HomeMy WebLinkAbout20230829Stipulation and Settlement.pdfSTIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 1
David J. Meyer, Esq.
Vice President and Chief Counsel of
Regulatory and Governmental Affairs
Avista Corporation
1411 E. Mission Avenue
P.O. Box 3727
Spokane, Washington 99220
Phone: (509) 495-4316
Chris Burdin
Deputy Attorney General
Idaho Public Utilities Commission Staff
P.O. Box 83720
Boise, ID 83720-0074
Phone: (208) 334-0357, Fax: (208) 334-3762
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION DBA
AVISTA UTILITIES REQUESTING
AUTHORITY TO REVISE ITS ELECTRIC
AND NATURAL GAS BOOK
DEPRECIATION RATES
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CASE NO. AVU-E-23-02
CASE NO. AVU-G-23-02
STIPULATION AND SETTLEMENT
This Stipulation is entered into by and among Avista Corporation, doing business as Avista
Utilities ("Avista" or "Company"), and the Staff of the Idaho Public Utilities Commission ("Staff'),
collectively referred to as the "Parties," representing all of the parties in the above-referenced
cases. The Parties understand this Stipulation is subject to approval by the Idaho Public Utilities
Commission ("IPUC" or the "Commission").
I. INTRODUCTION
1.The terms and conditions of this Stipulation are set forth herein. The Parties agree
that this Stipulation represents a fair, just and reasonable compromise of all the issues raised in the
proceeding, is in the public interest and its acceptance by the Commission represents a reasonable
resolution of the issues identified in this case. The Parties, therefore, recommend that the
RECEIVED
2023 AUGUST 29, 2023 3:30PM
IDAHO PUBLIC
UTILITIES COMMISSION
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 2
Commission, in accordance with RP 274, approve the Stipulation and all of its terms and
conditions without material change or condition. See IDAPA 31.01.01.274
II. BACKGROUND
2. On February 22, 2023, Avista filed an Application requesting authority to revise its
book depreciation rates. The Company requested authorization to revise its book depreciation
rates consistent with the results of the depreciation study undertaken by the Company.1 The
Company also requested that the Commission approve deferred accounting treatment if allocated
depreciation rates are not approved by all jurisdictions prior to September 1, 2023, resulting in a
difference between allocated depreciation expense included in Case Nos. AVU-E-23-01 and AVU-
G-23-01, and allocated depreciation expense ultimately approved in these dockets. The Company
further requested that the Application be processed by Modified Procedure through the use of
written comments. The study showed that the Idaho share of annual depreciation expense recorded
to O&M and A&G expense on the Company’s books should decrease by $1,248,960 for electric
plant and $329,186 for natural gas plant, based on the average service life rates of plant-in-service
as of December 31, 2021.
3. Because Avista is a utility that also provides service to electric and natural gas
customers in eastern Washington and natural gas in Oregon, it also filed depreciation studies in its
other jurisdictions under Docket Nos. UE-230123 and UG-230130 in Washington, and Docket No.
UM 2277 in Oregon. The Washington depreciation study is still being reviewed, whereas a
settlement of new depreciation rates was filed requesting approval with the Oregon Public Utility
Commission on June 21, 2023.
1 Avista hired Gannett Fleming, Inc. to undertake a depreciation study of its depreciable electric, gas and common plant in service.
The study was completed in 2022. The objective of this assignment was to recommend depreciation rates to be utilized by Avista
for accounting and ratemaking purposes.
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 3
4. On July 13, 2023 a settlement conference was held and attended by the Parties,
during which the Parties reached agreement on revisions to the Company’s book depreciation
rates. If ultimately approved by the Commission, in accordance with this Stipulation, such rates
would constitute revised depreciation rates, which would become effective for accounting
purposes on January 1, 2024, for both Idaho direct and common plant. Customer rates, however,
will reflect the revised depreciation rates per the Settlement in full in the Company’s next general
rate case, as discussed below.
