20231026Comments of the Commission Staff.pdf

CHRIS BURDIN O
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720 CBOISE,IDAHO 83720-0074 MMlâSiCN(208)334-0314
IDAHO BAR NO.9810
Street Address for Express Mail:
11331 W CHINDEN BLVD,BLDG 8,SUITE 201-A
BOISE,ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )AVISTA CORPORATION,D/B/A AVISTA )CASE NO.AVU-E-23-02UTILITIES,REQUESTINGAUTHORITY TO )AVU-G-23-02REVISEITSELECTRICANDNATURALGAS)BOOK DEPRECIATION RATES AND )COMMENTS OF THEAUTHORIZEDEFERREDACCOUNTING)COMMISSION STAFF INTREATMENTFORTHEDIFFERENCEIN)SUPPORT OF STIPULATION
DEPRECIATION EXPENSE )AND SETTLEMENT
STAFF OF the Idaho Public Utilities Commission ("Staff"),by and through its Attorney
of record,Chris Burdin,Deputy Attorney General,submits the followingcomments.
BACKGROUND
On February 22,2023,Avista Corporation,doing business as Avista Utilities
("Company"),applied for approval of a proposed change to electric and natural gas book
depreciation rates ("Application").The Company also requests that the Commission approve
deferred accounting treatment if allocated depreciation rates are not approvedby 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.
STAFF COMMENTS 1 OCTOBER 26,2023
On March 15,2023,the Commission issued a Notice of Application and Notice of
Intervention Deadline.Order No.35709.No parties intervened.On April 27,2023,the
Commission issued a Notice of Modified Procedure setting an August 8,2023,comment
deadline,and an August 15,2023,reply comment deadline.Order No.35754.
On July 13,2023,the Commission Staff ("Staff")and the Company,the only parties in
this case,participated in a settlement conference.On August 1,2023,Staff requested that the
Commission vacate the existing comment deadlines until a Proposed Settlement was filed.On
August 2,2023,the Commission issued an Order Vacating Comment Deadlines.Order No.
35874.
On August 29,2023,the Company and Staff ("the Parties")filed a Stipulation and
Settlement ("Proposed Settlement")and a Motion for Approval.On September 14,2023,the
Commission issued a Notice of Proposed Settlement and Notice of Modified Procedure setting
an October 26,2023,comment deadline.Order No.35924.
APPLICATION
The Company represents that it hired Gannett Fleming,Inc.to undertake a depreciation
study of its depreciable electric,gas,and common plant in service as of December 31,2021.The
Company submitted the followingtable with existing and proposed weighted depreciation rates,
by functional group,for its Idaho electric and natural gas plants.Application at 3.
Table No.1:Electric Weighted Group Depreciation Rates -Existing vs Proposed
Weighted Group Depreciation Rates
Functional Group Existing Proposed
Steam Production Plant 4.31%4.17%
Hydraulic Production Plant 2.19%2.27%
Other Production Plant 3.59%3.09%
Transmission Plant 2.07%2.32%
Distribution Plant 2.69%2.47%
General Plant 6.55%6.41%
Table No.2:Natural Gas Weighted Group Depreciation Rates -Existing vs Proposed
Weighted Group Depreciation Rates
Functional Group Existing Proposed
Underground Storage 1.50%l.51%
Distribution Plant 2.34%2.24%
General Plant 6.55%6.41%
STAFF COMMENTS 2 OCTOBER 26,2023
The Company represents that the results show its current annual depreciation expense for
its Idaho electric and natural gas service,would be decreased by $1,248,960 and $329,186,
respectively,by setting the depreciation accrual rates at the recommended levels.The Company
states that this recommended change is necessary to update asset lives and existing depreciation
accrual rates,which are currentlybased upon a depreciation study completed in 2018.
The Company represents that the overall net decrease in Idaho electric depreciation is
mainly driven by changes in net salvage values and average useful lives of production plant and
distribution assets,offset by changes in salvage costs for transmission assets.The Company
states that the overall decrease in Idaho natural gas depreciation expense is generally driven by
changes in net salvage values for distribution plant assets and increases in service lives for
transportation equipment.
The Company represents that it is not proposing any adjustments to the levels currently
approved for the production assets at the Colstrip production plant.
