XML 129 R34.htm IDEA: XBRL DOCUMENT

Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2012

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain prior year amounts on the Company's Consolidated Statements of Income, Consolidated Balance Sheets, and Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation. In the current year Consolidated Statements of Income, Ecova operating revenues and operating expenses have been reclassified to separate line items. Previously, such amounts had been classified within the line items captioned "Other non-utility revenues" and “Other non-utility operating expenses”, respectively. Also, see Note 1, “Other Income-Net” concerning a corrective reclassification made to certain 2011 and 2010 operating expenses. In the current year Consolidated Balance Sheets, "Intangible assets" are presented as their own line item. These were previously included in "Other intangibles, property and investments, net", which has now been renamed to "Other property and investments, net". In the current year Consolidated Statements of Cash Flows, "Pension and other postretirement benefit expense" and "Amortization of Spokane Energy contract" have been added as their own line items. These were previously included in "Other" in the operating activities section. Also, "Payments for settlements with Coeur d'Alene Tribe" was previously included as its own line item in operating activities. This has how been included in "Other" in the operating activities section.

Nature Of Business

Nature of Business

Avista Corporation (Avista Corp. or the Company) is an energy company engaged in the generation, transmission and distribution of energy, as well as other energy-related businesses. Avista Utilities is an operating division of Avista Corp., comprising the regulated utility operations. Avista Utilities generates, transmits and distributes electricity in parts of eastern Washington and northern Idaho. In addition, Avista Utilities has electric generating facilities in Montana and northern Oregon. Avista Utilities also provides natural gas distribution service in parts of eastern Washington and northern Idaho, as well as parts of northeastern and southwestern Oregon. Avista Capital, Inc. (Avista Capital), a wholly owned subsidiary of Avista Corp., is the parent company of all of the subsidiary companies in the non-utility businesses, except Spokane Energy, LLC (Spokane Energy). Avista Capital’s subsidiaries include Ecova, Inc. (Ecova), a 79.0 percent owned subsidiary as of December 31, 2012. Ecova is a provider of energy efficiency and other facility information and cost management programs and services for multi-site customers and utilities throughout North America. See Note 24 for business segment information.

Basis Of Reporting

Basis of Reporting

The consolidated financial statements include the assets, liabilities, revenues and expenses of the Company and its subsidiaries, including Ecova and other majority owned subsidiaries and variable interest entities for which the Company or its subsidiaries are the primary beneficiaries. Intercompany balances were eliminated in consolidation. The accompanying consolidated financial statements include the Company’s proportionate share of utility plant and related operations resulting from its interests in jointly owned plants (see Note 7).

Use Of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. Significant estimates include:


•	determining the market value of energy commodity derivative assets and liabilities,


•	pension and other postretirement benefit plan obligations,


•	contingent liabilities,


•	recoverability of regulatory assets, and


•	unbilled revenues.

Changes in these estimates and assumptions are considered reasonably possible and may have a material effect on the consolidated financial statements and thus actual results could differ from the amounts reported and disclosed herein.

System Of Accounts

System of Accounts

The accounting records of the Company’s utility operations are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission (FERC) and adopted by the state regulatory commissions in Washington, Idaho, Montana and Oregon.

Regulation

The Company is subject to state regulation in Washington, Idaho, Montana and Oregon. The Company is also subject to federal regulation primarily by the FERC, as well as various other federal agencies with regulatory oversight of particular aspects of its operations.

Utility Revenues

Utility revenues related to the sale of energy are recorded when service is rendered or energy is delivered to customers. Revenues and resource costs from Avista Utilities’ settled energy contracts that are “booked out” (not physically delivered) are reported on a net basis as part of utility revenues. The determination of the energy sales to individual customers is based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each calendar month, the amount of energy delivered to customers since the date of the last meter reading is estimated and the corresponding unbilled revenue is estimated and recorded.