5. Approval of this Stipulation prior to January 1, 2024, provides for the opportunity
to simultaneously implement new depreciation rates for accounting purposes for common plant in
all three jurisdictions in which Avista serves: Idaho, Washington, and Oregon.2 Allowing Idaho
common depreciation rate changes to be effective for accounting purposes at the same time as the
other two jurisdictions will synchronize the timing of the Company’s common depreciation
accounting changes for the three States, simplifying future accounting and audits of depreciation
expense, if the same rates and methodology are in effect for all jurisdictions.
III. TERMS OF THE STIPULATION AND SETTLEMENT
6. This Stipulation resolves all issues regarding proposed changes to the Company’s
depreciation rates as set forth in the filed depreciation study.
7. The Parties have agreed to book depreciation rates on directly assigned and
common plant effective January 1, 2024. The agreed-upon depreciation rates and summary detail
are shown in Attachments A through C. Attachment A provides a detail of all accounts for
comparison of Avista’s as-filed study results versus that agreed-to by the Parties, including plant
2 In Oregon, the Commission approved a Stipulation that will adjust common and direct plant depreciation items on
January 1, 2024. The Company’s request is still pending before the Washington Commission, with a proposed January
1, 2024, effective date.
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 4
accounts, specified depreciation rates, survivor curves, net salvage and composite remaining lives.
Attachment B includes a summary of the specific accounts revised by the Parties for electric (page
1) and natural gas (page 2), providing the survivor curves, salvage values, depreciation rates,
composite remaining lives and impact on Idaho electric and natural gas depreciation expense as
agreed-to by the Parties versus that as-filed by the Company. Attachment C provides a summary
of the change in Idaho depreciation expense by component, and by direct and allocated plant for
Idaho electric and Idaho natural gas plant versus existing Idaho electric and natural gas
depreciation expense on plant as of December 31, 2021.
8. The Stipulating Parties agree to the reserve adjustments that the Company proposed
in the filed case. To achieve a more stable accrual for certain general plant accounts in the future,
the Study recommended a five-year amortization to adjust unrecovered or over-recovered reserves
based on the amortization period by account. For Idaho, the reserve adjustment is a reduction to
expenses of $193,898 for electric and $59,170 for natural gas annually for five years.
9. Reflecting the agreed-upon depreciation/amortization rates for electric operations,
based upon plant balances at December 31, 2021, results in an annual overall decrease in
depreciation expense of approximately $2,808,875. See Table 1 (Electric) below and Attachments
B and C.
10. Reflecting the agreed-upon depreciation/amortization rates for natural gas
operations, based upon plant balances at December 31, 2021, results in an annual overall decrease
in depreciation expense of approximately $748,718. See Table 1 (Natural Gas) below and
Attachments B and C.
11. Summary Table No. 1 below captures the agreed-upon results:
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 5
Table I – Summary of Impact of Settlement on Depreciation Expense
Line 3, “Idaho Electric Distribution” reflects the Parties’ agreement to change Idaho
direct electric distribution accounts: 362, 364-366, 368, 369.20 - 369.30, and 373.10 -
373.50 as detailed in Attachment B, page 1. The overall impact of these agreed-to
adjustments reduces Idaho electric depreciation expense from that originally filed by
the Company by $1,366,017.
Line 4, “Idaho Natural Gas Distribution” reflects the Parties’ agreement to change
Idaho direct natural gas distribution accounts: 376, 378-380, and 385 as detailed in
Attachment B, page 2. The overall impact of these agreed-to adjustments reduces Idaho
natural gas depreciation expense from that originally filed by the Company by
$360,362.
12. The Parties agree to meet and confer prior to the filing of the next required
adjustment in depreciation rates in early 20283, in order to reexamine curves and other supporting
information regarding any proposed changes for the following list of accounts:
3 Every five (5) years the Company is required to reexamine depreciation rates in all jurisdictions in which it serves
any make any necessary adjustments.
