is prudent that Avista 16
continues to invest in its cyber, physical, business continuity, and compliance programs. 17
Investments in “Security” primarily fall into cyber and physical security, followed by 18
investments in business continuity and meeting new compliance requirements. 19
Critical Infrastructure Protection v5 Transition – Cyber Asset Electronic Access – 2023: 20
$416,000 21
Avista is required to meet North American Electric Reliability Corporation (“NERC”) Critical 22
Infrastructure Protection (“CIP”) Reliability Standards (“Standards”). Specifically, Avista has 23
been complying with CIP Version.3 Standards (“CIPv3”) and needs to transition to CIP 24
Version.5 Standards (CIPv5). This Business Case will support achieving compliance for Low 25
Impact Bulk Electric System Cyber Systems by implementing electronic access controls. 26
27

Kensok, Di 23
Avista Corporation
Identity and Access Governance – 2022: $595,000; 2023: $420,000; 2024: $201,000 1
Avista’s current Identity and Access Governance (IAG) program is a framework of business 2
processes, policies and technologies that facilitates the management of electronic or digital 3
identities. With an IAG framework in place, management can control user access to critical 4
information. The IAG program will create role-based system access profiles, define system 5
privileges, automate access management, and facilitate regular user access review and 6
validation. This solution will benefit Avista and its customers by adhering to the security 7
principle of ‘least privilege’, whereby individuals are limited access only to information and 8
resources necessary to perform their current and intended job functions. It also reduces the 9
risk associated with individuals having broad access to systems or to facilities their roles no 10
longer require. 11
12
Security Compliance – 2022: $235,000; 2023: $250,000; 2024: $250,000 13
This business case was originally titled NERC CIP Compliance in previous years. It was 14
focused on the cyber and physical security investments needed to meet new NERC CIP 15
standards. In response to various compliance agencies requiring updates or improvements to 16
Avista’s cyber and physical security, the Company determined that a broader scope was 17
necessary to achieve and maintain NERC CIP, Western Electricity Coordinating Council 18
(WECC), Transportation Security Administration (TSA), Payment Card Industry (PCI), 19
Federal Energy Regulatory Commission (FERC), and other emerging security compliance-20
driven requirements. Not being compliant is not a viable alternative, as it puts Avista’s cyber 21
and physical security posture at risk. 22
23
Enterprise Business Continuity – 2022: $41,000; 2023: $349,000; 2024: $100,000 24
Avista has developed and maintains an Enterprise Business Continuity Program to continually 25
enhance and improve the Company’s emergency response, business continuity, and disaster 26
recovery capabilities to ensure the continuity of its critical business process and systems under 27
crisis conditions. Severe storms, natural disasters, and significant security events are 28
unpredictable and, while they may have a low probability, they can have a high consequence. 29
These types of low frequency, high consequence events can have an impact on the resources 30
Avista depends on for its operations. 31
32
Enterprise Security – 2022: $2,216,000; 2023: $2,811,000; 2024: $1,405,000; 2025: 33
$956,000 34
Threat actors continue to evolve their tactics in response to our defenses and therefore 35
investments that were effective in the past, need to be enhanced with an upgrade or paired 36
with another solution to help mitigate new risk. Firewalls, anti-virus, and intrusion detection 37
systems all continue to evolve to ensure they are effective in preventing and detecting modern 38
attacks. Investing in physical and cyber security is a direct benefit to our customers, as it is 39
critical to the protection of the natural gas and electric infrastructure. It is also protecting the 40
Company’s sensitive customer, employee, operating, and financial information. Unable to 41
predict when or where the next attack will occur requires a proactive security posture to 42
identify, protect, detect, respond, and recover from any incident type. This may include a 43
physical breach to a Company facility, such as a construction yard or substation targeted for 44
copper wire or precious metals that can be cashed in for recycling, or a data breach to capture 45
sensitive customer information or operational data critical to delivering electric and natural 46