Accounts receivable includes unbilled energy revenues of the following amounts as of December 31 (dollars in thousands):



	2012		2011
Unbilled accounts receivable	$	77,298	$	82,950

Ecova Revenues

Service revenues from Ecova are recognized over the period services are rendered, which is typically on a straight-line basis for fixed-fee or project-fee engagements or ratably for other types of services. New client account setup fees and implementation (onboarding) fees are deferred and recognized over the contractual life that approximates the expected customer relationship, which is typically the contract period. Investment earnings on funds held for clients and fees earned from third parties on payment processing are an integral part of Ecova’s product offerings and are recognized in revenues as earned. Revenue arrangements with multiple elements occur infrequently and generally represent a very small percentage of total Ecova revenues. When they occur, the separate deliverables are divided into separate units of accounting if certain criteria are met, and the total consideration received is allocated among the different deliverables using the relative selling price method. In most cases, management uses its best estimate of the selling price for each deliverable to determine the amount of consideration to allocate and revenue is recognized for each deliverable once all the applicable revenue recognition criteria are met. In the Consolidated Statements of Income, the full amount of Ecova revenues are recorded in operating revenues (inclusive of the noncontrolling interest portion), but then the noncontrolling interest share (currently 21.0 percent) is backed out in the "Net income attributable to noncontrolling interests" line on the Consolidated Statements of Income.

Non-Utility Revenues

Other Non-Utility Revenues

Revenues from the other businesses derived from the operations of Advanced Manufacturing and Development (doing business as METALfx) and are recognized when the risk of loss transfers to the customer, which occurs when products are shipped.

Advertising Expenses

The Company expenses advertising costs as incurred. Advertising expenses were not a material portion of the Company’s operating expenses in 2012, 2011 and 2010.

Depreciation

For utility operations, depreciation expense is estimated by a method of depreciation accounting utilizing composite rates for utility plant. Such rates are designed to provide for retirements of properties at the expiration of their service lives. For utility operations, the ratio of depreciation provisions to average depreciable property was as follows for the years ended December 31:



	2012		2011		2010
Ratio of depreciation to average depreciable property	2.92	%	2.92	%	2.84	%

The average service lives for the following broad categories of utility plant in service are:


•	electric thermal production - 33 years,


•	hydroelectric production - 73 years,


•	electric transmission - 51 years,


•	electric distribution - 38 years, and


•	natural gas distribution property - 49 years.

Taxes Other Than Income Taxes

Taxes other than income taxes include state excise taxes, city occupational and franchise taxes, real and personal property taxes and certain other taxes not based on net income. These taxes are generally based on revenues or the value of property. Utility related taxes collected from customers (primarily state excise taxes and city utility taxes) are recorded as operating revenue and expense and totaled the following amounts for the years ended December 31 (dollars in thousands):



	2012		2011		2010
Utility taxes	$	53,716	$	55,739	$	49,953

Allowance For Funds Used During Construction

Allowance for Funds Used During Construction

The Allowance for Funds Used During Construction (AFUDC) represents the cost of both the debt and equity funds used to finance utility plant additions during the construction period. As prescribed by regulatory authorities, AFUDC is capitalized as a part of the cost of utility plant and the debt related portion is credited against total interest expense in the Consolidated Statements of Income in the line item “capitalized interest.” The equity related portion of AFUDC is included in the Consolidated Statement of Income in the line item “other expense (income)-net.” The Company is permitted, under established regulatory rate practices, to recover the capitalized AFUDC, and a reasonable return thereon, through its inclusion in rate base and the provision for depreciation after the related utility plant is placed in service. Cash inflow related to AFUDC does not occur until the related utility plant is placed in service and included in rate base. The effective AFUDC rate was the following for the years ended December 31:



	2012		2011		2010
Effective AFUDC rate	7.62	%	7.91	%	8.25	%	(1)


(1)	Generally, the AFUDC rate changes effective January 1 of every year, however this rate was effective from January 1, 2010 to November 30, 2010. Effective December 1, 2010, the rate was changed to 7.91%.

Income Taxes

A deferred income tax asset or liability is determined based on the enacted tax rates that will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s consolidated income tax returns. The deferred income tax expense for the period is equal to the net change in the deferred income tax asset and liability accounts from the beginning to the end of the period. The effect on deferred income taxes from a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax liabilities and regulatory assets are established for income tax benefits flowed through to customers as prescribed by the respective regulatory commissions.

Stock-Based Compensation

Compensation cost relating to share-based payment transactions is recognized in the Company’s financial statements based on the fair value of the equity or liability instruments issued and recorded over the requisite service period. See Note 20 for further information.

