Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Regulatory Assets and Liabilities

The following table presents the Company’s regulatory assets and liabilities as of December 31, 2022 (dollars in thousands):


				Receiving Regulatory Treatment						2022				2021
	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	)	$	240,325	$	—	$	—	$	—	$	240,325	$	—	$	244,154
Pensions and other postretirement benefit plans		(4	)		—		135,337		—		—		135,337		—		165,696
Energy commodity derivatives		(5	)		—		130,275		—		112,090		18,185		12,447		2,938
Unamortized debt repurchase costs		(6	)		6,177		—		—		—		6,177		—		6,768
Settlement with Coeur d’Alene Tribe	2059				37,809		—		—		—		37,809		—		38,926
Demand side management programs		(3	)		—		3,683		—		—		3,683		—		3,974
Decoupling surcharge	2025				11,699		—		—		6,250		5,449		9,907		14,625
Utility plant abandoned		(7	)		24,389		—		—		—		24,389		—		26,771
Interest rate swaps		(8	)		168,832		—		17,087		—		185,919		—		199,754
Deferred power costs		(3	)		47,399		—		—		23,356		24,043		7,334		3,501
Deferred natural gas costs		(3	)		52,091		—		—		52,091		—		14,095		6,932
AFUDC above FERC allowed rate		(11	)		51,649		—		—		—		51,649		—		48,455
COVID-19 deferrals		(12	)		—		1,650		8,143		—		9,793		—		13,591
Advanced meter infrastructure		(13	)		32,381		—		—		—		32,381		—		36,008
Other regulatory assets		(3	)		40,163		14,871		3,155		—		58,189		—		48,533
Total regulatory assets				$	712,914	$	285,816	$	28,385	$	193,787	$	833,328	$	43,783	$	860,626
Regulatory Liabilities:
Deferred power costs		(3	)	$	—	$	—	$	—	$	—	$	—	$	6,457	$	5,434
Utility plant retirement costs		(9	)		376,817		—		—		—		376,817		—		350,190
Income tax related liabilities	(3) (10)				427,365		27,458		9,178		73,267		390,734		56,331		458,789
Interest rate swaps		(8	)		13,020		—		11,184		—		24,204		—		15,062
Decoupling rebate	2025				29,945		—		—		9,469		20,476		3,049		6,259
COVID-19 deferrals		(12	)		—		1,227		10,647		—		11,874		—		12,500
Other regulatory liabilities		(3	)		6,718		22,943		—		12,929		16,732		11,312		13,281
Total regulatory liabilities				$	853,865	$	51,628	$	31,009	$	95,665	$	840,837	$	77,149	$	861,515

(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)

Premiums paid or discounts received 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. These costs are recovered through retail rates as a component of interest expense.

(7)

The WUTC approved recovery of AMI project costs through the 2020 general rate case settlements, including amortization of retired meters replaced through the project through 2033. There are additional smaller projects included in the balance that the Company expects to fully recover, which have not yet been through the regulatory process.

(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 majority of this balance represents amounts due back to customers and resulted from the Tax Cuts and Jobs Act signed into law in December 2017, 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 33 years. The Company expects the AEL&P amounts to be returned to customers over a period of approximately 22 years. Prior to 2022, for depreciation-related temporary differences under the normalized tax accounting method, the Company utilized the average rate assumption method to compute the amounts returned to customers. Beginning in 2022, the Company changed to the alternative method, to be in compliance with recently released revenue procedures and private letter rulings.

(11)

This amount is being amortized based on the underlying utility plant assets and the life of utility plant.

(12)

The WUTC, IPUC and OPUC issued accounting orders allowing the Company to defer certain costs, net of any benefits, related to the COVID-19 pandemic. The Company has recorded all benefits on a gross basis as a regulatory liability to customers and all additional allowed costs are a regulatory asset. The ratemaking treatment will be determined in future general rate cases in each jurisdiction.

(13)

This amount represents the deferral of the depreciation expense of the Company’s AMI project in Washington state. Recovery of these amounts was approved by WUTC in the 2021 general rate case order, and the asset will be amortized through 2033.

Schedule of Decoupling and Earnings Sharing Mechanisms

As of December 31, 2022 and December 31, 2021, 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,
	2022			2021
Washington
Decoupling (rebate) surcharge	$	(13,210	)	$	13,522
Idaho
Decoupling rebate	$	(7,889	)	$	(1,450	)
Provision for earnings sharing rebate		(686	)		(686	)
Oregon
Decoupling surcharge	$	2,853		$	3,152