Kensok, Di 24
Avista Corporation
gas service that can be used to perpetuate future attacks on the Company or its customers. In 1
either case, theft of a physical or cyber asset can result in unanticipated costs to remediate 2
damages, risk the safety and reliability of the energy system, or release sensitive data that the 3
Company stewards. 4
5
Facilities and Storage Locations Security – 2022: $441,000; 2023: $370,000; 2024: 6
$345,000 7
This business case maintains security at our facilities and storage locations. Security remains 8
a concern at these locations. The locations contain people, equipment, and material that are 9
critical to support our day-to-day operations and, in turn, the delivery of safe and reliable gas 10
and electricity. A physical security incident at any of these locations may harm people, 11
damage equipment, or even restrict our ability to respond to customers. Investments under 12
this business case are prioritized based on risk to the people, equipment, and assets in each of 13
the Company’s facilities and storage locations. Company vehicles, tools, equipment, and spare 14
parts often used to maintain our energy infrastructure and respond to emergencies may be 15
affected without continuous investment in physical security protections at our facilities and 16
storage locations. 17
18
Generation, Substation & Gas Location Security – 2022: $725,000; 2023: $645,000; 19
2024: $518,000 20
This business case covers physical security at the Company’s generation, substation, and gas 21
locations. Many of these locations are remote, unmanned, and vulnerable, which makes them 22
difficult to protect. A physical security incident at any of these locations could deny, degrade, 23
or disrupt the delivery of energy. In addition, physical attacks can also give intruders access 24
to critical cyber equipment, which can lead to a cyber security event.. 25
26
Telecommunication & Network Distribution location Security – 2022: $97,000; 2023: 27
$161,000; 2024: $115,000; 2025: $110,000 28
Security is an expectation of companies today by customers. Especially companies considered 29
critical infrastructure. Protecting communication infrastructure is vital as many of Avista’s 30
business processes depend on network communications and without them, they could not 31
function which could have an impact on our day-to-day operations that are needed to support 32
our customers. Not funding these investments can pose risks to the assets Avista depends on 33
to conduct business and delivery safe and reliable energy. 34
35
V. IS/IT OPERATING AND MAINTENANCE EXPENSES 36
Q. Please describe the general make-up of IS/IT Operating & Maintenance 37
(O&M) costs. 38
A. IS/IT O&M consists of centralized expense for labor and non-labor security, 39
information services and technology expenses primarily driven by increasing trends of 40

Kensok, Di 25
Avista Corporation
software vendors changing how they license and deliver software solutions, and by capital 1
investment across all areas of the Company, including Energy Delivery, Energy Resources, 2
Customer, HR, Finance, IS/IT, etc. In general, for any investment the Company makes that 3
is enabled, supported, or secured by technology and requires ongoing licensing, maintenance 4
and support, those expenses will be centralized in IS/IT O&M. The expense impact of annual 5
and multi-year operating agreements surrounding capital investment reflects most of the 6
overall incremental increase and are primarily driven by the digital transformation of the 7
utility. Keeping pace with emerging technologies and taking advantage of the opportunities 8
digital technologies provide, drive the need for the Company to convert analog information 9
into digital form and to incorporate digital technologies into business processes and 10
interactions with our customers and within the utility itself. Some examples of investment 11
that support the Company’s digital transformation include, Energy Imbalance Market (EIM), 12
Customer at the Center Platform, Human Machine Interface, Project Atlas, and Enterprise 13
Security, to name a few. 14
Illustration No. 4 below, displays all IS/IT O&M expense from 2018 through 2022. 15
As discussed by Ms. Schultz, the Company has pro formed IS/IT expense using known and 16
measurable expenses available through 2022 only, as reflective of the level of expenses in 17
Rate Year 1 beginning September 2023. No incremental adjustment was included within the 18
pro formed Rate Year 2. 19

Kensok, Di 26
Avista Corporation
Illustration No. 4: Average Annual Growth Rate of Contracts, Labor & Periodic Non-1
Labor (System): 2
3
4
5
6
7
8
9
10
11
As shown above in Illustration No. 4, IS/IT system labor and periodic (typically usage-12
based monthly, not quarterly/annual) non-labor expenses remain relatively flat from 2018 13
through the test year, increasing at an annual average growth rate (AAGR) of 4%. During this 14
same period, known and measurable contracts increase at an AAGR of 21%.3 The resulting 15
change is driven largely by the need to support IS/IT and non-IS/IT investments, changes to 16
the licensing and delivery models of software vendors, and changing market conditions. An 17
example of a contract with built in escalation is with Oracle, which is the publisher of several 18
of the Company’s enterprise software systems including Customer Care and Billing (CC&B), 19
Meter Data Management (MDM) and Oracle Financials. Historically these contracts increased 20
roughly 4% annually, but Oracle has announced they will increase prices by up to 8% annually 21
beginning in 2023. Another example is with IBM, which publishes The Company’s asset 22
management tool (IBM Maximo) as well as its business intelligence performance 23
management tool (Cognos). Annual increases for IBM software maintenance and support 24