Other Income - Net

Other Income - net consisted of the following items for the years ended December 31 (dollars in thousands):



	2012			2011			2010
Interest income	$	(944	)	$	(1,327	)	$	(1,159	)
Interest on regulatory deferrals	(68		)	(89		)	(248		)
Equity-related AFUDC	(4,055		)	(2,225		)	(3,353		)
Net loss on investments	3,343			488			3,297
Other income	(3,301		)	(280		)	(1,034		)
Total (1)	$	(5,025	)	$	(3,433	)	$	(2,497	)


(1)	Includes an immaterial correction of an error related to the reclassification of certain operating expenses from other expense-net to utility and non-utility other operating expenses and utility taxes other than income taxes. This correction did not have an impact on net income or earnings per share. See further discussion of this reclassification below under "Immaterial Correction of an Error".

Earnings Per Common Share Attributable To Avista Corporation Shareholders

Earnings per Common Share Attributable to Avista Corporation Shareholders

Basic earnings per common share attributable to Avista Corporation shareholders is computed by dividing net income attributable to Avista Corporation shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share attributable to Avista Corporation shareholders is calculated by dividing net income attributable to Avista Corporation shareholders (adjusted for the effect of potentially dilutive securities issued by subsidiaries) by diluted weighted average common shares outstanding during the period, including common stock equivalent shares outstanding using the treasury stock method, unless such shares are anti-dilutive. Common stock equivalent shares include shares issuable upon exercise of stock options and contingent stock awards. See Note 19 for earnings per common share calculations.

Cash And Cash Equivalents

Cash and Cash Equivalents

For the purposes of the Consolidated Statements of Cash Flows, the Company considers all temporary investments with a maturity of three months or less when purchased to be cash equivalents.

Allowance For Doubtful Accounts

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts to provide for estimated and potential losses on accounts receivable. The Company determines the allowance for utility and other customer accounts receivable based on historical write-offs as compared to accounts receivable and operating revenues. Additionally, the Company establishes specific allowances for certain individual accounts. The following table presents the activity in the allowance for doubtful accounts during the years ended December 31 (dollars in thousands):



	2012			2011			2010
Allowance as of the beginning of the year	$	43,958		$	44,883		$	42,928
Additions expensed during the year	4,213			5,232			5,194
Net deductions	(4,016		)	(6,157		)	(3,239		)
Allowance as of the end of the year	$	44,155		$	43,958		$	44,883

Materials And Supplies, Fuel Stock And Natural Gas Stored

Materials and Supplies, Fuel Stock and Natural Gas Stored

Inventories of materials and supplies, fuel stock and natural gas stored are recorded at average cost for our regulated operations and the lower of cost or market for our non-regulated operations and consisted of the following as of December 31 (dollars in thousands):



	2012		2011
Materials and supplies	$	26,058	$	24,148
Fuel stock	4,121		4,248
Natural gas stored	17,276		23,610
Total	$	47,455	$	52,006

Investments And Funds Held For Clients And Client Fund Obligations

Investments and Funds Held for Clients and Client Fund Obligations

In connection with the bill paying services, Ecova collects funds from its clients and remits the funds to the appropriate utility or other service provider. Some of the funds collected are invested by Ecova and classified as investments and funds held for clients and a related liability for client fund obligations is recorded. Investments and funds held for clients include cash and cash equivalent investments, money market funds and investment securities classified as available for sale. Investments and funds held for clients as of December 31, 2012 are as follows (dollars in thousands):



	Amortized Cost (1)		Unrealized Gain (Loss)		Fair Value
Cash and cash equivalents	$	13,867	$	—	$	13,867
Money market funds	15,084		—		15,084
Securities available for sale:
U.S. government agency	48,340		156		48,496
Municipal	820		28		848
Corporate fixed income – financial	5,010		16		5,026
Corporate fixed income – industrial	3,887		49		3,936
Certificates of deposit	1,000		15		1,015
Total securities available for sale	59,057		264		59,321
Total investments and funds held for clients	$	88,008	$	264	$	88,272

(1) Amortized cost represents the original purchase price of the investments, plus or minus any amortized purchase premiums or accreted purchase discounts.

Investments and funds held for clients as of December 31, 2011 are as follows (dollars in thousands):



	Amortized Cost		Unrealized Gain (Loss)			Fair Value
Money market funds	$	21,957	$	—		$	21,957
Securities available for sale:
U.S. government agency	74,721		172			74,893
Municipal	425		—			425
Corporate fixed income – financial	11,139		15			11,154
Corporate fixed income – industrial	6,495		23			6,518
Corporate fixed income – utility	2,088		4			2,092
Certificates of deposit	1,500		(3		)	1,497
Total securities available for sale	96,368		211			96,579
Total investments and funds held for clients	$	118,325	$	211		$	118,536

Investments and funds held for clients are classified as a current asset since these funds are held for the purpose of satisfying the client fund obligations. Approximately 97 percent and 88 percent of the investment portfolio is rated AA or higher as of December 31, 2012 and 2011, respectively, by nationally recognized statistical rating organizations. All fixed income securities were rated as investment grade as of December 31, 2012 and 2011.