Line Electric Gas
1 Depreciation study net impact per filings (1,442,858)$ (388,356)$
2 Agreed upon changes
3 ID Electric Distribution (1,366,017)
4 ID Natural Gas Distribution (360,362)
5 Net Impact Depreciation and Amortization (2,808,875) (748,718)
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 6
Table No. 2 – Accounts Subject to Further Examination Before Filing of Next Depreciation Study
13. Effective Date – Under this Stipulation, depreciation rates will change effective
January 1, 2024, within the Company’s books of record. Customer rates, however, will not fully
reflect this change until the Company’s next general rate case. On an annual basis, the net change
in electric and natural gas depreciation expense, versus that included in existing base rates
beginning September 1, 2023, will be deferred for recovery or return to customers, until a change
in rates occurs as a result of the Company’s next general rate case.
14. The Parties agree, consistent with Avista’s General Rate Case (“GRC”) in Case
Nos. AVU-E-23-01 and AVU-G-23-01, to the extent depreciation rates and the effective date of
the change in depreciation rates approved in these dockets (Case Nos. AVU-E-23-02 and AVU-
G-23-02), vary from the depreciation rates or effective date utilized to determine depreciation
expense included in GRC Case Nos. AVU-E-23-02 and AVU-G-23-02, the Company will defer
the difference in depreciation expense included and approved in the GRC, versus the actual
depreciation expense recorded on the Company’s books of record, as a result of the approved
Transmission
354.00 Towers and Fixtures
356.00 Overhead Conductors and Devices
Electric Distribution
365.00 Overhead Conductors and Devices
366.00 Underground Conduit
369.10 Overhead
369.20 Underground - Spokane Network
369.30 Underground - Other
Transportation
396.30 Medium Trucks
396.40 Heavy Trucks
396.50 Other
Natural Gas Distribution
376.00 Mains
385.00 Industrial Measuring and Regulating Station Equipment
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 7
depreciation rates and effective date per this case (Case Nos. AVU-E-23-02 and AVU-G-23-02).
Amounts deferred will be the subject of review and recovery or return to customers in a future
GRC or other proceeding.4
15. Thusfar, the Company has reached an agreement with the Parties in these dockets
and in the pending Oregon depreciation docket (UM 2277), as reflected in settlement Stipulations
awaiting approval by the respective Commissions. These Stipulations reflect consistent treatment
of depreciation on allocated plant items in service in Idaho and Oregon. Treatment of those same
allocated plant items (as well as additional Washington and Idaho only allocated plant items),
however, awaits final resolution in the State of Washington, which is expected before January 1,
2024. Consistent resolution of all common and other allocated plant depreciation across all
affected jurisdictions is necessary in order for the Company to fully recover its allocated plant
depreciation. Accordingly, Staff and the Company agree to re-open the terms of this Stipulation,
if necessary, as it relates to common and other allocated plant only, to reflect any further
adjustments to common and other allocated plant, that can be agreed to, in order to achieve
consistency with treatment in other jurisdictions. Nothing herein, however, shall require that Idaho
must conform to the treatment of common or other allocated plant in other jurisdictions, only that
4 Depreciation rates and the impact on depreciation expense per the original (as-filed) Depreciation Study were
included in the Company’s GRC, Case Nos. AVU-E-23-01 and AVU-G-23-01, with an assumed effective date of
September 1, 2023. The Settlement Stipulation agreed-to by the GRC Settling Parties in the GRC included a reduction
in electric and natural gas depreciation expense on existing plant, effective September 1, 2023, of approximately $1.5
million for electric plant and $325,000 for natural gas plant annually, with a deferral provision in place to reflect any
differences as discussed above. For the period September 1, 2023, through December 31, 2023, the Company
anticipates recording a deferred balance owed from customers of approximately $424,000 electric and $87,000 natural
gas, until depreciation rates change as a result of these dockets on January 1, 2024. Beginning January 1, 2024, the
Company anticipates recording an annual deferred liability owed to customers of approximately $1.5 million for
electric and $380,000 for natural gas. The deferral values may vary slightly due to agreed-to capital investment
included in the GRC. The deferral will cease on or after August 31, 2025, dependent on the rate effective date of the
Company’s next GRC, with the cumulative net deferred balance refunded to customers in the next GRC or other
proceeding.
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 8
the terms of this Stipulation will be revisited in an effort to harmonize common and other allocated
plant depreciation across all affected jurisdictions.