3 Known and measurable contracts refer to contracts currently entered into by the Company and other parties.

Kensok, Di 27
Avista Corporation
were consistent at 3%, though IBM upped their annual increase to 10% beginning in 2022. 1
Q. Please summarize the incremental IS/IT O&M expenses beyond the 2
Company’s 12 months-ended June 30, 2022 historical test period, included in this case. 3
A. In Ms. Schultz Electric and Natural Gas Pro Forma Studies, she has pro formed 4
security, information services, and technology expenses. IS/IT has narrowed the scope of 5
incremental expenses to known and measurable items that will be in place during the rate 6
period beginning in September 2023. It includes incremental employee labor driven by 7
compliance of cyber security and application patching requirements dictated by the 8
Department of Homeland Security’s (DHS) Transportation Security Administration (TSA). 9
Also included is the non-labor impact of annual and multiyear agreements for products and 10
services, licensing, and maintenance fees for a range of centralized information services. 11
These incremental expenditures are necessary to support the Company’s cyber and general 12
security, emergency operations readiness, electric and natural gas facilities and operations 13
support, and customer services. 14
Q. Will you please provide a summary table showing the O&M expenses pro 15
formed by the Company in this case? 16
A. Yes. Please see Table No. 2 below. This table includes the incremental labor 17
and non-labor expenses pro formed in the case, above test period levels, reflecting known and 18
measurable expenses representative of Rate Year 1 (and Rate Year 2). No incremental 19
adjustment for Rate Year 2, above Rate Year 1 levels, is known at this time. 20
Table No. 2 – Total Pro Formed Expenses - Rate Year 1 (System) 21
22
23
Total Pro Formed Expenses RY 1 Incremental
Labor $876,847
Non Labor $836,787
Grand Total $1,713,634

Kensok, Di 28
Avista Corporation
Q. What is driving the increase in labor O&M expense of $876,847 (system) 1
in Rate Year 1? 2
A. There are two compliance requirements driving the increase in labor O&M, 3
resulting in incremental labor expense for eight new employees above test period levels, 4
reflected in Rate Year 1 (and Rate Year 2). The first compliance driver is in response to the 5
ongoing cybersecurity threat to pipeline systems. Department of Homeland Security’s TSA 6
announced the issuance of certain Security Directives that impact the Company and require us 7
to implement a number of security protections. While TSA oversees natural gas, the 8
protections are overarching and protect Avista operations as a whole. For example, the latest 9
directive places an emphasis on vulnerability management and the time to patch a 10
vulnerability. This is due to the uptick in the number of vulnerabilities per year and the speed 11
at which they are exploited. As a point of reference, from 2015 to 2018 the number of 12
vulnerabilities increased from 6,487 to 17,305, while at the same time the adaptability, 13
sophistication, and speed at which cyber adversaries were targeting and exploiting known 14
vulnerabilities have also increased.4 For example, on Dec. 10, 2021, a newly discovered 15
vulnerability has put companies worldwide, including Avista, at risk. Hackers launched more 16
than 1.2 million attacks on companies globally within days of the discovery. The incident 17
response by our teams includes detecting the vulnerability in our systems, protecting our 18
systems where it is discovered, and remedying those systems with vulnerability patches as 19
they become available. To comply, Avista is making capital and O&M investments in 20
technologies to support the aforementioned Security protections. The capital costs will reoccur 21

4 Paraphrased from “Reducing the Significant Risk of Known Exploited Vulnerabilities”, Cybersecurity &
Infrastructure Security Agency, November 3, 2021:
https://www.cisa.gov/sites/default/files/publications/Reducing_the_Significant_Risk_of_Known_Exploited_V
ulnerabilities_211103.pdf