The Company reviews its investments continuously for indicators of other-than-temporary impairment. To make this determination, the Company employs a methodology that considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, credit quality of instrument issuers, the length of time and extent to which the fair value is less than cost, and whether it has plans to sell the security or it is more-likely-than not that the Company will be required to sell the security before recovery. The Company also considers specific adverse conditions related to the financial health of and specific prospects for the issuer as well as other cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in earnings and a new cost basis in the investment is established. Based on the Company’s analysis, securities available for sale do not meet the criteria for other-than-temporary impairment as of December 31, 2012.

Proceeds from sales, maturities and calls of securities available for sale were $138.0 million and $0.1 million, for the years ended December 31, 2012 and 2011, respectively. Gross realized gains were $0.5 million for the year ended December 31, 2012 and were negligible for the year ended December 31, 2011. There were not any gross realized losses during these periods.

Contractual maturities of securities available for sale as of December 31, 2012 and 2011 are as follows (dollars in thousands):



Maturity date	Due within 1 year		After 1 but within 5 years		After 5 but within 10 years		After 10 years		Total
December 31, 2012	$	3,047	$	11,786	$	41,485	$	3,003	$	59,321
December 31, 2011	425		55,126		41,028		—		96,579

Actual maturities may differ due to call or prepayment rights and the effective maturity was 1.9 years as of December 31, 2012 and 1.3 years as of December 31, 2011.

Utility Plant In Service

Utility Plant in Service

The cost of additions to utility plant in service, including an allowance for funds used during construction and replacements of units of property and improvements, is capitalized. The cost of depreciable units of property retired plus the cost of removal less salvage is charged to accumulated depreciation.

Asset Retirement Obligations

The Company recovers certain asset retirement costs through rates charged to customers as a portion of its depreciation expense for which the Company has not recorded asset retirement obligations (see Note 9). The Company had estimated retirement costs (that do not represent legal or contractual obligations) included as a regulatory liability on the Consolidated Balance Sheets of the following amounts as of December 31 (dollars in thousands):



	2012		2011
Regulatory liability for utility plant retirement costs	$	234,128	$	227,282

Goodwill

Goodwill arising from acquisitions represents the excess of the purchase price over the estimated fair value of net assets acquired. The Company evaluates goodwill for impairment using a discounted cash flow model on at least an annual basis or more frequently if impairment indicators arise. The Company completed its annual evaluation of goodwill for potential impairment as of December 31, 2012 for Ecova and as of November 30, 2012 for the other businesses and determined that goodwill was not impaired at that time.

The changes in the carrying amount of goodwill are as follows (dollars in thousands):



	Ecova		Other		Accumulated Impairment Losses			Total
Balance as of January 1, 2011	$	20,689	$	12,979	$	(7,733	)	$	25,935
Goodwill acquired during the year	12,933		—		—			12,933
Adjustments	177		—		—			177
Balance as of the December 31, 2011	33,799		12,979		(7,733		)	39,045
Goodwill acquired during the year	33,484		—		—			33,484
Adjustments	3,430		—		—			3,430
Balance as of the December 31, 2012	$	70,713	$	12,979	$	(7,733	)	$	75,959

Accumulated impairment losses are attributable to the other businesses. The goodwill acquired in 2011 was related to Ecova’s acquisition of Prenova, Inc. (Prenova) on November 30, 2011. The goodwill acquired in 2012 was related to Ecova's acquisition of LPB Energy Management (LPB) effective January 31, 2012. The adjustment to goodwill recorded represents purchase accounting adjustments for Ecova's acquisition of Prenova based upon final review of the fair market values of relevant assets and liabilities identified as of the acquisition date. The primary cause of the revisions was due to a net operating loss study and a change in the value of customer relationships. Final purchase accounting related to LPB is pending the completion of further review of the fair market value of the noncontrolling interests associated with a portion of the LPB business and this will be completed during 2013.