16. If this Commission has, by Order, already approved this Stipulation, the Company
and Staff agree to jointly petition the Commission to subsequently revise its Order to reflect any
subsequent agreed-upon changes to common and allocated plant depreciation, in order to achieve
consistency across all affected jurisdictions.
IV. GENERAL PROVISIONS
17. The Parties agree that this Stipulation represents a compromise of the positions of
the Parties in this case. As provided in RP 272, other than any comments filed in support of the
approval of this Stipulation, and except to the extent necessary for a Party to explain before the
Commission its own statements and positions with respect to the Stipulation, all statements made
and positions taken in negotiations relating to this Stipulation shall be confidential and will not be
admissible in evidence in this or any other proceeding. See IDAPA 31.01.01.274.
18. The Parties submit this Stipulation to the Commission and recommend approval in
its entirety pursuant to RP 274. Parties shall support this Stipulation before the Commission, and
no Party shall appeal a Commission Order approving the Stipulation or an issue resolved by the
Stipulation. If this Stipulation is challenged by any person not a party to the Stipulation, the Parties
to this Stipulation reserve the right to file testimony, cross-examine witnesses and put on such case
as they deem appropriate to respond fully to the issues presented, including the right to raise issues
that are incorporated in the settlement terms embodied in this Stipulation. Notwithstanding this
reservation of rights, the Parties to this Stipulation agree that they will continue to support the
Commission’s adoption of the terms of this Stipulation.
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 9
19. If the Commission rejects any part or all of this Stipulation or imposes any
additional material conditions on approval of this Stipulation, each Party reserves the right, upon
written notice to the Commission and the other Parties to this proceeding, within 14 days of the
date of such action by the Commission, to withdraw from this Stipulation. In such case, no Party
shall be bound or prejudiced by the terms of this Stipulation, and each Party shall be entitled to
seek reconsideration of the Commission's order, file testimony as it chooses, cross-examine
witnesses, and do all other things necessary to put on such case as it deems appropriate. In such
case, the Parties immediately will request the prompt reconvening of a prehearing conference for
purposes of establishing a procedural schedule for the completion of the case. The Parties agree to
cooperate in development of a schedule that concludes the proceeding on the earliest possible date,
taking into account the needs of the Parties in participating in hearings and preparing testimony
and briefs.
20. The Parties agree that this Stipulation is in the public interest and that all of its terms
and conditions are fair, just and reasonable.
21. No Party shall be bound, benefited or prejudiced by any position asserted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an acknowledgment
by any Party of the validity or invalidity of any particular method, theory or principle of regulation
or cost recovery. No Party shall be deemed to have agreed that any method, theory or principle of
regulation or cost recovery employed in arriving at this Stipulation is appropriate for resolving any
issues in any other proceeding in the future. No findings of fact or conclusions of law other than
those stated herein shall be deemed to be implicit in this Stipulation.
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 10
22. The obligations of the Parties under this Stipulation are subject to the Commission's
approval of this Stipulation in accordance with its terms and conditions and upon such approval
being upheld on appeal, if any, by a court of competent jurisdiction.
23. This Stipulation may be executed in counterparts and each signed counterpart shall
constitute an original document.
DATED this 29th day of August, 2023.
Avista Corporation
By: /s/ David J. Meyer
David J. Meyer
Attorney for Avista Corporation
Idaho Public Utilities Commission Staff
By:
Chris Burdin
Deputy Attorney General
STIPULATION AND SETTLEMENT – AVU-E-23-02 and AVU-G-23-02 Page 10
22.The obligations of the Parties under this Stipulation are subject to the Commission's
approval of this Stipulation in accordance with its terms and conditions and upon such approval
being upheld on appeal, if any, by a court of competent jurisdiction.
23.This Stipulation may be executed in counterparts and each signed counterpart shall
constitute an original document.
DATED this ____ day of August, 2023.
Avista Corporation
By:
David J. Meyer
Attorney for Avista Corporation
Idaho Public Utilities Commission Staff
By:
Chris Burdin
Deputy Attorney General