Kensok, Di 29
Avista Corporation
every 3-5 years and follow the investment refresh cycle, and the O&M costs will be sustained 1
year over year. To support this work, Avista has pro formed expense into this case related to 2
four new (incremental) “TSA Compliance” employees. Additionally, Physical Security 3
responsibilities are currently embedded and shared among many cybersecurity professionals 4
whose primary job responsibilities are protecting Avista from cybersecurity-related issues. 5
As cybersecurity issues continue to grow in scope and complexity this model is difficult to 6
maintain due to the increasing workload, the focus needed for cybersecurity and the shortage 7
of cybersecurity professionals. To remove the responsibility for Physical Security from 8
cybersecurity professionals, incremental labor expense has been pro formed to include a 9
Physical Security professional to handle the physical security workload. 10
The second compliance driver is in relation to the 2021 IBEW Local 77 contract, and 11
more specifically Article 16 negotiations (“Negotiations”) within the contract that speak to 12
our telecommunications organization. Prior to, and during negotiations, numerous grievances 13
were filed alleging infringement upon work by non-bargaining employees due to the 14
introduction and implementation of new technology systems that replaced legacy systems 15
traditionally supported by bargaining unit employees. The 2021 negotiations offered an 16
opportunity to provide a reset in roles/responsibilities and establish a path for future 17
adjustments in the skills and expertise of all applicable areas. These three new bargaining unit 18
technician positions (incremental additions that are not replacing existing positions) will be 19
trained to support the applicable new technologies. These new technician roles will also be 20
responsible for updating and maintaining our training program for the bargaining unit 21
employees as new technologies are introduced. The addition of new roles coupled with 22
changes to process and procedures will ensure the new technologies have adequately trained 23

Kensok, Di 30
Avista Corporation
support staff and well-maintained documentation. This will result in an overall increase in 1
efficiency and effectiveness of the technologies for our customers.5 2
In total, the O&M incremental labor costs of these eight new employee positions 3
amount to $876,847 (system) annually. See Table No. 3 below for a list of the positions 4
expected to be filled by end of Q4 2022. 5
Table No. 3: Pro Formed IS/IT Employees Above Test Period Levels (System) 6
7
8
9
10
11
12
Q. What is driving the increase in non-labor O&M expense of $836,787 13
(System) as shown in Table No. 2 earlier? 14
A. The main driver is capital investment in Enabling Technology, Business & 15
Operating Application Systems, and Enterprise Security from areas across the Company as 16
described earlier in my testimony. As digitalization drives technology further and further into 17
areas of the utility that traditionally were not as technology dependent, nearly all capital 18
investment - regardless of what functional area it supports - include technology components 19
that result in incremental increase to licensing, support and maintenance expense for those 20
systems. 21
Another significant driver is the increasing trend of software vendors changing how 22

5 Additional descriptions of each of the eight total incremental labor positions pro formed by the Company is
provided within the confidential workpapers of Ms. Schultz for Adjustment 3.04 – Pro Forma IS/IT Expenses.

Kensok, Di 31
Avista Corporation
they license and deliver software solutions; examples include a shift from a perpetual license 1
to a subscription license, or from an on-premise solution to a cloud-based solution. In addition, 2
software vendors regularly increase the cost of ongoing maintenance and support to keep up 3
with the cost of enhancing, fixing and supporting their products, and to align with market 4
driven forces such as annual consumer price index increases and inflation. 5
As digital transformation increases the number and complexity of systems dependent 6
on information technology, the Company prudently negotiates annual and multi-year 7
agreements to normalize, control and manage IS/IT expense to the benefit of our customers. 8
The non-labor incremental increase in this adjustment is the result of known and measurable 9
expense from those annual and multi-year agreements currently in place or continuation of 10
agreements expected, that have increased beyond the 12-months ended June 30, 2022 11
historical test period. A breakdown of the incremental increase to expense of $836,787 12
(system) by technology type is include in Table No. 4 below: 13
Table No. 4: Non-Labor Incremental System Expense (System) for Rate Year 1:* 14
*No incremental adjustment for Rate Year 2, above Rate Year 1 levels, is known at this time. 15
16
17
18
19
Q. Table No. 4 includes an increase of $836,787 (System) in RY 1, and it 20
appears that most of this increase is related to the Business & Operating Application 21
Systems. Please describe the reasons for the increase in the Business & Operating 22
Application Systems area. 23
A. The primary increases to the Business & Operating Application Systems 24
General Tech Type Test Year RY1
RY 1
Incremental
Enabling Technology $5,264,677 $4,930,725 ($333,952)
Business & Operating
Application Systems $13,306,959 $14,263,280 $956,322
Enterprise Security $1,998,676 $2,213,093 $214,417
Grand Total $20,570,311 $21,407,098 $836,787
1

