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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Ratio of Depreciation to Average Depreciable Property and Average Service Lives for Utility Plan in Service

For utility operations, the ratio of depreciation provisions to average depreciable property was as follows for the years ended December 31:

	2020			2019			2018
Avista Utilities
Ratio of depreciation to average depreciable property		3.43	%		3.28	%		3.17	%
Alaska Electric Light and Power Company
Ratio of depreciation to average depreciable property		2.77	%		2.48	%		2.46	%

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

	Avista Utilities		Alaska Electric Light and Power Company
Electric thermal/other production		27		42
Hydroelectric production		81		42
Electric transmission		49		43
Electric distribution		39		40
Natural gas distribution property		44	N/A
Other shorter-lived general plant		8		18

The gross balances of the major classifications of property, plant and equipment are detailed in the following table as of December 31 (dollars in thousands):

	2020		2019
Avista Utilities:
Electric production	$	1,457,497	$	1,445,017
Electric transmission		862,987		802,546
Electric distribution		1,978,868		1,847,273
Electric construction work-in-progress (CWIP) and other		384,372		350,331
Electric total		4,683,724		4,445,167
Natural gas underground storage		53,351		51,017
Natural gas distribution		1,282,563		1,203,186
Natural gas CWIP and other		83,644		81,245
Natural gas total		1,419,558		1,335,448
Common plant (including CWIP)		712,609		681,711
Total Avista Utilities		6,815,891		6,462,326
AEL&P:
Electric production		105,076		100,448
Electric transmission		22,419		22,000
Electric distribution		25,814		24,096
Electric CWIP and other		6,677		9,539
Electric total		159,986		156,083
Common plant		9,687		9,525
Total AEL&P		169,673		165,608
Total gross utility property		6,985,564		6,627,934
Other (1)		16,394		28,195
Total	$	7,001,958	$	6,656,129

(1)	Included in other property and investments-net and other non-current assets on the Consolidated Balance Sheets. Accumulated depreciation was $2.2 million as of December 31, 2020 and $5.4 million as of December 31, 2019 for the other businesses.

Summary of Effective AFUDC Rate

The effective AFUDC rate was the following for the years ended December 31:

	2020			2019			2018
Avista Utilities
Effective state AFUDC rate		7.25	%		7.39	%		7.43	%
Alaska Electric Light and Power Company
Effective AFUDC rate		8.04	%		8.96	%		9.04	%

Stock-Based Compensation

The Company recorded stock-based compensation expense (included in other operating expenses) and income tax benefits in the Consolidated Statements of Income of the following amounts for the years ended December 31 (dollars in thousands):

	2020			2019			2018
Stock-based compensation expense	$	5,846		$	11,353		$	5,367
Income tax benefits		1,228			2,384			1,127
Excess tax benefits (expenses) on settled share-based employee payments		(165	)		(612	)		990

The following table summarizes the number of grants, vested and unvested shares, earned shares (based on market metrics), and other pertinent information related to the Company's stock compensation awards for the years ended December 31:

	2020		2019		2018
Restricted Shares
Shares granted during the year		45,540		50,061		40,661
Shares vested during the year		56,203		48,228		53,352
Unvested shares at end of year		71,706		93,351		91,998
Unrecognized compensation expense at end of year (in thousands)	$	2,003	$	2,054	$	1,964
TSR Awards
TSR shares granted during the year		47,848		99,214		80,724
TSR shares vested during the year (1)		71,299		106,858		107,342
Unvested TSR shares at end of year		122,133		178,035		187,172
Unrecognized compensation expense (in thousands)	$	2,296	$	3,377	$	3,706
CEPS Awards
CEPS shares granted during the year		47,848		49,609		40,329
CEPS shares vested during the year		35,622		53,454		53,699
CEPS shares earned based on market metrics		63,763		106,908		30,102
Unvested CEPS shares at end of year		83,464		88,990		93,579
Unrecognized compensation expense (in thousands)	$	1,090	$	2,401	$	1,260

(1)

The market metrics were not met during 2020, 2019 and 2018 and no TRS shares were earned during these periods.

Other Expense (Income) - Net

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

	2020			2019			2018
Interest income	$	(1,952	)	$	(2,587	)	$	(2,710	)
Interest on regulatory deferrals		(1,222	)		(1,460	)		(990	)
Equity-related AFUDC		(6,970	)		(6,585	)		(6,554	)
Non-service portion of pension and other postretirement benefit expenses		6,433			8,899			5,156
Net (income) loss on investments		(905	)		(14,299	)		5,369
Other expense (income)		(201	)		1,104			1,187
Total	$	(4,817	)	$	(14,928	)	$	1,458

Allowance for Doubtful Accounts

The following table presents the activity in the allowance for doubtful accounts during the years ended December 31 (dollars in thousands):

	2020			2019			2018
Allowance as of the beginning of the year	$	2,419		$	5,233		$	5,132
Additions expensed during the year (1)		11,280			460			3,917
Net deductions		(2,312	)		(3,274	)		(3,816	)
Allowance as of the end of the year	$	11,387		$	2,419		$	5,233

(1)

Increase in 2020 related to COVID-19, bad debt expense in excess of the amount recovered through rates of $7.1 million, was deferred as a regulatory asset.

Summary of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill during 2019 and 2020 and the balance was as follows (dollars in thousands):

	AEL&P		Other			Accumulated Impairment Losses			Total
Balance as of January 1, 2019	$	52,426	$	12,979		$	(7,733	)	$	57,672
Goodwill sold during the year		—		(12,979	)		7,733			(5,246	)
Balance as of December 2019	$	52,426	$	—		$	—		$	52,426
Balance as of December 31, 2020	$	52,426	$	—		$	—		$	52,426

Summary of Appropriated Retained Earnings Amount Included in Retained Earnings

The appropriated retained earnings amounts included in retained earnings were as follows as of December 31 (dollars in thousands):

		2020				2019
Appropriated retained earnings		$	47,473			$	43,151