STAFF REVIEW OF PROPOSED SETTLEMENT
Staff reviewed the Company's Application and attachments,includingthe Depreciation
Study completed in 2022,formal and informal Production Requests,and audited the Company's
records.During the review,Staff analyzed the depreciation rates,service lives,remaining lives,
Iowa survivor curves,and net salvage values for all plant asset accounts.Based on the Staff's
review,and negotiations with the Company,Staff believes that the Proposed Settlement
represents a fair,just,and reasonable compromise of all issues raised in this case,and is in the
public interest.
The Parties have agreed to book depreciation rates on directly assigned and common
plant effective January 1,2024.Proposed Settlement at 3.Attachment A lists the depreciation
details for all accounts as agreed to in the Proposed Settlement.This attachment provides the
basic information required for Staff to verify depreciation expenses in cases.Whenever possible,
consistent depreciation rates for common system plant in service in all three jurisdictionswill
allow Staff to audit depreciation expenses more efficiently and minimizes the Company's
expenses to track different rates.
STAFF COMMENTS 3 OCTOBER 26,2023
The Parties agree to Company proposed reserve adjustments.These adjustments reduce
Idaho expenses annuallyby $193,898 for electric and $59,170 for natural gas over the five-year
amortization period.Id.at 4.
The agreed upon depreciation/amortization rates result in an annual Idaho overall
decrease in depreciation expense of approximately $2,808,875 for electric and $748,718 for
natural gas.Id.These reductions are calculated based on plant balances as of December 31,
2021,and shown on Table No.1 and Attachments B and C of the Proposed Settlement.
Staff has concerns that for some accounts the Iowa survivor curves and salvage values
may not adequatelyrepresent available data points and trends.Over time,this can result in less
accuracy in depreciation rates and possibly less timely future adjustments.The Parties agree to
meet to reexamine curves and supporting data on specific accounts prior to the next five-year
depreciation filing in 2028.Id.at 5-6.At a minimum,the twelve accounts identified in Table
No.2 will be further explored.
Under the Proposed Settlement the Parties agree that to the extent depreciation rates and
the effective date of the change in depreciation rates approved in these cases vary from the
depreciation rates or effective date utilized to determine depreciation expense included in the
General Rate Cases,Case Nos.AVU-E-23-01 and AVU-G-23-01,the Company will defer
beginning September 1,2023,the difference in depreciation expense included and approved in
the General Rate Cases,versus the actual depreciation expense recorded on the Company's
books of record,as a result of the approved depreciation rates and effective date per these cases.
Id.at 6-7.
Under the Proposed Settlement the parties agree to re-open the terms of the Proposed
Settlement,or jointly petition the Commission to subsequently revise its Order,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.Id.at 7-8.
PUBLIC COMMENTS
As of October 25,2023,the Commission has not received any comments from customers.
STAFF COMMENTS 4 OCTOBER 26,2023
STAFF RECOMMENDATION
Staff believes that the Proposed Settlement represents a fair,just,and reasonable
compromise for all issues raised in the case.The Proposed settlement results in an overall
decrease to depreciation and reserve amortization expenses.Therefore,Staff recommends the
Commission approve the Settlement and Attachments with all terms and conditions effective
January 1,2024.
Respectfully submitted this 26th day of October 2023.
Deputy AttorneyGeneral
Technical Staff:Terri Carlock
Ty Johnson
Travis Culbertson
Rick Keller
Shubra Deb Paul
i:umisc/comments/AVU-E-23-02 AVU-G-23-02 Comments
STAFF COMMENTS 5 OCTOBER 26,2023
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 26*DAY OF OCTOBER 2023,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF TO
AVISTA CORPORATION,IN CASE NOS.AVU-E-23-02/AVU-G-23-02,BY E-
MAILING A COPY THEREOF TO THE FOLLOWING:
PATRICK EHRBAR DAVID J MEYER
DIR OF REGULATORY AFFAIRS VP &CHIEF COUNSEL
AVISTA CORPORATION AVISTA CORPORATION
PO BOX 3727 PO BOX 3727
SPOKANE WA 99220-3727 SPOKANE WA 99220-3727
E-mail:[e-mail] E-mail:[e-mail]
[e-mail]
SECRETARY
CERTIFICATE OF SERVICE