20050317_1120.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:RICK STERLING
KATHY STOCKTON
DATE:MARCH 14, 2005
RE:ANNUAL REVISIONS TO A VISTA'S SCHEDULE 51 - LINE
EXTENSION, CONVERSION AND RELOCATION SCHEDULE.
On February 21 2005 Avista Utilities filed revised Schedule 51 , the Company s Line
Extension, Conversion and Relocation schedule in compliance with Order No. 28562 issued on
November 27 2000 in Case No. A VU-OO-l. Avista is required by the order to make an annual
filing, on or before April 1 , updating its line extension costs and charges to reflect actual costs
incurred in the previous calendar year.
Staff has reviewed the revised tariff and finds that it incorporates all of the changes
ordered by the Commission in Order No. 28562. Most of the revised line extension costs shown
in the proposed tariff sheets reflect a decrease from the cost in the current Schedule. This
decrease in costs is primarily the result of a substantial reduction in the overhead rate applied to
construction material costs. The Company states that it has undergone an extensive review and
modification of its purchasing activities and practices. As a result, purchasing activities have
been streamlined and the pool of construction materials used for overhead allocation was
expanded. The overhead rate went from 20 percent to 8.5 percent in 2004 and Avista expects it
to remain at that level during 2005. Staff has reviewed the reduction in overhead and believes it
is appropriate.
In addition to updating costs in Schedule 51 , A vista has also made a minor change in the
language of Section 2( c). This change was made to eliminate possible confusion and has no
material effect on the tariff.
DECISION MEMORANDUM - 1 -MARCH 14, 2005
Staff recommends approval of the revised tariff with an effective date of March 2005.
Rick terling
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DECISION MEMORANDUM - 2-MARCH 14, 2005