Kensok, Di 32
Avista Corporation
originate from non-IS/IT capital investments within the Customer Technology area. More 1
specifically, the Customer Load Disaggregation Platform service, an energy monitoring and 2
management platform for eco energy savings, and Salesforce for CRM/CXP, account for 3
nearly $750,000 of the Rate Year 1 incremental change within Business & Operating 4
Application Systems. Additional discussion below describes non-IS/IT capital drivers of IS/IT 5
O&M. 6
Incremental reductions within Enabling Technology from test year to Rate Year 1 7
result primarily from the restructuring of key licensing agreements within the Hardware 8
License Support and Software License Support categories. A prime example is Schneider 9
Electric Smart Grid Services, a tool used by electric, gas and network personnel to design and 10
manage assets, which moved from a one-year agreement to a three-year agreement. Prepaying 11
for three years allowed Avista to achieve both an $80,000 discount with the vendor and meet 12
our cost of capital. In total, Avista paid $1 million for the multi-year agreement versus $1.08 13
million, had we maintained annual payments for three years. Additionally, moving to a multi-14
year agreement drove an accounting change from being 100% O&M to 80% capital and 20% 15
O&M. Net present value calculations were run for both options and, ultimately, the prudent 16
business decision was made for our rate payers which resulted in a shift from O&M to capital 17
of approximately $166,000 (system) from test year to Rate Year 1. 18
Q. What are the primary types of incremental IS/IT non-labor O&M 19
expense? 20
A. The primary types of incremental non-labor O&M expenses include Hardware 21
and Software License support and maintenance, and Software Services and Subscriptions. 22
Hardware and Software License support and maintenance are costs associated with a 23

Kensok, Di 33
Avista Corporation
traditional licensing model where a capital asset license is purchased along with the required 1
license support and maintenance costs. Support and maintenance costs are the ongoing 2
expense portion associated with vendor provided security patches, bug fixes, incremental 3
upgrades, and expert technical support with pre-determined service level agreements. 4
Software Services and Subscriptions are costs associated with a less traditional but 5
increasingly more common licensing model where all or most of the license cost is considered 6
ongoing expense, rather than a capital asset. Examples include items like Software as a Service 7
(SaaS), data feeds, or site license subscriptions. Costs in this category range from solutions 8
that enable or supplement on premise systems, to complete end-to-end solutions 9
(infrastructure, networks, computing, storage, hosting, etc.) with little to no on-premise 10
footprint. The incremental expenses included in this case and displayed above in Table No. 11
4, on a system basis, are re-categorized and shown by general cost types in Table No. 5: 12
Table No. 5: Non-Labor O&M (System) 13
14
15
16
17
18
19
Q. Please describe what is being represented in Table No. 5. 20
A. As demonstrated, Table No. 5 represents an alternative view of the incremental 21
adjustment from Test Year to Rate Year 1, focusing on the general cost types of items that 22
make up the categories displayed in Table No. 4. As shown in Table No. 4, the largest single 23
1
General Cost Types Test Year RY1
RY 1
Incremental
Dedicated Voice and Data Circuits $78,970 $228,269 $149,299
Hardware License Support $1,544,417 $1,364,488 ($179,929)
Professional Services $648,216 $610,497 ($37,719)
Radio Tower Site Leases $274,954 $261,816 ($13,138)
Rental Expense - Equipment $120,768 $125,982 $5,214
Software License Support $10,002,908 $9,741,450 ($261,458)
Software Services and Subscriptions $7,893,949 $9,054,510 $1,160,561
Training $6,129 $6,129 $0
Wireless WAN $13,956 $13,956
Grand Total $20,570,311 $21,407,098 $836,787

