Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Decoupling and Earnings Sharing Mechanisms [Table Text Block]

As of December 31, 2019 and December 31, 2018, the Company had the following cumulative balances outstanding related to decoupling and earnings sharing mechanisms in its various jurisdictions (dollars in thousands):



	December 31,			December 31,
	2019			2018
Washington
Decoupling surcharge	$	22,440		$	12,671
Provision for earnings sharing rebate	—			(693		)
Idaho
Decoupling surcharge	$	2,549		$	2,150
Provision for earnings sharing rebate	(686		)	(774		)
Oregon
Decoupling rebate	$	(739	)	$	(898	)
Provision for earnings sharing rebate	—			—

Schedule Of Asset And Liability



			Receiving Regulatory Treatment						2019				2018
	Remaining Amortization Period		(1) Earning A Return		Not Earning A Return		(2) Expected Recovery or Refund		Current		Non-current		Current		Non-current
Regulatory Assets:
Deferred income tax	(3	)	$	95,752	$	—	$	—	$	—	$	95,752	$	—	$	91,188
Pensions and other postretirement benefit plans	(4	)	—		208,754		—		—		208,754		—		228,062
Energy commodity derivatives	(5	)	—		6,574		—		6,310		264		41,428		16,866
Unamortized debt repurchase costs	(6	)	8,884		—		—		—		8,884		—		10,255
Settlement with Coeur d’Alene Tribe	2059		41,332		—		—		—		41,332		—		42,643
Demand side management programs	(3	)	—		12,170		—		—		12,170		—		19,674
Decoupling surcharge	2021		26,904		—		—		12,098		14,806		3,408		17,501
Utility plant to be abandoned	(7	)	31,291		—		—		—		31,291		—		24,334
Interest rate swaps	(8	)	122,176		—		46,418		—		168,594		—		133,854
AFUDC above FERC allowed rate	(11	)	40,749		—		—		—		40,749		—		—
Other regulatory assets	(3	)	41,096		7,627		2,926		3,443		48,206		3,716		29,977



			Receiving Regulatory Treatment						2019				2018
	Remaining Amortization Period		(1) Earning A Return		Not Earning A Return		(2) Expected Recovery or Refund		Current		Non-current		Current		Non-current
Total regulatory assets			$	408,184	$	235,125	$	49,344	$	21,851	$	670,802	$	48,552	$	614,354
Regulatory Liabilities:
Deferred natural gas costs	(3	)	$	3,189	$	—	$	—	$	3,189	$	—	$	40,713	$	—
Deferred power costs	(3	)	37,699		—		—		14,155		23,544		25,072		16,933
Utility plant retirement costs	(9	)	312,403		—		—		—		312,403		—		297,379
Income tax related liabilities	(3) (10)		416,581		14,659		112		23,803		407,549		27,997		425,613
Interest rate swaps	(8	)	16,499		—		589		—		17,088		—		28,078
Decoupling rebate	2021		2,653		—		—		255		2,398		6,782		204
Other regulatory liabilities	(3	)	13,261		5,940		3,566		10,313		12,454		12,645		12,494
Total regulatory liabilities			$	802,285	$	20,599	$	4,267	$	51,715	$	775,436	$	113,209	$	780,701


(1)	Earning a return includes either interest on the regulatory asset/liability or a return on the investment as a component of rate base at the allowed rate of return.


(2)	Expected recovery is pending regulatory treatment including regulatory assets and liabilities with prior regulatory precedence.


(3)	Remaining amortization period varies depending on timing of underlying transactions.


(4)	As the Company has historically recovered and currently recovers its pension and other postretirement benefit costs related to its regulated operations in retail rates, the Company records a regulatory asset for that portion of its pension and other postretirement benefit funding deficiency.

(5)

The WUTC and the IPUC issued accounting orders authorizing Avista Corp. to offset energy 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 delivery. Realized benefits and losses result in adjustments to retail rates through PGAs, the ERM in Washington, the PCA mechanism in Idaho, and periodic general rates cases. The resulting regulatory assets associated with energy commodity derivative instruments have been concluded to be probable of recovery through future rates.

(6)

For the Company’s Washington 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.

(7)

In March 2016, the WUTC granted the Company's Petition for an Accounting Order to defer and include in a regulatory asset the undepreciated value of its existing Washington electric meters for the opportunity for later recovery. This accounting treatment is related to the Company's plan to replace approximately 253,000 of its existing electric meters with new two-way digital meters and the related software and support services through its AMI project in Washington State. In September 2017, the WUTC also approved the Company's request to defer the undepreciated net book value of existing natural gas ERTs (consistent with the accounting treatment for the electric meters) that will be retired as part of the AMI project. Replacement of the meters and natural gas ERTs began in the second half of 2018. The other piece of abandoned plant, relates to the Company's decision to replace a three-phase transformer at one of its generating facilities with three separate single-phase transformers. The Company expects to receive full recovery of the cost of the three-phase transformer; therefore, it has recorded the remaining net book value as a regulatory asset.

(8)

For interest rate swap derivatives, Avista Corp. records all mark-to-market gains and losses in each accounting period as assets and liabilities, as well as offsetting regulatory assets and liabilities, such that there is no income statement impact. The interest rate swap derivatives are risk management tools similar to energy commodity derivatives. Upon settlement of interest rate swap derivatives, the regulatory asset or liability is amortized as a component of interest expense over the term of the associated debt. The Company records an offset of interest rate swap derivative assets and liabilities with regulatory assets and liabilities, based on the prior practice of the commissions to provide recovery

through the ratemaking process. Settled interest rate swap derivatives which have been through a general rate case proceeding are classified as earning a return in the table above, whereas all unsettled interest rate swap derivatives and settled interest rate swap derivatives which have not been included in a general rate case are classified as expected recovery.


(9)	This amount is dependent upon the cost of removal of underlying utility plant assets and the life of utility plant.

(10)

The amount pending recovery represents amounts due back to customers and resulted from the TCJA, which changed the federal income tax rate from 35 percent to 21 percent. The Company revalued all deferred income taxes as of December 31, 2017. The Company expects the amounts for utility plant items for Avista Utilities to be returned to customers over a period of approximately 36 years. The Company expects the AEL&P amounts to be returned to customers over a period of approximately 40 years. The regulatory liability attributable to non-plant excess deferred taxes is approximately $11.1 million and $18.5 million (among all jurisdictions) as of December 31, 2019 and December 31, 2018, respectively. The return of this amount to customers will be determined by final orders from the WUTC, IPUC and OPUC during 2019 and 2020. See Note 11 for additional discussion regarding the new federal income tax law.


(11)	See Note 1 for a description of a reclassification associated with this regulatory asset, which is being amortized based on the underlying utility plant assets and the life of utility plant.