Intangible Assets

Intangible assets primarily represent the amounts assigned to client relationships related to the Ecova acquisition of Cadence Network in 2008 (estimated amortization period of 12 years), Ecos in 2009 (estimated amortization period of 3 years), Loyalton in 2010 (estimated amortization period of 6 years), Prenova in 2011 (estimated amortization period of 9 years) and LPB in 2012 (estimated amortization period of 10 years), software development costs (estimated amortization period of 3 to 4 years) and other. Adjustments to acquired intangible assets associated with Prenova based on final review of the fair market values include decreases of $0.4 million to the customer relationships intangible, $2.1 million to the internal use software intangible, and $0.8 million to other intangibles.

Amortization expense related to Intangible Assets was as follows for the years ended December 31 (dollars in thousands):



	2012		2011		2010
Intangible asset amortization	$	10,435	$	4,682	$	3,755

The following table details the estimated amortization expense for the next five years related to Intangible Assets (dollars in thousands):



	2013		2014		2015		2016		2017
Estimated amortization expense	$	9,893	$	9,621	$	7,238	$	6,116	$	5,222

The gross carrying amount and accumulated amortization of Intangible Assets as of December 31, 2012 and 2011 are as follows (dollars in thousands):



	2012			2011
Client relationships	$	32,059		$	18,859
Software development costs	33,990			29,327
Other	6,237			3,065
Total intangible assets	72,286			51,251
Client relationships accumulated amortization	(7,793		)	(3,623		)
Software development costs accumulated amortization	(16,557		)	(12,016		)
Other accumulated amortization	(1,680		)	(990		)
Total accumulated amortization	(26,030		)	(16,629		)
Total intangible assets - net	$	46,256		$	34,622

Of the total net intangible assets above, intangible assets associated with Ecova represent approximately $45.4 million and $33.6 million at December 31, 2012 and December 31, 2011, respectively.

Other Intangibles

Intangible Assets

Amortization expense related to Intangible Assets was as follows for the years ended December 31 (dollars in thousands):



	2012		2011		2010
Intangible asset amortization	$	10,435	$	4,682	$	3,755

The following table details the estimated amortization expense for the next five years related to Intangible Assets (dollars in thousands):



	2013		2014		2015		2016		2017
Estimated amortization expense	$	9,893	$	9,621	$	7,238	$	6,116	$	5,222

The gross carrying amount and accumulated amortization of Intangible Assets as of December 31, 2012 and 2011 are as follows (dollars in thousands):



	2012			2011
Client relationships	$	32,059		$	18,859
Software development costs	33,990			29,327
Other	6,237			3,065
Total intangible assets	72,286			51,251
Client relationships accumulated amortization	(7,793		)	(3,623		)
Software development costs accumulated amortization	(16,557		)	(12,016		)
Other accumulated amortization	(1,680		)	(990		)
Total accumulated amortization	(26,030		)	(16,629		)
Total intangible assets - net	$	46,256		$	34,622

Of the total net intangible assets above, intangible assets associated with Ecova represent approximately $45.4 million and $33.6 million at December 31, 2012 and December 31, 2011, respectively.

Derivative Assets And Liabilities

Derivative Assets and Liabilities

Derivatives are recorded as either assets or liabilities on the Consolidated Balance Sheets measured at estimated fair value. In certain defined conditions, a derivative may be specifically designated as a hedge for a particular exposure. The accounting for derivatives depends on the intended use of the derivatives and the resulting designation.

The Washington Utilities and Transportation Commission (UTC) and the Idaho Public Utilities Commission (IPUC) issued accounting orders authorizing Avista Utilities to offset commodity derivative assets or liabilities with a regulatory asset or liability. This accounting treatment is intended to defer the recognition of mark-to-market gains and losses on energy commodity transactions until the period of settlement. The orders provide for Avista Utilities to not recognize the unrealized gain or loss on utility derivative commodity instruments in the Consolidated Statements of Income. Realized gains or losses are recognized in the period of settlement, subject to approval for recovery through retail rates. Realized gains and losses, subject to regulatory approval, result in adjustments to retail rates through purchased gas cost adjustments, the Energy Recovery Mechanism (ERM) in Washington, the Power Cost Adjustment (PCA) mechanism in Idaho, and periodic general rates cases. Regulatory assets are assessed regularly and are probable for recovery through future rates.

Substantially all forward contracts to purchase or sell power and natural gas are recorded as derivative assets or liabilities at estimated fair value with an offsetting regulatory asset or liability. Contracts that are not considered derivatives are accounted for on the accrual basis until they are settled or realized, unless there is a decline in the fair value of the contract that is determined to be other than temporary.

Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Energy commodity derivative assets and liabilities, investments and funds held for clients, deferred compensation assets, as well as derivatives related to interest rate swap agreements and foreign currency exchange contracts, are reported at estimated fair value on the Consolidated Balance Sheets. See Note 17 for the Company’s fair value disclosures.

Regulatory Deferred Charges And Credits

Regulatory Deferred Charges and Credits

The Company prepares its consolidated financial statements in accordance with regulatory accounting practices because:


•	rates for regulated services are established by or subject to approval by independent third-party regulators,


•	the regulated rates are designed to recover the cost of providing the regulated services, and


•	in view of demand for the regulated services and the level of competition, it is reasonable to assume that rates can be charged to and collected from customers at levels that will recover costs.

Regulatory accounting practices require that certain costs and/or obligations (such as incurred power and natural gas costs not currently included in rates, but expected to be recovered or refunded in the future) are reflected as deferred charges or credits on the Consolidated Balance Sheets. These costs and/or obligations are not reflected in the Consolidated Statements of Income until the period during which matching revenues are recognized. If at some point in the future the Company determines that it no longer meets the criteria for continued application of regulatory accounting practices for all or a portion of its regulated operations, the Company could be:


•	required to write off its regulatory assets, and


•	precluded from the future deferral of costs not recovered through rates at the time such costs are incurred, even if the Company expected to recover such costs in the future.

See Note 23 for further details of regulatory assets and liabilities.

Investment In Exchange Power-Net

Investment in Exchange Power-Net

The investment in exchange power represents the Company’s previous investment in Washington Public Power Supply System Project 3 (WNP-3), a nuclear project that was terminated prior to completion. Under a settlement agreement with the Bonneville Power Administration in 1985, Avista Utilities began receiving power in 1987, for a 32.5-year period, related to its investment in WNP-3. Through a settlement agreement with the UTC in the Washington jurisdiction, Avista Utilities is amortizing the recoverable portion of its investment in WNP-3 (recorded as investment in exchange power) over a 32.5-year period that began in 1987. For the Idaho jurisdiction, Avista Utilities fully amortized the recoverable portion of its investment in exchange power.

Unamortized Debt Expense

Unamortized debt expense includes debt issuance costs that are amortized over the life of the related debt.

Unamortized Debt Repurchase Costs

For the Company’s Washington regulatory jurisdiction and for any debt repurchases beginning in 2007 in all jurisdictions, premiums paid to repurchase debt are amortized over the remaining life of the original debt that was repurchased or, if new debt is issued in connection with the repurchase, these costs are amortized over the life of the new debt. In the Company’s other regulatory jurisdictions, premiums paid to repurchase debt prior to 2007 are being amortized over the average remaining maturity of outstanding debt when no new debt was issued in connection with the debt repurchase. These costs are recovered through retail rates as a component of interest expense.

Redeemable Noncontrolling Interests

This item represents the estimated fair value of redeemable stock and stock options of Ecova issued under its employee stock incentive plan and to the previous owners of Cadence Network. See Notes 5 and 20 for further information.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax, consisted of the following as of December 31 (dollars in thousands):



	2012			2011
Unfunded benefit obligation for pensions and other postretirement benefit plans - net of taxes of $(3,698) and $(3,107), respectively	$	(6,867	)	$	(5,771	)
Unrealized gain on securities available for sale - net of taxes of $99 and $79, respectively	167			134
Total accumulated other comprehensive loss	$	(6,700	)	$	(5,637	)

Contingencies

The Company has unresolved regulatory, legal and tax issues which have inherently uncertain outcomes. The Company accrues a loss contingency if it is probable that a liability has been incurred and the amount of the loss or impairment can be reasonably estimated. The Company also discloses losses that do not meet these conditions for accrual, if there is a reasonable possibility that a loss may be incurred.

Immaterial Correction of an Error

Subsequent to the issuance of the Company's 2011 consolidated financial statements, the Company's management identified certain employee-related operating expenses, dues and donations, and other operating expenses totaling $7.6 million and $10.5 million in 2011 and 2010, respectively, which had been erroneously included in “Other expense-net” in the previously issued financial statements rather than as a reduction to “Income from operations”. Accordingly, such classification has been corrected in the accompanying 2011 and 2010 consolidated statements of income by including these costs within “other” operating expenses. The restated items are also reflected in the information presented in Note 24, Information by Business Segments and Note 25, Selected Quarterly Financial Data (Unaudited). Such items had no effect on net income or earnings per share.