Kensok, Di 34
Avista Corporation
driver of increased non-labor O&M costs is increases in software services and subscriptions, 1
of which the largest portion is a result of the non-IS/IT driven Customer Facing technology 2
capital project, as described below and shown in Illustration No. 5. 3
In addition, the Security Directives issued by the Department of Homeland Security’s 4
TSA directly impact Avista and require us to implement a number of security protections. The 5
need to meet these requirements has driven not only increases to labor O&M, but also non-6
labor O&M. New, Security driven software services and subscriptions have been brought into 7
portfolio to support these directives. Inflated market conditions have also caused greater than 8
average vendor price increases within the Software Services and Subscriptions category. 9
As shown in Table No. 5, above, the total incremental IS/IT non-labor O&M expenses 10
included in this general rate case above test period levels is approximately $837,000 (system). 11
The net effect of the incremental labor and non-labor IS/IT expenses, as discussed 12
above in Table No. 2, total approximately $1.7 million on a system basis, or $408,000 13
allocated to Idaho electric operations and $93,000 allocated to Idaho natural gas operations, 14
as discussed by Ms. Schultz within her direct testimony, and shown in Exhibit No. 4, 15
Schedules 1 (electric) and 2 (natural gas). 16
Q. Are IS/IT capital projects the only driver of incremental IS/IT O&M 17
expense? 18
A. No. As described earlier in my testimony, information technology is prevalent 19
throughout the utility and underpins most of the modern business and operating systems as a 20
result of the digital transformation of the utility. 21
Q. Provide an example of a non-IS/IT driven capital investment that is 22
driving incremental IS/IT O&M expense. 23

Kensok, Di 35
Avista Corporation
A. The Customer at the Center Platform is an initiative that consists of three 1
program investment areas: Customer Experience Platform (CXP), Customer Facing 2
Technology, and Customer Transactional Systems. These programs are described in further 3
detail in Company witness Ms. Hydzik’s testimony, as it is related to the Customer at the 4
Center program. While these projects are information system based, they are being sponsored 5
outside of my area, yet causing centralized costs in my area of responsibility. While 6
components of Customer Facing Technology have been in service for several years and drive 7
incremental IS/IT expense, more recently CXP and Customer Transactional Systems 8
investments have gone into service in phases starting from 2018 through today and will 9
continue. These non-IS/IT capital investments have driven increases in current and pro-10
formed IS/IT expense. 11
Q. Describe the incremental IS/IT O&M expense driven by the Customer at 12
the Center Platform investments. 13
A. The Customer Experience Platform is built upon a cloud computing offering 14
from Salesforce. Salesforce is an industry leading Customer Relationship Management 15
(CRM) solution and is only available as a SaaS solution. The cloud computing services are 16
billed on a per-user-per-month basis, thus resulting in an annual impact of $2.15 million 17
(system) as of 2022 on centralized O&M expense. This technology is enabling the business 18
to achieve their objectives around Customer at the Center Platform, as described by Ms. 19
Hydzik. 20
Additionally, teams in the Customer Facing Technology area made improvements to 21
technology for how customers report and check the status of power outages. This specific 22
solution is a compelling use case for Cloud computing technology that has enabled Avista to 23

Kensok, Di 36
Avista Corporation
meet the unpredictable demand. The total costs associated with all cloud computing services 1
are split between monthly and annual billings and have resulted in a net increase of $224,000 2
in 2022 centralized O&M expense. The above are a few examples of technology solutions for 3
the Customer at the Center Platform that resulted in increases to our centralized O&M 4
expenses. The provided CXP and CRM examples, in addition to Oracle Support for our 5
Customer Care and Billing, and Meter Data Management solutions, total approximately $3.35 6
million (system) annually, as of 2022, and have long been centralized in the IS/IT O&M 7
expense budgets. 8
Illustration No. 5, below, is an example of one non-IS/IT investment area that drives 9
IS/IT O&M. The visual displays the year over year change of known and measurable expense 10
from annual and multi-year agreements demonstrating the impact of Customer at the Center 11
Platform on all IS/IT contracts. As you can see, Customer at the Center Platform has grown 12
at a rate more than twice that of all other IS/IT contracts. 13
Illustration No. 5: Non-Labor O&M Driven by Customer Investments 14
15
16
17
18
19
20
21
22
Illustration No. 6, below, displays the percentage of IT, Security and Non-IT sourced 23
0
5
10
15
20
25
2018 2019 2020 2021 2022
Mi
l
l
i
o
n
s
Non-Labor O&M Driven by Customer Investments
Contracts: All Other Contracts: Customer at the Center
2018-2023 Average Annual Growth Rate:
Contracts: All Other: 14%
Contracts: Customer at the Center Platform: 31%

