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HomeMy WebLinkAbout20051220_1419.pdfDECISION MEMORANDUM TO:COMMISSIONER KJELLANDER COMMISSIONER SMITH COMMISSIONER HANSEN COMMISSION SECRETARY COMMISSION STAFF LEGAL FROM:CECELIA A. GASSNER DATE:DECEMBER 15, 2005 SUBJECT:CASE NOS. A VU-05-3 AND A VU-05-9; A VISTA CORPORATION' APPLICATION FOR AN ACCOUNTING ORDER REGARDNG TREATMENT OF CERTAIN ASSET REQUIREMENT OBLIGATIONS RESULTING FROM IMPLEMENTATION OF SFAS 143 On November 30, 2005 , Avista Corporation ("Avista" or "Company ) filed an Application with the Idaho Public Utilities Commission ("Commission ) seeking an accounting order authorizing the Company to treat certain asset retirement obligations ("AROs ) for the current and future fiscal years in accordance with Statement of Financial Accounting Standards (SFAS) 143. Pursuant to Idaho Code ~ 61-524, the Commission is empowered to establish a system of accounts to be kept by public utilities subject to its jurisdiction. THE APPLI CA TI 0 N In its Application, A vista has requested an accounting order authorizing the Company to (1) record, as a regulatory asset or a regulatory liability, the cumulative financial statement impacting resulting from the Company s implementation of SF AS 143; and (2) record on an ongoing basis, as a regulatory asset or a regulatory liability, an amount equal to the difference between the annual SFAS 143 accretion and depreciation expense and the annual depreciation expense based on Commission-approved depreciation rates. Under SF AS 143 entities are required to recognize and account for certain asset retirement obligations in a manner different from the way that A vista and other public utilities have traditionally recognized and accounted for such costs. Specifically, if a legally enforceable ARO, as defined by SF AS 143, is deemed to exist, an entity must measure and record the liability for the ARO on its books. DECISION MEMORANDUM The Application states that the Company has determined that it will be required to record AROs under SFAS 143 for certain assets. The Company states that the proposed accounting treatment will have no impact for ratemaking purposes. The Company further states that nothing in the Application is intended to request any approval regarding future ratemaking treatment. The accounting changes proposed in the Application are supported by a series of exhibits identifying the accounting entries the Company believes are needed for compliance with SF AS 143. ST AFF RECOMMENDATION Staff recommends that the Company s Application be processed by Modified Procedure with a 21-day comment period. This should allow sufficient time for interested parties to review the Company s Application and file their comments with the Commission. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-.204. COMMISSION DECISION Does the Commission preliminarily find that the public interest may not require hearing to consider the issues presented in this case, and that this case is appropriate for Modified Procedure pursuant to Commission Rules of Procedure 201 through 204? Does the Commission approve of a comment period of 21 days? Cecelia . Gassner M:A VUE0503 _0509- cg DECISION MEMORANDUM