Kensok, Di 37
Avista Corporation
IS/IT non-labor O&M from the test year through Rate Year 1. As is clearly demonstrated, a 1
significant portion of IS/IT non-labor O&M is driven by Security and Non-IS/IT areas of the 2
business. 3
Illustration No. 6: IS/IT Non-Labor O&M Driven by Non-IS/IT 4
5
6
7
8
9
10
11
12
13
14
Q. Describe how technology system support and maintenance service 15
contracts provide value and benefit customers. 16
A. Technology systems are becoming more integrated and complex as business 17
transactions become more integrated and automated. These technology systems require 18
regular maintenance activities to stay current on security vulnerability patching, software 19
defect patching, and various software functionality changes. Due to the increase in complexity 20
of these systems, vendor support is needed to assist with root cause analysis when 21
troubleshooting failures in the system. Without support and maintenance services for these 22
technology systems the Company and our customers would experience longer system 23

Kensok, Di 38
Avista Corporation
downtimes due to complexities of root cause analysis. In addition, the Company would be at 1
increased risk of malicious activities in our technology systems if we did not have access to 2
software vulnerability patches, and our ability to optimize and maintain the business value of 3
the technology system would be degraded. 4
Q. How has Avista focused on managing its overall IS/IT expenses for the 5
benefit of its customers? 6
A. Avista employs several approaches to regularly assess, review, and take action 7
to manage and control IS/IT costs. One approach is through software application license 8
acquisition, renewal, and recovery. A software analyst works in conjunction with our technical 9
and business subject matter experts to negotiate right-sized licensing, and to review and 10
validate the value and use of software applications to identify opportunities to reduce and 11
remove unused license and maintenance costs prior to any renewal of software agreements. 12
An example of this practice from the current year occurred when ahead of the license 13
renewal for our data analytics platform we analyzed license assignments and usage. Our team 14
examined reporting from the platform to identify users that may not be fully leveraging the 15
service or do not justify the assigned license cost. Additionally, we surveyed users to 16
determine how the service was being used, and whether there was a lower cost/no cost 17
alternative that would meet their needs. 18
Avista regularly evaluates all available purchasing options from our software 19
vendors. As we approach the upcoming renewal of our Microsoft desktop business 20
applications, we have identified an option to combine three currently licensed application 21
suites under a single purchasing SKU. This move is anticipated to create a cost savings of 22
$173,052 over 3 years without any reduction in service or license entitlement. Additionally, 23

Kensok, Di 39
Avista Corporation
by analyzing the available volume pricing tiers we have identified a potential opportunity to 1
increase our licensed user count at onset of the agreement which may reduce the overall cost 2
by an additional $78,437, while providing room for user growth over the next 3 years (and 3
potentially reduce administrative overhead associated with processing license expansion 4
orders).6 5
Another approach Avista takes to manage and control IS/IT costs is to identify 6
opportunities to consider annual and multi-year agreements with software and service vendors 7
when business needs align with the duration of the agreement. These agreements allow Avista 8
to lock in pricing at or below current or expected market pricing, providing protection from 9
adverse market conditions, which benefits both Avista and our customers. An additional way 10
IS/IT looks to reduce expense over time is to seek further discounts from vendors in exchange 11
for pre-payment of annual and multi-year agreements. Avista prudently approaches pre-12
payment of software agreements which are considered and agreed to when the benefits of 13
prepayment outweigh the cost, or where the vendor requires it as part of the agreement. 14
Q. What are other methods Avista uses to manage its overall IS/IT expenses 15
for the benefit of its customers? 16
A. Another method which has been discussed above is the use of digitalization, 17
an industry-wide strategy that requires additional investment in IT’s support capabilities. As 18
existing and new services are digitalized, IT departments are experiencing a significant 19
increase in workloads. Although these increasing workloads are expected, we actively work 20
to decelerate the associated cost increases using automation technology and changes to our IT 21
operating models. 22

6 If during the process of the case, these contracts are renewed at a reduced cost then that included in the case,
the Company will reflect Idaho’s share of the possible savings.

Kensok, Di 40
Avista Corporation
Other examples of practices to manage and control IS/IT expense include training 1
employees to use mobile devices to scan documents and temper investment in 2
printing/scanning technology, and working with our Supply Chain department to negotiate 3
volume rebates ($257,250 in discounts from 2020 across capital and expense projects), and 4
early pay discounts ($160,181 in discounts from 2020, and $130,741 in 2021 through October, 5
across capital and expense projects) for technology products and services procured each year. 6
Q. Does this conclude your pre-filed direct testimony? 7
A. Yes. 8